Most investments (including this funding round for Karfu) are for Ordinary Shares, giving you voting and pre-emption rights on those shares, but you should check the share class on the pitch as this can vary. In most cases (and in Karfu's), your shares will be held for you by Crowdcube Nominees Limited. Learn what a nominee is and does.
If Karfu is a success and is eventually bought by another company or goes public at a higher value than it was when you first invested, you’ll get a return on your investment. However, the opposite is also true. If Karfu fails, you may lose some, or all, of your investment.
Investing in startups and early-stage businesses is long term and high risk
. The majority of startups fail or do not deliver shareholders a return on their investment. Liquidity, or the ability to cash in your investment, is limited as it typically relies on the company being sold or going public. In addition, dividend payments are rare and the likelihood of your percentage shareholding being diluted by future fundraising is high.
So it’s important to diversify your investment portfolio by spreading your money across multiple investments and asset types. While you cannot eliminate all types of risk, this will help cushion your losses if some of your investments fail.