Risks related to equity investments

Risk according to the investment instrument: In Capital Cell you can purchase company shares or convertible bonds. A convertible bond is a financial asset that can be exchanged for new shares of a private company at a previously fixed price. It would be as if the investor were to give a short-term loan to the company in order to later receive shares in it.

Each investment instrument has different inherent risks caused by its structure, so it is important that you understand their nature before investing.

Dilution: Any investment made through Capital Cell may be subject to future dilution. Dilution occurs when a company needs additional capital and therefore issues new shares. Dilution affects all existing shareholders who do not acquire any of the new shares issued. As a result, the proportionate shareholding of the company's existing shareholders is reduced, - this leads to certain consequences, including loss of voting rights, dividends and the value of the shareholding.

Minority interest: As a minority investor within the company, you are likely to have fewer voting rights or ability to influence the company than majority investors. In some cases, this may mean that your shares are treated less preferentially than those of majority investors.

Valuation risk: The valuation of a company is what it is worth or what investors would pay for it. Putting a price on a company that is just starting its business is not easy either for the entrepreneur or for the investor who is considering acquiring shares. The startup will set the price of the company, which allows it to obtain a price per share. The investor runs the risk of overpaying for his investment, which has an impact on the eventual return on investment, if any.

At Capital Cell we evaluate the valuation of the company to protect investors from abusive situations. In addition, startups that are financed through us have a lead reference investor who has negotiated and validated the valuation of the company.