Please read carefully and thoroughly the risks associated with investing in private offerings
Real estate can be risky and unpredictable. For example, many experienced informed people lost money when the real estate market declined in 2007-8. Time has shown that the real estate market goes down without warning, sometimes resulting in significant losses. Some of the risks of investing in real estate include changing laws, including environmental laws; floods, fires, and other Acts of God, some of which can be uninsurable; changes in national or local economic conditions; changes in government policies, including changes in interest rates established by the Federal Reserve; and international crises. You should invest in real estate in general, and in the opportunities listed at the Site in particular, only if you can afford to lose your entire investment and are willing to live with the ups and downs of the real estate industry. Furthermore, any investment you make through this Site may take years to produce results or profits, and the securities offered on the Site are illiquid meaning that you might not be able to sell any such security at any point in the near future.
We encourage you to utilize Buy The Block educational resources before choosing to invest.
What should I keep in mind?
Crowdfunding offers investors an opportunity to participate in an early-stage venture. However, you should be aware that early-stage investments may involve very high risks and you should research thoroughly any offering before making an investment decision. You should read and fully understand the information about the company and the risks that are disclosed to you before making any investment.
The following are some risks to consider before making a crowdfunding investment:
- Speculative. Investments in startups and early-stage ventures are speculative and these enterprises often fail. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. You should be able to afford and be prepared to lose your entire investment.
- Illiquidity. You will be limited in your ability to resell your investment for the first year and may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange where you can quickly and easily trade securities on a market, you may have to locate an interested buyer when you do seek to resell your crowdfunded investment.
- Cancellation restrictions. Once you make an investment commitment for a crowdfunding offering, you will be committed to making that investment (unless you cancel your 48 hours before the closing of an offering).
- Valuation and capitalization. Your crowdfunding investment may purchase an equity stake in a startup. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult and you may risk overpaying for the equity stake you receive. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold through crowdfunding.
- Limited disclosure. The company must disclose information about the company, its business plan, the offering, and its anticipated use of proceeds, among other things. An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide more disclosure. The company is also only obligated to file information annually regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events—continuing disclosure that you can use to evaluate the status of your investment. In contrast, you may have only limited continuing disclosure about your crowdfunding investment.
- Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds.
- The possibility of fraud. In light of the relative ease with which early-stage companies can raise funds through crowdfunding, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that crowdfunding investments will be immune from fraud.
- Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts, and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.
How do I get informed?
Broker-dealers and funding portals that operate crowdfunding platforms are required to offer educational materials to help investors understand this type of investing. These materials further detail the risks involved when making a crowdfunding investment. You should take advantage of this resource to educate yourself and understand the risks of making crowdfunding investments. Remember, this is your money that you are putting at risk, and you should only invest after careful consideration of the risks.
Take a moment to view Block Vestor Education page here: https://buytheblock.com/blockvestor-education
Investing is risky, therefore, you must fully acknowledge you are in a financial condition to bear the loss of the investment on this site. You may also have difficulties or be unable entirely to resell any securities or investments purchased on this site. Investing in crowdfunding, especially startups, or small businesses are inherently risky.
In fact, perhaps riskier than most other investment opportunities, and you understand that the entire amount of your investment may be lost forever at any time for a variety of different reasons, some of which may not be disclosed or known to the issuer.
A BlockVestor may cancel any investment up to 48 hours after clicking the "Invest Now" button and receive a refund of such investment without any fees or penalties for any reason. A BlockVestor may cancel his or her investment for any reason up to 48 hours before an offering’s close and receive a full refund of such investment without any fees or penalties by sending an email to email@example.com with the subject line of “Investment Cancellation” and identifying the particular investment to be canceled. Refunds will be processed within (24) twenty-four hours.
The companies offer securities through this Site may disclose certain information to you such as business plans, estimates or financial projections. While Buy the Block has certain procedures in place to ensure the accuracy of this information and maintain high-quality companies on this Site, we highly encourage you to perform your own research and diligence, including asking questions of the companies on this Site. Buy the Block expressly disclaims any liability resulting from any reliance on this information and cannot certify the accuracy of such information.
None of the securities featured on this Site have been endorsed or otherwise reviewed by the SEC, FINRA, or any state agency. Furthermore, Buy the Block's registration as a Funding Portal under the SEC and FINRA is not and should not be considered an endorsement by either agency.
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To learn more about the risks associated with investing in private securities, please call 513.299.7941.