Our model is simple, aligning the goals of founders with those of our investors. Our platform facilitates companies and investors through the entire funding journey, from seed to exit.
All companies onboard to a private round initially, where they are encouraged to inject their own funds and access their own networks before we open them up to our established investor community on our platform. In this way, our investors and co-funding partners, can invest knowing the founders already have ‘skin in the game’.
We stay fully engaged with our investee companies and our investors throughout the journey, as we continue to work on follow-on funding opportunities to position our companies and our investors for profitable exit opportunities.
For Investors – Please sign up to make investments.
Previously the exclusive domain of venture capitalists and private equity firms, Shadow Foundr’s regulated funding platform allows every-day investors the opportunity to inject funds into companies that offer unique products or services, are scalable, have strong management teams and operate in sectors where they have competitive advantage and the ability to disrupt.
Investor protection always remains at the core of what we do. Our commitment to investors includes:
Sourcing the best opportunities.
Educating investors about start-ups and the sector.
Conducting vigilant due diligence and questioning of entrepreneurs and their businesses.
Championing higher levels of transparency and collaboration within the sector.
Seeking full justification of company valuations and rejecting them if unrealistic.
Viewing success as timing of exits and returns achieved for investors.
Encouraging founders and their followers to invest their own funds into the business.
Facilitating secondary market opportunities to allow early exits for investors.
Equity investment is about selecting businesses you believe have the potential to grow. You invest (cash) in exchange for some of the equity (shares) in a company, effectively meaning you own a portion of that company. If the company succeeds, your shares will become worth more than what you paid for them. If the business fails however, you will lose your investment.
The vast majority of start-up businesses fail, meaning many investors lose money when investing into these types of companies. A small minority will go on to make large returns for their seed-investors. So yes, equity investment can be profitable, however most businesses will fail, meaning there is also a high likelihood that you could lose your money if you invest into a start-up.
Most businesses fail because they lack the cash to get them through the early stages of their existence. Capital is crucial at the start of a company’s life, as it enables the business to turn its ideas into reality. The seed capital may be used to hire key staff, purchase inventory, or market the company and its ideas. All of these things require cash and this is the reason companies raise investment.
Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries, but the concept can also be executed through mail-order subscriptions, benefit events, and other methods. Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system.
The crowdfunding model is based on three types of protagonists: the project initiator who proposes the idea and/or project to be funded; individuals or groups who support the idea; and a moderating organisation (the “platform”) that brings the parties together to launch the idea.
Yes! There are several major risks when investing into start-up companies. The main risk is simply that the business could fail, which means investors will not get any money back, including their invested capital. Investments like this are also illiquid for a substantial period of time (often years) and as there is no secondary market for these types of investment, investors are unlikely to be able to sell their shares. Finally, there is the risk of dilution, which can happen if the company raises more funds at a later date. When this happens, the percentage of equity that existing investors hold in the company, will decrease relative to what they originally had. There are other risks associated with investing into start-ups and you can see more details in our Risk Warning.
Absolutely not. Even professional angel investors tend to invest no more than between 5% and 15% of their capital in start-ups. You need to ask yourself the question: “Can I afford to lose this money I am about to invest?” If the answer is “no”, then you should not invest.
Our own view is that we believe it is better to diversify by spreading investments over several companies. Remember that most early-stage businesses fail, so by having a larger number of investments, the chances of one of them succeeding is greater, than by having all of you funds tied up into just the one business.
No. We are not authorised to give advice. We will conduct due diligence to confirm and approve all the information provided on the start-ups we present, but it is down to you to make your own judgment about whether it’s a good company to invest into.
To sign up to our platform, investors must fill out our on-line questionnaire or sign up as one of the categories listed below. Applications will then be subject to review by Shadow Foundr, prior to investors being accepted onto the platform. This process is necessary because we need to know that you understand the nature and risks of these types of investments.
All potential investors will be subject to a client categorisation and must meet and sign up to one of the following categories, before being able to sign up to the website/platform as a new investor:
— Certified as a “high net worth investor” (HNI) – with an annual income in excess of £100,000 or net assets of £250,000 (excluding primary residence, any benefits in the form of pensions or otherwise and any rights under certain contracts of insurance).
— Certified or self-certified as a “sophisticated investor” – assessed by an FCA authorised firm as sufficiently knowledgeable to understand the risks associated with engaging in investment activity or self-certifying where the individual falls within one of the categories set out in the FCA rules.
— Where the FCA-authorised firm concerned will comply with the “suitability” requirements in the FCA rules or, alternatively, the customer has confirmed before the communication is made that another FCA-authorised firm will comply with the suitability requirements.
— Certified as a “restricted investor” – an individual who has not invested more than 10 per cent of their net assets in non-readily realisable security (net assets for these purposes does not include any primary residence, any benefits in the form of pensions or otherwise and any rights under certain contracts of insurance).
Shadow Foundr has three categories of investor for the purposes of the registration of new investors to the applicant firm’s website/platform:
— Certified High Net Worth Individual (This is applicable to an investor who earns more than £100,000 a year or have net assets of more than £250,000).
— Self-Certified Sophisticated Investor (This is applicable if an investor has invested in more than one unlisted company in the last two years or been a member of a business angel syndicate or network for at least six months).
— Regular Investor (This applies to most investors who are not advised and are not professional investors and do not invest more than 10% of their net assets into unlisted company shares or unlisted debt securities).
As we are dealing in financial services, Shadow Foundr is required by anti-money laundering regulations to verify the identities of investors. Investors must pass this process before making their first investment through Shadow Foundr:
— Automatic: Often we can verify your identity automatically when you enter your personal details on the platform before you make a deposit by using a third party online database. But sometimes we are unable to verify your identity this way. This is nothing to worry about and can happen for a number of reasons, for example if you have recently moved house, if the database does not cover the place where you live, or a simple data entry error.
— Document: If we can’t identify you using the automatic process, then we will need to verify your identity using documents as evidence of your identity and address. You will be asked to upload copies of the following two documents through the platform (which can be scans or photos taken on your mobile phone):
— Identity: Government issued photo ID (e.g. passport, national ID card, driving licence); and
— Address: Recent (i.e. within three months) utility bill, bank statement, or a letter from a national or local authority showing your name and address.
The information that you send us will be used solely to verify your identity and will not be used for any other purposes. Please note that we require two separate documents (even if your government issued photo ID also states your address). Once we have reviewed these documents we will let you know whether you have cleared the process or if we require anything else.
Remember that this is only required to be completed before you make your first investment.
All entrepreneurs are pre-vetted by Shadow Foundr. We undertake extensive background checks, including but not limited to AML (anti-money-laundering) checks, past Directorships and references. If something does not stack up, the entrepreneur and the opportunity will not be presented to investors.
There are two ways for investors to make money from an equity investment. The first is through a dividend, which usually occurs when a company is in profit and allows for part of those profits to be divided between the shareholders. The second is if an investor sells their shares. This will happen upon a company exiting through a trade sale, listing on a stock market or via a company buyback.
It takes time for start-ups to gain traction. Bearing in mind that most start-ups fail, if you do happen to invest in one that is successful, it usually takes a few years before a company would be in a position to pay dividends or exit via a trade sale or stock market listing.
Generally, investors will lose all of their money, unless a small portion of their investment is redeemed through the sale of any company assets. In that instance, whatever cash is in the business following the sale of assets and the payment of any liabilities the business may have, proceeds will be divided amongst the shareholders on a pro-rata basis. In most instances when a business fails, investors lose all of their money.
No. You can only lose the amount of money that you have invested if a business fails.
No. These types of investments are extremely risky. This is why diversification is key. By spreading funds over a number of investments, if one of those companies succeeds, the hope would be that it would cover the costs of your other investments and perhaps provide a profit overall.
Nothing. Our fees are paid by the entrepreneurs, upon a successful fund raise.
Once you have invested into a company, you are a shareholder and effectively own a portion of that company. You therefore have the right to speak directly with that company, although as part of their duty to shareholders, companies should also keep investors informed and updated on the company’s progress. Regular (usually twice annually or quarterly) and timely updates usually take away the need for investors to speak directly with the companies they invest in.
Yes, absolutely. We believe that by investors joining several networks they are comfortable with and entrepreneurs raising funds through multiple channels, more investments will be filled, meaning more start-ups can operate.
For Investors – Please sign up to make investments.
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