Don’t invest unless you’re prepared to lose all the money you invest. This is a high - risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more
Don’t invest unless you’re prepared to lose all the money you invest. This is a high - risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk. What are the key risks?
You could lose all the money you invest
Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
Some of these investments can be held in an Innovative Finance ISA (IFISA). An IFISA does not reduce the risk of the investment or protect you from losses, so you can still lose all your money. It only means that any potential returns will be tax free.
Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.
You won’t get your money back quickly
Even if the business you invest in is successful, it is unlikely that you will be repaid before the end of the specified term.
If the business you invest in does not meet its targets, it may not be able to pay you on the scheduled dates. You may find that you do not have access to your funds until later than expected.
Some platforms may give you the opportunity to sell your investment early through a ‘secondary market’ or ‘bulletin board’, but there is no guarantee you will find a buyer at the price you are willing to sell.
Don’t put all your eggs in one basket
Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
The value of your investment can be reduced
If your investment is in ordinary shares (as opposed to community shares), the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
These new shares could have additional rights that your shares don’t have, which could further reduce your chances of getting a return on your investment.
Under certain circumstances, the directors of a community benefit society have the power to write down the value of community shares.
You are unlikely to be protected if something goes wrong
The platform arranging this investment is not regulated by the FCA . Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms. Learn more about FSCS protection here.
The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here. For further information about investment-based crowdfunding, visit the FCA’s website here.
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Solar for Schools
Bond
Raising finance to create greener schools around the UK
5%
Targeted annual return
Amount raised
£2.75 million
Investors
274
Number of raises
6
The big picture
Solar for Schools believes that the next generation is key to us reaching our sustainability goals as a society, so they install clean-energy generating solar panels on school rooftops around the UK. These panels fund sustainability education programmes while making substantial savings for the schools on their energy bills. Their projects are funded by a community of socially-minded investors.
To date, installations by Solar for Schools have generated 19,228 MWh of solar electricity, enough to drive an electric car around the world 2,399 times. This has avoided 7,802 tonnes of CO2 and inspired over 79,872 students to fight climate change, starting with the installation of clean solar energy on their schools!
The big raises
To support their mission, Solar for Schools has raised finance through issuing Innovative Finance ISA eligible bonds via the Ethex platform six times. Access to flexible and affordable people-powered finance over the past 3 years has enabled Solar for Schools to sustainably scale and grow their business.
As an organisation, Solar for Schools has developed strong relationships with investors by delivering solar projects for schools and making regular repayments. This means that when they require further finance for pipeline projects, they have confidence that they can source this through their community of investors.
In 2017, 46 people invested £250,000 in bonds which funded solar panels on 7 schools and mitigated about 90 tonnes of CO2 a year since then
In 2018, 3 successful bond raises provide £1.25 million of investment for more schools
In 2019/20, a further £1.5 million was raised, including £400,000 invested by 30 people in just 3 days.
In total solar on 60 schools has been funded via Ethex.