What investors should consider before purchasing private company shares

Private-company investing carries risks that differ in kind, not only in degree, from investing in listed securities. The points below are informational and are not a substitute for independent advice.

Capital and valuation risk

• The full amount invested may be lost.
• Valuations are infrequent, negotiated and may not reflect realisable value.
• A previous financing round does not establish current or future value.

Liquidity and exit risk

• Shares may be difficult or impossible to resell.
• There is no guarantee of a public listing or any other exit.
• Holding periods may be long and outside the investor's control.

Information and structural risk

• Private companies are not required to publish the financial information listed companies must disclose.
• The interest acquired may be held indirectly, with different rights from direct shareholdings.
• Dilution may occur through subsequent financing rounds.
• Transfer restrictions, consents and rights of first refusal may apply.

Regulatory and company-specific risk

• Financial technology companies operate in regulated sectors where requirements can change.
• Competition, execution and market conditions may materially affect a company's prospects.
• Cross-border transactions introduce additional legal and tax considerations.

Before proceeding

Investors should read all transaction documentation carefully, consider whether the risk profile is appropriate for their circumstances, and obtain independent financial, legal and tax advice where appropriate.