Investing in a start-up typically requires time to realize actual value growth, usually a minimum of 3 years, but more often 5, although faster growth can occur. We should make our investment decision prepared for this timeframe. Often, it’s at the end of this period, during an acquisition or exit, that we can realize the company’s value growth.
However, it’s common for the Campaign Owner company to conduct additional capital raising in the meantime, potentially at a higher company valuation, meaning less equity is offered for the same amount of capital. If the Investor participates in the new capital increase, i.e., buy the new shares, their stake does not decrease or get diluted. It’s also possible to sell our shares to the next investors, thus accessing the profit. Dividend payments can also provide returns, though they are relatively rare during the growth phase. Additionally, if the share is transferable and tradable, we can freely sell it to anyone through a simple Over-The-Counter (OTC) sales contract, downloadable from the internet. However, organized markets for shares of start-ups are rare. Under the ECSPR license, TokePortal will develop its service supporting the secondary market, the Bulletin Board, which shows incoming buy and sell offers.
There’s no guarantee on the return of the investment, but it’s also in the founders’ interest. Consider the following exit scenarios:
- Wait for the promised period in the campaign and the fulfillment of the exit strategy, selling the shares when the founders exit. The Campaign Owner company may even go public at the end of the period.
- Sell our share to the next investors during a new capital raise.
- Access our money through dividend payments while retaining the share.
- Sell our share to a third party (in secondary trading).
During the Campaign, it’s advisable to ask related questions on the platform forum, to which the Campaign Owner is obliged to respond. The Forum is readable by any User with an investor profile.