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 investments listed on the Ethex website to be high risk. What are the key risks?
You could lose all the money you invest
Most investments on the Ethex platform are either withdrawable shares in community benefit societies, known as community shares, or bonds issued by them. Ethex also offers bonds issued by charities and other social purpose businesses. Some of the businesses raising finance with Ethex are start-ups and you need to be aware that 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.
Ethex undertakes due diligence on businesses looking to raise investment. This covers the intended use of funds, governance, financial viability and social & environmental impact. While this due diligence process is conducted in good faith it should not be relied upon and 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 sooner than set out in the offer materials.
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 money until later than expected.
Currently, Ethex does not operate a secondary market for investments made via the website. Although bonds qualifying for the IFISA must be transferable, there is no Ethex mechanism provided for you to sell these bonds, nor is there any guarantee you will find a buyer at the price you are willing to sell, or at all.
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
The value of community shares cannot increase, however under certain circumstances, the directors of a community benefit society have the power to write down the value of community shares, which means you will lose part or all of the money you have invested. This may occur where the value of assets of a society fall below the total value of money invested into shares of the society.
You are unlikely to be protected if something goes wrong
Ethex is exempt from regulation by the FCA . Learn more about our regulatory status here. 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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In order to invest in offers on the Ethex platform you need to register an account. Here's our guide to the registration process.
Things to know...
Ethex is a fully online investment platform, so you’ll need to register an account to start investing. We’ve created a helpful video (further down this page) that explains the registration process and we recommend you watch it before starting the process.
Remember, as with any investment, there are risks when investing with Ethex. Your capital is at risk and you could lose all the money you invest. The return on your investment depends on the ability of the organisation you have invested in to pay your returns.
Finally, to invest via Ethex you must be over the age of 18 and resident in the UK.
Common registration questions & answers
Q. What category of investor am I? A. When registering, you will be asked to categorise yourself as either a Restricted, Sophisticated or High Net Worth (HNW) investor. This is an FCA requirement and must be completed for you to be eligible to invest with Ethex. When clicking on each investor option, you will be given a description and you should select the one which most closely describes you.
Q. What is the Investor Appropriateness Test and why must I complete it before investing? A. The FCA requires potential investors to demonstrate an appropriate level of knowledge in relation to the types of investments we offer. The Appropriateness Test meets these requirements and helps you fully understand the risks involved when making any investments. Our help video gives you more detail on what to expect from the test.
Q. What’s the cooling-off period for? Again, this is a requirement from the FCA. At the point when you have completed your registration details, you will be advised that you must wait 24 hours before investing. This ensures you have adequate time to understand more about the nature of the investments on the Ethex platform. When the 24 hours are up, you can log back on to your account to invest
Still have questions? Please check out our Investors FAQ section for answers to common questions. Or email our team at help@ethex.org.uk. Our team are happy to guide you through the set up. However, as part of the registration, there is an appropriateness test that you need to answer. The team are not able to help with this part as the answers need to come from you.