Can my percentage ownership be diluted? If yes, when and how?
Yes. Any investment made through Texas Equity Shares may be subject to dilution in the future. Dilution occurs when a company issues more shares. Dilution affects every existing shareholder who does not buy any of the new shares being issued. As a result, an existing shareholder's proportionate shareholding of the company is reduced or 'diluted'- this has an effect on a number of things including voting, dividends and value.
Some businesses who pitch through Texas Equity Shares offer A-Ordinary Shares, which may include pre-emption rights that protect an investor from dilution. In this situation the business must give shareholders with A-Ordinary Shares the opportunity to buy additional shares during a subsequent fundraising round so that they can maintain or preserve their shareholding. Please research the pitch and the Articles of the company to see if the shares you are buying will have these pre-emption rights. Most companies do not offer pre-emption rights for B Investment Shares.
Will I get dividends?
Dividends are payments made by a business to its shareholders from the company's profits. Most of the companies offering equity on our platform are startups or early stage companies who will rarely pay dividends to their investors. This means you are unlikely to see a return on your investment until you are able to sell your shares. Profits are typically reinvested into the business to fuel growth and build shareholder value. Businesses have no obligation to pay shareholder dividends.
Can I resell my investment?
Yes. However, investments in crowdfunding assets should be viewed as a long-term and illiquid investment.
Conforming to current stipulations, you must hold any purchased shares for a minimum of 12 months from the acquisition date.
Liquidity is the ease in which you can sell your shares after you have purchased them. Buying shares in businesses pitching through Texas Equity Shares cannot be sold easily as they are unlikely to be listed on a secondary trading market, such as NASDAQ, AMEX or the New York Stock Exchange.
Even successful companies rarely list shares on such an exchange. In addition, if you purchase B Investment Shares, these are non-voting shares and
may not be attractive to potential buyers. Without a public market to find a buyer for shares, it may be more difficult to sell them for a cash return.
What will be my return on investment?
With equity crowdfunding you receive actual shares of the business. You will receive a traditional ROI if/when the company is listed on a stock exchange, gets sold or pays a dividend. At some point there will be a secondary market for crowdfunding investments and you can sell your shares.
How long until I see a return?
There is no definitive answer to how long it takes to receive a return. You may end up holding shares in a company for a long time, but that is not necessarily a bad thing. All products/markets mature differently and through wise investing you can predict what investments offer the fastest and
Usually you obtain ROI when the company is listed on a stock exchange, gets sold or pays a dividend.
At some point there will be a secondary market for crowdfunding investments and you can sell your shares.