New Guide Focuses on the Risks of Investing in Private Companies
Last year, we published a Guide to Investing. Its purpose was to help people deal with many of the issues facing them as investors: how to choose an investor; how to work with your advisor; and how to manage your investments going forward. Over 8,000 investors downloaded the Guide.
This past week, we launched an updated and expanded Guide that includes an important new chapter on Investing in Private Companies. Please take a look. Two of the most important points in Chapter 5 are:
- Investing in private companies is a risky proposition. You potentially can lose all of the money you invest.
- Most have resale restrictions – meaning you may never be able to sell your shares and get your money back.
Even though people have to sign a Risk Acknowledgement Form 
, we find that people still don’t understand that they may be getting into an investment where the risks are very high and that they may lose all of their investment.
So why do we allow people to invest in these circumstances? Well, this is what we call the “exempt” market. It is an important source of venture capital financing in our province. But it’s not for everyone. Only certain types of investors are eligible to invest in private companies.
Before you invest in this market, please take the time to read how it works. There are many questions that you should ask. The Guide has a worksheet for investing in private companies . Use it. It will help you make an informed decision.
Click on Let’s Talk about Investing to read other blogs on this topic and others.
Posted by Patricia at 2/1/2010 8:00:00 AM
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