Never test the depth of a river with both feet - Warren Buffett
Snowball Effect is proud to provide access to early stage equity investments for everyday Kiwis. We’re passionate about improving financial literacy in New Zealand and increasing investment into wealth-creating assets.
However, it’s crucial for you to understand the characteristics of financial products offered through this marketplace.
Companies making offers through Snowball Effect will range from very early stage businesses with little more than an idea, to more established businesses that may already be profitable. The risk of investing in a business tends to decrease as a business develops and matures. For very early stage businesses, history suggests that perhaps only one or two out of ten will make significant returns for investors. Despite the hopes and belief of the promoters, some will putter along without much happening for a long time. In others the total investment will likely be lost.
Investing in early stage businesses is risky. Overall, investor returns tend to be greater than the amounts invested, but you might not be one of the winners. Some of the other key risks include:
To decrease exposure to the risks, these types of investments should only be made as part of a diversified portfolio. Spread your risks. Only invest money that you can afford to lose.
Remember that you will never get enough information to know in advance how things will turn out. No one, even the directors of a company, can know in advance with 100% certainty just what will make a business fly, and what will bring it down. Even in public offerings for large mature companies, the information available is never enough to be sure how the future will turn out.
Please seek independent advice if you don’t fully understand the characteristics of this marketplace or the information in an offer.