Risk Warnings

Risk Warnings

Investing in insurance risk can be very rewarding, but it involves a number of risks and challenges. If you choose to invest in insurance products displayed on Riovic, you need to be aware of and accept five important considerations:

  1. 1. Loss of Capital

    Most early-stage insurance products experience losses for years, and if you invest in a product displayed on the platform, it is significantly more likely that you will lose all of your invested capital than you will see any return of capital or a profit. You should not invest more money in the types of products displayed on the platform than you can afford to lose without altering your standard of living.

  2. 2. Illiquidity

    Almost all investments you make in the products displayed on the platform will be highly illiquid. It is very unlikely that there will be a liquid secondary market for the shares in the syndicates. This means you should assume that you will be unlikely to be able to sell your shares until and unless the product is bought by another company; and, even if the product is bought by another company, your investment may continue to be illiquid. Even for a successful product, a purchase is unlikely to occur for a number of years from the time you make your investment. For products for which secondary market opportunities are available (including any available on the platform), it can be difficult to find a buyer or seller, and investors should not assume that an early exit will be available just because a secondary market exists.

  3. 3. Dilution

    Any investment you make in a product displayed on the platform is likely to be subject to dilution. This means that if the product raises additional capital at a later date, it will issue new shares to the new investors, and the percentage of the product that you own will decline. These new shares may also have certain preferential rights to dividends, sale proceeds and other matters, and the exercise of these rights may work to your disadvantage. Your investment may also be subject to dilution as a result of the grant of options (or similar rights to acquire shares) to employees of, service providers to or certain other contacts of, the product.

  4. 4. Diversification

    If you choose to invest in products of the type displayed on the platform, such investments should only be made as part of a well-diversified portfolio. This means that you should invest only a relatively small portion of your investable capital in such products, and the majority of your investable capital should be invested in safer, more liquid assets. It also means that you should spread your investment between multiple productes rather than investing a larger amount in just a few.