Investing through a crowdfunding platform, like all other investment opportunities, is inseparable from the various risks involved. The CrowdingLab platform will do its utmost to minimize the risks, which means that they will constantly monitor the changing environment with identifiable potential risks and apply their intended management techniques.
1. General investment risk prevention
The value of investments in the short term may fluctuate depending on the overall economic situation, prices, demand and supply fluctuations. It is recommended to invest in a medium and long-term orientation so that the investor can avoid the risk of short-term price fluctuations depending on the project.
2. The risk of changes in the Lithuanian economic situation and the tax system.
Possible changes in economic indicators, such as depreciation, decrease in the ownership of the project, inflation, changes in taxes, changes in bank lending policies, changes in lending policies. The platform's specialists will continuously monitor and evaluate the economic indicators to update the operational plans of new projects as early as possible in a changing environment. The platform will adapt the valuation procedures, risk assessment methodology and investment risk level algorithm accordingly to market developments.
3. Risk of default or malfunction of the project owner.
Possible defaults on the project owner's (non-payment of interest or inappropriate settlement with investors) due to unplanned or more complicated work than planned, due to changes in cash flows, arising new liabilities or creditor claims, etc. Performance of project owners and project evaluations based on unique and high-performance platform algorithm, in which calculations use several quantitative and qualitative variables. Each project will be secured by pledge, default interest will be subject to interest and, in the event of default, a recovery will be made from the pledged property. For this purpose, the relevant procedures and procedures are described and regularly updated: the procedure for assessing the reliability of project owners, the procedure for the recovery of debts and the procedure for resolving disputes concerning financing transactions, and others.
After evaluating the project, the owner of the project and the pledged property, one of the possible 4 risk levels is given (the investor presents three levels of risk to the project information): A - low risk B - medium risk C - high risk, unfinanced.
4. Liquidity risk.
The risk of loss, which is due to the low liquidity of the assets, which leads to the forced sale of assets at a lower price.
To reduce the risk of liquidity, the Platform's specialists will continuously monitor market developments and adjust the valuation procedures, risk assessment methodology and investment risk level algorithm accordingly. Continuous analysis and evaluation of indicators that impact on economic and other income, timely informing the project owner and the investor about possible changes in the market. Effective adjustment of algorithm for assessment procedures, risk assessment methodologies and investment risk degree is constantly monitored.
5. Risk of experience in predefined terms and higher than planned costs in a development project.
The development of projects may take longer than planned before the start of the project and the costs may be higher than planned, which may lead to overdue payments or default on project owners. The platform experts will evaluate the project owners' projects according to the project and / or project owner's cash flow analysis, asset valuation will be carried out only in selected asset valuation agencies, the ratio of the loan to the mortgaged property will not exceed 80%.
6. Market risk.
There is a risk of losing part of the investment suddenly and unexpectedly decreasing the value of the objects on the market. All pledged items will be funded using an adequate loan and collateral ratio (LTV), which cannot exceed 80%.
7. Interest rate risk.
A type of risk when there is a risk of loss or increased alternative costs due to a sudden change in the level of interest rates on the market.
Platform specialists will continuously monitor the level of interest rates on the market and will consider potential fluctuations in the evaluation of new projects. Depending on the interest rate risk and several other important variables, the platform's specialists will compile a pessimistic cash flow scenario for the project and, if necessary, will alert the investor to the risks of any interest rate risk in each project.
8. Other information
Investing involves the risk that you will not retrieve your investment, so you need to understand that the investment decision is your responsibility and you need to invest responsibly.
The degree of riskiness and the project you invest in, you choose individually, so CrowdingLab, as a technical intermediary, does not assume responsibility for any losses you may incur. Before investing in a platform, evaluate your investment experience, knowledge, financial situation and get acquainted with potential risks. To this end, by connecting to the platform, you will find an investor questionnaire, which you must complete and evaluate your knowledge.
Please note that the insurance provided for in the Law on Investments of Investors and Investors of the Republic of Lithuania does not apply to crowdfunding. For questions about risks or preventive measures, contact CrowdingLab specialists by e-mail: firstname.lastname@example.org.