Last updated: 31 March 2023
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
1. You could lose all the money you invest – If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
2. You are unlikely to be protected if something goes wrong – The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms. Learn more about FSCS protection here.
Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here or via the following URL link: https://www.financial-ombudsman.org.uk/consumers.
3. You won’t get your money back quickly – Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
4. Don’t put all your eggs in one basket – Putting all your money into a single business or type of investment, for example, is risky. Spreading your money across different investments makes you less dependent on anyone to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Read more about it here or via the following URL link: https://www.fca.org.uk/investsmart/5-questions-ask-you-invest.
5. The value of your investment can be reduced – The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here or via the following URL link: https://www.fca.org.uk/investsmart.
Please find the PDF version here.
When it comes to advertising, many companies often end up throwing money away as the engagement and click-through rate levels they’re receiving from their paid campaigns become stale and reduce.
Fortunately for you, as a marketer or entrepreneur who may be looking to get the most return on investment from their marketing budget, this blog shares some insightful strategies that can be effective when it comes to increasing the performance of future advertising campaigns.
There are 5 key areas you should consider when managing your advertising budget:
Below are those 5 key areas broken down so you can identify which are most relevant to your business and your advertising strategy.
Without recognising the right strategies to suit their operations, many organizations try every tactic they know about and assume that return on ad spend will come. Instead, developing a solid and effective strategy of advertising based on the most suitable platform for their company will allow the organization to invest effectively.
For a company it may be more suitable to invest in blogging and digital content; for another company, it might be more suitable to invest in targeted and paid social media ads or TV advertising. This should be decided by a whole team, and collectively a call should be made about the best allocation of budget and investment of time, finances, and energy.
Split testing, otherwise known as A/B testing can remove the guess work from your advertising strategy and help return return on investment from your marketing budget.
Split testing is where two landing pages are tested against each other, the same ad, the same ad budget but with two different landing pages. After a set period of time, measure the conversion rate on those pages and prioritise the page which offers the best return.
Equally this can be used with strap lines, ad creative and more to make the most out of your advertising budget. Demonstrating extensive split testing will also support in preparing for series A investment, as you’ll be equipped with what ad creative and landing pages convert best.
To manage your advertising budget, the focus should be made on one or two campaigns at a time. Your goals for these campaigns should be defined and based solely around what your company seeks to get out of each campaign.
Set the right target audience for your campaign and decide the ways in which your campaign will reach them. Also, define your success parameters. By the end of your campaign, assess if each goal has been achieved.
Measuring and bench-marking these goals is a great way to manage your ad spend but also make sure you’re not wasting capital or time.
Another effective way of managing your advertising budget is to use a budget template. Depending on the size of your budget and needs, one can find many various options of templates to try out and see what works best.
Once you have found the right budget template, continue to regularly visit and keep it updated.
To better understand the spending patterns of your organisation and return on investment, all marketing expenses, including those allocated to your advertising campaigns should be reviewed.
However, keep in mind that if several people have access to company cards for the purpose of advertisement expenses things might become difficult to manage for you and your team.
To avoid such tricky situations, you should choose an appropriate financial tool to track your advertisement budget or expenses accurately, which is easily accessible to your whole marketing team.
A number of applications and programs can be used, that are easy to use for employees for making invoices of expenses that can be viewed and approved by the senior management further.
If you focus on a media-based strategy for your business, then it should be carefully determined which media type is most suitable for your audience. Not every type of media is suitable to cater to your target demographic.
For instance, TV advertising is used for targeting a large audience and generating awareness. However to engage your audience, one can find social media to be more appropriate.
All these factors are important for managing the advertising budget in an effective long-term way.
At Velocity Capital, we invest in digital-first direct to consumer companies with unstoppable founders. Does this sound like you? Get in contact with us to find out how we can provide early stage capital funding to your business, and view our current investments to see who we’ve worked with so far.
We are also EIS fund managers and SEIS fund managers based in London. If you’re looking to invest in emerging tech startups, do get in contact with our team.
Fussy, the company dedicated to eradicating single-use plastic from bathrooms has successfully raised funds through the Velocity Capital EIS fund.
Semitone, the dedicated marketplace catering to musicians and enthusiasts seeking a diverse range of new, used, and vintage musical instruments, has successfully
BBC Studios has teamed up with Reality+ to launch a collection of immersive experiences in the metaverse based on the BBC’s world-famous
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Investing in start-ups and early-stage companies involves risks, including illiquidity, lack of dividends, loss of investment and dilution. It should be done only as part of a diversified portfolio. There is no assurance that the investment objectives of any investment opportunity will be achieved or that the strategies and methods described herein will be successful. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up.
The investments are targeted exclusively at investors who understand the risks of investing in early-stage businesses and can make their own investment decisions. Any pitches for investment are not offers to the public and investments can only be made through Sapphire Capital Partners LLP as the fund manager. Neither Velocity Capital Advisors Limited, Sapphire Capital Partners LLP nor any of their members, directors or employees provide any financial, legal or tax advice in relation to the investments and investors are recommended to seek independent advice before committing or if they have any doubts as to the appropriateness or suitability of such an investment in relation to their specific circumstances.
Investments made in investee companies via alternative investment funds may be covered by the Financial Services Compensation Scheme (FSCS). For more details, please contact us or refer to their website: https://www.fscs.org.uk.