What are some of the risks involved in investing?

Crowdfunding investments are risky and speculative. You should do your own research and scrutinize all disclosed risk factors before making an investment decision.

Speculative. Investments in startups, early-stage ventures and emerging technology companies are speculative and these enterprises often fail. Unlike an investment in a mature business, where there is a track record of revenue and income, the success of a startup, early-stage venture or emerging technology company often relies on the development of a new product or service that may or may not find a market. You should be prepared to lose your entire investment.

Illiquidity. Your ability to resell your investment in the first year will be restricted with narrow exceptions. You may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange, where you can quickly and easily trade securities, you may have to locate an interested private buyer to resell your crowdfunded investment.

No voting rights. Investment instruments hosted on Eelamclub are typically held via the Crowd SAFE, which does not provide voting rights to investors. Investors may receive voting rights if that instrument converts to stock, but crowdfunding investors’ voting rights will mostly likely be diluted when as the company raises additional funds. In addition, crypto-assets typically do not have voting rights and owning a token will not give you influence over the token maker or seller.

Cancellation restrictions. Once you make an investment, you can cancel the investment at any time and for any reason up to 48 hours before the campaign deadline. Some campaigns may have multiple deadlines around rolling closes. Investors should pay attention to notices companies provide regarding rolling closes. Learn more.

Valuation and capitalization. No exchange or other secondary market is expected for securities sold under Regulation . Companies fundraising via Regulation CF are often early-stage startups and are unlikely to have substantial operating or financial histories. There is limited–if any–information for valuing securities offered through Eelamclub and there is a substantial risk that the price of securities purchased on Eelamclub may exceed their value and any amount for which they may eventually be resold. Furthermore, securities sold on Eelamclub may provide investors with inferior terms than similar securities provided by a company in other offerings.

Limited disclosure. The company must disclose information about itself, its business plan, the offering, and its anticipated use of proceeds, among other things. It’s important to note that an early-stage company may be able to provide only limited information about its business plan and operations because it is still developing its operations. The company is also only obligated to file information regarding its business annually, including financial statements.

Under certain circumstances the company may cease to publish annual reports and investors may have no information rights.

Investment in personnel. An investment in a startup, early-stage venture or emerging technology company is also an investment in the founding entrepreneur(s) and/or the company’s management. Being able to execute on the business plan is an important factor in determining whether the business will be viable and successful. A portion of each investment may be used to fund salaries. Investors should carefully review any disclosure regarding the company’s use of funds.

Possibility of fraud. There is a risk that a company raising on Eelamclub engages in fraud. Eelamclub vets the companies we host, but there is no way to control the actions of a company once a campaign ends and Eelamclub cannot verify everything.

Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors. These investors often negotiate for seats on the company’s board of directors and play an important role in providing additional resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.

Less Risk Of Diversification. The more you invest in a single company, the bigger the risk you run of losing everything if that venture fails.  “Our target batting average is ‘1/4, 1/4, 1/4, 1/4’ which means that we expect to lose our entire investment on 1/4 of our investments, we expect to get our money back (or maybe make a small return) on 1/4 of our investments, and we expect to generate the bulk of our returns on 1/4 of our investments.”

In the same way that diversification reduces risk; it also opens up to tremendous opportunities for success. This is especially true for angel investors; every small investment you make increases your chance of a big pay off if a company succeeds.

When you diversify your portfolio, you're not stuck investing in one sector; you can invest across multiple industries. This allows you to simultaneously invest in different markets and earn on some of the hottest consumer trends.

You don’t need to be an expert in a specific industry or field to invest. Angel investing allows you to diversify in startups working in healthcare, beauty, food and restaurants, food production, small industries, deliveries,services sectors, insurance, real estate, sea fishing and farming, and more and more at the same time. All it takes is one idea to take off for you to earn something better.

Risks. 

We have a limited operating history upon which you can evaluate our performance, and accordingly, our prospects must be considered in light of the risks that any new company encounters.

The amount of capital the Company is attempting to raise in this Offering may not be enough to sustain the Company’s current business plan.

Although dependent on certain key personnel, the Company does not have any key man life insurance policies on any such people.

The Company is not subject to regulations and may lack the financial controls and procedures of public companies.

Changes in government regulation could adversely impact our business.

We may implement new lines of business or offer new products and services within existing lines of business.

Damage to our reputation could negatively impact our business, financial condition and results of operations.

Security breaches of confidential customer information, in connection with our electronic processing of credit and debit card transactions, or confidential employee information may adversely affect our business.

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.

Neither the Offering nor the Securities have been registered under federal or state securities laws, leading to an absence of certain regulation applicable to the Company.

The Company's management may have broad discretion in how the Company uses the net proceeds of an offering.

The Company has the right to limit individual Purchasers commitment amount based on the Company’s determination of a Purchaser’s sophistication.

The Company has the right to extend the Offering deadline. The Company has the right to end the Offering early.

The units of SAFE will not be freely tradable until one year from the initial purchase date. Although the units of SAFE may be tradable under federal securities law, state securities regulations may apply, and each Purchaser should consult with his or her attorney.

Purchasers will not become equity holders until the Company decides to convert the Securities into CF Shadow Securities or until there is a change of control or sale of substantially all of the Company’s assets.

Purchasers will not have voting rights, even upon conversion of the Securities into CF Shadow Securities; upon the conversion of the Crowd SAFE to CF Shadow Securities (which cannot be guaranteed), holders of Shadow Securities will be required to enter into a proxy with the intermediary to ensure any statutory voting rights are voted in tandem with the majority holders of whichever series of securities the Shadow Securities follow.

Purchasers will not be entitled to any inspection or information rights other than those required by Regulation CF.

Purchasers will be unable to declare the Security in "default" and demand repayment.

The Company may never elect to convert the Securities or undergo a liquidity event.

Equity securities acquired upon conversion of SAFE securities may be significantly diluted as a consequence of subsequent financings.

Equity securities issued upon conversion of company SAFE securities may be substantially different from other equity securities offered or issued at the time of conversion.

There is no present market for the Securities and we have arbitrarily set the price.

In a dissolution or bankruptcy of the Company, Purchasers will not be treated as priority debt holders and therefore are unlikely to recover any assets in the event of a bankruptcy or dissolution event.

Our business could be negatively impacted by cyber security threats, attacks and other disruptions.

The Company has the right to conduct multiple closings during the Offering

If the Company meets certain terms and conditions an intermediate close of the Offering can occur, which will allow the Company to draw down on half of the proceeds of the Offering committed and captured during the relevant period. The Company may choose to continue the Offering thereafter. Investors should be mindful that this means they can make multiple investment commitments in the Offering, which may be subject to different cancellation rights. For example, if an intermediate close occurs and later a material change occurs as the Offering continues, Investors previously closed upon will not have the right to re-confirm their investment as it will be deemed completed.