Risks Associated With Startup And Early Stage Investments

Investments in early stage or startup companies are highly speculative and involve a high degree of risk. There is often no public market for the securities of such companies and no assurance that a public market will ever develop. There is often no assurance that a purchaser of the securities will be able to sell or dispose of them. Sale, transfer and other disposition of the securities is often restricted by applicable securities laws and by subscription, investor rights, shareholder and other agreements. A purchaser of such securities should be able to hold the securities indefinitely and to bear the loss of the entire investment in the securities and should not expect the purchaser's investment to provide any current income. Investment in such securities may be inappropriate for any person who is not in a position to lose the entire amount of such investment. An investment in such securities should be made only by persons who understand or have been advised with respect to the tax consequences and risks of the investment and who can bear the loss of their entire investment for an indefinite period of time. It is often unlikely that an investor will receive any significant income, gain, dividends or distributions from startup or early stage companies for a considerable period of time, if ever.

Each investor should carefully evaluate the business, assets, technology, intellectual property, financial condition, prospects, management, operations, markets, history, legal position, customers, revenues, competition and claims of any company and any other material factors affecting the enterprise, as well as the risks and benefits of an investment in any securities, with the assistance of such advisors as the investor may require.

Many risks and uncertainties affect startup and early stage companies, which often have very limited operating history, profits or cash flow. There can be no assurance of the success of such enterprises. Their potential must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with new or developing businesses, including technology risks, unproven business models, untested plans, uncertain market acceptance, competition and lack of revenues and financing.

To launch and pursue such businesses often requires substantial amounts of capital. If a company is not able to obtain sufficient financing or revenue from operations or is not able to carry out its business plan, it may fail, resulting in the total loss of investors' capital.

The technological fields and markets that many startup and early stage companies address have undergone and are expected to continue to undergo rapid and significant change. Rapid technological developments may result in the technology of companies becoming obsolete, uneconomical or uncompetitive before any commercial success or financial return can be achieved. Numerous other risks may affect developing companies and ventures, including risks that products or services will be found to be ineffective, unreliable, unsafe or uncompetitive and risks that such companies' technologies, products or service will not achieve market acceptance or penetration. Market acceptance of new products, services or technologies depends on many factors and uncertainties and cannot be assured.

Startup and early stage companies may compete with entities that have established businesses, relationships and positions in the market and that have much more substantial financial, business, technological, marketing and distribution assets, operations and resources. There can be no assurance that any developing company will be able to compete successfully with more established companies.

There can be no assurance that the securities markets will be receptive to public offerings of any particular company or sector, in particular initial public offerings by early stage or technology companies. Similarly, the availability of strategic or financial acquirers of companies cannot be assured. The interest of the securities markets and potential acquirers in any company will vary with general economic conditions, valuations of comparable companies, perceptions of technology and industry sectors, the financial markets and many other factors.

If the securities of startup and early stage companies become publicly traded, the value of the investors' equity interests in the enterprises will fluctuate with the value and pricing that the stock markets place on the companies. Such securities are often subject to substantial variations in valuation and stock price.

Any projections, forecasts, plans or other forward-looking statements of companies are subject to numerous risks, uncertainties, changing circumstances and other factors that could cause actual results, performance, plans, prospects, operations and opportunities to differ materially from any forward-looking statements, including competition, inability to identify and do business with appropriate customers, existing and future law and regulations, liabilities under the securities laws, inability to hire, retain or qualify sufficient management and staff, general economic conditions, rapid technological change, cost overruns, delays in bringing products or services to market, marketing failures, difficulty in penetrating markets, delays or failures in developing anticipated capabilities, products or services, failure to obtain necessary regulatory approvals, insufficient funding, lack of availability of capital, rates of economic growth, levels of consumer and business spending, conditions in the technology and financial industries, dependence on strategic partners and business relationships, unproven business models, adverse developments affecting customers and end-users, fluctuations in securities markets and valuations, limited marketing, expansion risks, losses and costs, uncertain revenues and profitability, conditions in particular industries, accounting problems, costs, delays and liabilities arising from legal proceedings, failure to obtain and maintain intellectual property or proprietary rights and management failures.