The knowledge of measuring your risk-bearing capacity in crowdfunding

The risk as a matter of eggs...

It's important that you are careful when it comes to lending or investing your money in one single investment opportunity. You shouldn't put all your capital in one single operation or in one single company, project etc.

The golden rule in risk taking - best practices

When it comes to financial investments, the old saying "Don't put all your eggs in one basket." proofs as  THE golden rule.

Why? Simply put: to diversify the risks on several opportunities with different criteria, return on investment, duration, and from each other independent markets and industries.

Diversify your investments

The return on investment and performance of a financing opportunity in form of a loan and/or capital investment must be always evaluated together with its associated risks.

Lending your money

Lending your money to a company or a person represents a risk of loss in capital and the need to locking your savings. Your money will be blocked for a predetermined period according to the lending conditions, without the possibility to have this money available during that timeframe.

Investing your capital
The capital investment in shares and financial assets (loan, securities, bonds, royalties, etc.) issued by companies not listed on the stock exchange represent specific risks

  • risk of complete or partial loss of capital invested
  • risk of illiquidity of financial assets and shares you are holding (the sell of your shares is not garanteed, can be uncertain or even impossible)

necessary to understand and to anticipate before lending or investing your money.

Also note that the return on investment is depending on the success of the opportunities you've financed. There remains always a risk the project – for which a company is asking financing – fails in achieving the expected results.

But is risk taking really a matter of eggs?

However you evaluate your risk-taking capability read some inspiring and relevant international proverbs before investing your money:

All that glisters is not gold. (English proverb)
One must not sow all his seed in a field. (French proverb)
A mouse does not rely on just one hole. (Latin proberb)
Don't put all your eggs in one basket. (German proverb)
A sly rabbit has three openings to its den. (Chinese proverb)
One who wants everything loses everything. (Brazilian proverb)

Risk of default of payement and default risk

This risk can have different proportions depending on the company's or project owner's situation.

Read more in our blog, accessible here

Risk of illiquidity

The risk of illiquidity describes the situation in which you can't easily ensure the liquidity of your investments at personal financial difficulties. 

For more details and decryption, click here

Business risk

Each financed company represents specific risks. Risks that are specific to its market, its industry, its business model, and other areas. 

Measure better these business risks by clicking here