Risk Factors
Investments offered by Catapult Crown involve a high degree of risk and may result in partial or total loss of your investment. Alternative investments, such as venture capital investments, are complex, speculative investment vehicles and are not suitable for all investors. Catapult Crown products are restricted to qualified investors who meet certain eligibility criteria and who have sufficient knowledge and experience to understand the risks of investing.
Investing in unlisted companies should be done as part of a diversified investment portfolio. The rate of return on such investments can vary widely over time. Investment losses are possible, including the potential loss of all amounts invested.
Securities Law Matters
The LP Interests are not and will not be registered under the Securities Act, or any other securities laws. The LP Interests will be provided without registration based on the Securities Act, and any other applicable securities law's exemption for transactions not requiring a public offering. Limited Partners will need to make certain representations to Catapult Crown and to the General Partner and each SPV, including that they are acquiring LP Interest in each SPV for their own account, for investment purposes only and not with a view to its distribution.
Taxation Matters
Investment in the SPVs and the actualization of Investments may lead to tax repercussions depending on the jurisdiction, tax status and other circumstances of each potential investor. Each potential investor is encouraged to consult its tax advisors regarding the US federal tax consequences, and any other potential tax consequences under the laws of any State, locality or other relevant taxing jurisdiction.
Legal, Tax and Regulatory Risks
Legal, tax and regulatory changes could take place during the term of an SPV that may negatively affect such SPV or the underlying Portfolio Company and its investment results. This may result in an SPV to be adversely affected because of new or revised legislation, or regulations imposed by the SEC, U.S. Department of Treasury, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations that supervise the financial markets.
Potential Investors shall not Rely on Due Diligence
Although the General Partner, the Management Company or affiliates thereof will oversee certain due diligence on the Portfolio Companies for purposes of their own investment, none of the General Partner, the Management Company or their affiliates shall independently authenticate the accuracy or completeness of the information given to them. The General Partner and the Management Company cannot and will not guarantee the accuracy or completeness of this information.
Investing in Early-Stage Companies
There is a high degree of business and financial risk in investing in early-stage companies and it can result in substantial losses. It is highly speculative, and it involves a high degree of risk which could result in the loss of part or all an investor's investment. Each investment in an SPV is an indirect investment in a single Portfolio Company, and as such there is no diversification of risk. Investors should not subscribe for an LP Interest in any SPV unless they can bear a total loss of their investment.
Dilution
Any investment you make through the Catapult Crown platform may be subject to dilution. This means that if the company raises additional equity funding in the future, it will issue new shares to new investors and the percentage of the business you own will decline. Any new shares may also allow for certain preferential rights to dividends, sale proceeds and other matters.
Long-Term Investment
The Investments are long-term investments. When successful, early-stage investments typically take five years or more from the date of investment to reach a state of maturity where disposition is possible. Investors must be able to bear the economic risks of an investment in the LP Interest for an indefinite period.
Lack of Diversification
Each SPV will invest in a single Portfolio Company, generally in the field of dental related products and technology or other industries. Each SPV's performance will be directly connected to the performance of the Portfolio Company in which it invests and the SPV could be severely impacted by unfortunate developments affecting such Portfolio Company.
Illiquid Investments
The Portfolio Companies in which Catapult Crown will make investments will be privately held at first. Consequently, there will be no easily accessible secondary market for the SPVs' interests in such Portfolio Companies, and those interests will be subject to legal restrictions on transfer. There is no guarantee that Catapult Crown will be able to realize liquidity for such investments on time, if at all.
Restrictions on Transfer and Withdrawal
There will be no public market for the LP Interests. Additionally, the LP Interests are not transferable unless the General Partner authorizes it. Limited Partners may not withdraw capital from the SPVs. Therefore, Limited Partners may be unable to liquidate their investments before the end of an SPV's term.
Absence of Effective Remedies Against the General Partner
It is not guaranteed that there will be sufficient solutions available to any Limited Partners if the General Partner falls short in fulfilling its duties. The governing documents of the SPVs include provisions for exculpation and indemnification of the General Partner and its respective partners, members, managers, officers, directors, shareholders, employees, and affiliates.
Certain Litigation Risks
Numerous litigation risks may affect the General Partner and affiliates thereof, particularly if one or more of the Portfolio Companies face financial or other difficulties during the term of such SPVs. Legal disputes may occur from the foregoing activities and could have a significant disadvantageous effect on the SPVs.
The foregoing list of risk factors does not purport to be a complete enumeration or explanation of the risks involved in an Investment. Prospective investors are recommended to review the applicable offering documents of each SPV for a more complete discussion of the risk factors associated with an investment, and consult with their own advisors before deciding whether to invest.