Mystartr: Crowdfunding in Malaysia

RISK WARNING

This risk warning (“Risk Warning”) is prepared by Mystartr Sdn. Bhd. (Company Registration No. 201201010580 (984100-U)) (“us”, “we” or “our”) to inform an investor (“Investor”, “you” or “your”) in respect of the risks investing in a business / company (“Issuer”) hosted on www.mystartr.com (our “Website”) to raise funds through equity crowdfunding (“ECF”).

ECF is a new phenomenon in Malaysia. It opens up early stage investment opportunities to a broader group of investors, which was previously accessible only by a small group of professional investors. However, there are risks that you should be aware of if you wish to invest in an offer provided by an Issuer on our Website.

You are strongly advised to read through the risks listed below in order to help you make an informed decision.

Most of the Issuers are startups or companies at their early stages or small and medium enterprises (“SMEs”). Investing in these entities may result in significant gains due to their business potentials and business opportunities. However, they are relatively risky ventures and there is a high risk of business failure due to lack of substantive operating history. Therefore, you may end up losing all the money you invested.

The growth and survival of a company will partially depend on the ability of its directors / promoters to maintain and promote the business. In the event the directors / the promoters fail to carry out their obligations, you may also end up losing all your investments.

When you want to dispose of your shares and/or exit the Issuer you invest in, the exit options are limited. The Issuers are private companies hence there is no public market available for the shares unless you are able to find a willing buyer to buy your shares at an acceptable price, or when the Issuer becomes a public listed company, or when the Issuer is acquired by another company. However, all these events may take a number of years and it will be difficult for you to cash out or exit in the short term.

As discussed, the Issuers are mostly startups or at their early stages or SMEs. The return in the manner of dividends and/or profits may take a number of years to materialise. In most cases, the Issuers may opt to not distribute dividends and/or profits. Profits, if any, are most likely reinvested back into the Issuers. Therefore, if you wish to materialise your returns in the short term, ECF may not be your most ideal choice.

The Issuers that manage to grow their businesses are likely to raise more capital. When new shares are issued, your shareholding percentage will be diluted, i.e. your ownership of the company will reduce. It may not necessary be detrimental to you as your shares may be more valuable if the company’s valuation increases after several funding rounds. However, in some cases, due to the nature of Issuers, the shares are diluted in both valuation and percentage.

The new shares may have certain preferential rights to dividends, sales proceeds and other matters in priority of the shares held by you and exercise of those rights may work to your disadvantage.

Dilution of shares may also occur in the event an Issuer grants its shares to its employees through employee share option schemes or any other similar methods.

Most of the Investors are minority shareholders in the Issuers, i.e. the shares held by you individually or collectively with the other Investors will not reach the threshold requirement to have an influence on the operation of the Issuers. You are advised to read the terms listed on our Website in regard to an offer you are interested in to understand the rights granted by an Issuer to you.

All your rights as a shareholder will be specified in a shareholders’ agreement. However, such a shareholders’ agreement is prepared by the Issuers and there is no guarantee that the Issuers may grant you any minority shareholders’ rights (e.g. tag along rights) nor there will be any guarantee that you will have any recourse against an Issuer in the event the Issuer fails to exercise your minority shareholders’ rights.

Past performance and forecasts are not reliable and shall not form a guarantee of future investment performance. Therefore, you shall always conduct necessary assessments to make an informed investment decision.

The Issuers are expected to provide general information of their offers on our Website to the Investors. However, there is no statutory obligation placed on the Issuers that they must provide you with all business, financial and all other information as required by you. Therefore, there is a risk that you might not be able to conduct accurate and full assessments in regard to an offer you are interested with.

All transactions and/or payments made on our Website shall be in Malaysian Ringgit (RM) unless agreed and specified otherwise. If you are an Investor, and you make payment through an overseas account, the money you pay will be subject to the exchange rate at that particular time and taxes, if applicable. As a result, your investment amount, after being converted into Malaysian Ringgit (RM) may differ from the original amount. Any loss arising from this Clause 9.1 shall be your own risk and we shall not be liable whatsoever.

The above provisions are by no means an exhaustive list of the risks associated with ECF. Before you choose to place an investment on our Website, you must ensure that you have used all reasonable endeavours to investigate and verify the information provided by the Issuer in view of your personal assessments, or with assistance from appropriate professional advisers.