Direct investment risks

As with any investment, there are risks when making a direct investment on Abundance. The Offer Document or Factsheet will cover some of the risks specific to an individual direct investment, but it is also important you understand the following general risks that apply and how those differ between companies and councils.

Our direct investments include debentures (like bonds) issued by companies (company investments) and loans offered by councils (municipal investments). While they are regulated differently, in the case of both types of direct investment you are lending money to an organisation and so the risks to your investment are similar.

Your capital is at risk and returns are not guaranteed

All the direct investments on Abundance are debt investments, which means you are lending money to the company or council offering the investment. When you make a direct investment on Abundance your capital is at risk. If the company or council you have lent money to runs into difficulties, it may not be able to pay your returns and you may not get back all or any of your original investment.

The risks to your capital and your returns will be different for each investment you make, and in particular the risks will vary when investing in a company compared to a council.

You make the investment decisions

You must choose the direct investments you want to make on Abundance and each investment will have a different return, length of term and risks that you should consider carefully.

The risks for your investment will depend on the particular company or council you are investing into and the terms of that investment. Investments with a higher return are usually correlated with higher risks. You should review all the information provided about a particular investment, including the risks section in either the Offer Document or Factsheet before you decide whether the investment is right for you.


You should consider investing across a range of different direct investments on Abundance, offered by different companies and councils. By spreading your money over a number of investments you reduce the overall impact if any one of your investments runs into difficulties and is unable to repay your investment.

Investments can be long term

Some of the direct investments on Abundance are long term. Should your situation change and you need to access your invested money before the investment has reached its term you may not be able to sell your investment (see ‘Selling your investment’ below). There is a risk that changes in the market such as interest rates or the performance of the specific investment will mean the value of your investment could go down as well as up if you choose or need to sell.

Selling your investment

The direct investments on Abundance are designed to be purchased and held for the full fixed term. They are transferable which means you may be able to sell them if you need access to your money earlier. Abundance provides a marketplace which enables buyers and sellers to connect and trade our direct investments, but this is informal and is not like a stock exchange or other regulated market. You may not be able to sell instantly or at all if there are no interested buyers and if an investment is in default you will not be able to sell it.

Remember, if you need to sell an investment in a hurry, if interest rates have changed over time or if an investment has performed poorly, you may not get all of your money back.

Market interest rate changes

Interest rates may go up and down over the term of your investment. This may affect the price another investor would be willing to pay if better rates for products with similar features and risk profile are available elsewhere. If interest rates rise, you may not get back all of the money you invested if you need to sell it via the Abundance marketplace.

Secured investments are not guaranteed

Some company investments may be secured against certain assets of the company and its shares or an associated company. This means that in the event the company went out of business, for example, investors would be secured creditors and would be paid out of any proceeds recovered from the value of those assets, ahead of unsecured creditors that rank below them.

However, security does not guarantee repayment and there may be reasons why assets can’t be realised to pay investors. These include where the market value of the assets concerned is insufficient or the costs of realising them make a sale uneconomic.

Abundance goes out of business

Abundance administers the direct investments made on our platform, including the repayment of capital and interest to investors. Therefore there is a risk that the administration of the direct investments made through Abundance could be disrupted if Abundance became insolvent. In particular, the services offered by Abundance may be reduced which could limit your ability to sell your investment. In some situations the marketplace may close which would restrict the liquidity of your investment significantly.

As a firm regulated by the FCA, Abundance must demonstrate how it ensures the investments are administered to their full term and limits any impact to investors. Abundance has a business continuity policy in place that sets out how Abundance would manage the orderly wind down of its business using its ongoing revenues, and we are required to hold an amount of capital in reserve to support this wind down. In addition, in the event that Abundance was unable to conduct an orderly wind down itself, Abundance has contracted global restructuring advisory firm, RSM UK, to step in and administer the outstanding investments. You can read more about Abundance’s wind down plan here.

Investment advice

Abundance is not authorised to provide financial advice to investors and does not do so. It is therefore your responsibility to do your own assessment on whether to invest in a specific investment or not. If you do not understand anything regarding a particular investment please seek independent financial advice.


All investment rates of return are shown before tax. The amount of tax payable by you is dependent on your own individual circumstances and may be subject to change in the future. Some investments on Abundance are required to deduct tax from your interest payments equal to the basic rate of income tax — the Factsheet or Offer Document for each investment explains if interest payments are paid gross or net of tax deduction.

Past and future performance

The past performance of an investment is not a guide to its future performance and should therefore not be relied on when making an investment. This is particularly important if you are buying an investment through the marketplace. The value of investments may go down as well as up depending on the performance of the investment or market conditions at the time if you are considering selling your investment.

There may be estimated projections or forecasts as to future performance in Offer Documents and Factsheets. Abundance works with the company or council to make sure (as far as possible) that these are reasonable and are supported by objective data but they may still be affected by risks and other factors. There is no guarantee that any business or council will succeed or meet its objectives. You should consider carefully any predictions and forecasts in the Offer Document and any detailed risk warnings relating to them.

Financial Services Compensation Scheme (FSCS)

Any uninvested cash you hold in your Abundance account is covered under the FSCS. The FSCS also covers the services we provide in relation to the direct investments you make on Abundance in debentures or bonds. However it is important to understand that FSCS does not cover our services in relation to council loans (municipal investments).

Where FSCS does apply, it does not offer protection for poor investment performance and only covers compensation claims if we have gone out of business. Find out more.