Capital at risk

Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance. Your capital is at risk.

Investments offered on the Tokenize.it platform involve a high degree of risk and may result in partial or total loss of your investment. The value of an investment may go down as well as up and investors may not get back their money originally invested. An investment in a private company is not the same as a deposit with a banking institution.

Alternative investments via profit participation rights in private companies are complex and speculative and are not suitable for all investors. The profit participation rights are intended for private and institutional investors with an affinity for risk who have experience with the acquisition of comparable types of investments and blockchain-based tokens. Prospective investors should carefully consider the risk warnings and disclosures for the respective investment available on the platform. Investors who cannot afford to lose their entire investment should not invest.

No investment recommendations

Tokenize.it does not provide investment, legal or tax advice and does not make investment recommendations. No communication, through this platform or in any other medium should be construed as a recommendation to purchase any security offered on or off the Tokenize.it platform. No material provided by Tokenize.it is intended to address the financial objectives, situation or specific needs of any individual investor.Consequently, Tokenize.it recommends that prospective token recipients inform themselves about the legal, economic, and tax-related consequences of receiving a profit participation right both before participating in a transaction and, as necessary, during the period of holding such profit participation right. Investors are expected to make their own independent investment decisions and bear any risks themselves.

Information provided on the Tokenize.it platform

The information on companies issuing tokens (each, an “Issuer”) published on the Tokenize.it platform is provided solely by each Issuer. Tokenize.it does not check the profitability of Issuers. The projections made by an Issuer do not guarantee successful development of such Issuer in the future.

Information provided by Tokenize.it is subject to change, may be incomplete, and has been obtained from sources believed to be reliable, but is not guaranteed. Tokenize.it assumes no liability for the information provided.

Limited market for private company investments

There is only a limited market for investments in private companies. Because of the lack of an appropriate market, the sale of profit participation rights in private companies is possible only to a limited extent.

‍Taxation of tokenized profit participation rights

Token holders are generally taxed taking into account their personal tax status and individual circumstances. Assuming profit participation rights are classified as equity-like profit participation rights for tax purposes, (i) withdrawals on profit participation rights are taxable in the same way as dividends and (ii) capital gains are taxable in the same way as capital gains on the sale of shares (after deduction of any taxes and duties by the issuing company). It cannot be ruled out that the tax authorities may take a different view. It is a token holder’s own responsibility to assess the income tax consequences associated with receiving income from the profit participation rights.

‍Material risks related to purchasing profit participation rights
Limited resale options for profit participation rights

A token holder may not be able to sell his profit participation rights to a third party at any given time at all or not without a discount on the purchase price. A token holder may incur losses as a result. There is currently no liquid secondary market for the profit participation rights.No participation or voting rightsA token holder has no participation and/or voting rights that a shareholder of an Issuer may hold and can therefore not exert influence on this Issuer the same way a shareholder could.

‍Lost wallet credentials mean loss of investment

Any loss of exclusive control of the wallet credentials by the token holder may lead to an irretrievable loss of the tokens signifying the profit participation rights (i.e. a total loss). An Issuer transfers the tokens to the token holder's wallet address. Ownership of the tokens and thus the ability to exercise the profit participation rights requires knowledge of the token holder's associated wallet credentials. If the token holder loses or forgets the wallet credentials, access to the tokens and thus the profit participation rights is lost. If the wallet credentials fall into the hands of third parties, tokens could be misappropriated or stolen. An Issuer does not know the token holder's wallet credentials and cannot recover the wallet credentials or the tokens or restore access to the token holder's wallet.

Wallet compatibility risks

If a token holder uses a wallet that is incompatible with the tokens, it is generally no longer possible to access the tokens. Unintentional or incorrect transfers of the tokens to other wallet addresses can lead to the loss of the tokens and thus the profit participation rights.

Blockchain technology is still developing

The blockchain technology is at an early stage of technical development and is not subject to an Issuer's control. Technical malfunctions or security gaps may occur in the blockchain network, the wallet or the smart contract. In any case of impairment of the functionality of individual components, the assertion, transfer and trading of the tokens and thus the profit participation rights may be restricted.

‍Material risks related to Issuers
‍Dependency on market and competitive developments

The economic success of Issuers depends in particular on the development of the market in which an Issuer operates. Statements and assessments of future business development may be inaccurate or become so. Market or competitive developments can have a negative impact on the value of the profit participation rights, especially dividends may not be paid out.

Insolvency risk

In the event of an Issuer's insolvency, token holders may partially or completely lose the invested capital. There is no legally required or voluntary deposit insurance for the profit participation rights. In the event of insolvency proceedings against such Issuer's assets, the token holder ranks behind all current and future claims against an Issuer in accordance with §§ 38, 39 Abs. 1 Nr. 1 to 5 InsO with all claims from the profit participation rights. Before the opening of insolvency proceedings, token holders can only assert claims from the profit participation rights to the extent that fulfillment does not pose a risk of insolvency or over-indebtedness of the respective Issuer. This qualified subordination can lead to the token holder's claims being permanently unenforceable; the risk of irrecoverability is significantly higher compared to the general insolvency risk.

Changing laws and regulations

Legal framework conditions of business activities may change, and changes to the business model or investments of an Issuer may become necessary.

Novel legal structure

The tokenized profit participation rights are a product not previously present in the market and not tested in court or on the market in its current form. Therefore, it is associated with legal and tax risks. Courts or authorities may consider individual or all provisions of the profit participation rights as ineffective. While not completely ruled out, a legal separation of the actual ownership of the token and the legal ownership of the profit participation rights is conceivable, however, an Issuer’s public reward declaration additionally secures the claims to the profit participation rights of a token holder, in addition to the investment conditions conferring the profit participation rights.

No guarantee of future profitability

The Issuer may be a startup that is currently initiating the execution of its business plan–please refer to each Issuer’s pitch deck for details. There is no guarantee that an Issuer will achieve profitability. The prospects of an Issuer's success should be evaluated considering the challenges, costs, difficulties, complications, and delays typically faced by early-stage companies. An Issuer may face challenges in achieving the necessary objectives to overcome these risks and uncertainties.

Negative effect of global crises or political events

The occurrence of widespread communicable diseases, like COVID-19, and geopolitical incidents such as wars may lead to global health crises and disruptions. These events have the potential to negatively affect economies and financial markets worldwide, including in Germany, where Issuers’ primary operations are located. This could result in an economic downturn, reducing demand for Issuers’ products and services and presenting challenges to their business prospects. Additionally, there is a risk of being unable to secure additional capital on acceptable terms, if at all.

Need for additional funding

To fulfill their short and long-term goals, Issuers may require additional funds beyond the current fundraising amount. However, there is no assurance that an Issuer will successfully secure these funds on acceptable terms or at all. Failure to raise sufficient capital in the future could jeopardize the execution of the business plan, putting ongoing operations at risk. In such a scenario, an Issuer might be compelled to cease operations, selling or transferring most, if not all, remaining assets, potentially resulting in investors losing all or a part of their investment.

Challenges associated with developing new products

Issuers have the flexibility to introduce new lines of business, but this entails significant risks, especially in underdeveloped markets. The development and marketing of these new ventures may require substantial time and resources, with uncertainties surrounding achievement of initial timetables, feasibility of price and profitability targets, and success in gaining market acceptance. Failure to introduce new products and services effectively could lead to loss of business, less favorable pricing terms, or increased costs, adversely affecting such Issuers’ overall business, financial condition, or results of operations.

Intellectual property risk

Issuers rely on certain intellectual property rights for its business operations. However, these rights may not be sufficiently broad to provide a significant competitive advantage. The measures taken to protect this intellectual property may not prevent challenges, invalidations, circumventions, or design-arounds, especially in regions with limited intellectual property protection. Enforcement may be hindered in cases where infringers have dominant positions or for other business reasons. Failure to obtain or maintain competitive intellectual property rights, adequately protect them, or prevent unauthorized use could negatively impact such Issuer's competitive standing and financial results. The reliance on nondisclosure and noncompetition agreements may not guarantee the protection of trade secrets and proprietary rights, and the expansion of the business underscores the increasing importance of intellectual property protection. Initiating litigation, such as infringement lawsuits, may be necessary to protect or enforce intellectual property rights, but these actions can be expensive, time-consuming, and divert management's attention. The evolving nature of technology-related laws adds uncertainty to intellectual property positions in the industry, making it uncertain whether an Issuer will prevail in potential lawsuits or receive commercially valuable damages or remedies.

Risks related to retaining the team

Issuers rely on their executive officers, key employees, and key contractors for the development of their businesses and products. There is a risk that these individuals may not dedicate their full time and attention to Issuer matters. The success of an Issuer’s business is closely tied to the knowledge and skills of this group. While it's unlikely that adverse events would simultaneously affect all members of the group, the possibility exists, and any one or a few members could experience such events at any time. The loss of these key individuals could have negative effects on an Issuer's business, financial condition, cash flow, and results of operations.

Potentially no corporate team death or disability insurance

Issuers’ operations and business plans heavily rely on specific key personnel, but an Issuer may not have secured insurance policies for their death or disability. Consequently, in the event of the death or disability of these individuals, such Issuer will not receive compensation to help manage their absence. This absence could have a negative impact the Issuer and its operations. Additionally, there is no assurance that key personnel will remain with an Issuer, as non-competition agreements are not always enforceable. Thus, acquiring key man insurance does not fully mitigate the risks associated with depending on key personnel.

Challenges building a quality brand

Issuers’ business success relies heavily on their reputation and brand quality in current and new markets. Any incident that diminishes customer loyalty could significantly devalue their brand and harm their business. Negative publicity, regardless of accuracy, can adversely affect Issuers. The increasing use of social media platforms and online communication channels poses a risk, as information is disseminated rapidly and can be adverse or inaccurate, potentially harming their performance, prospects, or business without allowing them an opportunity for correction.

Cyber threats

Issuers face potential advanced and persistent cyber threats targeting both their information infrastructure, where proprietary and sensitive data is stored, and their smart contracts governing the tokenized profit participation rights. These threats include sophisticated malware, phishing attacks, and potential vulnerabilities in their software or applications. Skilled hackers may compromise their network security, leading to data breaches, system disruptions, or shutdowns. Skilled hackers may compromise an Issuer’s smart contracts. Defects in software design or manufacturing may unexpectedly interfere with an Issuer’s information infrastructure. Disruptions or failures, caused by various factors such as cyber-attacks or natural disasters, could result in data security breaches, loss of critical data, and performance delays, negatively impacting an Issuer’s business. Unexpectedly high growth and acceptance rates for an Issuer’s products and services may strain its information technology systems, leading to connectivity and access issues that, if not promptly addressed, could adversely affect its business and results of operations. Compromised smart contracts may lead to a draining of the tokens or their economic value in favor of third parties, leaving token holders without some or all of the economic benefits of the profit participation rights owned.

Information security risks

Issuers’ businesses may involve handling personally identifiable information across various information technology systems, both internal and those managed by third-party service providers. Ensuring the integrity and protection of this data is crucial. The evolving and stringent governmental regulations regarding information, security, and privacy pose challenges, and their systems may require substantial investments or time to meet these requirements and customer expectations. A security breach in such Issuers’ or their service providers' information technology systems could lead to operational interruptions, causing inefficiencies and profit loss. Furthermore, any significant theft, loss, misappropriation, or unauthorized access to customer or proprietary data could result in fines, legal claims, or proceedings.

Use of funds at the sole discretion of the Issuer

Unless an Issuer has agreed to a specific use of the proceeds from its fundraise, the Issuer’s management will have considerable discretion over the use of proceeds from the fundraise. You may not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately.

‍Material risks related to Crowdinvesting offerings
‍Issuers determine investment amount maximums

Issuers may prevent any investor from committing more than a certain amount in a Crowdinvesting offering at an Issuer’s sole discretion. This means that an Investor’s desired investment amount may be limited or lowered based solely on an Issuer’s determination and not in line with relevant investment limits set forth by applicable laws. This also means that other Investors may receive larger allocations of the offering based solely on an Issuer’s determination.

Premature Crowdinvesting campaign end possible

An Issuer can in its sole discretion end a Crowdinvesting campaign before any expiration date previously communicated. This means a person’s failure to participate in the Crowdinvesting offering in a timely manner, may prevent such person from being able to invest in the Crowdinvesting offering – it also means an Issuer may limit the amount of capital it can raise during the Crowdinvesting offering by ending the offering early.

Continuous acceptance of investments

Issuers conduct rolling closes during their Crowdinvesting offerings, meaning funds are accepted continuously until a Crowdinvesting offering is ended by an Issuer. The total amount of targeted funds documented in the Key Information Document and elsewhere may not be reached, however, Issuers may still use funds actually raised during a Crowdinvesting offering as indicated in the offering documentation irrespective of whether the funding goal was reached or not.

Offering price is no indication of actual value

The offering price was not established in a competitive market. Issuers have arbitrarily set the price of the profit participation rights with reference to the general status of the market and other relevant factors. The offering price for the profit participation rights should not be considered an indication of the actual value of the profit participation rights and is not based on an Issuer’s asset value, net worth, revenues, or other established criteria of value. There is no guarantee that the profit participation rights can be resold at the offering price or at any other price.