Investments on Equivesto are high risk. There is a chance you could lose your entire investment. Once you invest in a company on Equivesto, you are now a direct shareholder in that company. Each company has its own projections, goals, and expectations around capital and when/how they aim to provide earnings and returns to their investors.
Read each company's campaign page and documents carefully to understand each company's individual goals around investment repayment.
When investing in companies on Equivesto, you should not expect to get your money back for at least 5 years.
When companies do repay investors, there are several ways investors could see those returns.
Dividends: A payment announced by the company to its eligible shareholders (investors). Dividends are a payment of a portion of the extra money the company has at the end of the year, usually made up of its profits. Companies will sometimes declare dividends as a percentage of that years profits, evenly divided by the number of shares.
Sale of the Company: One way investors might see returns on their investment is the sale of the company. Often, startups are looking to grow in size and become a potential target for purchase by a larger company in their space. If this were to happen, the acquiring company would make an offer to the startup to buy all of its outstanding shares, including those held by investors. By the time the startup is acquired, the hope is that the value has grown considerably, so the founders and investors would make money based on the difference between the price they paid for their shares, and the price they sold them at (capital gains).
Going Public (Listing on a Stock Market): Many companies hope to grow in size and eventually 'go public' by listing themselves on a stock exchange like the Toronto Stock Exchange (TSX). When a company goes public and lists itself on an exchange, it allows public investors to buy and sell its shares between themselves. This allows the original investors to also sell their shares publicly, any time they like. By the time a company goes public, the hope is that it will be much larger, and the price the shares trade at in the market will be much more than the original investor paid for them (capital gains).
Share Repurchase: Some companies hope to give their investors their money back by allowing share repurchases. These are special events when the company buys back some or all of its shares from its investors. Some repurchases are required whenever the company chooses, and some are voluntary and chosen by the investors. The value of the shares at the time of repurchase is set by the company, and can be equal to the original price paid (if the company paid dividends in between) or at a new higher price based on the company's increased value.
When picking which companies to invest in, make sure you carefully review their goals around investor return and ensure that those align with your own investment time horizon goals. However, given the companies on Equivesto are small businesses, it is important to plan for at least no return on your investment for at least 5 years.