Disclaimers: Angel funding edition

Crowd Sourced Equity Funding Discussion Paper - Australia CAMAC Septmber 2013

I’m a fan of Angel-list and have invested in two companies already over the platform (as trustee for Club Troppo’s 4.7 billion self-managed super fund). Here’s the disclaimer which you verify before you get to invest. I like it, though even here I’d rather just one or two clear and simple statements to tick. At least on the consumer side, it’s the sort of thing that we should be moving towards in our review of crowdfunded equity. Will we? Well I’m not holding my breath.

Angel investors should expect to lose their money—almost all startups fail. Even if you diversify, you should expect your total losses to exceed your gains.
I understand that I will likely lose my money
Unlike public stocks, angel investments are illiquid. You can’t sell your stake when you choose—it may take years for a startup to return money, if it ever does.
I understand that I have no control over the timing of liquidity
Investing with notable investors does not guarantee a return. Make your own decisions. Watching notable investors can inform your decisions, but you must do your own diligence.
I understand that I must do diligence and read the investment docs
Early investors are diluted every time a startup raises money. Your share gets diluted in every subsequent financing and you have no right to invest in those financings.
I understand that my ownership will be diluted in subsequent rounds
Startups change plans constantly and often enter a different market with a different product. Plans and forecasts are not predictions about the future.
I understand that startups often radically change their plans
You must indemnify AngelList against any losses, even if the startup committed fraud or lied. This includes any investment opportunities you may have missed.
I understand that AngelList isn’t responsible for losses or missed opportunities
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