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Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more

Risk Warning

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more

Read our full Risk Warning

Risk Information

Estimated reading time: 2 min

The Financial Conduct Authority (FCA), which regulates financial services and markets in the UK, considers projects on the Collective to be high-risk investments due to potential for investment losses.

What are the key risks?

  1. You could lose all the money you invest
    • If the project you invest in fails, you’re likely to lose 100% of the money you’ve invested.
    • Advertised rates of return aren’t guaranteed. This is not a savings account. If the project you invest in does not generate profits, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money. If it looks too good to be true, it probably is.
    • While the Collective carries out due diligence on projects, we can’t guarantee the project will pay dividends and repay your investment. You should always do your own research before investing.
  2. You won’t be able to access your money for a set length of time
    • You can’t sell your investment or get your money back before the end of the investment term.
    • Dividends aren’t guaranteed and might not be paid regularly.
  3. You shouldn’t put all your eggs in one basket
    • Putting all your money into a single company or type of investment is risky. You should consider spreading your money across different investments so that you’re less dependent on one doing well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
  4. You are unlikely to be protected if something goes wrong
    • You won’t be protected by the Financial Services Compensation Scheme (FSCS) if a project you invest in fails or performs worse than expected. See the FSCS investment protection checker for more info.
    • You also won’t be protected by the Financial Ombudsman Service (FOS) if a project you invest in fails or performs worse than expected. However, if you have a complaint about the Collective, FOS may be able to consider it. Learn more about FOS protection.

Resources to learn more

  • The Collective’s full risk warning
  • Five questions to ask yourself before you invest
  • The FCA’s summary of investment-based crowdfunding
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Investment risks

As with any investment, there are risks that come with investing through the Octopus Energy Collective. It’s important you fully understand these so you can decide if investments on the Collective are right for you.

This is not a complete list of risks. You should also review the project's share offer document and do your own research before investing.

Risks to consider

You’re responsible for your investments

If you decide to invest, you’re solely responsible for this decision and anything that happens as a result. For example, you should consider if you can afford to lose the money you invest, and if you can cover any tax you may incur from owning shares.

 It’s your responsibility to carry out background research before you invest. You should thoroughly review any documents supplied by a project, and you may want to seek financial, investment, or tax advice from a professional as the Collective does not provide this.

Past performance does not guarantee future returns

You can find data on a project’s historical financial performance (if applicable) in the project’s share offer document. Please note that past performance is not a reliable indicator of future performance, and does not guarantee the project’s future success or investment returns.

This is an illiquid investment

Investment liquidity refers to how easily you can get your money out of an investment. When you invest in a project on the Collective, your money is inaccessible for the entire investment term — making it an illiquid investment.

You can’t withdraw the money you’ve invested during the investment term. And for now, we won’t be offering a secondary market for you to sell your shares to other people.

This investment is not diversified

Diversification refers to spreading your money across a range of investments so that you’re less dependent on one performing well. When you invest in a project on the Collective, you’re essentially investing in one company, so you should consider how you’d be impacted if the project were to fail. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

Returns are not guaranteed

Projects aim to pay dividends at a fixed rate to investors every three months. However, you may receive a lower payment than expected — or no payment at all — if the project underperforms or fails.

You could lose the money you invest

The project you invest in will aim to buy your shares back from you at the end of the investment term. If it’s financially able to, the project will buy the shares at the same price you paid for them — giving you your original investment amount back. 

There’s a risk you receive less than what you put in, or no money at all, if the project underperforms or fails during the investment term. You should only invest money you can afford to lose.

You are unlikely to be protected if something goes wrong

The Financial Services Compensation Scheme (FSCS) is a Government-backed scheme that can sometimes compensate you if you lose money through investing. 

Money held in your Octopus Energy Collective Wallet (like from a top-up or investment pay-out) is protected by the FSCS. However, once the money is invested into a project, it is not protected by FSCS. So, if you suffer a loss from the project underperforming or failing, you are unlikely to get compensation. 

The Financial Ombudsman Service (FOS) is a different service that aims to resolve disputes between consumers and financial firms. FOS will not compensate you if you make a loss from investing, but may be able to help you if you have a complaint against the Collective
.

Investing on the Collective platform involves risks to your capital. Our investments are illiquid, which means they can’t be easily bought or sold as there is no market available. It’s important that you’re comfortable holding your investment for the full term. If you’re unsure you should speak with a financial advisor or qualified professional for advice. For more in-depth information, head over to our risks page. You'll also find specific risks for each investment outlined in their respective offer documents.

Octopus Energy Collective Limited registered office: UK House, 5th Floor, 164-182 Oxford Street, London, United Kingdom, W1D 1NN. Registered in England and Wales No. 14036581. Authorised and regulated by the Financial Conduct Authority (FRN 997572).

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