Are private placements risky?
Private placements involve many risks, some of which are:
- Illiquidity of securities
- There may be no public market for securities
- Limited public information
- Limited operating history of the company
- Dependence on key existing and future personnel
- Possibilities of immediate and substantial dilution
- Broad discretion in application and use of funds
- Additional financing often will be required, but no guarantee that it will be available