Client Categorisation Policy

Everyone who invests through Crowdbase falls into one of two categories, and which one you are in decides how much protection you get. By default you are non-sophisticated, which is the category with the most protection.

Non-sophisticated investors

This is where everyone starts. You do not have to do anything to be in this category and most of our investors stay in it.

You get four protections:

A knowledge test. Before you can invest, we ask about your experience, your objectives, your financial situation and your understanding of the risks. If it looks like crowdfunding may not be appropriate for you, we tell you so, and we ask you to confirm you have read and understood the warning. You can still invest.

A loss simulation. We ask you to work through what losing 10 per cent of your net worth would mean for you, based on your income, your assets and your commitments.

An extra warning on larger investments. Where a single investment is more than the higher of EUR 1,000 or 5 per cent of your net worth, we warn you and ask for your explicit consent before it goes through.

A four day reflection period. You can cancel any investment within four calendar days, without giving a reason and without cost.

What "net worth" means here

Net worth is a defined term in the European crowdfunding rules, not just whatever you are worth. It is your net annual income, plus your liquid assets, minus your annual financial commitments.

It leaves out your home and any other property, your occupational pension, and shares you cannot freely sell or redeem, including any crowdfunding investments you already hold. For most people this makes the figure smaller than they expect.

Sophisticated investors

A sophisticated investor is someone who understands the risks of investing in capital markets and has the resources to take those risks without it doing them serious financial harm.

The criteria come from Annex II of Regulation (EU) 2020/1503. We cannot change them or make exceptions.

If you are a company, you need to meet at least one of these:

• own funds, meaning your capital and reserves, of at least EUR 100,000
• net turnover of at least EUR 2,000,000
• a balance sheet total of at least EUR 1,000,000

If you are an individual, you need to meet at least two of these:

• personal gross income of at least EUR 60,000 per financial year, or a portfolio of cash deposits and financial assets worth more than EUR 100,000
• you work or have worked in the financial sector for at least a year, in a role that required knowledge of the kind of transactions or services involved here, or you have held an executive position for at least 12 months in a company meeting the criteria above
• you have made significant trades on the capital markets, averaging at least 10 a quarter over the last four quarters

If you are an institution, the route is different and shorter. Regulated financial firms, large undertakings, governments and public bodies and other institutional investors, meaning the entities within points (1) to (4) of Section I of Annex II to Directive 2014/65/EU, are treated as sophisticated once they give us proof of that status. They do not go through the process below.

This institutional route is not open to individuals, and it is not open to clients who have been treated as professional at their own request by another firm.

What you give up

Becoming a sophisticated investor means losing the four protections above. The one that matters most is the reflection period. As a sophisticated investor your commitment is final the moment you place it.

You also stop being asked to take the knowledge test and the loss simulation.

How to ask

You will find the request form in your account. It sets out the criteria and warns you what you are giving up. On it you confirm which criteria you meet, that you understand what you are losing, and that what you have told us is true.

We then take reasonable steps to check that you qualify. We will approve your request unless we have reasonable doubts that what you have told us is correct. We will tell you when your status is confirmed.

It lasts two years

An approval given on request is valid for two years. After that it expires and you are treated as non-sophisticated again, with all the protections that brings.

If you want to keep the status, submit a fresh request. You can do that at any time, including after it has expired.

Tell us if things change

While you hold the status, it is your responsibility to tell us about any change that could affect it. If we become aware that you no longer meet the criteria, we will let you know that we are treating you as non-sophisticated again.

Changing your mind

You can ask to move back to non-sophisticated at any time.