Editing Augmentum Fintech PLC (section)

== Risks ==
The company’s key risks fall broadly under the following categories:

=== Macroeconomic Risks ===
The performance of the Group’s investment portfolio is materially influenced by economic conditions. These may affect demand for services supplied by investee companies, foreign exchange rates, input costs, interest rates, debt and equity capital markets and the number of active trade and financial buyers.

All of these factors could have an impact on the Group’s ability to realise a return from its investments and cannot be directly controlled by the Group. Particular current factors include high inflation, recession fears and sanctions related to the situation in Ukraine.<ref name=":3">https://augmentum.vc/wp-content/uploads/2023/07/Augmentum-Fintech-plc-Annual-Results-for-the-Year-Ended-31-March-23-1-1.pdf</ref>

=== Strategy Implementation Risks ===
The Group is subject to the risk that its long-term strategy and its level of performance fail to meet the expectations of its shareholders.

Investment Risks

The performance of the Group’s portfolio is influenced by a number of factors. These include, but are not limited to:

# the quality of the initial investment decision;
# reliance on co-investment parties;
# the quality of the management team of each underlying portfolio company and the ability of that team to successfully implement its business strategy;
# the success of the Portfolio Manager in building an effective working relationship with each team in order to agree and implement value-creation strategies;
# changes in the market or competitive environment in which each portfolio company operates;
# the macroeconomic risks described above; and
# environmental, social and governance (“ESG”) factors.

Any of these factors could have an impact on the valuation of an investment and on the Group’s ability to realise the investment in a profitable and timely manner.

The Company also invests in early-stage companies which, by their nature, may be smaller capitalisation companies. Such companies may not have the financial strength, diversity and the resources of larger and more established companies, and may find it more difficult to operate, especially in periods of low economic growth.<ref name=":3" />

=== Portfolio Diversification Risk ===
The Group is subject to the risk that its portfolio may not be diversified, being heavily concentrated in the fintech sector and the portfolio value may be dominated by a single or limited number of companies.<ref name=":3" />

=== Cash Risk ===
Returns to the Company through holding cash and cash equivalents are currently low. The Company may hold significant cash balances, particularly when a fundraising has taken place, and this may have a drag on the Company’s performance.

The Company may require cash to fund potential follow-on investments in existing investee companies. If the Company does not hold sufficient cash to participate in subsequent funding rounds carried out by portfolio companies, this could result in the interest the Company holds in such businesses being diluted. This may have a material adverse effect on the Company’s financial position and returns for shareholders.<ref name=":3" />

=== Credit Risk ===
As noted the Company may hold significant cash balances. There is a risk that the banks with which the cash is deposited fail and the Company could be adversely affected through either delay in accessing the cash deposits or the loss of the cash deposit. When evaluating counterparties there can be no assurance that the review will reveal or highlight all relevant facts and circumstances that may be necessary or helpful in evaluating the creditworthiness of the counterparty.<ref name=":3" />

=== Valuation Risk ===
The valuation of investments in accordance with IFRS 13 and International Private Equity and Venture Capital (IPEV) Valuation Guidelines requires considerable judgement.

The Company’s investments are illiquid and a sale may require consent of other interested parties. Such investments may therefore be difficult to value and realise. Such realisations may involve significant time and cost and/or result in realisations at levels below the value of such investments as estimated by the Company.

Valuations are often based on comparator prices and market-based multiples, which can be affected by equity market sentiment and comparators’ situations that may not reflect the individual positions of companies invested in.<ref name=":3" />

=== Operational Risk ===
The Board is reliant on the systems of the Group and Company’s service providers and as such disruption to, or a failure of, those systems could lead to a failure to comply with law and regulations leading to reputational damage and/or financial loss to the Group and/or Company.<ref name=":3" />

=== Key person risk ===
There is a risk that the individuals responsible for managing the portfolio may leave their employment or may be prevented from undertaking their duties.<ref name=":3" />