Investment by its nature involves profit and loss, and AlMajna works to select robust and promising projects, as described in thequality of projectspage, but this does not eliminate the possibility of loss due to various factors and circumstances, including market-related factors, start-up related factors, accidents, or other factors.
The investor is the owner of the capital and is one of the partners. Thus, he/she, along with the other partners, are co-responsible for the results of the enterprise. Just as AlMajna verifies the identity and validity of the data of the exhibitors on the platform, the investor should verify any information that he/she considers incomplete, closely follow the work progress, and review its results. To achieve these tasks, he/she should leverage powers and authorities granted to him/her through the contracts, in addition to soliciting expert support from professionals, such as lawyers, accountants and financial auditor. For this purpose, the investor can benefit from the available AlMajna consulting support.
The best method to protect the interests of all stakeholders, especially investors, if the transaction is profit-and-loss based, is to establish a partnership in the form of a legally registered company, with the names of the partners explicitly laid out, their equity shares, their capital contribution, management and signature rights, legal audit, etc. Although many individuals may prefer to be lax on these measures out of convenience, they are necessary precautions to guarantee rights and mitigate conflict. As for debt-based transactions, where the investor is not a partner in equity, investor interests can be safeguarded by taking documented guarantees, such as asset pawning, in addition to the debtor (the entrepreneur in this case) drafting documents attesting the debt, such as cheques and trust receipts .
Business projects have varying degrees of risk, and ALMAJNA works to maintain, on average, a medium degree of risk for proposals exhibited on the platform. That said, an increase in risk is usually accompanied by an increase in profit, and vice versa. The investor should take this into consideration.
Investment transactions proposed on the platform have different degrees of risk. Specifically, debt-based instruments are less risky than those based on partnership, where the parties share in the profit and loss.
A common investment strategy is to distribute the investment on projects that are diverse in terms of funding stage, sector, risk, and profitability, so that investment proposals synergistically balance out, which is known as diversifying the investment portfolio. This is safer than solely investing in a single project.
It is important to pay the capital to the proposal over several stages, with payments being coupled with progress milestones that represent matters that have been previously agreed upon in the contract, or specific indicators that have been achieved and documented. These procedures can be accomplished in coordination with AlMajna.
It is good to include other investors – at least one – for each proposal that you fund. Thus, you may exchange experiences, consult in decisions, and collaborate on the tasks required by the enterprise/proposal.
When selecting a proposal, always scrutinize the proposal’s team, i.e. examining their qualifications. This aspect is just as important as the quality of the proposal itself.
We can help you grow your project.