Investment in unlisted private companies: These funds primarily invest in unlisted private companies, where there are no guaranteed exit values, timelines, principals, or returns. Investment in these funds could cause loss of entire or substantial amount of principal.
Long Tenure with Illiquidity Risk: These funds are generally close ended and have a long tenure. The units of these funds are highly illiquid for the entire duration.
Sector Concentration Risk: These funds may take concentrated exposure across companies in focus sectors. Any disruption in the fundamentals of this sector could adversely affect the performance of the fund.
Risk in Early-Stage Investment: Some of these funds focus on early-stage companies. At this stage, there is no established track record and success rate cannot be determined.
Credit Risks: In case of debt investments, the funds may be exposed to credit risks of the underlying borrowers including repayment, delays, defaults, etc. In case of default by any of the portfolio companies, the fund may or may not recover all or part of the principal and / or interest amount, which would adversely impact investment value or returns.
Risk due to Competition: For some of these funds, there may be several other funds in similar stage of investment, and this may impact the deal flow in these funds.
Force Majeure Event Risk: Occurrence of pandemics like Covid 19 may significantly impact any type of investments made by the fund in the portfolio companies and the impact of such events is undeterminable.