Risk Disclosure
The risks we ask you to read before you commit.
Most risk pages are 400 words of boilerplate. This one is a plain-language register — structural, market, operational, and regulatory. If a risk is material, we name it. If we can mitigate it, we say how. If we cannot, we say that too.
Structural risks
Loss of principal
Real-estate development and value-add investments can and do lose money. Under a severe downside — cost overruns combined with a falling market and forced exit — it is possible to lose some or all of your committed capital.
Mitigation: VIG commits first-loss corporate equity per project and caps leverage below a hard LTV ceiling. Investor principal sits behind both layers, but these buffers do not eliminate the risk of loss.
Illiquidity and lock-up
Project SPV units are not traded on a regulated exchange. Before project exit, you cannot expect to redeem at will. Holding periods of 24–48 months are typical.
Mitigation: The VIG Circle Exchange offers member-to-member secondary matching. A discretionary liquidity reserve may fund early redemptions in genuine emergencies. Neither is a guaranteed redemption right.
Concentration in Bulgaria / Sofia residential
VIG is a thesis-concentrated operator. Your exposure is tied to Sofia residential real estate, the Bulgarian economic cycle, and Bulgarian property law.
Mitigation: VIG is explicit about its concentration. Diversify across asset classes and jurisdictions at your portfolio level, not at the VIG level.
Bilateral agreement with each SPV
Each investment is a direct bilateral agreement with a project-specific SPV under Bulgarian commercial law. Gains and losses do not net across projects until (and unless) the VIG AIF is launched and you subscribe through it.
Mitigation: Each memorandum discloses the SPV structure, counterparty, seniority, and waterfall. Before committing, read the memorandum and ask for the bear-case scenario.
Market risks
Property price decline
Sofia residential prices have risen for several years. A cyclical correction, particularly combined with higher financing rates, could compress both exit values and rental yields.
Mitigation: Bear-case scenarios on every active project page model a material price decline before investor principal is touched. Do not rely on best-case projections alone.
Interest-rate environment
Construction financing cost and exit financing availability are sensitive to interest-rate regime. Unexpected rate shifts can compress margin or delay exit.
Mitigation: VIG caps leverage per project and stress-tests the capital stack to +200 bps rate shocks. Not all outcomes can be hedged.
BGN / EUR currency transition
Bulgaria operates a currency-board peg of the lev (BGN) to the euro. Bulgarian adoption of the euro is on the regulatory agenda but has been repeatedly delayed. A de-pegging event, while not expected, is not impossible.
Mitigation: VIG maintains EUR reporting for investors and conducts operational accounting in BGN. A de-pegging event is outside VIG operational control and would affect all Bulgarian-market positions.
Operational risks
Permitting and zoning
Projects can be delayed or re-scoped by changes in zoning, permit issuance, or municipal planning. Permit timelines in Sofia have historically been variable.
Mitigation: VIG acquires only plots with defined permit status and budgets explicit permit-risk contingency. Permit status is disclosed per project.
Construction cost inflation
Material and labour cost inflation in the Bulgarian construction sector can erode margin between underwriting and completion.
Mitigation: KOGER construction lock-ins and milestone-controlled capital release limit downside; not all cost shocks can be absorbed.
Key-person risk
VIG is founder-led. A loss of one or more key individuals could delay projects or weaken operating discipline during transition.
Mitigation: Succession and deputy-authority protocols are documented internally. Investor-facing implications are disclosed if material events occur.
Counterparty default
Contractors, brokers, and end-buyers can default. Receivable collection and legal enforcement take time in Bulgaria as in any jurisdiction.
Mitigation: Counterparty screening, milestone-released funding, and notarial enforcement reduce but do not eliminate this risk.
Regulatory risks
Regulatory status today
VIG is not a regulated financial institution. It operates a private fund and project-specific SPVs under Bulgarian commercial law. Investor protections afforded to investors in regulated AIFs do not apply at this stage.
Mitigation: Each investment is documented under bilateral agreements with named counterparties, legal counsel opinions, and notarial evidence. The AIF registration process is underway.
AIF registration timing
Registration of the VIG Alternative Investment Fund (AIF) is subject to regulatory review by the Bulgarian Financial Supervision Commission (FSC / KFN) and is not guaranteed to complete on any particular schedule.
Mitigation: Registration progress is communicated to waitlist subscribers. No AIF-specific terms are offered or enforceable before authorisation is issued.
Taxation and withholding
Bulgarian withholding on distributions to non-residents, double-tax treaty relief, and your home-jurisdiction taxation of foreign real-estate income vary by investor. Tax rules also change.
Mitigation: A jurisdiction-specific tax memo is included in onboarding. VIG does not and cannot provide investment, legal, or tax advice — consult qualified professionals in your jurisdiction.
AML, KYC, and sanctions
VIG applies mandatory AML / KYC and sanctions screening to all investors. Applications may be delayed or refused where required checks cannot be completed.
Mitigation: Compliance documentation is handled by the VIG IR team and external counsel. The onboarding process is documented in the Data Room.
How risk is disclosed per project
Each active project page lists project-specific risks alongside the underwriting scenarios. The project memorandum, available in the Investor Room, contains the full risk register, counsel opinions, and counterparty disclosure. Platform-level risks on this page apply in addition to project- level risks, not in place of them.
Formal disclosure. Nothing on this page is investment, tax, or legal advice, nor an offer to sell or a solicitation to buy any security, fund interest, or SPV unit. All investments carry risk, including possible total loss of principal. Past performance does not guarantee future results. Consult qualified legal, tax, and financial advisors before making any investment decision.