Small firms seeking to expand without the burden of raising capital are being
targeted by a new online stock market that puts then directly in touch with
global investors via video.
Users of Cavendish Management’s Fundex service are invited to pitch their ideas and companies to a network of potential investors free of charge, with just a 2 per cent fee for a successful outcome.
According to reports, entrepreneurs tend to ask for funds ranging from £100,000 to £300,000 but even the micro firm wanting to raise £2m will pay a success-fee of just £20,000 - accompanied by no upfront charges.
Any small business owner, or a professional advisor on their behalf, is therefore free to pitch their investment idea to investors, who have pre-registered a sector of enterprise they are willing to financially support.
Mike Downey, CMR’s managing director, said that the UK’s fourth stock market is open to any serious investor and business, but hailed smaller companies as the parties which should benefit the most.
“FundEX… has the very important role of providing smaller companies with access to sources of capital without the excessive costs normally associated with raising money,” he said.
“We would like to think this is one of the most creative and useful developments to have happened in the capital markets for smaller companies.”
The creativity of what seems to be an online version of the BBC’s enterprise hit, Dragons’ Den, rests on FundEX’s format of enabling the smallest UK entrepreneur to pitch ideas to large overseas investors via recorded video.
There is no charge for filing a video pitch, and entrepreneurs will be contacted via e-mail if an investor is willing, or perhaps just curious, in the business proposition.
According to CMR, investors will be almost immediately alerted when a video pitch matching their saved investment preferences are filed in FundEX.
Then they simply click a website link that automatically sends a confidential email to the entrepreneur or adviser seeking capital, effectively putting both parties in touch for negotiation.
Freelance business owners are reminded to take professional advice and due diligence before broadcasting their business idea, which if successful, will demand a payment of 2 per cent reducing to 0.25 per cent, according to CRM’s terms and conditions.
FundEX reaches investors beyond the UK and US, and predicts the current number of businesses benefiting from the service (around a few hundred) will climb to the “many thousands.”
Mainly this is down to the reality that many overseas small company owners do not have access to a developed capital market, tailored to micro-enterprise.
“FundEX fills that gap,” said Mike Downey. “We regularly get approached by overseas companies looking for funding help and I expect that to grow considerably in the future. We also get very many new investors from all over the world logging on.”