Regional development agency Advantage West Midlands is to launch a £3.2m web-based local business exchange (LBX) that aims to help small and medium-sized companies raise equity finance of between £500,000 and £5m.
The new exchange could help up to 10% of SMEs in the region, which have had difficulty finding suitable sources of equity finance. The new exchange is planned to open in summer 2004.
Mary Martin, director of West Midlands Access to Finance, says: “For years now, businesses in the West Midlands have suffered from a chronic shortage of accessible finance which has hindered the regional economy. The Local business Exchange will provide a market for investors more willing to invest smaller amounts of money into smaller companies which will complement the market covered by the London Stock Exchange.” But the success of the scheme she says will depend entirely on the participation and enthusiasm of the region’s businesses.
A pioneer in this niche, AngelBourse has been running for almost two years as an online primary capital raising and secondary trading market with a pan-European focus. It gives sophisticated investors the opportunity, through subscription to its service, to commit to small and medium-sized enterprises and monitor the performance of their investments in a secure environment.
This type of platform aims to help entrepreneurs get onto the first rung of the ladder. It is specifically tailored to help private companies raise capital, have their shares traded on an open market and generally raise their public profile to eventually be able to graduate onto a larger exchange such as AIM and ultimately the LSE.