The UK Development Capital Exchange (DCX) is to change its name to Early-Stage Investment Exchange (ESIX) as part of a corporate restructure. The name change is intended to refocus the exchange in view of the light touch regulation applied to sophisticated investors putting money into private companies. Until earlier this year when the regulation was altered, for a sophisticated high net worth individual to be granted access to invest in a private company the individual needed to be certified through, for example, a lawyer or accountant. Self-certification is now allowed.
DCX came into being in 1998. ESIX, as it now is, plans to launch a new Unlisted Shares Exchange (USE) in December this year, which will provide a facility for entrepreneurs to post their shareholdings in private companies for sale when they want to retire, realise capital or sell for any other reason.
While ESIX bridges the information gap between fund-seekers and investors, the actual deals are individually negotiated using the business plan as a basis for discussion. The investors are responsible for their own due diligence under the guidance of their professional advisors.
David Rose, CEO of ESIX, said: “Research shows that there are as many as 50,000 cash-starved businesses seeking funding between £10,000 and £1m at any one time. Other research shows that there are some 150,000 investors, each with between £20,000 and £500,000 to invest at any one time. ESIX provides the common information medium needed by any market to bring buyers and sellers together.”
The Cruickshank Report into Competition in UK Banking in 2002 put the number of enterprises seeking the level of funding that ESIX addresses as between 20,000 and 50,000 at any one time. On the investor side of the equation, with 2.8m private enterprises in the UK it is reasonable to assume that there are as many as 3.5m individuals who have risked their own capital and assets (the definition of an entrepreneur) on their own enterprise. Or they may be shareholders taking salary and dividends from established private companies.