A website where companies and entrepreneurs looking for funding can place their propositions was officially launched this week by Cavendish Management Resources (CMR), the SME advisory company.
Usually start-ups looking for finance have to pay a fee to funding brokers to have their plans forwarded to investors, with no guarantee of success. Even the UK Government’s subsidised National Business Angel Network charges £225 for listing a businesses’ need for funding.
Mike Downey, CMR’s managing director, said: “It has become a real deterrent to start-ups and innovation, with some brokers taking substantial upfront fees without successfully delivering the funding sought.”
The CMR Business Exchange eliminates this cost by providing a direct link between business angels and those companies seeking investment. Businesses can place their plans directly onto www.cmrworld.com, which can then be accessed by angel investors from all over the world, who, if interested, can contact the company direct.
The only fee involved is if an investor decides to fund a company, whereupon a fee of 2% of the funds raised is charged, or 1% if it is above $1m. The market leader in this field at the moment, AngelBourse, charges £2,000 upfront. A successful funding charge of 5% is levied, up to 2% of which is paid to the company’s intermediary, which also charges for its services.
Initially set up in January 2003, the service now has over 500 propositions on the site. The long-term strategy of CMR is to expand the exchange into Europe and beyond, taking advantage of those countries that lack the sort of business angel networks the UK has.