Funding service targets small firms

Small companies looking for investment but put off by the costs associated with raising finance are being targeted by a new online stockmarket.

Run by Cavendish Management Resources (CMR), FundEx allows entrepreneurs to pitch their ideas and companies to investors via the internet.

Originally launched a year ago as the CMR Business Exchange, FundEx offers the new facility of presenting to potential investors by means of video.

There is no cost to participating companies apart from a success-only fee of between 0.25% and 2%.

Mike Downey, CMR managing director, told MyBusiness.co.uk that although firms of any size are welcome to use the service, it will be most attractive to smaller companies wanting to avoid the high costs normally associated with raising capital.

According to CMR, raising £2m on the small business stockmarket Ofex costs around £200,000 including £70,000 upfront. In contrast, to raise £2m on FundEX costs £20,000 with no upfront charges.

Downey added that around 500 businesses have used the service in its previous form with the highest investment so far being £2.5m. Most firms, he said, are seeking funding of between £100,000 and £300,000.

"It is a logical step to use the internet in this way to greatly increase the chances for good business and entrepreneurial opportunities to get the support they need," he said.

"Also, the availability of video makes the communication of ideas and plans so much easier and more effective."