Investor interest in successful West Midlands SMEs is holding firm despite the credit crunch.
Sue Summers, chief executive of online share trading platform Investbx, believes recent activity has suggested a growing appetite amongst private investors, business angels and private equity houses to diversify their portfolio and the attention is turning towards growing firms in the region.
The importance of being involved earlier in the ‘transitional’ growth of a business has risen in line with the demand for more medium and long-term investments.
“Discussions over the past three months have indicated a significant desire to look at emerging SMEs, as many investors are looking at the ‘longer-term’ option as a sensible way of spreading their risk and maximising value,” explained Sue.
“This is encouraging news for companies that are finding it difficult to raise money through traditional sources, as it gives them an additional opportunity to put their growth plans into action without the constraints of the economic environment.”
She continued: “In fact, we are building a strong community of potential investors, who are supportive of participating in the growth of these expanding businesses.”
When Investbx was launched last year it was tasked with helping the region bridge the £500k - £2m equity gap by connecting investors with local businesses.
Using an innovative online trading platform, companies can raise capital for growth in exchange for shares, with Investbx securing the investors on behalf of the applicant.
Investors are provided with independent research on which to base their decision and, via an auction-driven platform, have the capability to trade shares.
Sue continued: “Serial entrepreneurs and regional business leaders are vital to the success of Investbx, as they will act as ambassadors and build market confidence in what we are looking to achieve.
“From their point of view, we offer the opportunity to gain access to a growing company in the early stage of their development, offering diversification and potential liquidity.”
“Encouragingly, we have also recently been receiving approaches of interest from private equity groups about businesses we have in our pipeline.”
Sue concluded: “We will continue to see investment decisions taking longer and due diligence remaining appropriately stringent.
“Whilst this may lengthen the transaction process, it is something we are prepared for as a relatively new organisation and plays to the market demands for well prepared companies, offering value for money.”