PLUS Market an alternative to the AIM Market

Thinking of an IPO, have a look at your options, an AIM listitng will cost you £200k a year a PLUS listing will cost you £50k, thats a lot of cash for a new listed company. The Post below takes you through the PLUS market.

PLUS Markets is rapidly gaining favour among advisers and CEOs of ambitious, entrepreneurial companies. James Harris finds out why

The word around the markets is that PLUS, the small- and mid-cap stock exchange, has fared better than others, and proved resilient in the recessionary storm. As a result, the market is attracting much more interest.

Companies on PLUS tend to be capitalised at less than £50 million. This is seen as a factor in the market’s growth as it means these ventures are on a market with similar sized businesses, which helps increase their profile and visibility among investors. ‘Our focus on growth companies is meeting a real need in the market,’ explains PLUS Markets’ Vivienne Cassley. ‘Companies can trade on our market knowing they won’t be competing against lots of billion-pound businesses.’

Recent successes include 3D Diagnostic Imaging, a developer of scanning technology. The company has raised more than £2 million since it was admitted to PLUS in April, while business training company Winning Pitch has seen its turnover increase by 43 per cent since its December 2007 listing.

The total market capitalisation of the companies quoted on PLUS (around 200 at the end of August) increased by 34 per cent to over £2.5 billion in the first half of 2009. While set up to attract entrepreneurial-sized companies, it’s fair to say that PLUS also has its fair share of heavy hitters, not least RAK Real Estate, which listed in February via a reverse takeover with a market cap of £600 million. The next biggest company on the market is football club Arsenal Holdings, valued at £470 million. ‘A lot of the new entrants have tended to be more established companies,’ observes Karen Gilbert, also at PLUS Markets.

Strictly business

Many cite a lighter touch to regulation and the lower fees as a major factor in why PLUS is managing to tempt business away from the Alternative Investment Market (AIM), the junior market of the London Stock Exchange. While AIM fees and compliance can cost up to £200,000 a year, the average annual cost of a listing on the PLUS-quoted market is a more modest £50,000.

But maintaining the quality of the companies on the market is key to PLUS’s success, says Cassley: ‘Regulation is appropriate to the size of our companies. Everything is there to protect investors but we keep it simple. The emphasis is on allowing companies to generate returns for their shareholders while not tying them up with red tape.’

The exchange is also gaining ground internationally. Around ten per cent of the market consists of non-UK organisations, and as Gilbert notes, ‘International companies on PLUS are from all over the world and from many different sectors. While our focus is very much on building the market for growth companies in the UK, international companies are also important to our business.’
One of the thriving international companies on the market is China CDM, a carbon emissions broker admitted to PLUS in December 2006. The company’s market cap has soared from £25 million to £86.3 million, and it has raised £15 million since coming to market.

The growing popularity of PLUS means it is now seen less as a gateway to AIM and more as an important market in its own right. ‘With four new advisers joining the market this year and a really strong pipeline of companies, we are really building momentum,’ says Cassley. ‘People are taking notice and advisers are adding PLUS to their toolbox.’

To e-mail Vivienne Cassley click here
Capital Markets,
Standon House,
21 Mansell Street,
London E1 8AA
Tel: 020 7553 2033

pitching to an angel Investor

A source of funding for the 50k to 500k investment can be the Angel Investor this is some information to help you get started.

To start what are Angel Investors?

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.

Some resources to find Angel Investors:

www.angelinvestmentnetwork.co.uk
www.theangelinvestor.com
www.angel-investors.
www.swain.org.uk
www.go.uk.com

How to pitch to an angel

In today’s turbulent economic climate, securing business funding can be a minefield for entrepreneurs. With credit from banks drying up, many small business owners are turning to alternative forms of funding such as angel investment. However, this can put added pressure on those who are not used to ‘promoting’ their business in front of potential investors. Here is a list of top 10 tips to help entrepreneurs deliver a successful business pitch:

1. Elevator pitch – Business owners should be able to pitch their products or services in any circumstances, even when they have a very limited amount of time. An elevator pitch is a quick, yet comprehensive, overview of a business short enough to be delivered in the time span of an elevator ride.
2. Prepare – As Mark Twain said “It takes more than three weeks to prepare a good impromptu speech.” Pitching to a potential business angel could dramatically change the future of a business. Preparation is key to take advantage of this opportunity.
3. Setting up the stage – If possible, it’s always ideal to prepare the room of the meeting well in advance. This is especially important if the pitch includes a product demonstration or the use of multimedia aids.
4. Look your best – A common concern for small business owners is choosing the right clothing for a pitch. Wearing a suit is usually preferred as it shows a level of respect for a potential investor. A general rule of thumb is that in these circumstances you can never overdress!
5. Know your numbers – When looking for investment, small business owners should know their accounts inside-out and be able to discuss them with investors in detail. Commit key figures to memory and prepare a one-side ‘crib sheet’ to avoid forgetting crucial information due to nerves.
6. Have a clear strategy in place – A solid business plan that identifies the strategy is crucial. The plan must contain a commercial idea which will provide an eventual profit for investors or, as a minimum, sufficient profit to repay the interest and the principal on a loan.
7. Product vs. People – Investors are interested in not only the product, but also the marketplace, the competition, the management team, the eventual exit strategy and of course the entrepreneurs themselves. Business angels are investing in people as much as companies, as they plan to work together over the long term. Establishing a rapport with the potential investor is key to a successful partnership.
8. Care – Business angels invest their own money and they would expect to see business owner putting themselves on the line for their project. If an entrepreneur doesn’t show commitment to what he/she is doing, why should investors?
9. Be honest, even about tricky subjects – A question that angel investors frequently ask is “what are the risks in this business?” Small business owners must be prepared to discuss contingency plans and potential difficulties the business could face. Angel investors will appreciate a realistic assessment and honest responses as opposed to a rose-tinted view.
10. Feedback – Regardless to the outcome of the pitch and if funding gets secured, receiving feedback from potential investors it’s invaluable. Entrepreneurs should be prepared to receive negative feedback and take it on board to refine their business ideas.

Finally, remember, no small business owner is alone. The support of experienced investment agencies and other professional advisors should not be understated. In addition, if small business owners prepare thoroughly and follow these best practice tips they will be well-placed to successfully attract potential investors despite the downturn.

By Michael Weaver is chief executive of business investment agency Beer & Partners.

Reasons Why Even Top-Notch Executives Fail

10.5 Reasons Why Even Top-Notch Executives Fail

1. Absence Of A Clear Strategic Direction
2. Failure To Create A Sense Of Ownership
3. Absence Of A Comprehensive Goals Program
4. Failure To Align The Goals Of Every Individual, Team, And Department To The Strategic Direction
5. Using An Inadequate Definition Of Leadership
6. Inability Or Unwillingness To Hear Bad News, Especially About Oneself
7. Failure To Develop And Use Measurements
8. Failure To Hire Or Retain The Right People
9. Failure To Facilitate Two-Way Communication
10. Failure To Empower Others
10.5. Unwillingness To Ask For Help



Synopsis of a book by David Herdlinger, He is a coach. His company, Herdlinger Associates,
provides personal and team coaching services for individuals and organizations worldwide. Through the powerful dynamics of coaching, he has helped thousands of executives and professionals at all levels and in all types of organizations unleash their potential and achieve more than they ever dreamed possible.

www.tenpointfive.com


Gordon Whyte

Keep it cheap. will you start Up

Whether you are starting a dog washing business or founding the next search engine empire, you will be more successful if you keep it cheap. Do not quit your day job so you'll have time to develop. Don't get those expensive offices. Don't invest in 5000 flyers or a telephone book advertisement. Make every possible effort to start your business on a shoestring, and to grow it only with the revenue of paying customers, because that is how you maximize its value.

A start-up, is by very definition, an untested business. It doesn't have the product, customers, delivery methods, management team or pricing strategy required to succeed. What it does have, is freedom.

If an entrepreneur keeps his nascent business cheap, he has the freedom to design a solution that combines customers, products, services, prices, delivery mechanisms and one or more hardworking professionals to create a ‘virtual machine’ that makes more money than it spends. He has the time required to come up with a business that has the capacity to grow. He can keep his prices low, his quality high, his company under control.

If an entrepreneur burdens his ‘baby business’ with high fixed costs, like his own salary, a big office, with big marketing expenditures, long before it is in a position to repay those costs, he makes it harder for his business to succeed. In a worst case scenario, entrepreneurs burn through their life savings, their credit, and burden their business with debt it will never repay. An entrepreneur in this position has lost the ability to define his business so it suits the market it must live in. In effect, he has cut it off from the people it must serve in order to survive.

Your business should be very solid before you accept outside investment for it. The more financial partners you have in a business that isn't up and running, the more difficult getting the company up and running will be. When you are playing with other people's money, they have expectations about how you will spend it. Since they have never run your business successfully, their ideas about where the money goes and what it does might be entirely wrong. If you want to have the freedom to make the right choices, let them keep their money until your business is ready to grow.

For example, the boys from Google created the earliest versions of their internet search engine while working in a dorm room. Their startup costs were very low and no one was taking a big pay check. Only when they had a proven technology that had demonstrable value, did they accept outside investment. They were looking for money to scale their business, not to develop its core technology. This is why Google's founders are some of the wealthiest young men in the world.

As an entrepreneur you may feel like you are doing it all wrong when your office is in the garage, and your idea of a business lunch is a pasty down at the pub. The truth is, what your business needs is your best efforts to create a cost effective, streamlined, easy to deliver, scalable product or service that meets the needs of its customers. It needs you to get it into the black as quickly as possible and to keep it there.

Doug Richard is the CEO of School for Startups and original BBC2 Dragon