IFAs to offer shares in unquoted firms for venture capital

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The Independent Online

Anyone will be able to become a venture capitalist thanks to a plan to allow retail investors to take a stake in new start-ups for as little as £1,000.

Anyone will be able to become a venture capitalist thanks to a plan to allow retail investors to take a stake in new start-ups for as little as £1,000.

Small and medium-sized businesses will be able to raise up to £3m by selling shares through independent financial advisers (IFAs). The first offering ­ a Yorkshire-based media business ­ will take place next month.

The company behind the scheme is dpo ­ short for direct public offering. It was set up by five businessmen who were aware of the frustration endured by successful entrepreneurs who could not raise money needed to expand.

Dpo aims to offer companies the chance to raise between £250,000 and £3m ­ the gap between the finance secured by family and friends, and that traditionally offered by venture capitalists. Traditionally this form of venture capital opportunity tended to go only to the very high net worth investor/business angel. Dpo aims to make venture capital available to the growing group of affluent individuals.

Gideon Lyons, dpo's chief executive, said: "Many small businesses are faced with difficulties and frustrations in accessing the necessary capital to grow.

"Companies now raise finance in smaller amounts from a broad base of shareholders in a transparent, cost effective way whilst still maintaining control of the company."

A recent survey of 22,000 businesses found that nearly half the respondents financed growth via a bank loan. The Federation of Small Business said more than half were dissatisfied with the cost of overdraft finance, with only 1 per cent satisfied with the availability of venture capital. Dpo said it would offer unquoted shares direct to retail investors with a minimum investment of £1,000.

The company is embarking on a four-week campaign to drum interest from IFAs. The first offering will be of shares in Media Generation, a Harrogate-based media business involved in offering services to personal investors and small businesses. Mr Lyons, who turned his family automotive business Pullmaflex into a European leader, said there was "a clear demand" for this type of investment.

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