From ordering food, to booking holidays and searching for jobs – technology is having a huge impact on our daily lives and one area that cannot be ignored is its role in reshaping the world of finance.
Technology is putting choice in the hands of individuals and businesses and changing their relationships with banks and finance providers. And we want to harness this innovation for the companies seeking growth funding on our business support programme, ELITE.
ELITE brings together over 400 companies from across Europe, including 73 from the UK and four from Yorkshire, with academics, entrepreneurs and a community of leading advisers and investors.
To expand our suite of services, at the end of this year London Stock Exchange Group will launch an online private placement platform for ELITE companies and professional investors, called ELITE Club Deal. Through the platform, ELITE companies from Yorkshire will be able to connect with professional investors, such as asset managers, venture capital firms and private equity houses, to secure financing. Companies often find it challenging to meet investors, pitch their ideas and secure financial backing. ELITE Club Deal will bring together in a ‘one stop shop’ the participants and documentation for companies to raise growth capital. It will streamline the process, making it more efficient, transparent and straightforward, not only for companies but also for advisers and investors.
Some of the most exciting businesses we are meeting are small and medium sized firms that are innovating and growing at a rapid pace. An explosion in crowdfunding is giving individual investors the opportunity to invest in some of these companies but options for professional investors remain more limited. They too want to have a stake in fast growing private businesses.
ELITE Club Deal will allow professional investors to access over 400 fast growing private companies that are already part of ELITE’s successful community. Company profiles and deal documents will be available to investors in one place and in a standardised format, making it simpler for them to identify businesses they want to back.
A unique feature on the platform will also allow professional investors to access company data and negotiate deal terms in advance as lead or ‘cornerstone investors.’ These financings will later be made available to ‘follow-on investors.’ This again will help simply the investment process.
Digitising the company funding process doesn’t, however, preclude the entire financial community from continuing to work together. Banks, accountants and lawyers, will play an integral role on the platform, acting as ‘agents’ to facilitate introductions between companies and investors or acting as ‘ELITE Partners’ to support companies through the whole process.
But with the plethora of alternative funding platforms springing up, why is LSEG launching another? Over the last 300 years, since our beginnings in the City of London, London Stock Exchange’s central ambition has been to connect aspirational companies with investment capital. Fast growing, ambitious businesses are the growth engines of our economy and never more so than in these current volatile economic times. These businesses drive innovation, job creation and ultimately the economic prosperity of our country but in order for them to grow they need access to financing.
We recognise that growth businesses on ELITE have different financing needs depending on their size, maturity and sector, and may need further rounds of private capital before considering the public markets. What is essential is to put in place a funding ladder for these businesses to climb and scale. After the companies have evaluated their challenges and grown in confidence as businesses through the programme, ELITE Club Deal will give them the opportunity to seek private funding and undertake the next steps in their development plans, all in the secure environment of the ELITE community.
Pilot phase testing with five European ELITE companies begins shortly, with a full go-live for the ELITE Club Deal platform planned for late 2016. This is our tech innovation, a mechanism to bridge the supply and demand for capital in a new way, building on our existing offerings and expertise, and ultimately support the prosperity of Yorkshire’s fast growing businesses. If you’re a Yorkshire business and want to be part of the ELITE community, visit: www.elite-growth.com