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i-Dealcorp aiming to revolutionise the way listed businesses are funded

Thursday, December 1, 2016 11:37
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To understand what i-Dealcorp does it helps first to know how smaller companies listed on the stock market currently raise funds to grow.
 
It’s a uniquely flawed and clunky process that hasn’t changed in decades.
 
The role of rainmaker is filled by the corporate broker (not a stockbroker, but a firm that specialises in finding new sources of capital).
 
It does this by tapping into a list of potential investors, such as high net worth individuals, investment firms and private client stockbrokers. 
 
It is fair to say at the junior end of the market there isn’t too much institutional money sloshing around.
 
Interaction between investor and broker is done over the phone and in an almost cloak-and-dagger fashion.
 
The investor is provided with some general information on the deal and then asked if he or she wants to be ‘taken inside’, which simply makes them privy to confidential details of the fund-raising.
 
Only once the broker’s list of contacts has been approached is it able to say how much can be raised and at what price.
 
In order to get a share placing away, investors must be offered an incentive, which usually means discounting the shares being sold.
 
Now, as I hinted above, there are all sorts of problems with the system as it stands.
 
News often leaks out of a prospective equity issue, leading to a pre-emptive fall in the share price, while investors sometimes demand extortionate discounts to take part in the cash call.
 
Meanwhile, the fees charged for this service, which can be 5-10% of the sums raised, can often rankle with companies. 
 
There are numerous other reasons why the system is broken and they are part of the reason why the crowd-funders are moving in to provide alternative pools of investment capital.
 
What nobody has done in this digital era is automate the process – to put company and investor together on one platform.
 
This is where i-Dealcorp, the brainchild of former corporate broker Luca Tenuta, comes in.
 
Having helped raise tens of millions of pounds for growth companies here in London and Europe he has some experience of the rather tortuous process.
 
The i-Dealcorp platform has been pitched as a dating site for companies and would-be investors. 
 
Its chief executive Tenuta sees it more as a communication tool.
 
It works for the investors by allowing them access to opportunities to invest in companies on the fund-raising trail. 
 
However, it does a little more than that by allowing high net worth individuals, brokers and institutions, and private investors the opportunity to screen for opportunities based on sector, a firm’s size and geographic location.
 
For the companies, which pay an annual fee of £3,000 to access i-Dealcorp’s site, it offers a safe method of sharing information.  
 
Prospective investors are electronically vetted and only made ‘inside’ on the confidential details of the cash call when the company’s senior directors are totally happy with the credentials of a potential
backer.
 
It should be a quick and seamless process. 
 
It also, potentially, cuts out the broker and the expensive commissions; at the very least it provides stick with which to beat the broker down on price. 
 
But it works for the brokers too, who can use the platform to find clients looking to raise capital. 
 
The official launch is today, though i-Dealcorp has already done some marketing to prospective customers.
 
Tenuta is confident the platform, which for now is open to listed companies in Europe, the US and Canada, can attract 100 paying customers by the end of March.
 
This time next year, there should be 500 listed company clients, at which point it would be cash flow positive, and the long-term goal is to have over 30,000 listed companies users of the site, the founder said.
 
He is hoping prospective investors will flock to the site too.
 
“This may seem a little arrogant, but as word gets out, and we start to market this, I’m convinced we’ll be successful,” says Tenuta.
 
“There is a real need for a platform like ours, both for investors and companies.”
 

Story by ProactiveInvestors

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