Cut It Out

Foreign Exchange

Many smaller businesses get off to healthy starts assisted by moderate loans from family and friends, while larger companies access financial markets to raise millions of dollars in expansion capital. Then there are those who fall between those two extremes: Companies that need more than a few thousand dollars but less than a few million.

"That's where I was two years ago," says Thomas Burnham, "and I'm still there today. The difference now is OFEX, AIM and other new stock markets designed for entrepreneurs like me and other Business Start-Ups readers."

In February 1995, when Burnham opened his first South Beach Cafe in East Lansing, Michigan, he immediately began thinking about replicating the successful art deco eatery throughout the United States and Europe. His only obstacle was capital. "I needed $600,000, so I turned to friends in Great Britain [in the fall of 1995]," Burnham recalls. "Instead of introducing me to investors, they introduced me to two new stock exchanges for start-up entrepreneurs: OFEX and AIM. Within six months, we took South Beach public on OFEX and raised $600,000."

In early 1997, South Beach did two supplemental OFEX offerings, raising another $750,000, then moved to AIM last May and raised $3 million for more construction and working capital.

The new London exchanges--established in 1995--make going public easier, faster and less expensive (8 percent to 12 percent of what you raise) for companies in any business operating virtually anywhere in the world, according to Burnham. "OFEX is geared to raise up to $2.5 million and AIM is geared to raise from $2 million to $10 million," he says. "U.S. companies are encouraged to participate."

For step-by-step guidelines on where to start, Burnham suggests contacting the Institute for International Entrepreneurship, Graduate School of Management at the University of Dallas.

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This article was originally published in the February 1998 print edition of Entrepreneur with the headline: Cut It Out.

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