FREQUENTLY ASKED QUESTIONS

 
Updated 14/03/2002
The following information is a guide in answering some of the more commonly asked questions.

Investment Seeker

Q. How can the SCX assist me in raising capital for my business?
A. The SCX actively promotes the exchange to investors through advertising media, industry networks and professional associations to ensure a diverse and wide group of investors are accessing the site in search for investment opportunities. One of our goals is to attract investors across a range of industries to ensure that businesses currently "in vogue" are not the only ones to receive a chance at finding suitable investors.
Q. At what stage of development does my business need to be before I can raise capital?
A. In general the fundamentals of the business i.e. product or service, market potential and management is more important than the business' stage of development. With the fundamentals intact prudent investors are always willing to look at an opportunity regardless of whether the business is a start-up or already generating profits.
Q. Are there any prerequisites for my business to list on the SCX?
A. Yes. There are several requirements a business must have prior to listing. In general the business must:
1. Be viable. The product or service your business trades on must have points of differentiation from competitors. Ideally the market should be large (not necessarily international) with the opportunity demonstrating strong growth potential.
2. Management must be capable. Even though most small businesses cannot afford to employ every person required to underpin growth from the outset, the current management must be able to demonstrate that they are capable of reaching documented growth targets.
3. Provide sufficient returns. In order to attract the attention of investors the business must be able to provide sufficient evidence that returns to the stakeholders will balance the risk involved in the investment. Furthermore you will find that many investors have definitive investment timeframes from which to exit an investment profitably. This is a matter for negotiation with a prospective investor; nevertheless it is a good idea to think of possible ways for an investor to "cash in" at some stage in the future.
4. Have a documented plan. Although it is not essential to have a complete and comprehensive business plan at listing, it is essential that you have prepared documentation sufficient in depth to describe the business and its opportunity, some degree of research to substantiate your claims and basic financial information.
Q. Do you list every business opportunity that applies?
A. No. In fact the ratio is approximately 1 listing for every 5 applications. We do this not because we feel the opportunity has zero chance of finding an investor but rather because we hold the investment criteria from our subscribing investors and therefore know what it is they are looking for. We do hold the information of the applicant business so if an investor does show an interest in a particular market we can contact the business when we feel their listing fee will not be a waste of money.
Q. Do you replace the role of our own accountants, lawyers or advisers through the capital raising process?
A. The SCX does not want to replace any functions your existing advisers perform for your business. The SCX service team will map out the capital raising process and information requirements; beyond this point our involvement depends on your circumstances.
Q. What role does the SCX take once an investor shows an interest in a business opportunity?
A. Once an investor contacts the SCX regarding an investment opportunity we forward the business plan or other supporting documentation available and advise the applicant business of the contact. The SCX can in no way recommend the suitability of an investment opportunity nor employ any means to assist a favourable investment outcome, this is left purely to the information prepared by the applicant and the thoroughness of the investor's due diligence. Subject to the investor's initial enquiries being positive a meeting is then set-up in the SCX offices between the applicant, the investor and a senior SCX representative to facilitate a more detailed approach to investment compatibility between the applicant and investor. At this point the SCX withdraws itself from the process other than assisting the applicant with information gathering and formatting if required and ensuring that both the applicant and investor is aware of their respective duties of care and disclosure in moving toward a possible investment. Each party must rely on their own advisers as to whether a suitable investment agreement can be reached, as the SCX is not licensed to act in this capacity.

Investor Information

Q. What does membership to the Companies Exchange section get me.
A. A membership to the Companies Exchange enables access to the members area. With your membership you will have access to the investments currently before the SCX. Only members will be able to veiw the opportunities. Members are automatically registered to receive the SCX e-newsletter. The e-newsletter is filled with information relevant to the VC industry. Memberships are normally AUD$400, but for a short time the fees will be waived.You can register for a password via member benefits or click here.

The SCX newsletter will Also be released through the SCX discussion group, a lively email discussion group for small business in Australia. Please consider joining
the discussion group, click here.