Forget bank funding, launch your own bond

“Growing, profitable companies can’t raise funds easily anymore,” says Rupert Lee-Browne. “It’s much more difficult than it was four years ago. The way that banks are behaving – and their attitude to growth businesses – is plain wrong.”

Caxton FX, a £400m-turnover foreign exchange business, could easily go to the banks or take private equity funding, but Rupert Lee-Browne, its founder, says the sheer number of hoops and guarantees you’d have to give them doesn’t make it worth it.

“Our business hasn’t changed – it’s still growing quickly – but the bank’s attitude has changed completely,” he says. “There has been a total volte-face about their lending policies, and it’s having a significant impact on the economy. Banks are stopping gazelle businesses from expanding.”

Lee-Browne’s reaction to this is, essentially, to stick two fingers to the banks and raise the funding himself.

On Monday, Caxton FX will issue financial bonds, which Lee-Browne hopes will raise up to £4m of working capital – here’s the website. He hopes that existing Caxton FX customers will be interested in investing:

“They already trust us with their money, so it just makes sense. We want to create a simple investment opportunity that cuts out the middlemen and provides investors with an attractive rate of return, which beats the UK high street banks.”

Investors can invest between £2,000 and £50,000 in return for a 7.25 per cent gross annual rate of return.

“Raising funding through the bonds means we won’t be constrained by anyone else – there won’t be a bank asking for a weekly management report; we can just get on with growing the business,” adds Lee-Browne.

Caxton FX isn’t the first entrepreneurial business to go down this route – Hotel Chocolat and King of Shaves have also launched bonds in order to raise cash.

The main benefit is that the funds can help your business to grow. “We need greater reserves for working capital and funds to help continued expansion into existing and new markets. The funds will give us more collateral, and help us launch new products both here and abroad.”

He concludes: “The point is that there are alternative ways of raising finance. Growing businesses needn’t think they’re stuck with their bank – we certainly aren’t.”

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