London Calling The London stock exchange is courting American entrepreneurs for its small-cap market. Are you a perfect match?

The British are coming. And this time around, they'rebringing cash for growing businesses.

Nearly every month this year, representatives from the LondonStock Exchange will fly to the United States to make a series ofpresentations about how U.S. companies can go public and score bigbucks on the LSE's international small-cap market, called theAIM. (AIM originally stood for Alternative Investment Market, butthese days, the investments are not nearly so alternative.)

Bruce Khouri heard the AIM calling in 2003. As founder and COOof SolarIntegrated Technologies (AIM symbol: SIT), Khouri was fundinghis company's rapid growth out of his own pocket. SolarIntegrated's unique solar-electric roofing systems were gainingpopularity among commercial customers like Coca-Cola and Frito-Lay,so Khouri needed a substantial amount of cash to finance assemblyand installation for waiting customers. He also had his eye onforeign markets, such as Germany, where solar electricity is morewidely embraced, but he lacked the cash to launch marketing,inventory and installation crews there.

"At the time, raising capital in the U.S. was notappropriate," says Khouri, 47. "We were a guppy in alarge ocean." With only $8 million in 2004 sales, SolarIntegrated Technologies was not going to get the attention itneeded from the public markets in the U.S. Although venture capitalwas an option, Khouri ruled it out. "We didn't take the VCroute because the haircut would have been dramatic," he says,referring to the low price most VC investors would have beenwilling to pay for the company's stock. With that possibilitynixed, a public offering on the AIM seemed like the perfectoption.

Rapid growth and European expansion plans are two things thatmake companies like Khouri's good candidates for IPOs on theAIM, says Anne Moulier, North American business development managerfor the LSE. The excitement in her voice when she talks about theAIM is uncharacteristic of a banker--and it's not a toneyou'd hear on Wall Street. Then again, the AIM is definitelynot Wall Street.

"We believe the AIM can offer what Nasdaq used to, but nolonger can today," Moulier says. "It's about accessto capital and to blue-chip institutional investors." Indeed,it is the investors that set the AIM apart, not only from the U.S.markets, but also from small markets around the world. Markets inGermany, Korea, Singapore and Toronto, to name just a few, try toattract listings from U.S. companies. Only the AIM has trulysucceeded because London's institutional investors, such asBear Stearns, Citibank, Merrill Lynch, Morgan Stanley and TDWaterhouse, are willing to invest in AIM companies.

"Last year, companies raised $15.6 billion on [the]AIM," says Moulier. "Ten billion of that was from initialofferings and $5.6 billion was through secondary [follow-on]offers." All in all, 519 companies joined the AIM in 2005,bringing the total number of companies listed to over 1,300,representing 25 countries.

The market is young and rich; since its inception in 1995, ithas placed over $42 billion. More than 40 percent of the totalinvestment has gone to companies based outside the United Kingdom,according to the LSE's own numbers.

The AIM is clearly picking up steam. During 2004 and 2005, themarket introduced 181 new foreign companies--almost double thetotal of the previous nine years combined. As for U.S.-basedcompanies, the momentum is obviously building. More than 15 percentof new foreign companies listed on the AIM last year were based inthe U.S. The total number of U.S. firms listed is now 37, and thereare more in the queue.

That's probably no surprise to any entrepreneur who hastried to comply with Sarbanes-Oxley reporting requirements. U.S.markets like the Nasdaq seem hamstrung by Draconian regulations andlackluster economic performance. Although the Nasdaq once rolledout the welcome mat for young, growing companies, these days goingpublic seems reserved for companies that can afford the immensecosts of regulatory compliance.

The advent of Sarbanes-Oxley legislation has certainly madeMoulier's job easier, she says. By comparison, listing (andstaying listed) on the AIM is a walk in the park. Theexchange's unique structure makes it basically self-regulating.Instead of lengthy filings, the market has a system of professionalrepresentations by small investment banks called "nominatedadvisors," or "nomads" for short. Nomads get to knowthe company in great detail, then represent the company to theinstitutional investors. This essentially skips the kind ofregistration requirements that the SEC places on companies thatlist in the United States.

Solar Integrated Technologies first became interested in the AIMin 2003. It started with a few introductions to advisors andbankers in British financial markets. Only five months later, itdebuted on the AIM, making the company $22 million richer. Of that,Khouri says, approximately $2.9 million went toward paying lawyersand accountants, underwriters and other intermediaries. Thecompany's nomad also received stock warrants.

The timeline is short on the AIM not only because theregulations are more flexible, but also because the institutionalinvestors are a tightknit group. "We had only six institutionsthat dominated our free float," says Khouri, referring to thefinancial firms that initially purchased his stock on the AIM.Together, the investors purchased about 25 percent of the company,he says.

Perhaps the most interesting thing about the AIM is thediversity of companies that have found a home there. From veryearly stage companies to very mature ones, U.S. and internationalbusinesses in just about every industry are represented. Forexample, Moulier points out two very different success stories fromthe United States in 2005: Polyfuel, a development-stagealternative energy company in Mountain View, California, thatraised $15.5 million in an initial round and $17 million in asecond round (which took just 48 hours from start to finish); andBilling Services Group, a telecommunications services company thathad 2005 revenue of $157 million and raised almost $250 millionthrough two offerings in 2005.

Those results should be encouraging to U.S. entrepreneurs whoare frustrated with markets at home. The same pressures that makeraising money stateside so difficult are opening doors--andcheckbooks--in London. The process of listing on the AIM isstraightforward, and there is an abundance of reputableprofessionals available to help entrepreneurs throughout theprocess--including the people behind the market, like Moulier."We're committed to the U.S. market; it's an importantmarket for the LSE," she says.

Likewise, a growing number of entrepreneurs in the UnitedStates, like Khouri, are blazing a wide path and are happy to sharetheir experiences. "The AIM platform was perfect for us,"says Khouri. "It was the right place at the righttime."