Betbrokers, the AIM-listed betting group that has Derek Tullett, the City grandee, and Eddie Jordan, the former Formula One motor racing team boss, as directors, sought to reassure investors about its future yesterday after admitting it had to turn down bets because of a funding shortage.

Wayne Lochner, the chairman and chief executive, insisted that the company was not struggling for survival, but he conceded that, in order to take all the bets that its customers wanted to place, it needed to raise another £1 million to £2 million of extra capital.

“We're not going to close down,” Mr Lochner told The Times. “We're the victims of our own success. We are being offered more business than we can currently execute. We have to find a way of increasing our capital so we can clear the transactions.”

Betbrokers, the market value of which has collapsed from £31.7 million to £1.5 million since its flotation in November 2006, describes itself as a “retail and wholesale brokerage for the sports betting industry”. About 60 per cent of its business comes from bookmakers seeking to hedge their bets as part of risk limitation strategies, with the balance coming from wealthy punters who use Betbrokers to shop around for the best price on large bets.

Mr Lochner said that the £495,000 raised in March via a loan note had helped, but was not enough to cope with recent trading activity. He said that, with Daniel Stewart, his financial advisers, he was looking at options for raising fresh capital, including tapping directors and Betbrokers' roster of well-known sporting “ambassadors”, including Lester Piggott, the former jockey.

Mr Lochner, whose last company, Affinity Internet Holdings, collapsed in 2003 after the dot-com bubble burst, said that the funding situation could be resolved “in the next few days”.

In a trading update, Betbrokers said that the average deal size in May had fallen from £1,370 to £424 on a year-on-year basis as the company was “forced to turn down a majority of bets due to a lack of available funds in the clearing house”. Traded volumes during the month fell from £4.47 million to £2.27 million, but it still expects to make a full-year profit.

Mr Lochner, who is seeking a non-executive chairman to allow him to focus on his role as chief executive, said: “We could have done three times more business if we'd had more capital.”

Shares of Betbrokers, which floated at 15p, fell by 0.175p to 0.475p. Asked whether he might take the company private if the shares failed to recover, Mr Lochner replied: “It's not on the table right now.”

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