Exam on Demand (EoD) has received £350,000 to prove cheating at exams does not pay.

The company, which is based at the Sussex Innovation Centre in Brighton, has secured the investment from the South-East Growth Fund to develop and market its products, which make online exams secure.

Finance director Andrew Rowland said EoD was "cagey" about revealing how the system worked.

He said: "It's so simple that when people see it they wonder why no one has used this system before."

In October EoD started a nine-month pilot in prisons with the Department for Education and Skills.

Mr Rowland said: "Once it's finished everyone will suck their teeth for a while until we've worked out if it was successful. We're sure it will be."

The company and the Learning and Skills Council will launch the system across Sussex, targeting niche markets such as hospitality and tourism.

EoD is also preparing to launch in the United Arab Emirates and Dubai. Mr Rowland said: "Countries like Dubai are moving into sectors such as IT, financial services and tourism.

"They want people to take UK exams by the likes of the Chartered Institute of Environmental Health and the Institute of Occupational Health."

This is the second private investment in the company after it raised £200,000 last year.

Mr Rowland said it had been difficult to secure funding, partly because of the need to get money without upsetting the company's Enterprise Investment Scheme (EIS) status.

He said: "The EIS was introduced to encourage 'business angels' to invest in start-ups but its not terribly sympathetic to raising further funding.

"Investment funds are extremely reluctant to invest in unproven companies. Contrary to popular belief, venture capitalists are very risk adverse "Most of them are very happy to buy into bigger companies because they're a safer bet but it's difficult for companies like ours."