The subject of venture exchanges, or secondary markets for small cap companies, is a hot topic right now. Sparked in part by the signing of the JOBS Act, and the new securities exemptions now coming into play, investing in SMEs is better for everyone if there is an efficient vehicle to sell (or buy) your securities. Of course everyone wants to invest in a fabled Unicorn that delivers a 100X IPO but the reality is that many SMEs companies will not achieve legendary status. Creating market liquidity for shares in small companies is a way to allow holders to have a potential exit if they so choose.
David Burton, a Senior Fellow at the Heritage Foundation, is an expert in securities law and SME finance. He recently put together a stellar panel of authorities to discuss the potential of venture exchanges.
Participants included:
- R. Cromwell Coulson – Chief Executive Officer, OTC Markets
- David Weild, IV – Chief Executive Officer, Weild & Company (former Vice Chair of Nasdaq)
- Thaya Knight – Associate Director, Financial Regulation Studies, Cato Institute
- Leonard J. Amoruso- Partner, Murphy & McGonigle
Smaller IPOs have been in decline for decades. This collapse in small IPOs may have cost the US economy over 10 million jobs. There has been a dramatic shift where small, yet fast growing companies, try to stay private for as long as possible. Simultaneously market makers have been dis-incentivized to provide liquidity for small cap shares. If you want to know why, watch the video below.