Private listed shares trading?
|Having been actively involved in the start-up community both as an advisor and as someone who was in the market for angel investing, I understand all too well how daunting it can be to access liquidity. Your options are generally limited, the business concept currently needs to, in most instances innovative, incorporating the aspects of desirability, viability, and feasibility. While this builds incredibly resilient start-ups in can be quite disheartening to young entrepreneurs and established private firms. Regardless of what start-up past or present that you look at growth has been expensive, and challenging, particularly for later-stage start-ups.
Those who are close but not quite capable of listing on a public stock exchange, run into the disadvantage of having to compete with less liquidity, less growth, and ultimately fewer benefits. There’s a divide between public and private companies, on one end ample access to liquidity on the other next to nothing. The concept of private share trading is nothing new; unlisted companies still practice it today, usually with paper trades occurring at the small scale. Often this type of transaction is held for long durations, and not always because an investor wants to but because there is no counterparty willing to back the other side.
It is not for everyone, but it is an area that is gaining a little bit of traction. Morgan Stanley’s ShareWorks and the Nasdaq Private Market have seen successful operations in the space, and now CartaX is aiming to demonstrate similar metrics with some improvements to catch the public trader’s eye. While these types of projects do create some scepticism, enormous benefits for the companies, the employees, and investors make it attractive at first glance. I like the dark pool liquidity options, as an investor not only do, we get access to more tradable products but access to entities earlier.
It also makes the idea of ‘going public’ not as necessary, giving profitable performing entities less reliance on needing to go public to grow further. It takes a little bit of the pressure off to build and grow hyper-fast, leaving much more room and time to invest in the foundations and push the roots deeper. It is still early days, and like all investments, there is a risk, for the business, for the investor, and the newly minted private exchanges, so anything could happen in this experiment.
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