An international stock exchange aimed at solving start-up capital issues went live this week, launched by René Römer, chief executive of the Dutch Caribbean Securities Exchange.
The StartUp Stock Exchange (SSX) is a global marketplace that connects entrepreneurs to investors. It is designed for early stage start-ups looking to raise growth and development capital.
The SSX was founded by serial entrepreneurs Ian Haet and Brian Niessen, who say capital is an ongoing issue for start-ups not based in major start-up hot spots such as Silicon Valley, New York and London.
“Worldwide many entrepreneurs are building excellent businesses but don’t have access to the funding they need. At the same time, investors of all sizes don’t have access to vetted companies and diverse early stage opportunities,” Haet says in a statement.
Haet told StartupSmart that Australian start-ups would be interested in participating in the exchange because it would connect them to a pool of international investors and give them greater fundraising flexibility.
“As an entrepreneur myself, I know that fundraising can become a dominant activity for a young company,” he says.
Start-up companies have to apply and be vetted by the SSX before being able to raise funds, and investors have to be verified before they can start investing.
“Once verification is complete, investors can fund their client account and pledge to buy shares of our initial public offerings (IPO’s),” said Haet in a release. “We are commencing with two IPOs: a daily private sales company and Software as a Service (Sas) company, focused on small business compliance.”
Based in Willemstad, the capital city of the Caribbean island-nation of Curacao, the SSX complies with the legal framework of regulations of the Dutch Caribbean Securities Exchange (DCSX), an international exchange for listing and trading securities.
Haet told StartupSmart the SSX would be a good fit for companies looking to raise between $100,000 and $2,500,000 (USD).
“Every company that lists must pass a six-step vetting process that reviews business plan, team, corporate and legal factors. At each step SSX provides actionable feedback so the company is also receiving advice along the way,” says Haet.
Adrian Stone, co-founder of start-up accelerator AngelCube and investor group Investor Inc, told StartupSmart that anything that provided liquidity for start-ups was welcome, but the initiative would need time to develop.
“The whole point of the exchange is to provide liquidity, but just because you hang your shingle up and say you’re a stock exchange doesn’t mean you’ll actually get it for investors or companies,” says Stone.
“Small stock exchanges haven’t typically raised the critical mass needed for the liquidity for investors. They have lots of ground to be covered before they can prove they’re doing what they aim to for start-ups and investors.”
Stone added that even if the exchange did take off, start-ups were still likely to find themselves needing to raise the majority of their funds through other means.
“It might be a good way to top up the funds, but won’t be a panacea to the big problem of raising money. You’ll still have to raise the bulk of the money from your networks,” he says.