Stock Markets provide High Growth, Innovative Companies with a means of raising large amounts of long term capital by selling company shares to outside investors. It is said that the company is "floated" on the Stock Market through an "IPO" (an initial public offering). An IPO offers for many companies the best way of financing their continued growth and is for most Venture Capital operators the prefered exit route for their investments. However, an initial public offering involves for the entrepreneur some loss of control over the company. This loss of control is proportional to the amount of equity that is sold to outside investors.
The entry standards imposed for a full listing on traditional Stock Markets may be too rigorous for young technology based companies. Recently, however, a number of initiatives have been taken by traditional Stock Markets as well as by new market operators to create new Stock Markets for High Growth, Innovative Companies. These offer all the benefits of a public equity market, such as an increased public profile and access to new capital and investors, with simplified entry requirements.
| Stock Markets entail: |
But: |
| Share equity |
Some loss of control |
| Share capital gain |
Risk of volatility of share price |
| No reimbursement and no interest to pay |
Strong financial discipline required |
|
