Singapore’s First Startup Stock Exchange

Given the evolution of FinTech and maturity of crowd-funding platforms, exchanges around the world are not resting on their laurels to attract capital and they desire to maintain their de facto status for capital raising exercises.

They are coming up with platforms to serve a wider variety of investors.

Following the well-publicised news of Stock Exchange of Thailand (SET)’s new start up bourse, Curacao-based Startup Stock Exchange (SSX) is aiming to launch their stock exchange in Singapore by mid-year. It is aimed to function as a gap between crowdfunding sites and traditional stock exchanges. This comes timely for start-ups as we are starting to see a tighter regulation regime for listed companies, it may deter companies from listing as a source of capital.

In SET’s startup exchange, “companies could list on the day they are established and the dividends will be flexible and not necessarily in cash, but could take the form of company products or other perks.”

For SSX, it was acquired by International Stock Exchange Group (ISEG) somewhere in May 2016. So far, it has gathered 950 investors on their platform. Their next immediate priority is to launch exchanges concurrently in 50 countries. I find their goal too ambitious and it requires regulatory hurdles which may prolong their launch dates.

To add on, Funderbeam is likely to disrupt traditional capital raising methods using blockchain technology. Check out “this stock exchange for startups uses blockchain technology to make it possible for anyone to invest and trade in growth companies“.

As I see it, it does not mean there will be an exodus of investors flocking from the traditional exchanges to newer, innovative exchanges. In the latter category, there are huge risks such as proper disclosure, track record, due diligence on proper documentations, liquidity, and lack of safeguard mechanisms & regulations.

Equity in start-ups tends to be extremely risk for we know that the survival rate for start-ups is low. Perhaps, it makes more sense to offer it to accredited investors.

For now, I feel that most of the developments are conceptual and I would stick with traditional platforms such as SGX and ASX. Nonetheless, it is certainly an exciting time to be investors.