Transactions & Finance

Silicon Valley to Get Its Own Stock Exchange

Long desired by the East Coast stock exchanges, the project to set up a startup exchange in California cleared a major hurdle this month when the SEC gave the go-ahead for the San Francisco-based Long-Term Stock Exchange. Set to open before the end of the 2019, the LTSE will be the country’s 14th equity exchange, and first in the state of California.

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Long desired by the East Coast stock exchanges, the project to set up a startup exchange in California cleared a major hurdle this month when the SEC gave the go-ahead for the San Francisco-based Long-Term Stock Exchange. Set to open before the end of the 2019, the LTSE will be the country’s 14th equity exchange, and first in the state of California.


As its name would suggest, the LTSE will focus on long-term investments and sustainable value creation. The role of investors would be increased, with greater voting rights which should benefit founders in the long term.     

 

Get in early

 

The objective of this stock-exchange and its founder, Eric Ries – the entrepreneur who came up with the ‘lean-startup’ concept – is to get startups to list on the stock exchange at a much earlier stage than they do at present (12 years after founding, on average) in order to let investors share in the benefits of their early-stage growth. Conceived as a response to the volatile logic and short-termism of East Coast exchanges, the LTSE intends to offer solutions better adapted to the needs of startups, which are often vulnerable at the early stages of their lives.

There remains one final step before the LTSE welcomes its first names, the exchange must provide the SEC with details of the listing criteria it intends to use and how it intends to make shares in startups available to buy and sell. Once this has been done, the expectation is to launch the exchange before the end of the calendar year.

The Long-Term Stock Exchange will allow its companies to list simultaneously on its exchange and those in New York, which will continue to have a big appetite for tech companies.   

 

Théo Maurin-Dior      

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