Coming soon to a boardroom near you is one of the more significant developments the private market has seen in some time. Thanks to the merger of SharesPost, an online platform that connects investors to venture-backed companies, and NASDAQ, the world’s second largest stock market, investors will be able to buy and sell shares in privately held companies.
This is big news for investors that want to own a piece of today’s surging private companies, especially fast-growing technology-enabled firms. Think Twitter, Pinterest, Square, Dropbox and others.
This is also major news for all privately held companies, especially those in Chicago seeking to increase access to capital to fuel their growth.
Due to the recent emergence of crowd-funding websites, companies have gained the ability to reach a wide base of potential investors. But some still consider online crowd-funding to be the Wild West.
This NASDAQ merger with SharesPost is significant because NASDAQ brings over 40 years of control and expertise in building markets -– not to mention a global reach and a credible brand.
NASDAQ has also become an increasingly friendly partner for Chicago’s innovation community. On February 25, I rang the Closing NASDAQ Bell with 18 of Chicago’s most rapidly growing companies. All were winners of the 2012 Chicago Innovation Awards. It was great to have Chicago recognized on this stage that represents the global epicenter of business and technology. And it was clear that the NASDAQ folks were impressed to meet with some of our recent winners — like Coyote Logistics, SMS Assist, Belly and other growing firms that could conceivably be listed on NASDAQ someday.
As with anything new, education will need to occur for the investor community and private market to fully grasp the potential. On August 19 at the Museum of Broadcast Communications, the Chicago Innovation Awards will host a NASDAQ executive who will speak to approximately 350 of Chicago’s growing firms about how they can engage with the NASDAQ Private Market. Local businesses looking to increase their access to capital might find value in joining that day.
In a conversation I had with a rep from NASDAQ shortly after the merger announcement, I learned that NASDAQ won’t just accept any company to the Private Market. A vetting process will occur, and only the most promising firms will be accepted. Scalability, competitive advantage, a strong management team, impact in the marketplace -- all of these will matter, as they should. But given the growth of Chicago’s innovation community, and the soundness of the business models we have seen emerge from our region, NASDAQ should be pleased with what they find in the Windy City.
Luke Tanen is executive director of the Chicago Innovation Awards, the region’s foremost celebration of new products and services, and co-author of Innovating…Chicago-Style, which tells the stories of 80 Chicago-area innovators who have launched groundbreaking new products and services over the past decade.