Not interested in stable large companies developing divisions, some investors prefer supporting small enterprises. Much riskier since often someone who has a good original idea must learn to calculate how to make money with that. Even though an idea has merit consumers have to buy into it for a company to make it. So, the Wild North strand continues in Canada and in the markets, it manifested into the TSX Venture Exchange (TSVX).
Venture
That middle name says it all. Embarking in that stock means uncertainty, risk, and daring. It remains not all mapped out or protected. Often on new paths, it takes some gumption and grit to get those companies up and rolling. If it works or larger companies find it enchanting or consumers become enamored with the idea, it can make investors much money. The TSX Venture Exchange started from a merger of the Alberta and Vancouver stock exchanges. To keep markets fresh, give startups a better chance at obtaining capital and protect investors the rules of engagement became formed to foster those relationships. To showcase exceptional small enterprises TSX made an index called the TSX Venture 50. What it helped create became a diversified two-tiered capital formation system. Once accomplishing the rules given in the TSX Venture Exchange one can graduate to TSX disclosure-based exchange market. If seeking other exchanges outside of Canada, then it can become used to propel to USA national exchanges.
Advantages
A small company can go public earlier by using the TSVX. It attracts investors and builds awareness for a company’s products and ideas. USA entrepreneurs have an option to list with the Canadian TSX Venture Exchange. The cost lists as significantly lower than USA national exchanges. Rubbing up against large USA divisions in large companies can take up much-needed resources for infrastructure building. Using the Canadian exchanges lets a firm practice being a larger company in a smaller market. If done well a firm gets more attention. Since 2000 more than 652 firms have graduated from TSVX to TSX. Now 181 companies who started as a TSVX now list as a NASDAQ/NYSE company in the USA.
Disadvantages
Increased visibility as a company means more responsibility. As media coverage and public awareness goes up so does the discovery of issues, factions in a company and cultural issues with products. A company may need more protection from litigation than it did before. If not careful with unique processes, protocol and ideas others may take proprietary information. As a public company, others may target it as an acquisition or merger since shares can become used as a currency substitute. A firm must have a working team and infrastructure in place to develop fully. All of which savvy potential investors know. A loss does not always become a negative thing. A close look at a country’s business tax laws serve as an indicator it can become leverage to protect other assets for other companies.
Fun
For veteran investors finding firms to develop has a satisfaction. The ability to influence and shape a developing company has an allure. Like an artist, investors have signatures in the market often viewed by the practices a firm does. Though not publicly known, among serious investors at that level they can list each other’s companies they have influenced vastly. Networking with small companies gives many resources in times of need. Developing allies when dealing with fiercely competitive markets increases the likelihood of a steady stream of profits. Elite veteran investors know how to take a negative in a company and use it. Playing across country boundary lines makes it even sweeter and fun.
Possibilities
If tired of the tried and true take a walk into the TSVX. The year 2019 for some businesses has started. Using filters and the 2018 Venture list forms an investor can mull over the possibilities over the holiday season. Giving the gift of fun during the holiday season has always been a good idea. Some of the filters check for:
- Greater than $5 million market capitalization
- More than one year listed on TSVX
- Dec. 2017 closing share price greater than $.25
- Dec. 2017 closing share price at least $.10
After qualifying then companies one-year share price, one-year trading volume and then the market capitalization becomes checked to discern the top 50. Using their filters an investor can determine their own list for 2019. Form a group, have a grand debate about small companies and place a few friend wagers for the year. Make some set points for checking on what the risky venture did and have some investor fun like the elites. Grand reason to go to dinner with some friends or bowling. Give it a try. If it fails only a small amount lost and for many a tax write-off. If it makes money then just ensure the investment fever does not start.