How will a new stock exchange model benefit private companies?

WeOwn is pioneering a new approach to accelerate SME growth


Access to capital is a global issue for SMEs. Despite making up 99% of all businesses worldwide, private companies are struggling to secure the funding they need through traditional fundraising routes – and the situation isn’t getting any easier.

If anything, the stock market is becoming less attractive to SMEs. Which is precisely why WeOwn is re-envisioning the stock exchange model, to give high growth business better access to investment opportunities when they need it most.

Why isn’t the stock exchange set up for SMEs?

The stock exchange model has remained largely unchanged since it was first developed in the 1600s – which is surprising, considering how much the world has evolved. This is because it meets the needs of larger enterprises; but it doesn’t serve SMEs.

The current stock exchange is based on a network of intermediaries, including brokers, advisors, lawyers and custodians. This has two major impacts on the trading model:

  1. there are lots of people involved, which make logistics complex and slow-moving
  2. everyone needs to profit from their involvement, which pushes up the price of entry

As a result, the process of listing publicly can be expensive and wasteful, and simply not affordable to most growing businesses. In fact, flaws with the traditional stock market approach are now starting to affect larger organisations. In order to counteract the cost of launching an IPO, companies need to raise a significant amount of money, which leads to over-inflated valuations. This often creates a fall in share prices post-launch, as brands fail to live up to their promise – major household names such as Aston Martin, Uber and Lyft have fallen victim to this scenario in the past couple of years.

If globally hyped brands can’t make the stock market work for them, what hope do lesser known SMEs have? Business owners realise this, and it’s driving them away from public fundraising.

How can we make the stock exchange work harder for SMEs?

There are a number of private fundraising options available to high growth businesses – WeOwn’s digital investment platform is one of them – but some SMEs still want to go public, to reap the publicity benefits and expose their brand to a wide group of potential investors.

Rather than forcing them into expensive, constricting old world models, WeOwn wants to change the stock exchange, to democratise access and open up new fundraising opportunities to scale-up businesses. Our digital investment platform is already providing straightforward access to business funding and corporate finance, and we’re new extending these principles through to a new, global decentralised exchange, to fully democratise the investment lifecycle, offering both SMEs and investors complete tradability and liquidity. And we’re calling this new stock exchange WeExchange.

How will WeOwn’s new stock exchange model benefit SMEs?

The stock exchange may have started out as a sensible way for companies to raise money, but over time the model has become overengineered and inaccessible to many. WeExchange strips back all the complexity to launch a simpler, quicker way of connecting businesses and investors through public listings, to create an exchange model centred around driving growth.

Here are some of the benefits to the way we’re designing the WeExchange marketplace:  

  • The costs are lower – like all our business funding products and services, WeExchange cuts out the middleman to provide direct connections between SMEs and investors. Launching a leaner operating model not only makes transactions quicker; it’s much more cost-effective, so we can afford to reduce listing and trading fees, which means cheaper access for companies at critical growth stage
  • It enables immediate growth opportunities – the less money being spent on third parties, the more resources SMEs have from their public sale to put straight back into the business. The WeExchange platform is built on the blockchain, which makes access to funding particularly quick and secure. Transactions can be settled in a matter of seconds, enabling us to offer immediate liquidity to participating businesses and investors
  • It reaches a global investor audience – traditional stock exchanges tend to be managed nationally, which can restrict which investors are eligible to participate in public listings. WeExchange operates decentralised core services, to open up investment opportunities to a global audience. However, this does not mean our model lacks suitable structure; it is supported by rules and procedures in order to protect users, supervised by the Liechtenstein regulator. We’re striking the perfect balance of freedom and security

What does the future stock exchange look like for SMEs?

As current attitudes to the stock exchange show, scale-up businesses are growing tired of being ignored, and they are looking for ways to go public without breaking the bank. While the industry is starting to realise that something needs to change, WeOwn is the first fintech to do something about it, developing a democratic stock exchange model available to SMEs and investors 24/7.

The WeExchange model is already in development and our launch is planned for 2020. We’re determined to create a future in which high growth companies find it easy to access the resources their business needs, and a better stock exchange set-up is the next strategic piece in order to solve the funding puzzle.

Download our new guide – Taking Stock: Why it’s Time for a New Global Exchange Model to find out more about the future stock exchange.

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