The United States capital markets are the marvel of the global financial system. While current markets do an extraordinary job of supporting mature global enterprises and providing unparalleled liquidity and stability, our financial infrastructure has naturally evolved to serve these massive entities, creating an unintended gap in the ecosystem.
While mega-cap companies thrive, thousands of brilliant, innovative small and mid-sized businesses are searching for the capital they need to take their next critical step.
In the 1990s, small IPOs (under $50 million) were a primary stepping stone for these companies. Today, the landscape has shifted. Companies stay private much longer, deferring public offerings until they have reached a massive scale.
At Dream Exchange, we don’t view this evolution as a flaw to be disrupted or fought against. Rather, we see a profound opportunity to add much-needed support to an underserved portion of the market. We believe the solution lies in collaboration—specifically through the creation of a specialized, regulated marketplace designed to complement our existing infrastructure: the venture exchanges.
Once enabling legislation is enacted into law, a venture exchange will be a registered national securities exchange that trades the shares of smaller companies, operating with listing standards and market structures tailored to their unique phase of growth. Supported by common-sense legislative frameworks like that which is proposed in the Main Street Growth Act, a venture exchange can revitalize the middle market and send a rising tide across the entire economy.
Here is how a collaborative venture exchange model benefits every participant in our financial ecosystem.
1. For Retail Investors: Expanding Access to Early Growth
Currently, the tremendous growth that happens before a company reaches a large-cap valuation is primarily accessed by institutional investors and private equity. Rather than shutting retail investors out until the later stages, venture exchanges will offer a way to safely expand the pie.
By providing a regulated and transparent environment, we can allow everyday retail investors—”Main Street” Americans—to invest alongside institutional investors in thoroughly vetted, early-stage companies that will be listed on these venture exchanges. It’s about broadening access to the American dream of wealth creation and thereby creating a more inclusive market, which will be available for everyone.
2. For Founders & Early Investors: A Stepping Stone to the Main Market
For early-stage investors and founders, the journey to the current listing markets with their large capitalization requirements can feel like an all-or-nothing leap. Venture exchanges provide a vital intermediate step. As presently contemplated, these venture exchanges will offer a regulated secondary market where its liquidity will provide early investors the opportunity to realize a portion of their returns and provide them with enough liquidity to reinvest their investments in the next generation of startups.
Furthermore, this environment can also act as an incubator for their listed companies. By learning the rigors of public reporting and governance on a venture exchange, these companies become stronger and better prepared candidates for eventual listing to the current listing markets, like the NYSE or NASDAQ. We aren’t competing with these listing exchanges; we are helping to build the future pipeline for all listing markets.
3. For Banks and Brokers: Empowering Our Financial Partners
The shift away from small IPOs resulted in fewer opportunities for regional broker-dealers and investment banks to underwrite small-cap companies that may be ready to go public on a listing market.
As proposed, a venture exchange will be designed specifically to partner with these vital financial institutions. By creating a market structure that supports liquidity in smaller stocks, we are opening new, sustainable revenue streams for the broker-dealer community. We want to incentivize the return of equity research for small-cap companies and empower the financial firms that serve local and regional economies to do what they do best: facilitate growth.
4. For the Economy: Fueling Job Creation and Equitable Innovation
Small and mid-sized businesses are the historic engine of job creation in the United States. When a company secures public capital, its workforce naturally expands to meet its new potential.
By adding a venture exchange to our capital markets infrastructure, we can efficiently direct capital toward minority-owned businesses, veteran-owned businesses, and enterprises located in regional hubs, which are often overlooked by traditional venture capital. This collaborative effort directly translates to boosts in innovation and robust job creation right here at home.
The Path Forward
The American capital markets are a marvel, but to maintain our global competitive edge, we must ensure the ladder of growth has no missing rungs.
At Dream Exchange, we are proudly planning on building the first venture stock exchange to provide this essential support. We are not looking to disrupt the established market; we are building a complementary marketplace that uplifts small businesses, empowers regional banks, and invites the public to share in the journey of innovation.
Let’s work together to complete the ecosystem and build a market that truly serves everyone.
