The Toronto Stock Exchange has landed in the Windy City to connect with Midwest startups who might be interested in raising public capital in Canada.
Last fall the Toronto Stock Exchange opened a Chicago presence to educate U.S. founders about the opportunities of going public on the TSX or TSX Venture Exchange (TSXV), which is tailored for early-stage companies.
Led by George Khalife, the VP of capital formation at the Toronto Stock Exchange, the organization's Midwest outpost is designed to connect with founders who are exploring the option of going public on one of Canada's equity markets.
Khalife said the Toronto Stock Exchange wanted to focus on Midwest companies as many share similarities to startups in Canada: a growing technology sector that lacks available later-stage capital.
"Similar to the landscape in Canada, the Midwest benefits from an excellent ecosystem of incubators, accelerators, and early-stage investors," Khalife said. "Once companies start to look for later tranches of capital, it becomes increasingly difficult to do so without having involvement from investors in the coasts"
Khalife said Canada's two-tiered model hasn’t been fully considered by many U.S. companies that could benefit from it. The TSX is a senior market designed for larger, more stable companies with an average market cap of $2 billion, while the TSVX is tailored for early-stage companies that have an average market cap of about $30 million.
"Think of TSXV as an incubation platform for earlier-stage companies to get more acquainted with being a public entity," he said. "For sports fans, the analogy I always use is a basketball player going from the NCAA to the NBA."
Currently there are around a dozen Midwest companies publicly listed on TSX and TSXV, Khalife said.
Khalife said businesses will choose to list on the TSX or TSXV if they're looking for capital that is less dilutive and provides an avenue for future acquisitions and financing, or if a company wants the added credibility of being a public entity to attract top talent or land larger customers.
"Ultimately, our goal is to encourage CEOs and founders to learn about this option and to add it to their list of financing alternatives for consideration," he said.
Companies who list on the TSXV will often graduate and up-list to TSX or eventually dual-list on a U.S. stock exchange, Khalife said.
"From a startup perspective, it’s an exciting time for the Midwest where we are seeing a surge of innovation happening for traditional industries within the Rust Belt," Khalife said.
