NASDAQ debuts private company marketplace for growth stage firms

NASDAQ has launched a private company marketplace that aims to give growth-stage companies more control over the funding process.

The new marketplace wants to allow companies to garner funding from a wider field of investors that goes beyond the typical venture capitalists that are often the only way that some companies run into funding.

Related: Nasdaq trading frozen for three hours by computer glitch

Companies wanting to become members of the marketplace have to conform to at least one of five criteria. The five qualification requirements are:

  • Funding received must have totalled $30 million [£18 million] in the last two years and at the same time the enterprise value must have reached $50 million [£30 million].
  • Total assets and annual revenue must each be $50 million [£30 million].
  • Annual net income of $750,000 [£448,457].
  • Shareholders equity of $5 million [£3 million] and a two-year operating history.
  • Sponsorship requires “backing by a recognised financial investor with a track record of successful venture investments.”

Once accepted, firms can use the platform to allow employees taken on at an early stage to buy and sell shares, control how many shares can be sold at any one time, as well as control the timing of transactions and depth of financial disclosures to prospective investors.

“What we’re allowing companies to do is take control of secondary market for their shares,” said Greg Brogger, who is taking charge of the programme on behalf of NASDAQ, according to Tech Crunch.

Brogger admitted that 15 to 20 companies have already signed up to the marketplace and around 500 more have been earmarked as being a good fit in the future.

In terms of the ideal company, Brogger stated that one raising between $20 million [£12 million] and $50 million [£30 million] using the platform would be perfect and NASDAQ is likely pinning its hopes on the companies remaining with the exchange if they eventually float publicly at some juncture.