What Is The TSX Venture Exchange? Learn How to Invest in it
Mon, Mar 18, 2013
Popular Stock Exchange In Canada
The TSX Venture Exchange is a stock exchange with the primary goal of allowing microcap companies which can’t get listed anywhere to access public markets for capital.
The exchange has billed itself as a public market for private capital. That means it has focused on being a place where companies with very tiny market values (from as little as $1 million) can go public.
In the United States most exchanges require significant revenues, values, or capital requirements before listing. Think of how Facebook (NYSE:FB) raised billions of dollars before its IPO and Google (NYSE:GOOG) did the same. Both of those had market values in the billions of dollars before their shares were available to the investing public.
The tsx venture exchange quotes allows companies to list at far earlier stages of development. The average market cap of a company listed on the TSX Venture Exchange wiki is $16.9 million (January, 2013).
This fact promotes many advantages and quite a few drawbacks to potential venture-stage company investors.
The major drawback is the companies that trade on the TSX Venture Exchange Quote are extremely risky. The overwhelming majority of the companies listed on the TSX Venture Exchange are very early in their development. Most of them have no sales. And they’re often funded with less capital than they really need to make their business successful. As a result, most of them simply fail and go bankrupt.
The advantage of listing companies at such an early stage of their development is that the capital appreciation potential is massive. Most of the company’s are so early stage that if they are successful, the shares can and do climb 10 times, 20 times, or more as the company grows. These cases of success, however, are very limited.
Investors wondering what is the TSX Venture Exchange Companies should be acutely aware of some other factors which make an investment in one of the companies listed there one of the riskiest investments they’ll likely ever make.
The exchange is infamous for decades of scams, dubious ventures, and insider and stock price manipulation games.
In short, it’s a very dangerous place to invest. But with the danger comes a tremendous amount of reward potential.
So, take it from someone with years of experience on the TSX Venture Exchange investments and who has actually made money in the world’s riskiest market: if you are interested in investing in TSX Venture Exchange stocks, only invest money you can afford to lose all it.
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