Without question, Canadian junior and small-cap companies looking to raise public capital are facing what many consider to be a ‘funding crisis’.
Many of the headwinds facing these companies are driven by macro-economic factors, such as slowing global growth or pressures on commodity prices however that is only part of the picture. There are also a number of policy-related and structural realities of the Canadian capital ecosystem that are adding to the growing list of challenges that junior firms must try and overcome in order to raise investment capital at a reasonable cost.
Earlier this month Richard Carleton, CEO of the Canadian Securities Exchange, sat down with Jim Goddard of HoweStreet.com to discuss the nature of the funding crisis facing entrepreneurs seeking to raise investment capital, with a specific focus on the role that the CSE is playing to help provide a desperately needed solution.
Over the course of the interview, a variety of topics were covered including how regulatory decisions and recent economic conditions are impacting the Canadian independent broker dealer community; the emergence of crowdfunding; the current debate on the uptick rule and whether or not short selling should be allowed on junior/small-cap stocks and how the CSE is working to fulfill its mandate of providing cost-effective access to capital for publicly listed companies.
While the interview covers a lot of ground, one of the most compelling points is the possible landscape that could confront Canadian companies looking to raise capital should current conditions persist.
Citing the example of challenges faced by smaller investors not being able to widely participate in deals in the US, Carleton stated that by enabling individual investor participation in early-stage capital investments here in Canada, investors have the opportunity to “profit in the growth of the Canadian economy and to help support the entrepreneurial spirit of individuals who create wealth for the country.” At the moment, however, more clarity is required on the exact mechanism that best serves this goal.
To listen to the full interview, click the video below and if you have any viewpoints on the current climate for raising capital, leave a comment or tweet your thoughts to @CSE_News.