David Weild Presentation at SEC 3.4.15
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Transcript of David Weild Presentation at SEC 3.4.15
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© IssuWorks – Proprietary and Confidential © 2014-2015 All Rights Reserved
SEC Advisory Committeeon Small and EmergingCompanies ’15
The U.S. Need For Venture ExchangesMarch 4, 2015
David Weild IV
[email protected] 646-472-9603
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’15
SEC Advisory Committeeon Small and Emerging
Companies
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© IssuWorks – Proprietary and Confidential © 2014-2015 All Rights Reserved
SEC Advisory Committeeon Small and EmergingCompanies ’15
’15SEC Advisory Committeeon Small and EmergingCompanies
Weild & Co. | IssuWorksReplacing lost distribution
• We combine
• Data acquisition
• Data science (investor targeting)• CRM (institutional investors)
• Direct marketing (customized outbound emails)
• Computer-telephony (telephone follow-up)
• Feedback
• To provide:
• Enhanced distribution to Wall Street
• Enhanced distribution to Companies
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SEC Advisory Committeeon Small and EmergingCompanies
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© IssuWorks – Proprietary and Confidential © 2014-2015 All Rights Reserved
SEC Advisory Committeeon Small and EmergingCompanies ’15
’15SEC Advisory Committeeon Small and EmergingCompanies
Background
• Published Studies
• Why are IPOs in the ICU? (Weild & Kim)
• Market Structure is Causing the IPO Crisis (Weild & Kim)
• Market Structure is Causing the IPO Crisis - and More (Weild & Kim)• A Wake-up Call For America (Weild & Kim)
• The Trouble with Small Tick Sizes (Weild, Kim & Newport)
• Making Stock Markets Work to Support Economic Growth (Weild, Kim &
Newport)• The U.S. Need for Venture Exchanges (Weild & Kim)
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© IssuWorks – Proprietary and Confidential © 2014-2015 All Rights Reserved
SEC Advisory Committeeon Small and EmergingCompanies ’15
’15SEC Advisory Committeeon Small and EmergingCompanies
Widely followed:
• SEC
• Federation of European Securities Commissions
• European Commission
• OECD
• G-20
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’15SEC Advisory Committeeon Small and EmergingCompanies
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Agenda:
• The Problem
• Why It Is Important
• Primary Cause• Solution: Venture Exchanges
• Manage by Objective
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SEC Advisory Committeeon Small and EmergingCompanies ’15
THE PROBLEM
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SEC Advisory Committeeon Small and EmergingCompanies ’15’15SEC Advisory Committeeon Small and EmergingCompanies
By the Numbers (1998 to Present)
• U.S. Fell from #1 to #12 in Small IPOs
• U.S. Fell from #1 to #2 in Large IPOs
• U.S. Fell from 14% to 8% Start-ups• U.S. Fell from 9,000 to 5,000 Listed Companies
• U.S. IPOs fell from 500/year to 150/year, should be 950/year
• Lackluster employment
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SEC Advisory Committeeon Small and EmergingCompanies ’15
What IPO market?
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SEC Advisory Committeeon Small and EmergingCompanies ’15
What IPO market?
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SEC Advisory Committeeon Small and EmergingCompanies ’15
Investment Banking System Collapsed (1994)
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No Money For Sales, Distribution and Market Making in
Small Cap Stocks (2014 Bookrunners of Small IPOs)
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What Some Academics Attribute to Weild & Kim as, “ The Ecosystem
Theory of Small IPO Decline.”
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What IPO market?
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WHY IT IS IMPORTANT
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SEC Advisory Committeeon Small and EmergingCompanies ’15’15SEC Advisory Committeeon Small and EmergingCompanies
Why Everyone Should CareJobs | Prosperity | Problem Solving
• Jobs (10 million+ total, 1.5 million- 2.5 million direct)
• Poverty (Full Employment)
• Retirement (Growth)• Innovation
• Oncology
• Renewable Energy
• Internet Security• National Security
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PRIMARY CAUSE
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SEC Advisory Committeeon Small and EmergingCompanies ’15’15SEC Advisory Committeeon Small and EmergingCompanies
Two Causes
• Capacity (Diminished revenue to pay for investment banking,
research, sales and capital commitment in support of liquidity)
• One-size-fits-all market model
• Works for naturally liquid stocks (large- and mid-cap)
• Fails illiquid stocks (small-, micro- and nano-cap)
• Cost to Issuers
• Disclosure
• Transaction failure
• Aftermarket failure
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Loss of Economic Incentives
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SEC Advisory Committeeon Small and EmergingCompanies ’15
SOLUTION: VENTURE EXCHANGES
Let’s put an end to “One-size-fits-all markets”
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SEC Advisory Committeeon Small and EmergingCompanies ’15’15SEC Advisory Committeeon Small and EmergingCompanies
What is a “ Venture Exchange?”
• NASDAQ in the 1970s and 1980s was the de facto U.S. Venture
Exchange
• London’s AIM
• Toronto’s TSX Venture
All have lost their way through a loss of the ecosystem-focused (as
opposed to shareholder-focused) economic model.
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Be Bold: Institutionalize the Solution
• Create “Regulation Venture Exchange”
• Establish a “Venture Exchange Division” of the SEC (and
FINRA and DTCC)
• Charter “member-owned” (sustains the ecosystem) “Venture
Exchanges”
• Permit listings up to $2 billion (feeds ecosystem) in market
value
• Competition:
• Between Venture Exchanges
• Between Venture Exchanges and Other Exchanges for
Listings Up to $2 Billion in Market Cap.
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SEC Advisory Committeeon Small and EmergingCompanies ’15’15SEC Advisory Committeeon Small and EmergingCompanies
Exempt Venture Exchanges From:
• Order Handling Rules
• Reg. ATS and NMS
• Unlisted Trading Privileges (Rule 12f-2)
• Decimalization
• Sarbanes-Oxley
• State Blue Sky
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Create a new pro-growth environment:
• “Yes” to
• SEC Review (not State, not NOMAD)
• SEC Scaled Disclosure
• JOBS Act Research Rules
• “No” to
• ETFs & Index Funds
• Depress liquidity
• Siphon capital from capital formation
• Undermine ‘Entrepreneurial IQ’
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In addition, some improvements to private
markets:
• Require basic disclosure
• Require a consolidated tape
• Allow national aftermarket solicitation of accredited investors andinstitutions
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MANAGE BY OBJECTIVE
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The Objective: By the Numbers: 10 mil lion jobs
• U.S. Fell from #1 to #12 in Small IPOs
• U.S Back to #1
• U.S. Fell from #1 to #2 in Large IPOs
• U.S. Back to #1
• U.S. Fell from 14% to 8% Start-ups
• U.S. Back to 14%
• U.S. Fell from 9,000 to 5,000 Listed Companies
• U.S. Goes from 5,000 to 13,000+ growing at 3%/year
• U.S. IPOs fell from 500/year to 150/year• U.S. Goes from 150/year to 950/year growing at 3%/year
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© I W k P i t d C fid ti l © 2014 2015 All Ri ht R d
SEC Advisory Committeeon Small and EmergingCompanies ’15
The U.S. Need For Venture ExchangesMarch 4, 2015
David Weild IV
[email protected] 646-472-9603
’15SEC Advisory Committeeon Small and EmergingCompanies
mailto:[email protected]:[email protected]