The times they are a changin.
One of the effects of the financial crisis was that SME's (Small and Medium Sized companies) could not get their hands on capital needed for growth or survival. Banks tightened credits, the listing department at the exchange was on life support and investors big and small became more careful than Sansa Stark rsvp-ing to a wedding invitation.
It also became clear that exchanges had, over time, lost their focus on why there were exchanges to begin with, i.e. creating a market place where capital could be raised and money could be invested for the long term. The focus of exchanges had changed from 'investment' to 'trading'. This was not because of the profit they were able to generate by enabling the HFT environment, that was just a great side effect. It was because the client (the end investor both institutional and private) wanted it. Exchanges and trading firms simply tapped into a huge client demand for more complex products, faster access and volatile short term profit.
And then the ceiling came crashing down, leaving the financial industry with the realization that A. trust had to be re-instilled in the market as a whole and B. an economy had to be rebuild.
For that reason, SME's and their search for capital and growth rapidly became the pet project of the established financial industry and Fintech. Especially Fintech erupted with several crowdfunding websites. To name a few (for the Dutch market): www.symbid.nl www.leapfunder.com and www.kapitaalopmaat.nl. Meanwhile, traditional firms blew new life in NPEX and Euronext rebranded itself after the NYSE split on 'financing the real economy' and showing their commitment by setting up Enternext. And now, a new player has entered the market. NXchange went live with their first listing yesterday, cutting out trading firms, banks and brokers by providing direct access.
So, yes the times have changed. If you had a SME business six years ago and were looking to expand, you'd be forced to go 'friends and family'. Now you have three exchanges knocking on your door, a small village worth of crowd funding websites and it won't be too long before banks can crank credit all the way up to 11.
But what to choose? What are the differences in their business models? What are the risks as none of these newcomers are 'too big to fail' And, is the future of finance really all about going retro and back to the basics of matching supply and demand? Is that a sustainable business model for an industry that has become so large? Or is this just a first step and will one of the new exchanges partner up with a fintech company like BUX and add cfd's on a crowd funded listing to add trading bells and whistles (and let history eventually repeat itself)?
To be honest, we have no idea. We fully endorse the concept that this market should be about 'financing the real economy'. But who has the winning concept? Llet's open the discussion. We'd like to invite all these initiatives to present themselves on this site. What differentiates them from the rest? Where do they see themselves in five to ten years? And, once they have done that, let's set up an event discussing the virtues of their platform together with their target audience.