Contxto – Market liquidity can be tricky when the tradeoff between timing versus the desired selling price don’t always align. Add that on top of the few funding alternatives for startups other than private capital and you have yourself a predicament.
To the rejoice of many, more solutions will eventually be available thanks to Zissmo. Based in Chile and the United States, this fintech plans to launch an alternative stock exchange for startups by the end of the year.
Founded in 2017, Zissmo’s website said it was the world’s first digital Secondary Market to connect startups with private companies, investors, consultants, as well as other players. Since SharesPost sounds pretty similar and started in 2009, though, we’re looking into the matter.
Nonetheless, Zissmo’s trading vehicle allows participants to expand investment opportunities and grow portfolios in an efficient manner. In the process, geographic barriers become obsolete.
“The platform connects investors with startups, startups with consultants and organizations related to entrepreneurship as incubators or accelerators within the same digital roof,” said CEO and co-founder Richard Haensel.
“The objective of Zissmo is to promote scalable or dynamic enterprises by providing effective tools to make their process of success faster and more effective.”
According to reports, this special exchange will use derivative known as “TROS,” meaning Tradeable Rights Over Shares. These units will transfer the rights of underlying shares to the owner. Depending on your needs, this makes it easier both politically and economically, just as calculating payment of dividends.
Also this regard, this makes it easier to liquidate positions over the platform. In other words, Zissmo permits industry players to “exit” their positions or engage with startups that have already closed capitalization rounds.
Seeing that Zissmo’s target audience is the whole global entrepreneurship ecosystem, the fintech has a lot to work with. The peer-to-peer platform has represented over 1,000 companies in addition to more than 140 investors from 60 countries, increasing the probability of success greatly.
“We need investment so that there are more success stories,” said Haensel. “Generating this higher rate of investors, I think we should have them in the short-term.”
Based on its new methodology, Zissmo allows partners to invest in a variety of pre-selected companies over its database. In turn, investors or VC firms can search for investments or portfolio diversification. There are four parts to this process.
Deal flow: Review and select promising companies.
Investment terms: Appraise investment terms.
Funding: Invest capital in the companies of your choosing.
Trading: Let the portfolio company trading commence.