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Small Stocks, Big Ambitions: 4 Benefits of Investing in TSX Venture Exchange

TSX Venture Exchange (TSXV) is a unique exchange which provides its listed companies, often in their early stages of growth, with access to public capital. TSXV attracts innovative companies whose assets, business, and market capitalization are too small to meet the listing requirements of a larger exchange like Toronto Stock Exchange (TSX). TSXV is one of the world’s largest global public venture markets and benefits from a diverse roster of companies including businesses in sectors such as clean technology, life sciences, and energy.

While there’s no guarantee of returns when investing in any emerging company (whether it's public or private), TSXV-listed companies offer a number of potential benefits:

  1. Venture Growth Equity
    TSXV listings are often high-growth companies from a range of sectors responsible for innovative products and businesses. The average market cap of the companies listed on TSXV is approximately $29 million – this means that investors have the opportunity to invest in companies at their formative stage. One way to identify growing companies is by tracking the This link will open in a new tab. TSX Venture 50, a yearly ranking of the top performing companies from each of five industry sectors. The average TSX Venture 50 share price performance was 94% year-over-year in 2018, and from 2006 to May 2019, 99 TSX Venture 50 winners went on to graduate to TSX.
  2. Investment Accessibility
    Many growth companies stay private. These companies are out of reach for most investors. And for those that can access private venture investments, it can be extremely difficult to increase their holdings or divest. Growth companies that go public on TSXV provide investors with the ability to purchase more shares – shares which have more liquidity and can be sold easier than those of a private company. Note that over 17 billion shares have traded on TSXV year-to-date.
  3. Comfort of Regulation
    Unlike public companies, private companies are not obligated to disclose important information about the financial health of their company. TSXV is a fully regulated junior market with listing and reporting standards that must be met by all TSXV-listed companies – this regulatory oversight gives investors the comfort that public disclosure is available to conduct their own diligence. As TSXV companies grow, some of them may eventually meet TSX listing requirements and choose to graduate to TSX. When and if they do, their shares may be exposed to a wider market, which may enhance liquidity for their shareholders. To date, over 650 companies have followed this path. In fact, as of May 31, 2019, one in five companies on the S&P/TSX Composite Index is a graduate of TSXV.
  4. Diversified Investment Opportunities
    Investors have access to approximately 1,700 TSXV listed companies across 12 industries (including This link will open in a new tab. mining and This link will open in a new tab. technology). For example, the top industry performers in 2019's TSX Venture 50 were:

Where can you get more information on TSXV-listed companies?

Until recently, non-institutional investors had to search a wide variety of sources to compile data and receive news of public companies – even then, their information could be incomplete and even misleading. Fortunately, this process has been made easier through the introduction of This link will open in a new tab. TMX Matrix, a financial screener that can be used to easily gain the same insights into deals as market insiders. With access to financial data, investors are empowered to make better decisions, gain deeper insights, and unlock unique growth opportunities.

So how do you invest in a company listed on TSXV?

The process of investing in a TSXV company is the same as that for a TSX company: once you’ve done your due diligence and find one or more companies that interest you, contact your broker or access your brokerage account and reference the ticker symbol of those companies.


The author

Richard Goodman

Richard Goodman

TMX

Richard Goodman recently joined TMX Group as its Head of Capital Development. He is responsible for domestic and International capital development initiatives, including the removal of structural trading barriers, attracting new global pools of capital to drive capital formation, launching new TMX projects to bring attention to TSX and TSX Venture companies, and form partnerships with domestic and international organizations to improve the connectivity between TSX and TSX Venture issuers and the investment community.

Prior to joining TMX, Richard spent most of his 25+ year career in Capital Markets. Richard was recently the Head of Investment Banking at two Toronto-based independent dealers, raising equity capital for hundreds of public and private venture companies. Prior to that, he practiced securities law at McMillan. Richard started his career as a Consultant and Project Leader at Nestle and then CIBC.

Richard earned a JD from the University of Western Ontario, an MBA at the Richard Ivey School of Business and a BA (Economics) from York University.