The companies on Equivesto are at a much earlier stage than those listed on the Toronto Stock Exchange (TSX) or even the TSX Venture Exchange. Private investments (like those on Equivesto) have unique traits that differentiate them from public investments like the stock market.
A few of the big differences:
- It's much riskier - Only invest on Equivesto with discretionary capital (money you're willing to lose). Startups and small businesses generally have a high fail rate.
- Longer holding terms - Unlike the stock market where the sale of investments are readily possible, investments on Equivesto have no secondary market and cannot be easily sold. With startup and small business investing, expect 5-7 years before seeing return.
- Less regulation - Less regulation means lower costs, but it also means less oversight on how a business is run and spends its capital.
- Not susceptible to market volatility - Since there is no available secondary market for private investments, companies on Equivesto are not as susceptible to day-to-day market events.
- Vote with your dollars - Equivesto provides an opportunity for investors to collectively choose with their dollars which companies are worthy of funding and succeed.
- Access private deals - Private equity investing, like that on Equivesto, had previously been a restricted part of the market that was only available to the wealthy.
- Company Size - Public stock markets feature the majority of the largest corporations in Canada and around the world. Companies listed on Equivesto are much smaller, and often have a much more local focus. With small businesses, it is clearer which individuals and communities will benefit as a result of your investment.