“The entire ecosystem to grow companies is not working very well,” said Jos Schmitt, CEO of Aequitas Innovations, my recent guest for Startup Grind Toronto.

“It’s great to come up with an idea but then how do you fund it, how do you take it to market, how do you develop a distribution channel and acquire clients?” he added.

Schmitt says there is currently a lack of funding for small and mid-sized businesses (SMBs), to which he attributes the lack of liquidity options for investors, the lack of growth-enabling funding options for corporations, and the reluctance from institutional investors. He says all of these things are further compounded by a lack of investor confidence, competition and transparency in Canada’s markets.

Schmitt, a “startup grinder” himself, has spent decades building and growing trading platforms, as well as clearing and settlement solutions. Today, Aequitas is building a new Canadian exchange and private marketplace, focused on innovative and cost-efficient solutions for Canada’s capital markets.  According to Schmitt, one of Aequitas’ most exciting offerings will provide relief for the venture markets.

“Canada’s venture market is going through a fundamental period of change,” he told the sold-out event hosted by corporate finance and startup specialist law firm Wildeboer Dellelce. 

According to Schmitt, companies do not have access to the capital they need, leading them to list too early on public markets, to exit prematurely or to secure foreign funds, which has a negative impact on Canadian growth and employment. To combat this problem, Aequitas plans to build a new private securities market, which will facilitate funding for today’s SMBs to grow into the large, market leaders of tomorrow.

In simpler terms, Schmitt said Aequitas is “building the eHarmony of securities and investors.”

During the discussion, many of the questions came back to liquidity. Many of the event’s attendees wanted to know how Aequitas’ private securities platform will facilitate liquidity.

Schmitt spoke enthusiastically about the platform, describing it as a vehicle for SMBs to market stock and raise funds with accredited and other qualified investors. Complementing this fundraising platform, he said, will be a place where investors can trade private securities to provide liquidity in a way that is customized to each individual company. It all depends on where they are in their life cycle.

“Aequitas will match securities with the right trading solutions to service the investors and issuers in line with their needs,” Schmitt said. “There are many Canadians who want to bring change to our venture markets. Our work will be a game changer as we will bring together Canada’s entrepreneurs with the right partners and champions.”

The next Startup Grind Toronto is June 5, with Dominique Belanger of BDC Venture Capital.

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