So that you can readily buy and sell shares, they must first be listed on a Stock Market.
The London Stock Exchange is the primary UK stock market. It has two markets for trading shares: the Main Market and a junior market called the Alternative Investment Market (AIM) for smaller companies. In Canada, The Toronto Stock Exchange has two markets and six ways of listing companies such as Direct Listing, Initial Public Offering (IPOs), Reverse Takeover (RTOs), and the Capital Pool Company programme (CPC).
We particularly like the Canadian CPC model, and are adapting it to the UK market. In essence, a group of industry and financial experts create a company and list it on the stock market to raise money to acquire a private business. Simply put, it is a crowdfunding of a publicly listed company and investors can trade their shares on the stock market unlike when investing in an unlisted company financed by crowdfunding.
A key factor in crowdfunding is the “exit route” for the investor: how can she/he realise her/his investment and turn it back into cash? Most crowdfunding investors will be locked in for a long time, and whilst it may be fun to follow the venture and share its ups and downs, at some point a sale or transfer of the investment holding will be required, even if it has to wait until the executors in probate have to transfer the holding to future beneficiaries!
Company fundraising and investor tax reliefs explained
Investment finance is also known as equity finance. It involves selling part of your business as shares to an investor. The investor will take a share of any profits or losses that the company makes. UK government schemes such as SEIS and EIS help companies raise investment finance by offering tax reliefs to investors