The Toronto (TSX) and Australian Stock Exchanges (ASX) have earned international recognition as the preferred exchanges for listing growth-stage technology businesses.

Whilst Directors may aspire to a future on NASDAQ, NYSE or LSE, most find the TSX and ASX more willing to support a listing at an early stage in their corporate development.

Leaving aside for another post, the discussion of the merits or otherwise of listing an early-stage business, we observe that once IPO champagne and party balloons have gone flat, life can get pretty tough.

What is considered an early-stage company?

Early-stage companies by definition have an ongoing need to raise capital. In the technology sector it is not unusual to see early-stage technology companies needing multiple rounds of funding.
Some companies are able to generate a steady stream of good news post listing creating a virtuous cycle of buyer interest and liquidity that opens doors for subsequent placements.
Not every company is so fortunate; and even if the markets are receptive, there is no guarantee that the amounts of capital available are sufficient to ‘cross the chasm’ (we love Geoffrey Moore‘s books) sufficiently to demonstrate the revenue growth that unlocks strong public market interest.

Growth Strategies for Early-stage Companies

So what are the options for listed early-stage technology companies needing to change their stars?

  1. Buy growth

    There is no shortage of small listed companies keen to buy earnings accretive businesses (preferring to pay in shares).  Ideally, these acquisitions are synergistic to the existing business but finding sellers willing to accept payment in illiquid stocks make life difficult for dealmakers.

  2. PIPE (Private Investment in Public Entities)

    There are some institutional funds that specialise in PIPE deals in listed growth stage technology businesses.    These firms typically take a medium-term bet on a company’s strategy and execution capabilities of the management team.   The bet being that in a roughly 24 to 36-month period the company will be able to use the funds raised from the PIPE investment to make a significantly large transition that the broader public markets will warm to the company’s growth story lifting the share price whilst providing sufficient liquidity for the PIPE investor to offload their position and realise their profits.

  3. Public to Private ownership*

    As the reach of international 私人产权 (PE) companies grow, PE firms are finding that some of the best investments for their fund are currently listed. This makes P2P transactions more common and executable. As many smaller listed companies have tightly held shareholdings, the ability to make a P2P transaction work is improved.

    * Noting that most PE firms will only invest in profitable businesses with the ability to sustain some level of debt leverage.  Hence, this option is rarely available to most listed early-stage technology companies as they are typically single-business, pre-profit companies.

Stay tuned for our next blog in this series in which we will look at the two main variants of PIPE deals that we are currently seeing in the market.

If you would like to discuss your funding options, please contact us at Eaton Square for a confidential discussion.

里斯 · 亚当斯

里斯 · 亚当斯
Global Managing Principal

Reece is the Managing Principal of Eaton Square and is focused on M&A and capital services. His industry expertise incorporates IT Services, Engineering, Management Consultancies, Software and Technology and HR Services. With over 20 years of corporate strategy and mergers and acquisitions experience working in both global corporations and small and medium-sized services businesses, Reece’s depth of knowledge is invaluable in assisting clients to navigate the complexities of M&A transactions.

[email protected]
Ph: +61 03 8199 7911



Neil Bourne is the Managing Principal for Eaton Square Sydney. Neil has been working with growth stage technology business for over 15 years in venture capital and corporate finance. Neil is married to Sarah, has three children and enjoys Brazilian jujitsu and outdoor sports.

[email protected] 61 1800 332 866