Reading: Alternative Going Public Strategies

Alternative forms of public investment have emerged already in the "analogue" world. Many of them have tried to get around the traditional underwriting structure and offer platforms where investors and entrepreneurs can meet.

One such early version of investment platforms are investment clubs, in which various (affluent) investors pool their funds to co-invest. By pooling their funds, information costs can be shared so that the clubs have better incentives to get informed and conduct their own due diligence. At the same time, clubs can write larger tickets than individual investors, so that they become more attractive partners to the target firms.

Still, the size of these platforms is often limited to a small number of colleagues and coordination among club members is not always easy. Moreover, the value-added that they can offer the firm relative to other sources of financing is not always clear. It is therefore not surprising that such platforms have not evolved into a mainstream source of growth financing (though many of them occupy attractive market niches).