Can This New Stock Exchange Help Black Startup Founders?
By CultureBanx Team
LTSE (Long-Term Stock Exchange) will help startups go public
Black women are the nation's fastest growing demographic of startup founders
The country’s 14th national equity exchange, LTSE (Long-Term Stock Exchange) received SEC approval to help startups go public earlier this year. Since black women are the nation's fastest growing demographic of startup founders, will this provide an opportunity to help get their companies publicly traded and increase participation of African Americans in the stock market?
Why This Matters: An exchange for startups like LTSE should be music to black female founders ears, but tone death Silicon Valley may impede upon this. For decades at the nexus of money and power in Silicon Valley, they've been underestimated and overlooked. Research shows that black women are among the least likely to get checks cut by venture capitalists, which is the starting point along the road to most IPOs. So few raise venture money that the percentage is, statistically speaking, nearly zero and perhaps going public on LTSE could be a better option. From 2009 to 2017, black women only raised $289 million, or 0.0006% of the total $424.7 billion of venture capital money raised, ProjectDiane found.
When it comes to African American participation in the stock market its lower than other ethnic groups and further contributes to the widening wealth gap. A 2017 market research report found that about 67% of African Americans with incomes of at least $50,000 have money invested in stocks or stock mutual funds. Unfortunately the average black family makes around $40,000 a year, so this new LTSE exchange won’t move the needle in getting more people from the demographic to start investing in stocks.
Situational Awareness: Competition is steep in this space as LTSE is diving into the deep end, because of the 13 other national exchanges, 12 are owned by just 3 companies. The NYSE (New York Stock Exchange) has 23.3%, the Nasdaq has 19.5%, and the Cboe (Chicago Board of Exchange) has 18.4% of the equity trading market, according to the Tabb Group. Expectations are that LTSE will be operational later in 2019.
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