The Tel Aviv Stock Exchange (TASE) and NASDAQ, the world’s second-largest stock exchange, announced a joint venture on Tuesday to build a private market for Israeli startup companies before they go public.
The venture, which will be based in Tel Aviv, will be run by management selected by both exchanges. It will provide Israeli startups with strategic counseling and mentoring, exclusive networking, and a private, secondary market for financing, in an effort to help small Israeli companies get the support they need to face the challenges of building a business in Israel’s difficult market.
TASE CEO Yossi Beinart said in a statement that “the cooperation with Nasdaq is great news for the Tel Aviv Stock Exchange and the Israeli economy,” adding, “For the first time we can offer Israeli companies a real solution to challenges in their growth and give them a real alternative to an exit, so that they will continue to operate as independent companies with significant operations in Israel.”
Israel’s famous startup industry, while enjoying explosive growth, faces serious challenges, the largest of which is a lack of infrastructure in which to nurture new companies. An additional problem is a lack of funding options to help businesses grow from startups into full-fledged operations.
Beinart said that one of two things happens to young Israeli companies: either they get sold early because they don’t have capital to grow, or they find a market outside of the country. “And this is where we come in,” he explained.
“It’s very possible [companies are] being sold too early because they can’t do the natural thing of growing up themselves, and this is who I’m trying to cater to,” Beinart told the Jerusalem Post.
For those companies, the NASDAQ-TASE venture will provide an environment in which to mature before going public.
TASE’s chief risk officer, Gal Landau-Yaari, said that the new exchange will connect Israeli companies to foreign investors who will have unique access to private shares, debt, and secondary offerings.
In addition to building the joint venture with NASDAQ, TASE will begin using NASDAQ’s technology platform for trading stock, derivative, bond, fixed-income and commodities. The technology already operates in over 100 markets worldwide.
Using the Genium INET platform, NASDAQ vice chairman Sandy Frucher said, will give TASE “limitless opportunity to expand their product and business offerings to the domestic and international markets.”