Market maker Virtu Financial Inc. is the latest backer of ClearList, a digital-trading venture that links investors to private companies before they go public.
Virtu’s stake will help the trading platform expand as it brings its knowledge of public equities to the private market, ClearList Chief Executive Officer Bill White said in an interview. White’s firm, which was created last year, gives wealthy clients and large investors access to new types investments in the capital markets, including primary offerings and secondary trading for private companies.
The investment brings two of the largest electronic equity market-makers together, Virtu and GTS, a global trading firm that has a big presence in public stock listings. GTS started ClearList with backing from hedge fund titan Paul Tudor Jones’s investment firm. Other existing backers include David Williams, founder of Williams Trading.
“I’ve seen a lot of good companies fail because they weren’t able to access the markets efficiently,” White said. “Having partners like GTS and Virtu, liquidity providers who contribute to the evolution of the market,” will give ClearList an edge in helping to solve that problem, he said.
Initial public offerings took a hit during the coronavirus pandemic, while at the same time companies have been waiting longer to go public. Some cited Covid-19 as evidence of the need for greater liquidity in markets after firms and investors found it harder to sell shares.
ClearList’s offerings “will help bring an improved level of liquidity, transparency and efficiency to the private markets,” said Doug Cifu, Virtu’s CEO. “We are very impressed with the technology and trading expertise ClearList brings.”
ClearList focuses on so-called accredited investors who have the ability to buy into riskier deals, one way companies at early stages of development can access capital to expand ahead of a potential public offering.
Having two market makers in the private space ready to facilitate market transactions through ClearList “is great news for private companies,” said Ari Rubenstein, co-founder and CEO of GTS. “If you bring technology to help modernize the private markets, it yields tremendous gains.”
PRIVATE PLACEMENT DISCLOSURE:
ClearList warns that investments in private, unregistered securities involves a high level of risk and may not be suitable for all investors. An investment in private company securities is highly speculative and should only be considered a long-term investment. Before deciding to invest, you should carefully consider your investment objectives, level of experience and risk appetite. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities, including on the ClearList LLC Alternative Trading System. There is also no guarantee that any private placement will be publicly listed through a direct listing or Initial Public Offering. You should be aware that each investment also carries its own specific risks and that you should complete your own independent due diligence regarding the investment including obtaining additional information, opinions, financial projections, and legal or other investment advice.