Somewhat- allow us to explain.
Round One and stock exchanges are similar in an essential way- Round One and the stock market's Initial Public Offering (IPO) process provides venues and mechanisms for companies to publicly offer securities in exchange for investor funds. Hence the word "public" in IPO. Securities issued via IPO are offered through a registered securities brokerage or other authorized dealers, they aggregate investor funds to remit to the listed company and record beneficial ownership in favor of your investor account.
But here, the similarities with regulated equity crowdfunding distinctly end.
Securities issued via IPO are always listed on a stock exchange for trading between investors. When you buy shares on a stock exchange, you're not buying them directly from the company anymore- you're only taking them off another shareholder's hands.
Which brings us to the first major difference:
No Ready Market 🚫📈
Crowdfunding securities or 'shares' issued on the Round One platform don't have a ready market for selling or trading. You won't be able to sell or 'trade' your crowdfunding shares in real time, through an online broker- as easily as a share of a listed company like Ayala Corp. (AC) on the country's stock exchange (the PSE). This is one of the most important differences- sale of your ownership stake in a crowdfunded security would likely have to be done on a private basis.
Listed Companies "Blue Chips" 💎
It's not about the size of the dog in the fight, it's about the size of the fight in the dog🐕🐩! Some listed companies have been around for decades, San Miguel Corp (SMC) traces its foundations to the 1890s and has a market capitalization of Php 225 billion (as of date)! Crowdfunding issuers tend to be on the... trimmer more youthful side. Early stage companies and SMEs will not have the track record of some exchange listed companies, but every company deserves an opportunity to go for an equity fundraise.
Size & Scale 🔎
The last few Philippine Stock Exchange (PSE) IPOs have ranged in the billions of pesos. The stock exchange is where the country's biggest companies list and has been open to the general investing public for a long time now. On one hand we here at Round One like things a little more bite sized. Php 50 million is the maximum, annual fundraising amount for any company looking to crowdfund. We're helping startup, early stage and SMEs to get their shot at equity fundraising, which is more focused in scope and appeal to certain investors.
There are big differences in the amount of preparation, submission of information and financial data a company that wants to list on an exchange has to manage. For a crowdfunding platform, requirements are lessened in proportion relative to a fundraiser's offering size, company size and busines stage. Similarly, the registration and listing process are somewhat simpler and faster.
✋RISK WARNINGS ✋
Crowdfunded investments are alternative investments and are thus generally considered high risk and speculative in nature. You are likely not to recieve dividends or regular income from such investments. There is a substantial chance that you may lose the entirety of your investment. Fundraiser and campaigns listed or eligible for listing on the Round One platform are not endorsements by Round One regarding investability and may not be construed as financial advice. We caution you to speak to your financial advisor on how to best allocate your portfolio based on your needs and objectives.
For additional information, check out our Risk Warnings.