Alpha, Canada's newest stock exchange, wants to become the home to the country's technology sector.
A Deloitte Inc. study commissioned by Alpha found what most observers of the tech sector in this country already know: that the tech industry is stunted. Tech as a percentage of GDP is below the G-20 average and forecast to fall behind Mexico and Saudi Arabia in a few years, the report found.
There's not enough funding, the report argues, which forces companies to sell to early even if they are succeeding, or they are forced to go public before they are ready to try to find capital.
The report, which included interviews with 22 tech sector leaders, laid out a five-point agenda for fixing the problem. The proposed solutions include more support for crowdfunding, establishing a pre-initial public offering "grey" market in tech securities and creating an exchange that focuses on tech. Alpha wants to be that exchange.
"With sufficient funding, firms should be able to take a longer view and develop larger firms here in Canada, avoiding the trap of early exits where all too often our intellectual property leaves the country," the report finds.
Becoming a hub for tech might help Alpha fulfill its ambitions as a full-fledged exchange.
Alpha was launched as a trading system a number of years ago, and just graduated to become an exchange that can list companies, but to do so it will have to lure listings away from the dominant Toronto Stock Exchange and TSX Venture Exchange. Focusing on tech, which certainly needs the help, appears to be a page from the playbook of Nasdaq. The U.S. exchange used tech listings to become a real player against the dominant New York Stock Exchange.
Of course, it's not clear that Alpha will be around to make this happen. The Maple Group consortium of investors wants to buy the exchange and merge it with TMX Group Inc. Whether Alpha will continue as a separate platform in Maple is unclear.
That said, the deal isn't done, so Alpha must plan as if it is going to continue independently in case the transaction doesn't happen.