From the moment they invest, investors are looking for an exit point when they can transfer their investment, releasing funds to be recycled to new ventures. Growth stock markets can provide them with this exit route. These markets offer listing opportunities with simplified requirements for firms that cannot or do not want to be listed on the main stock markets. Listing provides these firms with access to a potentially wider equity-investor base.
Unfortunately, the European alternative equity markets are relatively weak. Easier EU-wide access to growth stock markets is needed in order for firms to be able to become listed easily and for stocks to be readily accessible to qualified investors from around the EU. Easier access to financing through stock markets could provide opportunities for the flotation of firms seeking to broaden their capital base on competitive terms. Initial public offerings of stock provide a natural exit route for venture capital investors and give valuation guidance for sales to other companies.
Without flexible exit markets for venture capital, ideally surrounded by relevant advisory services, venture capital funds will face difficulties. This weakness strangles the growth of key SMEs.