Last year, roughly 135 companies went public in the U.S., less than half as many as 20 years earlier.Thanks to an abundance of private capital, innovative and disruptive companies — the Amazons of tomorrow — can amass all the funding they need in their formative years without selling shares to the public.That may work for investors who can invest in private equity, venture capital and other so-called alternative investments. But it’s a different story for most Americans.Private investments by law are off-limits to people who lack substantial wealth to start with. Which means most Americans cannot invest in startups that make up the highest-growth parts of our economy.“It used to be that growth in the economy was financed by the retirement savings of ordinary people,” Eric Ries, founder and a director of the Long-Term Stock Exchange, told Vox in June. “Now we’ve switched to a model when the growth is being funded by oligarchs.”The missed opportunity matters. For more than half (51%) of private-sector workers in the U.S., a 401(k) plan is the only pension their employer offers. On average, more than two-thirds of assets held in such plans are invested in stocks. The inability to participate in the growth that companies generate can translate to less income in retirement.
The Long-Term Stock Exchange aims to change that. It’s the only U.S. stock exchange designed primarily to support companies and investors with long-term horizons. To create a climate that supports building businesses and having a positive impact on stakeholders and society over years and decades.For example, as part of listing on the exchange, issuers will be required to develop and publish policies on long-term value creation, consistent with the following principles:
Long term-focused companies should consider a broad group of stakeholders and the critical role they play in one another’s success
Long term-focused companies should measure success in years and decades and prioritize long-term decision-making
Long term-focused companies should align the compensation of executives and directors with long-term performance
Directors of long term-focused companies should be engaged in and have explicit oversight of long-term strategy; and
Long-term focused companies should engage with their long-term shareholders.
The principles — and the policies that companies would put forward based on them — reflect what a new generation of companies and similarly aligned investors know: That the fortunes of shareholders depend over the long run on the well-being of customers, employees and communities.Twenty-two years ago this past May, Amazon went public, three years after its founding. Had you invested $1,000 in the IPO and held your shares this whole time, your investment would now be worth roughly $1.2 million.We marvel at how Amazon remade retail. But consider, too, how investing in Amazon has turbocharged people’s 401(k) accounts in the two decades since it went public.For too many IPOs, public markets have become, as Sviatoslav Rosov, director of capital markets policy at the CFA Institute puts it, “dumping grounds for mature companies rather than the engine of economic growth as in the past.”The Long-Term Stock Exchange aims to be a catalyst for a new generation of companies to go public on a time line that gives everyone the chance to invest in them. That way, both Wall Street and Main Street can benefit from the growth these companies hold the potential to create.
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