What is a Marketplace?
A community of innovators who come together to help individual entrepreneurs or entrepreneurial teams advance their business idea. Their help typically takes the form of assistance with seeking funding and mentor expertise appropriate to the idea. These marketplaces typically take an equity interest in a startup admitted to the community in exchange for access to funding, team building and mentoring. The community may be a closed marketplace such as a YCombinator where the group is tightly connected to each other and typically do business within the closed circle. Or, it may be an open marketplace such as 500 Startup where startups admitted to the marketplace have a broader range of options in fund seeking, team building and mentoring help. Co-working spaces, such WeWork, are not considered marketplaces.
Why would a marketplace want to become a TANRC licensed Marketplace?
Marketplaces that are part of TANRC will be able to help their community members avoid the problems that our current Wild, Wild, West paradigm has created. The number of marketplaces helping entrepreneurs has grown significantly but the number of deals being made is shrinking. More marketplaces are competing for fewer deals.
For the last several years, the level of investment made as seed capital has decreased significantly because of rising levels of fraud by start-up ecosystem participants, inflated valuations, and fears of poor returns. Investors are leery of investing in start-up firms outside their circle, as doing so leaves them investing “blind” without knowing enough about the founding team’s track record, accountability, or trustworthiness. This leaves many entrepreneurs under-capitalized. This needs to change! A licensed marketplace will assure the ecosystem that participants in their marketplace will abide by standards and processes set by TANRC’s member community and overseen by TANRC.
As FINRA does for the publicly traded firms, TANRC is uniquely positioned to help the privately funded firms. In joining TANRC and promising to abide by community set processes and standards, you will be engaging with individuals and firms that have made the same promise. The investor money, the talented entrepreneurs who need your specialized help and a network to help launch the start-up when ready will be more accessible than they are now. Let’s all join together to build a better way!
What are the steps to becoming a TANRC licensed Marketplace?
First, the individual community members join TANRC and pledge to adhere to community set standards and processes.
Second, once the majority of individual community members have joined TANRC as either accredited or endorsed members, the marketplace applies to be recognized as a TANRC licensed marketplace. In doing so, they are acknowledging that they will oversee their marketplace and ensure that TANRC standards and processes are followed. Once licensed, they must require remaining members who have not become Accredited or Endorsed members of TANRC’s system to do so within reasonable a timeframe.