Japan's startup and IPO landscape is poised for significant growth following the launch of a new trading platform for unlisted companies. Earlier this month, the Financial Services Agency registered Smartround Securities as a specialist brokerage for secondary market trading of unlisted shares, classifying it as a Type I Financial Instruments Business. This move is part of broader efforts to expand private markets and attract more investment in domestic startups [1].
Historically, investors in Japanese startups had limited options to exit their investments, relying mainly on IPOs or acquisitions. The new platform aims to provide a more efficient mechanism for buying and selling shares, which should facilitate capital flow to growing businesses. Sylvain Thieullent, CEO of Horizon Trading Solutions, emphasized that this development will help companies enter public markets better prepared, ultimately improving the quality of Japan's IPO pipeline [1].
The platform also aligns with global regulatory trends, as seen in the U.S. and U.K., where authorities are reshaping private markets. Jeremy Tan, CEO of Tiger Fund Management, noted that Smartround supports regulators' goals to enhance corporate governance and transparency for unlisted companies. The digitalization of ledgers and corporate records is expected to provide investors with greater oversight and founders with new channels to interact with minority investors. Access to the platform requires founders and senior management to comply with disclosure requirements, further promoting transparency [1].
Despite these advancements, Thieullent cautioned that the challenge remains in creating liquidity and better price discovery for private shares, which do not offer the same transparency as listed stocks [1].
CONCLUSION
The registration of Smartround Securities as a specialist brokerage for unlisted shares marks a pivotal step in Japan's efforts to strengthen its startup ecosystem and IPO pipeline. By improving liquidity, transparency, and investor oversight, the platform is expected to attract more capital and prepare companies for successful public offerings. However, challenges in price discovery and liquidity for private shares persist.