Equity markets can mobilise large amounts of capital from a diverse range of investors to finance long‑term, large‑scale ventures. They also provide the risk‑willing capital necessary to develop nascent technologies. Growth companies often face challenges when funding projects due to limited financial history, lack of collateral and unstable cash flows, which are typically prerequisites for bank loans. To address this funding gap, many jurisdictions have created equity markets for growth companies to ease access to capital. These dedicated equity markets have become a vital source of capital for growth companies, particularly those with significant intangible assets but lacking the collateral typically required for bank financing.
Growth companies, those that have moved beyond the start‑up phase and continue to expand, can play a key role in the economy. While the definitions of “growth markets” and “growth companies” may vary across countries and regions, this report focuses on equity markets that cater to small and medium-sized enterprises (SMEs) and growth-stage companies, which typically have more flexible entry requirements than main markets. Growth companies are defined as those listed on these dedicated markets. The findings of this report draw on a new OECD dataset covering 59 jurisdictions and on the responses to the OECD Survey on Equity Markets for Growth Companies provided by regulators from 30 jurisdictions.
An increasing number of companies are listing on growth markets.
At the end of 2023, more than 16 000 growth companies were listed across 59 jurisdictions worldwide, representing nearly one-third of the 52 000 publicly listed companies. However, their capitalisation represented less than 4% of the capitalisation of main markets. Over half of all growth companies are listed in Asia, and their capitalisation represents 80% of total growth market capitalisation. The dominant industries among listed growth companies are technology, industrials and healthcare, highlighting the innovative and forward-looking nature of these markets.
Between 2019 and 2023, over 4 000 initial public offering (IPOs) were launched on growth markets worldwide. In more than half of the jurisdictions analysed, the number of IPOs on growth markets was more than three times higher than on main markets. Nevertheless, the total capital raised by growth companies (USD 313 billion) was a third of the capital raised by companies on main markets (USD 965 billion).
Growth markets offer more flexible listing and disclosure requirements.
Growth markets typically adopt more simplified requirements compared to main markets. While offering documents, audited financial statements and regulatory or exchange approval are always required, flexibility is allowed on minimum capital, financial performance and free float. Minimum revenue or profitability criteria are rarely mandatory and 22 jurisdictions permit a simplified prospectus or waived it under certain conditions. Requirements for follow-on offerings are also lighter, though the purpose of the offering and use of proceeds remain mandatory in 25 jurisdictions. Approval is required in 26 jurisdictions, usually from regulators or exchanges, and sometimes from shareholders if thresholds are exceeded.
Most stock exchanges also apply lower fees on growth markets than on main markets. However, smaller IPOs often face higher fees relative to the capital raised due to fixed costs. Some jurisdictions offer financial incentives, tax breaks or public support to ease this burden.
Flexible and proportionate corporate governance requirements are often applied to listed growth companies.
Reducing regulatory burdens allows growth companies to participate in public equity markets more effectively. In 22 jurisdictions, corporate governance requirements are more lenient for growth companies, either based on the listing venue or company size. This applies in particular to board independence and the establishment of audit committees. While board independence remains an important safeguard, seven jurisdictions apply it less stringently to growth companies. Similarly, only 17 jurisdictions require growth market companies to establish an audit committee, compared to 24 jurisdictions on main markets.
Growth markets in 19 jurisdictions allow simplified financial reporting. This includes lower frequency of disclosure, reduced reporting content, and the choice to use either local accounting standards or international frameworks.
Growth markets provide support for companies throughout the listing journey.
Growth companies are often required to appoint advisers, who play a critical role in facilitating access to public equity markets. Advisers, typically financial intermediaries, provide due diligence, ensure regulatory compliance and guide companies through the IPO process. They also offer an additional layer of oversight while preserving the flexibility of growth market listings. Nineteen jurisdictions mandate the use of advisers for growth markets, with 13 requiring their continued involvement throughout the listing period.
As companies mature, stock exchanges and regulators can support their transition to main markets. To facilitate the transfer from growth to main markets, 18 jurisdictions offer companies incentives, such as specific frameworks, exemption of prospectus or simplified prospectus requirements, reduced listing fees, as well as exemptions from additional regulatory approvals.
Low liquidity is a defining characteristic of equity growth markets.
Equity growth markets are characterised by low liquidity, largely because founders and key investors retain significant stakes in the company and because growth companies fall outside investors’ research coverage. In nearly half of the jurisdictions, research on growth companies is limited or costly for investors to obtain. Five jurisdictions support or provide subsidies to enhance research coverage of growth companies. These may include subsidies to brokers or research firms, or initiatives by stock exchanges offering free or subsidised research. In addition, 13 jurisdictions have implemented market maker regimes to support the liquidity of growth company stocks.
Ownership is another factor: over one-fourth of growth companies’ listed equity is owned by strategic individuals, compared to just 7% in main market companies. Other corporations account for around 17%, often as part of their innovation strategies. Institutional investors, by contrast, hold just 18% of growth market equity, compared with 46% on main markets. Their lower participation reflects the small size of growth companies, which often excludes them from major indices. Regulatory and/or supervisory limits, as well as the small size of growth companies, sometimes restrict insurance companies’ and pension funds’ investment in these companies. Half of the jurisdictions provide support to growth companies through dedicated government‑led funds.
A comprehensive policy approach is key to ensuring the long-term success of growth markets, balancing regulation and investor protection.
While growth markets are expanding globally, challenges remain. Improving corporate governance standards, ensuring appropriate incentives to transition from growth to main markets, increasing secondary market liquidity, and expanding the investor base are critical for making growth markets more attractive to both issuers and investors. Addressing these challenges will require comprehensive policy approaches, including regulatory adaptations, financial incentives and enhanced market‑making mechanisms. These measures are essential to support the dynamism and resilience of growth markets.