Most companies seek to list on the stock exchange to raise a large amount of funds and attain high valuations. However, many of these companies are not able to meet the stringent stock exchange listing criteria’s such as minimum company size, proven track record as well as minimum shareholders spread.

 

On the other hand, Private Equity Investors often give low valuations to companies who seek them for funding in order to attain a higher return. They also typically have strong control over the company’s management decisions.

 

OTC fills this funding gap, as it creates a bridge for companies to gain access to the pre-qualified public investors’ funds. It does this by creating a market making platform whereby pre-qualified investors are able to trade the shares of OTC quoted companies.