Case Study: Enabling Secondary Trading for Private Companies
Texture Capital successfully facilitated a secondary trading window for Detroit City Football Club (DCFC) through a customized, client-branded marketplace. This innovative[1] event demonstrates how private companies can provide liquidity to shareholders in a controlled, compliant, and efficient way—setting a model for others to follow.
Background:
A few years after its Regulation Crowdfunding raise, DCFC sought to deliver on its promise of investor liquidity. To achieve this, they partnered with Texture Capital to launch a secondary marketplace on Texture’s SEC-registered Alternative Trading System (ATS). Rather than continuous trading, we designed a scheduled liquidity event—branded as the ‘Transfer Window’ to reflect the club’s soccer culture.
Marketplace:
Texture built a fully branded, investor-friendly marketplace with seamless onboarding and integrated KYC. Over 470 participants registered, many completing the process within minutes. One week before the event, investors could log in, view their holdings (via integration with transfer agent Kore Transfers), and submit buy or sell orders—specifying side, quantity, and limit price.
The Trade:
On the trading day, Texture executed a single call auction using our proprietary algorithm, which maximized matching across participant limit prices. Demand far exceeded supply, with buy orders outnumbering sell orders 8:1. Thanks to the auction format, all eligible shares cleared at one uniform price—ensuring fairness and avoiding the volatility that might have emerged in continuous trading. The resulting execution price exceeded recent private sales, strengthening DCFC’s position for future fundraising.
Key Takeaways for Issuers:
⚽️ Allowing secondary liquidity for investors does not need to be scary for issuers. Working with a regulated intermediary like Texture Capital can provide project management, compliance, and peace of mind for issuers and investors alike.
⚽️ A customized, client branded marketplace, like Texture provides can make it seamless for investors who may be unfamiliar with buying and selling private shares.
⚽️ Issuers can maintain control of the trading process, by scheduling periodic liquidity windows, so that secondary trading doesn’t interfere with other capital raising efforts.
⚽️ Allowing investors the opportunity to sell or buy shares on an ATS like Texture’s can be an important part of the investor relations best practices.
⚽️ In certain scenarios, particularly with less liquid securities, a call auction can be a better model than a continuous lit order book.
⚽️ It’s important to partner with intermediaries like Texture Capital, who integrate directly with transfer agents such as Kore Transfers— who enable efficient post-trade settlement and accurate record-keeping.
If you are interested in learning more about how Texture Capital can help your company enable secondary liquidity for their investors, please reach out to sales@texture.capital.
RISK DISCLOSURES: https://www.texture.capital/risks
[1] Texture Capital is unaware of any other firms offering a client branded interface for secondary trading of securities.
[2] According to DCFC – Texture has not independently verified this information.