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The lifeblood of any business is capital. But for companies in need of it, the challenges of finding a suitable model that caters to their unique strategy may seem overwhelming at times. This is especially the case for smaller companies working with limited resources—whether it’s a fledgling startup looking to go public or a small-cap business looking to raise cash. The need to raise the company’s profile, as well as capital to fund growth, is essential. However, once the company finds it, the advantages are plentiful. TMX Group Inc. (TSX: X) understands the obstacles that these companies have to face. As the parent company of the Toronto Stock Exchange and the TSX Venture Exchange, TMX Group has made it a priority in seeing that its issuers get the attention they need to succeed.

While the multibillion-dollar giants can throw their weight around to survive, and thrive, it’s the undersized companies that often get overlooked, especially during an economic climate such as this one. The significance of something seemingly as small as getting through on a phone call could be the difference between failure and success of a business.

This could be why TMX Group’s strategy on providing full-service and customizable features for its issuers has attracted more and more companies, including many from the United States that are dissatisfied with the options at home. The majority of the companies trading on the TSX have a market cap of less than $1 billion, indicating that the exchange has an expertise in helping companies in this area.

“We view our listings business as a value-added business,” says Tom Kloet, CEO of TMX Group. “If you compare it to some other aspects of the business that become commoditized over time, this is clearly a value-added part of our business. Our service level, the attentiveness to details, the willingness to work with a listed company and help them through their transaction, while maintaining the appropriate regulatory environment, I think is an attribute that we have through the whole team.”

Though the idea of listing in a foreign exchange outside the United States may seem more complex at first, Kloet says that there actually are many similarities that help companies become accustomed to the subtle nuances, and in some cases advantages, to going public on the TSX or Venture Exchange. One obvious advantage is the close proximity between Canada and the United States from a geographical standpoint. In addition, the time zones for trading are parallel between the two countries.

“The presence of domestic banks and brokerage firms in Canada, as well as a number of the bulge-bracket U.S. investment banks in Canada, also helps to give us some advantages,” Kloet says. “But beyond that, we offer an outstanding distribution of our trading products to traders across all spectrums so that there’s good velocity with respect to the stocks that we list. We have a proportionate regulatory regime where we recognize that one model doesn’t fit everything and that the venture company needs and can flourish in a different—not better, not worse, not tougher, not easier—but a different regulatory structure than perhaps a fully mature company, and we recognize that, as well.”

However, there are differences between listing on a U.S. exchange versus going to the TSX or Venture Exchange. It is important for companies to recognize these distinctions to figure out what works best for them.

“They have to think about what they want their shareholder base to look like, because we’re not suggesting we’re the perfect model for everybody,” Kloet says. “If you want a retail U.S. shareholder base, you have to think about the implication of that relative to listing on our exchange. The other thing I would advise companies to think about is how it profiles their company because different companies have different reasons for listings and part of it is profiling the company. And they have to consider the tax ramifications of a transaction that results in a listing on our institution, as well. But overall, I think the package we offer is very interesting for a broad group of companies who want to look at the public markets as a way to access capital.”

There is a misnomer, however, that the companies listing on the Toronto exchanges are only focused in the energy and mining industries. That isn’t the case. While the TSX and Venture Exchange are leaders in those sectors, they also cater to a broader market in other arenas.

One example of this is the success that Fluid Music Canada Inc. (TSX: FMN) has experienced through listing on the exchange. The California-based company licenses private-label music for distribution in background music and messaging over the Internet.

Lorne Abony, CEO of Fluid Music, describes the company as the YouTube of music, and he believes it is the next generation of the $8.5 billion market of specialty music. The company went public through an initial public offering on the TSX in June 2008, raising $27 million. Its current market cap is currently $85 million.

“Being listed on the TSX is almost the perfect balance of some of the things that you need to be a successful public company,” Abony says. “You have significant access to capital markets, strong regulatory oversight and investor protection without the onerous conditions that exist in certain jurisdictions. There are some foreign exchanges that don’t have appropriate regulation or legislation. I don’t think that helps the company because ultimately it trickles down to the investing public who doesn’t have confidence in the listed company. So unless there’s that strong level of oversight and a strong regulatory framework, then it’s not a proper venue for a company. On the other end of the continuum, too much oversight is also not proper. So, I believe the TSX strikes the appropriate balance.”

Abony should know. Prior to Fluid Music, he became the youngest CEO in TSX history when Fun Technologies Inc., which he co-founded, listed on the exchange in 2004. Fun Technologies was sold in 2006 to Liberty Media Corp. in a deal valued close to $500 million. In addition to the TSX, Abony has had experience running companies listed on the London Stock Exchange and NASDAQ.

“Having worked with the TSX before, I cannot emphasize enough how helpful, educational and supportive they are,” Abony says. “They’re very consistent in working with you. They’re not an adversary. There are other exchanges that are basically advanced businesses. So you pay your listing fees and then they don’t really care about you. Of course, the TSX charges listing fees and transaction fees, but they don’t really discriminate against smaller companies. We’ve been a small company and a large company on the TSX and have been treated identically and treated extremely well. It’s a great market for young companies to list.”

And given that Canada’s economy was able to avoid most of the financial crisis fallout, the market is in better condition than most, providing a more receptive investor environment for smaller companies. In addition, the investing culture in Canada isn’t as affected by hedge funds and shorting that has weakened the U.S. market. Abony notes that Canadian investors tend to take a more long-term approach.

“It’s easier to list in Toronto,” he says. “They’re more accommodative to a potential issuer. They’re not about problems; they’re about solutions. So they’re much more solution focused. I wish more Americans knew that the Toronto Stock Exchange existed.”

While the TSX has been a specialist in the small- and mid-cap market, the TSX Venture Exchange does the same for small- and micro-cap companies. The majority of the companies listed on the Venture Exchange have market caps less than $5 million, with a sizeable portion less than $1 million. For these emerging companies looking to go public, there are several vehicles that they can choose from. In addition to a traditional IPO or reverse takeover, the TSX Capital Pool Company program is another unique listing method that companies can choose.

Douglas Samuelson, executive vice president and general counsel for Acro Energy Technologies Corp. (TSX: ART.V), says that his company was most comfortable with the advantages that the Venture Exchange provided for Acro Energy and its shareholders. The Texas-based company is a solar energy integrator that designs, builds and installs solar energy systems that convert sunlight into electricity.

The company was formerly known as Lonestar Capital Corp. until it closed its CPC acquisition of Acro Electric Inc. in February 2009.

“Our founder and CEO, Harry Fleming, and I were involved with an IPO that was done on the Toronto Stock Exchange in May 2007, so we had a familiarity with the Toronto Exchange and felt comfortable with doing a cross-border transaction,” Samuelson says. “We’ve looked at the CPC process and saw that it is an opportunity to get a clean, publicly traded shell company to do an acquisition. We thought that the Venture Exchange offered us a national listing on an exchange that we felt comfortable with. The reporting and disclosure requirements on the Venture Exchange—both as a Capital Pool Company and as a just plain, vanilla-listed company—were strong enough to protect our shareholders and the investing public, but also they weren’t overboard. It’s a good balance of reporting and disclosure requirements, and that’s generally the factors we use to look at going up on the Venture Exchange.”

Though Venture Exchange companies may be smaller in market cap, they’re still treated with the same priority as their TSX cousins. In fact, in many cases, the young emerging companies are the ones that need more attention than the matured businesses on the TSX. To accommodate those needs, the Venture Exchange provides services that help new companies and raw executives understand what exactly is required from them as a public company.

“A lot of the companies that are on the Venture Exchange don’t have a general counsel like we do,” Samuelson says. “They don’t have millions of dollars to spend on accountants and lawyers to do these things for them. If you have the opportunity to work with the exchange, they will educate you through their seminars and their workshops, and provide you with educational materials. I’ve got binders of information from them and leading experts on how to fulfill your corporate responsibilities, and you have people at the exchange that will answer your phone calls and talk with you about issues. I think it’s invaluable to small companies that are just going public.”

It’s services like these that add value to companies listing on the TSX and Venture Exchange. Kloet says that TMX Group intends to continue building out these services. “We have an investor-relations company that will help new startup companies and companies all across the spectrum with how to run a listed company in the public markets,” Kloet says. “Those kinds of services are really beneficial for our listed companies, and it’s an area that I would expect to see grow.”

As for its own growth, TMX Group is having a very strong year, which is even more remarkable when considering the struggles that its competitors have to face because of the downturn. As of September 2009, Kloet says that TMX Group has already seen its total financing activity surpass that of 2008, which is a sign that its exchanges are in good health. In addition, TMX Group is looking to expand its equity derivatives business, which could be a major benefit to its listed companies.

“The penetration of equity options in Canada is not as extensive as it is in the U.S.,” Kloet says. “That’s good for the listed companies because, to the extent that we grow that options business, it reduces the cost of raising capital; it reduces the friction cost with respect to the trading of their stocks.”

Yet, for all the tools that the TSX and Venture Exchange provide for companies, many in the United States remain unaware of the resources that could be available to them. By educating themselves of the potential of the Canadian market, companies and investors alike will find a treasure trove of opportunity that they perhaps didn’t know existed.

“We are a broad-based capital market with a comprehensive suite of products in the equities world and the capital-raising world, in the fixed income world and in the derivatives world,” Kloet says. “For investors and companies alike, I would continue to look at Canada as being a very interesting place to invest given the relative success we’ve had through the financial crisis, the strong financial position of the country and the resource-based economy.”