It looks like there is an interesting discussion starting around the dearth of venture backed IPOs. This is something that the NVCA tried to get rolling a few years ago, just before the financial markets totally blew up. Read “Recommendations to Restore Liquidity” on the NVCA’s site.
The current discussion was sparked by a WSJ opinion piece.
Here is a good piece by Dan Primack of Fortune – he basically doesn’t think Sarbanes Oxley is the cause of the malaise.
Jeff Bussgang was brought into the fray and is pretty sure that regulation is killing the IPO market.
I’m a little more nuanced. I think SOX is just one piece of the problem. I’m not sure fixing it will suddenly unleash a ton of IPOs. I think it will help, but not a ton. I see a lot of problems that the NVCA identified, mainly around the fact that small companies don’t have enough ibanking options – because ibanks can’t make money taking companies public any more. I’ve heard rumors that this is because there is no $ trading for your clients – supposedly the electronic exchanges kicked the butt of the banks, plus some sort of regulation drove down the commissions that they can charge. IDK, just what I’ve heard. So it seems like it’s hard to get shares in the hands of institutional investors. Plus we are missing all those wonderful retail day traders who drive up the price of everything. And, since many large VC backed, private, companies can use places like SecondMarket to sell shares and get liquidity, why even bother to go public anymore??
Anyways, let’s hope this discussion goes somewhere and doesn’t get interrupted by a major financial crisis like it did last time.
