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According to the FT it is simply part of a greater trend. "This is a sign of US strength, not weakness. In many countries going public may be the only way to r

According to the FT it is simply part of a greater trend. "This is a sign of US strength, not weakness. In many countries going public may be the only way to raise permanent capital, and banks the only way to finance investments, but the US has a sprawling venture capital industry, deal-hungry private equity firms, relatively healthy banks, a private placement market that is the envy of many other countries, and the most vibrant corporate bond market on the planet." http://www.ft.com/intl/cms/s/0/534b5560-f7d1-11e5-96db-fc683b5e52db.html http://www.ft.com/intl/cms/s/0/534b5560-f7d1-11e5-96db-fc683... https://www.google.com/search?q=IPO+market+decrepit+as+going+public+loses+its+allure https://www.google.com/search?q=IPO+market+decrepit+as+going...

tremon 11y ago
Not sure if I'd classify that as a strength though. All it indicates is that there's a lot of wealth concentration.
- fragsworth 11y ago
  Agreed. The idea that it is a strength smells a lot like trickle-down economics.
  - nickoakland 11y ago
    FT writers are such free market fundamentalists they make WSJ writers look like Bernie Sanders supporters.
    - justincormack 11y ago
      That's really not true. The FT is pretty varied but there is a lot of market criticism.
- oldmanjay 11y ago
  Wealth is tremendously concentrated into just a few countries, yes. Those countries consider that concentration a strength, because it allows them to do things that countries with a lower concentration of wealth cannot even contemplate. By what definition can it be considered a weakness?
  - ethanbond 11y ago
    I think parent comment means the concentration of wealth to certain people within a country relative to others within that same country. That is, already-wealthy VCs are still seizing lucrative opportunities on private markets (as pointed out). It's just the public that isn't able to participate because companies aren't going public.
    - sharkweek 11y ago
      Not trying to say VCs are holy, but... they are investing, in large portion, the public's money, just in the private marketplace. Pension funds, insurance, family offices, etc., are all active in venture, and that's all "our money" as well.
    - oldmanjay 11y ago
      That may well be true but I was charitably assuming the poster was trying to be on-topic.
rwj 11y ago
Depends. If they are holding back from IPOs because they don't believe they can match their private valuations, that would be a sign of weakness.
- muzz 11y ago
  Or a bubble in private markets. There are plenty of "unicorn" private companies which would be worth far less in public markets
JBReefer 11y ago
But IPOs allow the public to enjoy the proceeds from corporate profits, whereas privately held companies do not. Publicly traded companies are one of the most important pro-egalitarian components of Capitalism.
- WalterSear 11y ago
  >Publicly traded companies are one of the most important pro-egalitarian components of Capitalism. Capitalism eventually buys the market. There has never been a different outcome.
- st3v3r 11y ago
  At the same time, going public is usually one of the worst things a company can do for itself. With few exceptions, instead of being ok with mild profits, shareholders demand extreme amounts of profit and growth, and will bitch and moan and threaten to takeover if that doesn't happen.
  - checker 11y ago
    True, but why don't more tech companies follow Amazon's lead of tempering shareholder expectations? Is Amazon somehow unique in being able to do this?
    - huac 11y ago
      Amazon is in great financial position, but they reinvest all net revenue. So I guess they don't qualify as constant profit (now) but they count as growth, with eventual high profit
    - st3v3r 11y ago
      Kind of, because they're still making buttloads of money. I also don't know offhand what percentage of stock Bezos and Co own. Google is able to get away with a lot of this because 1). They still make buttloads of money, and 2). Larry and Sergei own the majority of stock (at least I'm pretty sure they do).
gozur88 11y ago
A strength or an indication of historically low interest rates? The money to pay off the VC's can be borrowed very cheaply, if not by the company itself then by other investors with an interest in a longer-term investment. Beyond that, the reason private equity firms are so "deal-hungry" is low interest rates put a damper on returns from all sources.

tremon 11y ago

Not sure if I'd classify that as a strength though. All it indicates is that there's a lot of wealth concentration.

fragsworth 11y ago
Agreed. The idea that it is a strength smells a lot like trickle-down economics.
- nickoakland 11y ago
  FT writers are such free market fundamentalists they make WSJ writers look like Bernie Sanders supporters.
  - justincormack 11y ago
    That's really not true. The FT is pretty varied but there is a lot of market criticism.
oldmanjay 11y ago
Wealth is tremendously concentrated into just a few countries, yes. Those countries consider that concentration a strength, because it allows them to do things that countries with a lower concentration of wealth cannot even contemplate. By what definition can it be considered a weakness?
- ethanbond 11y ago
  I think parent comment means the concentration of wealth to certain people within a country relative to others within that same country. That is, already-wealthy VCs are still seizing lucrative opportunities on private markets (as pointed out). It's just the public that isn't able to participate because companies aren't going public.
  - sharkweek 11y ago
    Not trying to say VCs are holy, but... they are investing, in large portion, the public's money, just in the private marketplace. Pension funds, insurance, family offices, etc., are all active in venture, and that's all "our money" as well.
  - oldmanjay 11y ago
    That may well be true but I was charitably assuming the poster was trying to be on-topic.

rwj 11y ago

Depends. If they are holding back from IPOs because they don't believe they can match their private valuations, that would be a sign of weakness.

muzz 11y ago
Or a bubble in private markets. There are plenty of "unicorn" private companies which would be worth far less in public markets

JBReefer 11y ago

But IPOs allow the public to enjoy the proceeds from corporate profits, whereas privately held companies do not. Publicly traded companies are one of the most important pro-egalitarian components of Capitalism.

WalterSear 11y ago
>Publicly traded companies are one of the most important pro-egalitarian components of Capitalism. Capitalism eventually buys the market. There has never been a different outcome.
st3v3r 11y ago
At the same time, going public is usually one of the worst things a company can do for itself. With few exceptions, instead of being ok with mild profits, shareholders demand extreme amounts of profit and growth, and will bitch and moan and threaten to takeover if that doesn't happen.
- checker 11y ago
  True, but why don't more tech companies follow Amazon's lead of tempering shareholder expectations? Is Amazon somehow unique in being able to do this?
  - huac 11y ago
    Amazon is in great financial position, but they reinvest all net revenue. So I guess they don't qualify as constant profit (now) but they count as growth, with eventual high profit
  - st3v3r 11y ago
    Kind of, because they're still making buttloads of money. I also don't know offhand what percentage of stock Bezos and Co own. Google is able to get away with a lot of this because 1). They still make buttloads of money, and 2). Larry and Sergei own the majority of stock (at least I'm pretty sure they do).

gozur88 11y ago

A strength or an indication of historically low interest rates? The money to pay off the VC's can be borrowed very cheaply, if not by the company itself then by other investors with an interest in a longer-term investment. Beyond that, the reason private equity firms are so "deal-hungry" is low interest rates put a damper on returns from all sources.