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Two things: 1: The article is cherry-picking for a headline. In 1980, there were 71 IPOs [1]. In 1990, there were 110. In 1996, the year that this article poin
by 11thEarlOfMar 8y ago
Two things:
1: The article is cherry-picking for a headline. In 1980, there were 71 IPOs [1]. In 1990, there were 110. In 1996, the year that this article points to, there were 677, the highest number since 1980. This was the center of the ".COM" bubble when many if not most companies had no business going public. To put a finer point on it, From 1981-1990, there were 2,153 IPOs. From 1991-2000, there were 4,361.
2: It was the backlash of A. 'shit equity' that was produced in the .com bubble, B. two recessions, and C.common sense, that led to fewer and fewer IPOs since 2000. Just consider YC itself. How many $100+ Million companies are in it's portfolio (25?)? How many are public (a: 1)? In the 2001-2010 decade, due to a., b., c., there were 1009 IPOs. Since 2011, 726.
The low number of public companies is due to market dynamics and the sentiments of founders that have ensued since the .COM bubble. Author cherry picked the peak IPO year.
[1] https://site.warrington.ufl.edu/ritter/files/2017/03/IPOs2016Statistics_Mar29_2017.pdf https://site.warrington.ufl.edu/ritter/files/2017/03/IPOs201...
- mcguire 8y agoSo, the number of IPOs between 2001-2010 was less than half that of 1981-1990?
- 11thEarlOfMar 8y agoYes, due to the .COM bubble bursting (2001-2003) and the sub-prime mortgage crisis (2008-2009). Take a look at page 3 in [1].
- ummonk 8y agoAnd it's on track to be half of the 1981-1990 number again in 2011-2020?
- 11thEarlOfMar 8y agoYes. Reason being that companies are waiting much longer to IPO. Take a look at Table 12b on page 34 [1]. In the 1980s, the average number of companies that offered an IPO with sales >$1BB was under 5%. In the 2010s, it averages about 15%. (in 2005 $) Still contending that this move towards quality is the legacy of .COM mania and the ensuing Sarbanes-Oxley burden.
- mirimir 8y agoAre you arguing that .com companies came to comprise a substantial share of the stock market? I'm not disagreeing. Just surprised.
- 11thEarlOfMar 8y agoYes, in the same report, page 27, in 1999, 78% of IPOs were tech companies (that was the peak year for .COM IPOs).
- mirimir 8y agoI don't mean just IPOs. From the article: > When I say “shrinking,” I’m using a specific definition: the reduction in the number of publicly traded companies on exchanges in the United States. In the mid-1990s, there were more than 8,000 of them. By 2016, there were only 3,627, according to data from the Center for Research in Security Prices at the University of Chicago Booth School of Business. So how many of those ~4400 publicly traded companies that disappeared between the mid-1990s and 2016 were .com IPOs?
- 11thEarlOfMar 8y agoI couldn't find an accounting, but here are a few names from a 1999 Wired article[2]. The only one I recognize is Priceline: - iTurf TURF* - Autobytel ABTL* - Extreme Networks EXTR - iVillage IVIL* - Priceline PCLN - Vignette VIGN* - Web Trends WEBT* - Healtheon HLTH* - VerticalNet VERT* * No longer trading [2] https://www.wired.com/1999/04/hot-ipos-are-flaming-out/ https://www.wired.com/1999/04/hot-ipos-are-flaming-out/