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But what exactly is good about a large number of IPOs? It will change how companies are funded, but why do you assume things will be worse? It seems to me that

by glesica 14y ago

But what exactly is good about a large number of IPOs? It will change how companies are funded, but why do you assume things will be worse? It seems to me that a somewhat more thoughtful system of investing might be a good thing. In some sense, taking a company public is cheating because public markets are easy to manipulate, just look at the Facebook IPO (note, I'm not saying Facebook broke the law, just that they built up hype in a way that would not have been possible in private markets). Facebook didn't actually have to convince any VCs that it could turn a profit. It just had to convince VCs that it could have a successful IPO. There's a subtle, but important difference there.

jusben1369 14y ago
Hey Glesica. I think you hit the nail on the head with your 2nd last sentence. "It just had to convince VCs that it could have a successful IPO." If VC's think IPO's are less and less realistic as an exit strategy then the other major event will be acquisition exits. That will narrow the funnel of deals they'll be involved in to those that feel like they have a good chance of being acquired. To have a good chance of being acquired you'll need to get onto the radar of one from a handful of companies who have the pockets to do that (Oracle, Facebook, Microsoft - not really Apple as they right now don't do large acquisitions) I saw your comment on manipulating public markets and see it referenced below in a couple of places too by others. Honestly, Dell pulled his company private because he can't manipulate public markets. It's important to remember that. Zuckerberg and FB have gone from wunderkind to potential "loser" status when moving from private to public markets.
- glesica 14y ago
  I agree with you that acquisition isn't necessarily any better than IPO as a target. On the other hand, there is a certain amount of money floating around out there and it has to go somewhere. Maybe the total volume of VC money would go down, but I suspect at least a good chunk of it would be re-targeted toward startups with long-term viability of their own. In terms of the market manipulation, I'm not saying that just anyone can come along and screw with the public markets. Dell can't manipulate the markets because the company is well-understood and operates in a well-understood market. Pretty much by definition startups are not well-understood and most (though certainly not all) operate in poorly-understood markets (or at least operate differently from incumbents in their markets). This means that startups have a better shot at successfully manipulating the public markets, allowing VCs to get paid even if the company itself doesn't pan out.

by glesica 14y ago

jusben1369 14y ago

Hey Glesica. I think you hit the nail on the head with your 2nd last sentence. "It just had to convince VCs that it could have a successful IPO." If VC's think IPO's are less and less realistic as an exit strategy then the other major event will be acquisition exits. That will narrow the funnel of deals they'll be involved in to those that feel like they have a good chance of being acquired. To have a good chance of being acquired you'll need to get onto the radar of one from a handful of companies who have the pockets to do that (Oracle, Facebook, Microsoft - not really Apple as they right now don't do large acquisitions) I saw your comment on manipulating public markets and see it referenced below in a couple of places too by others. Honestly, Dell pulled his company private because he can't manipulate public markets. It's important to remember that. Zuckerberg and FB have gone from wunderkind to potential "loser" status when moving from private to public markets.

glesica 14y ago
I agree with you that acquisition isn't necessarily any better than IPO as a target. On the other hand, there is a certain amount of money floating around out there and it has to go somewhere. Maybe the total volume of VC money would go down, but I suspect at least a good chunk of it would be re-targeted toward startups with long-term viability of their own. In terms of the market manipulation, I'm not saying that just anyone can come along and screw with the public markets. Dell can't manipulate the markets because the company is well-understood and operates in a well-understood market. Pretty much by definition startups are not well-understood and most (though certainly not all) operate in poorly-understood markets (or at least operate differently from incumbents in their markets). This means that startups have a better shot at successfully manipulating the public markets, allowing VCs to get paid even if the company itself doesn't pan out.