Hmm, that used to be my theory, but the data doesn't seem to support it. The rise in M&A as exit over IPO is the key metric I tracked in researching this. The i

Hmm, that used to be my theory, but the data doesn't seem to support it. The rise in M&A as exit over IPO is the key metric I tracked in researching this. The inflection point seems to be around two years earlier than the 2002 passage of SarbOx, c. 2000: http://www.xconomy.com/national/2008/07/01/whos-afraid-of-an-ipo-everybody-at-the-moment/ http://www.xconomy.com/national/2008/07/01/whos-afraid-of-an... and http://smallbiztrends.com/2010/05/trends-in-exits-from-vc-backed-investments.html http://smallbiztrends.com/2010/05/trends-in-exits-from-vc-ba... That said, the modern startup path does seem to structurally delay IPO, which in the short term has resulted in 20-50% shaves of post-IPO public investors and long term difficulties in adding value of the sort Garry mentions. Just the causality basis isn't clearly SarbOx. My current theory is the tilting of the king vs. cash towards king, as epitomized by Zuck. It's possible that the market had started driving companies towards private control to emphasize long-term growth over short-term, quarterly stock performance, which drove the Enron-era scandals. The collapse of the tech bubble might have had an impact, too. I concur with Bilal that private audits are a more likely causal link than SarbOx, though that could be our mutual gov't experience talking. The JOBS Act created the IPO on-ramp (5 year SarbOx tapered exemption to reduce costs of public compliance), as well as 10x expanding the Reg A ($5M → $50M mini-offering cap) exemption to make it easier for startups to blend over into public exposure. However, these non-standard pathways are little known to both the investors that traditionally take early board seats and certainly early-stage founders. It's also unclear how much of JOBS has even been implemented due to continuing backlogs from political obstruction of Dodd-Frank at the regulatory level.