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This is not true. Because there is a liquid market for equities, it is possible for companies to IPO into that market, incentivizing entrepreneurs to start comp
by tvladeck 13y ago
This is not true. Because there is a liquid market for equities, it is possible for companies to IPO into that market, incentivizing entrepreneurs to start companies and for VCs to fund them. High liquidity in the market also leads to higher-resolution pricing, which gives the economy information on where, and where not, to invest.
- tehwalrus 13y agoI'm not talking about a new share release. I'm talking about the buying and selling of existing shares.
- tvladeck 13y agoRight. So am I. It's the liquidity of the secondary market that makes the primary market possible. That's my point.
- tehwalrus 13y agoOh I see. You mean that without the capital gains there's no reasons for VCs to invest in the first place, since listing on the stock market is VCs and founders selling their equity. I agree on that point - but then VCs and founders aren't non-productive; they built a company. You still don't need an entire massive industry for "secondary equity sales" in order to float...maybe. I'm less convinced of my own point now, well done. If I had time to build an economic model to study it, I would.