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"Venture capitalists’ rule of thumb is that a company must have $100 million in sales and have a capitalization around $1 billion to do an IPO, in order to have
by grellas 17y ago
"Venture capitalists’ rule of thumb is that a company must have $100 million in sales and have a capitalization around $1 billion to do an IPO, in order to have enough money to meet the reporting structures of the Sarbanes-Oxley law."
Yup, loads of startups are waiting in the wings for their IPOs based on these criteria. Until regulatory reform lessens the compliance burdens for smaller-cap public companies, the IPO market will "awaken" only for the rare startup.
Sadly, this limits valuations for all startups, even those that are successfully acquired. Without a realistic IPO option for most startups, potential acquirers will know that their target companies have less leverage on price and will negotiate accordingly.
This notwithstanding, the article makes the broader point that things are beginning to thaw, which is a very good development for all startups.
- ojbyrne 17y agoOpenTable had $56 million in sales and a capitalization of $400 million at IPO (http://stocks.investopedia.com/stock-analysis/2009/reservations-about-open-table-ipo-openrstdgiswiebix0526.aspx http://stocks.investopedia.com/stock-analysis/2009/reservati...). The difference is large enough, in my opinion, to suggest that the article is just including the standard party line of bitching about Sarbox. OpenTable may have issues but I doubt the "reporting structures" are a major one. I'd suggest that the larger concerns about many Silicon Valley startups are about simpler issues like growth, profitability and defensible competitive advantage.
- grellas 17y agoPoint well taken that the quoted criteria overstate things (though Sarbox does remain a real drag on IPO opportunities for many startups).