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We have the heightened burden of SEC regulations to thank for all these companies staying private. If the regulatory burdens were lower more companies might go

We have the heightened burden of SEC regulations to thank for all these companies staying private. If the regulatory burdens were lower more companies might go to public markets to raise capital, instead of to VCs. The regulations are meant to protect the everyman, but the perverse result is that the opportunity to participate in these fantastic returns is now restricted to the executive tier at the startups, the rich accredited investors, the VCs, and the private equity firms. The rest of us are left out ... unless we become founders ourselves.

ojbyrne 12y ago
Except in the days before the "heightened burden of SEC regulation" IPO shares were largely only available to wealthy clients of the banks that underwrote the IPOs. The rest of us were just as left out.
- refurb 12y ago
  Not sure I understand. IPO shares are still only available to the wealthy clients of the banks that underwrite them.
  - ojbyrne 12y ago
    That was my point - nothing has changed. The OP was suggesting things were better in the past.
    - sparky 12y ago
      Yeah, I think that comment conflates three things: 1) The regulatory burden of going public (Sarbanes-Oxley compliance et al.) pushes companies to stay private, which keeps the average Jane from investing in those companies via the public markets. 2) For those companies that are privately held (whether that's because of the regulations in #1 or for more fundamental reasons), separate regulations (accredited investor rules et al.) prevent the average Joe from investing privately. 3) On top of #1 and #2, market forces and norms give more investment opportunities (both public and private) to large, established players than individual laymen. For example: * Companies may prefer to take $1M each from 5 large investors than $1k each from 5000 people, both to reduce logistical burden and because those large investors statistically have other unique things to offer like expertise, advice, and connections. This is unfortunate for the small-time-but-sophisticated investor, but seems quite rational. * IPO shares only being offered to large friends and clients of the underwriter. The justification is reduced logistical overhead as in the previous case, but the true motivation is widely suspected to be cronyism.
alphonse23 12y ago
I see where you're going with this, but try to understand the common man can't always be a founder... cause the common man has bills/mortgages/rent/families/kids and a whole lot of other things to deal with. Also, have you been out there in the startup world lately? There are tons of people out there with ideas (mostly bad, some possibly good) -- and no money. I imagine these big investments will push the costs of tech labor up (designers and devs) -- since there are people out there with the money now -- which can possibly be a good thing and a bad thing... But in either case, it will become harder to price talent/skills properly.

ojbyrne 12y ago

Except in the days before the "heightened burden of SEC regulation" IPO shares were largely only available to wealthy clients of the banks that underwrote the IPOs. The rest of us were just as left out.

refurb 12y ago
Not sure I understand. IPO shares are still only available to the wealthy clients of the banks that underwrite them.
- ojbyrne 12y ago
  That was my point - nothing has changed. The OP was suggesting things were better in the past.
  - sparky 12y ago
    Yeah, I think that comment conflates three things: 1) The regulatory burden of going public (Sarbanes-Oxley compliance et al.) pushes companies to stay private, which keeps the average Jane from investing in those companies via the public markets. 2) For those companies that are privately held (whether that's because of the regulations in #1 or for more fundamental reasons), separate regulations (accredited investor rules et al.) prevent the average Joe from investing privately. 3) On top of #1 and #2, market forces and norms give more investment opportunities (both public and private) to large, established players than individual laymen. For example: * Companies may prefer to take $1M each from 5 large investors than $1k each from 5000 people, both to reduce logistical burden and because those large investors statistically have other unique things to offer like expertise, advice, and connections. This is unfortunate for the small-time-but-sophisticated investor, but seems quite rational. * IPO shares only being offered to large friends and clients of the underwriter. The justification is reduced logistical overhead as in the previous case, but the true motivation is widely suspected to be cronyism.

alphonse23 12y ago

I see where you're going with this, but try to understand the common man can't always be a founder... cause the common man has bills/mortgages/rent/families/kids and a whole lot of other things to deal with. Also, have you been out there in the startup world lately? There are tons of people out there with ideas (mostly bad, some possibly good) -- and no money. I imagine these big investments will push the costs of tech labor up (designers and devs) -- since there are people out there with the money now -- which can possibly be a good thing and a bad thing... But in either case, it will become harder to price talent/skills properly.