Venture Capital IPO Market

Published: 4/14/2011 9:41:41 AM

The venture capital backed IPO market has been in the doldrums for several years now, although it has recently shown signs of life.

The reasons for a broken IPO market are varied and depending on who you talk to, you will get any of the following reasons:

- Lack of a blockbuster IPO

- Sarbanes-Oxley and the cost of going public

- Lack of research on small cap public companies

- Exchange decimalization reducing the desire for market makers to participate

- Institutional investors burned during the .com boom of the late 1990s

- Generally bad current economic environment

- A high revenue bar and growth/industry dominance requirement

- Lack of boutique tech investment banks for whom a smaller IPO is a worthwhile deal

- Availability of large private equity investors such as DST and others who buy out early investors.

I'm sure there are many more reasons why the IPO market is not what it used to be. Perhaps this explains the recent rise of private markets to provide liquidity for early shareholders and employees such as SecondMarket and SharesPost.

Whatever the reasons, the long-term health of the technology industry and innovation in the United States depends on properly functioning private and public financial markets.



Don Jones
CEO, VentureDeal

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