| WSJ article "IPO Obstacles Hinder Startups" offers a | | | | execute, execute. If, however, the business does |
| good coverage of how IPOs are becoming tougher | | | | NOT have built-in scalability - and most don't - they |
| for small venture-backed companies. | | | | should absolutely NEVER go public. They should get |
| This raises the question, what should CEOs and | | | | acquired, and become part of a larger portfolio. |
| early-stage VCs do, once a company has reached | | | | Last year, 41 start-ups backed by venture-capital |
| $100 M+ in annual sales? (Below this threshhold, it is | | | | investors became publicly traded U.S. companies, |
| absolutely undesirable to go public; investor courting, | | | | down from 67 in 2004 and 250 in the boom year of |
| ongoing investor management, Sarbanes-Oaxley | | | | 1999, according to research firm VentureOne. |
| compliance related paperwork and massive expenses | | | | I would say, the recent numbers are much closer to |
| - being some key distractors ...) | | | | what they should be. |
| In general, by year 5 or year 6 in a company's | | | | After all, how many enterprises really have built-in |
| history, the Series A investors, the Founders, and the | | | | scalability in their business model? |
| early executive team that is still around - get itchy to | | | | Most companies simply go public and then struggle, |
| extract some liquidity. Today, given the sophistication, | | | | giving smart investors absolutely no reason to touch |
| the available money, and the level of activity in the | | | | them, and hence, giving analysts no incentive to |
| Private Equity industry, a late-stage / LBO fund could | | | | cover them! |
| easily step in and provide the necessary liquidity. | | | | Rather, a secondary exit market for private |
| Liquidity, I believe, is no reason to go public | | | | placements of a chunk of the company's shares held |
| prematurely. An enterprise that has built-in scalability | | | | by early shareholders - is a far better alternative. |
| should stay private, stay on course, and execute, | | | | |