There’s one sure way to make sure investors don’t lose money in initial public offerings: Make sure there are none. And “none” is barely an exaggeration. As Vas Sridharan notes, there has been exactly one (1) ONE Valley IPO this year.
Why does no one go public anymore?
Yes, in part because the market’s crappy. But also in part because our legislators have made it outrageously expensive to go public, especially for small tech companies.
By banging on the “PROTECT, PROTECT, PROTECT” drum, our legislators have also created an environment in which risky start-up IPOs are seen not as an opportunity for risk-tolerant investors to make early-stage investments but as clever con-schemes in which sophisticated “insiders” prey on unsuspecting mum and pops. In this environment, what sentient CEO wouldn’t choose an M&A exit route?
Here’s another way to protect innocent investors, one that won’t have the side-effect of adding millions in red-tape administrative costs and/or driving emerging companies to London’s AIM or to corporate buyers: Teach innocent investors not to gamble their retirement savings on risky tech IPOs.
See Also: IPO? Not This Year
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