Re:Stock and Bond Markets Dethroned: Private Fundraising Is ...
by JumpCrisscross on Monday April 02, 2018 @03:07PM
(#16738077)
> compliance is so burdensome and expensive that firms don't want to enter the public markets
There's something bigger going on than SOX. That was the hypothesis the JOBS Act was predicated on [1]. Yet the trend continues uninterrupted.
My hypothesis: broadly held (i.e. by employees) companies taking long-term technology risks are fundamentally new. Moreso than reporting requirements, minute-by-minute pricing isn't helpful to a company challenging accepted wisdom over long time horizons. (Contrast: Tesla and SpaceX.) Being able to time large-scale valuation changes with technological milestones is a huge advantage no amount of public deregulation will compete with.
The trade-off between valuation control on one hand and liquidity on the other hand has multiple solutions. Deep private markets have an equilibrium between closely-held private businesses (e.g. Koch Industries) and widely-held public companies (e.g. Apple). (Multi-tier voting in public companies, as Snap and Facebook have, on the the other hand, seems untenable.)
There's something bigger going on than SOX. That was the hypothesis the JOBS Act was predicated on [1]. Yet the trend continues uninterrupted.
My hypothesis: broadly held (i.e. by employees) companies taking long-term technology risks are fundamentally new. Moreso than reporting requirements, minute-by-minute pricing isn't helpful to a company challenging accepted wisdom over long time horizons. (Contrast: Tesla and SpaceX.) Being able to time large-scale valuation changes with technological milestones is a huge advantage no amount of public deregulation will compete with.
The trade-off between valuation control on one hand and liquidity on the other hand has multiple solutions. Deep private markets have an equilibrium between closely-held private businesses (e.g. Koch Industries) and widely-held public companies (e.g. Apple). (Multi-tier voting in public companies, as Snap and Facebook have, on the the other hand, seems untenable.)
[1] https://www.sec.gov/spotlight/jobs-act.shtml