I’ve read many political screeds blaming Sarbanes-Oxley for the current state of affairs, but in my view, that perspective is wildly exaggerated by those with political axes to grind. Having implemented SOX compliance at a large international public company the year it was enacted (2002), and then seen how it operated at a far smaller public Internet company a couple years later, it’s clear to me that the burden placed on startups is surmountable and relatively modest (compared to, for example, the underwriter’s discount and legal fees involved in an IPO), whereas it’s a much bigger deal for large, complex enterprises with many subsidiaries and foreign operations, etc. SOX alone certainly does not explain the “lost decade” phenomenon you describe.

My company has been able to organize funding through 2 companies inn Europe: SO Ventures (life sciences) and eSolve Capital, which through their eSolveNano division (http://esolvenano.com) offers a very well placed aggregating function for hitech sectors.

Thanks for the high level view of what’s happening right not. On a different note, I’m interested to know how come you haven’t pivoted your blog with the services, like Disqus, that allow commenting via a social account.

@cdstern

1. SOX and the regulatory ennvironment have a ton to do with the lack of IPOs. Companies that are doing 50MM in rev simply can’t afford the $2MM in accounting fees associated with being public. You need to be at least $200 MM on your way to $500 MM or you get cooked.
2. You have to have a product that Institutional investors understand. A lot of people lost a lot of money in the late 90s investing in page views. The 90s were characterized by “we trust you,” the last 10 years was characterized by “we don’t trust you” and with the evolution of how start ups are built around thought processes such as lean the discussion will be able to change from trust me to let me show you.

RE the Angel bubble … I wonder if this isn’t a factor of there are a lot more little deals, based ideally on testing and pivoting around metric based companies. If this is the case then it seems like this is a more diversified approach and more likely to succeed for the industry as a whole. Fred Wilson wrote a great piece on seed investing last week about the fact that VCs can get in at much lower dollar values with more companies and spread the risk around. That doesn’t seem like a bubble to me.

The scariest part of the article was the reference to the high tech, long run way innovation sectors that are dying such as space and biotech. We have been way ahead. We, as a society, need to figure out how to fix that.

Sorry for the long comment.

They had many offers to sell along the way, but wanted to build a great stand alone company….. Maybe we just need fewer quick flip investors and entrepreneurs?

IPO’s – You compared different decades and their IPO production ie 1991- 2000 and 2001 – present etc. Well, what about the burgeoning private markets? The liquidity via sharespost.com and secondmarket.com allows companies to raise additional capital and bridge their finances in the private markets, if they are capital efficient and have revenue, why would they force an IPO? I think you missed premise of the IPO to raise money (not just cash-out for investors)…

Acquisitions – Are going to pick up like crazy! WIth companies like GOOG, AMZN, MSFT, AAPL having millions or even BILLIONS on the book and very little to no debt, they will be consuming startups left and right. Hasn’t it already happened in fact? Each of the previously mentioned companies has made ATLEAST TWO acquisitions… with the low cost of acquisition for growing startups, I think we’ll see the large corporations in the public markets acquiring private startups daily….

Can’t believe you don’t see this…. Am I being presumptious, or do my premise support my logic?

Many of the IPO exits in the 90s were virtually fraudulent (not really, but you know what I mean).