On: What Have VCs Really Done for Innovation?

[pg]

Maybe the NVCA statistics are somewhat bogus, but there is a pretty compelling way to answer the question empirically: how many tech companies have made it as far as an IPO without taking money from VC funds?

Maybe the world is changing. Maybe now that it's cheaper to start startups, some will start to make it all the way to IPOs without VC funding. Obviously I would love it if a company we funded could make it to an IPO without any further dilution. But that seems like insanely wishful thinking.

[prakash → pg]

how many tech companies have made it as far as an IPO without taking money from VC funds?

Any particular reason you are looking at an IPO as a milestone? Somehow I see the YC companies more like SAS.

[pg → prakash]

It's unequivocal. You could also use a revenue threshold.

[prakash → pg]

How about some combination of Revenue + Profitability?

Revenue alone doesn't help, I think Facebook crossed $300 MM but was not profitable at that point in time.

Current IPO's target revenue in the range of $50 MM (I think), pre-bubble IPO's required 4 straight quarters of revenue growth (something like that), this is a moving dynamic.

[akeefer → prakash]

For what it's worth, my understanding is that the target these days (especially thanks to the costs of Sarbanes-Oxley compliance) is closer to $100 MM in revenue to even think about an IPO.

[ivankirigin → pg]

Sending astronauts to space also is a clear sign your space program is real. It is also retarded in most cases.

[sachinag → pg]

The issue with IPOs as the marker of "success" is that public market investors are much more hostile to companies without the VC stamp of approval - they're relying on the implicit due diligence of the VC firms to make sure that there are no issues with the technology, the patent landscape, and other various hangups. (This applies much more to health care companies, where my VC experience was, but the mentality is the same as the public market investors are the same regardless of industry.)

[wavesplash → sachinag]

Could you help clarify this? In my experience the only things that seem to matter are the offering bank and the financials.

[sachinag → wavesplash]

Having the "stamp of approval" is a bare minimum requirement to go public; you can't find enough buyers of the securities without it. The pricing, as you say, is affected by the financials and (I dispute this, but hey, it's not germane) the underwriters.

[adrianwaj → pg]

I'm unsure of how you'd execute on it, but have you thought about rolling up many startups into 1? From there you could IPO, cross-own, etc.

I think the founders, especially the ones closest to an exit would need a good reason to change their path forward.

There'd be no shortage of talent, although acting as an organization mightn't be so attractive.

Check out Web Conglomerate if interested to learn more: http://tr.im/wgxn

[abalashov → adrianwaj]

although acting as an organization mightn't be so attractive.

I think that's the key issue undermining the economic coherence of such an endeavour.

[adrianwaj → abalashov]

What did you think of the 6 points mentioned?

Would they offset the feeling of having a new someone for whom to report?