Answer To Silicon Valley's Liquidity Question: Think Smaller

13 thoughts on “Answer To Silicon Valley's Liquidity Question: Think Smaller”

  1. @Om,

    I don’t buy it. Google was generating revenue organically, whereas most of FB’s revenue is contract revenue (welfare payments) and Twitter has none. Add to this the fact that it was commonplace in the capital markets to refer to web companies as part of a “paradigm shift”, which meant it was easier to sell dirt packaged as “magic soil”. Last issue is Sarbannes-Oxley, which I think is the nail in the coffin.

    I’m sure a great discussion took place, but let’s not forget H&Q and the like made a killing selling “magic soil.”

    My $.02.

  2. Om,

    Sorry to miss this morning. Heard from 3 attendees today that the session was incredible. Congrats. As for liquidity, I think we’re about to see a resurgence of IPO activity. This won’t happen immediately, but the simple fact is that risk capital has no where to go for returns, and many very solid private companies have been built over the past 5+ years that now represent really good public capital investments.

    There are many large (>$50mm) revenue companies in growth markets with predictable businesses that would benefit greatly from public capital. At the same time, there are public market investors that have no were to go for alpha or beta.

    Returns on a risk-adjusted basis look great in young tech companies.

    Jon

  3. I’m not buying the smaller private exchanges yet – yes they support smaller liquidity events, but at some point, the venture investors in companies will want a full exit. Perhaps the venture model itself needs to change, especially since most companies do not require the levels of funding they used to, particularly those that are web-related. I took a look at some of the private exchange options out there recently: http://www.ventureexaminer.com/venture-examiner/2009/6/18/exploring-private-exchanges.html

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