Population Statistic: Read. React. Repeat.
Saturday, April 12, 2021

So far this year, there’s been little action on the initial public offering market for Web/tech companies, and it’s bugging the heck out of venture capitalists, who claim that that’s bad for the overall economy:

Entrepreneurs are optimistic by nature, but they will need more than that in the current market. Many tech companies live and die by venture capital funding, and venture capitalists need an exit strategy. The current IPO market is not much of one, and the chances for buyouts by other companies may become slimmer in the current credit environment. Lack of exit options keeps VCs in deals longer, which increases their own risk and makes them less likely to fund other promising ventures.

Actually, I don’t think the buyout market is that bad, even with tightening credit. There’s always stock deals, that can turn out to be much more lucrative in the long run. Combine that with the prospect of continuing work as part of a larger-but-simpatico company, and most up-and-coming tech entrepreneurs happily will opt for being acquired over playing a high-finance money game.

We’ve already seen how strategizing for eventual buyouts by the Googles and Microsofts of the world has changed the rules for valuations in tech startups, and now that dynamic is impacting the established investment procedure for VCs. The old money guys are just mad that they’re being left out of the action now.

by Costa Tsiokos, Sat 04/12/2021 02:14:26 PM
Category: Business, Internet, Tech
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