Venture-backed IPO’s: Who needs ’em?

Unless you’ve been living under a rock you’ll know that venture backed IPO’s have been MIA for most of 2008 on both sides of the Atlantic.  It’s a 30 year low and everyone has their favorite theory as to why the drought has happened, from SOX, to the credit crunch, to (probably the most obvious) down markets.  The money’s still there and VC’s aren’t panicking.  Some people are even asking what’s all the fuss about?

And they’re right.  When the markets rebound so will venture-backed IPO’s.  It’s amazing how one bad half a year can bring out the doomsayers en masse as if that’s enough to dismiss the entire venture capital industry that’s been built up over decades.  Sure there are additional contributing factors and governments and regulators should do everything they can to allow start-ups and venture-backed firms to prosper, but the IPO market will return.

As for the VC’s, if anything they aren’t taking enough risk with firms they look at (and that’s everywhere, not just here in Europe where it’s long been a knock against local players).  There’s been a cookie cutter appearance to many VC-backed firms in the tech space lately and that decreases overall attractiveness for a firm if there are a dozen others exactly like it in the same space.  Much of that has to do with an ever increasing amount of money being funneled into certain attractive sectors, as well as the length from investment to IPO taking longer and longer.

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