Sunday, December 14, 2008

Insights on the Recession and Broken IPO Market

Check out these great articles:

Encourage the Rebels; Economic growth will depend on innovative entrepreneurs, not incumbent corporations
Vinod Khosla, Newsweek

Reopening the IPO Window
Joseph Bartlett, Science Progress

Some highlights of the article include:
"As recently as 1996, the average deal size of a Nasdaq IPO was $34 million, and the average market capitalization was $133 million. Ten years later, the average IPO deal size was $113 million, and the average market cap was over $330 million—a size that only a much bigger company can sustain."

"But consider this: When Intel went public in 1970, it offered $8 million of stock and sported a market value of $53 million. Cisco Systems Inc.’s IPO in 1990 raised only $50 million, at a price which yielded a post-deal market cap at IPO of $226 million."

"The evidence suggests that we are now killing our most promising companies, our future “national champions,” before their time. Does anyone seriously believe Cisco would have grown more if it had been acquired by Digital Equipment, or that Microsoft would have thrived inside IBM?"

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