Perspectives

Feb 01

2017

Research analysts culled at top investment banks

Financial Times Read full article at ft.com

Aug 12

2016

Startups Cash Out Before IPOs as Venture Capitalists Turn Pickier

With venture capitalists growing pickier, the IPO market largely shut, and investors newly insistent that startups operate in the black, flush corporations are providing lucrative paydays for some startups that once had grander ambitions.

The Wall Street Journal Read full article at wsj.com

Jul 25

2016

C.E.O.s Meet in Secret Over the Sorry State of Public Companies

…About a dozen chief executives of investment firms…arrived for a meeting that they were told they would absolutely have to keep secret.

The agenda…was to discuss the sorry state of publicly traded companies: too little trust and connection between shareholders and management, too many rules imposed by so-called governance experts and too many idiosyncratic accounting guidelines. As a result, much of the smart money in the United States is going — and staying — private, creating more companies that have less public accountability and transparency.

The New York Times - Dealbook Read full article at nytimes.com

Jun 21

2016

The End of Accounting

Investors are poorly served by arcane accounting methods, a new book argues. New ways are needed to measure companies’ performance.

The Wall Street Journal Read full article at WSJ.com

Jun 04

2016

The Disappearing IPO Market

Are Unicorns Killing the 2016 IPO Market?

Rising regulatory burdens combined with a surfeit of venture capital are making new stock offerings passé. That’s good for investors.

Barron's Read full article at barrons.com

Feb 29

2016

Fewer, Faster, Smarter

The new innovators and disruptors promise a revolution in how we live. We can’t strangle them with rotary phone-era regulations.

Democracy Journal Read full article at democracyjournal.org

Jan 21

2016

Silicon Valley’s $585 Billion Problem

VCs have pumped up the value of the “unicorn” startups. Now tech IPOs are in trouble. Good luck getting out.

Fortune Read full article at fortune.com

Jan 19

2016

Expect Some Unicorns to Lose Their Horns, and It Won’t Be Pretty

The unicorn wars are coming, as the downturn in the market will force these onetime highfliers to seek money at valuations below their earlier billion-dollar-plus levels, known as “down rounds.”

The New York Times Read full article at nytimes.com

Jan 04

2016

Tech Startups Face Fresh Pressure on Valuations

A surge in private fundraising in 2015 helped technology startups steer clear of a painful initial-public-offering market. In 2016, they may not be able to avoid it.

A number of tech and Internet companies failed to reach their private valuations in their 2015 IPOs, while others later fell below their high-water marks in open trading, sending a chill through the growing crowd of private startups valued at $1 billion.

Big investors, concerned about the ability of IPOs to continue to generate hefty returns, in recent months have pulled out of funding rounds and marked down the value of their stakes in private startups.

Tougher private fundraising conditions could make it more difficult for startups to avoid the IPO market in 2016 if they need to raise money. And those deals, investors and bankers say, could face a chilly reception.

The Wall Street Journal Read full article at wsj.com

Dec 07

2015

Tech Startups Have a Big Problem

A year ago, investors clamored to get a piece of hot tech startups like Zenefits and Snapchat. This magazine even argued that it was unfair that regular investors couldn’t access the world’s fastest-growing private companies.

Today those investors are probably happy they never had the chance.

Fortune Read full article at fortune.com

Dec 07

2015

Tech Startup Crowdfunding Isn’t All It’s Cracked Up to Be

Allowing everyday Americans to invest in today’s high-growth startups—picture grandma and grandpa putting a portion of their retirement savings into the next pre-IPO Facebook —has long been the dream of advocates of so-called equity crowdfunding. This dream was supposed to be enabled by the Jumpstart Our Business Startups Act, which became law in April 2012. Three years later, after substantially more wrangling than anyone anticipated, Title III of that act is finally codified as rules written by the Securities and Exchange Commission. According to those rules, as of May 16, the floodgates of equity crowdfunding will be officially open.

The Wall Street Journal Read full article at wsj.com

Dec 06

2015

Tech start-ups waiting ‘way too long’ for IPO

Financial Times Read full article at FT.com

Nov 18

2015

Regulators Look Into Mutual Funds’ Procedures for Valuing Startups

Federal securities regulators are looking more closely at whether U.S. mutual funds have proper procedures in place to accurately price shares of private technology companies amid signs the tech boom is wavering, according to people familiar with the matter.

The Wall Street Journal Read full article at wsj.com

Oct 29

2015

Mutual Funds Flail at Valuing Hot Startups Like Uber

Millions of Americans own a piece of the hottest private technology companies through their mutual funds. But no one knows what those investments are actually worth.

The Wall Street Journal Read full article at wsj.com

Jul 09

2015

Can You Tell the Difference Between a Robot and a Stock Analyst?

Each day, Wall Street churns out millions of words encouraging investors to buy or sell stocks, bonds and mutual funds.

In the future, more of those words might not be written by humans.

As automation in financial services grows, computers and algorithms have taken on some of the traditional work of traders, clerks and financial advisers. Now, a host of startups that use artificial intelligence to write news stories and other reports have set their sights on writing work at banks and financial-service companies.

The Wall Street Journal Read full article at wsj.com

Jun 29

2015

Private tech bubble: eyes wide shut

Financial Times Read full article at FT.com

Jun 09

2015

Tech Startups Woo Investors With Unconventional Financial Metrics — but Do Numbers Add Up?

As young technology companies jostle for investors who will pour money into the firms as they try to make it big and strike it rich, some companies are using unconventional financial terms.

The Wall Street Journal Read full article at wsj.com

Jun 04

2015

Mutual funds chase head start on hit IPOs with pre-public investing

U.S. mutual funds are placing bigger bets on privately held companies to get a head start finding the next IPO superstar, a strategy that has yielded some dramatic payoffs and flameouts.

Reuters Read full article at reuters.com

Jun 02

2015

Private share trading takes off as tech companies shun IPOs

Financial Times Read full article at FT.com

Mar 23

2015

Tech Money Sends Funds on the Hunt for Unicorns

The retirement accounts of millions of Americans have long contained shares of stalwart companies like General Electric, Ford and Coca-Cola. Today, they are likely to include riskier private stocks from Silicon Valley start-ups like Uber, Airbnb and Pinterest.

Big money managers including Fidelity Investments, T. Rowe Price and BlackRock have all struck deals worth billions of dollars to acquire shares of these private companies that are then pooled into mutual funds that go into the 401(k)’s and individual retirement accounts of many Americans. With private tech companies growing faster than companies on the stock market, the money managers are aiming to get a piece of the action.

The New York Times Read full article at nytimes.com

Feb 20

2015

Bill Gurley: FOMO in the ‘Private IPO’ Market Is Fueling Valuations

After speaking about the risks of “cramming” too much money in startups at the Goldman Sachs technology conference last week, venture capitalist Bill Gurley exited the stage.

More than a dozen investors swarmed the lanky partner of Benchmark, eager to speak with him— but few were planning to heed the venture capitalist’s advice. According to Gurley, one man, who represented a large mutual fund, asked, “You don’t want us to invest in this but the big tech stocks are not delivering enough growth and my competitors are getting into these startups, so what are we supposed to do?”

Gurley says he didn’t have a good answer but he wasn’t surprised by the sentiment, which he describes as FOMO, a slang popular among millennials that stands for “fear of missing out.”

The Wall Street Journal Read full article at wsj.com

Feb 07

2015

Heat Death: Venture Capital in the 1980s

The history repeats itself crowd thinks that that there must be a bubble sooner or later. “Now?” they constantly ask, “Is it a bubble now?” as if history has to repeat whatever was most memorable about the last time. History may repeat itself, but there’s an awful lot of history that this particular venture capital cycle could repeat. Below is a short history of venture capital in the 1980s, my interpretation and comparison to the ’90s and today, and some thoughts about what that means.

Reaction Wheel - Jerry Neumann's Blog Read full article at reactionwheel.net

Dec 23

2014

How to Be an Expert in a Changing World

When experts are wrong, it’s often because they’re experts on an earlier version of the world.

Paul Graham Read full article at paulgraham.com

Oct 22

2014

Hedge Funds Add to Venture-Capital Bounty

Maverick Capital Ltd., one of the oldest hedge-fund firms, plans to launch its first venture-capital fund on Jan. 1, according to investors, with hopes of raising $400 million to take stakes in young companies.

In pitching the fund at Maverick’s annual investor meeting last week, one investor said, founder Lee Ainslie III said the New York firm was seeing the best opportunities in many years for making early-stage investments in private companies.

Such deals aren’t the bread and butter of hedge funds, which typically bet on the moves of stocks and other publicly traded assets.

But Maverick, with roughly $9 billion under management, is among a growing number of Wall Street firms that are trying to get a piece of the lofty valuations being achieved by startups in Silicon Valley and elsewhere.

The Wall Street Journal Read full article at wsj.com

Oct 13

2014

The Big Mystery: What’s Big Data Really Worth?

What groceries you buy, what Facebook posts you “like” and how you use GPS in your car: Companies are building their entire businesses around the collection and sale of such data.

The problem is that no one really knows what all that information is worth. Data isn’t a physical asset like a factory or cash, and there aren’t any official guidelines for assessing its value.

As more companies traffic in information and use big-data analytic tools to find ways to generate revenue, the lack of standards for valuing data leaves a widening gap in our understanding of the modern business world.

The Wall Street Journal Read full article at wsj.com

Oct 08

2014

More Big Venture-Backed Companies Shun IPOs, For Now

The market for initial public offerings is booming, and Alibaba Group Holding Ltd. made the largest-ever stock-market debut last month amid much fanfare. But other highly valued private companies are deciding that rushing to go public isn’t worth the trouble.

 

The Wall Street Journal Read full article at wsj.com

Jul 10

2014

Low Frequency Disclosure

If you think stock prices are irrational, Flash Boys proves why you’re right. And the craziness makes perfect sense.

Medium Read full article at medium.com

Jul 08

2014

Welcome to the Everything Boom, or Maybe the Everything Bubble

Welcome to the Everything Boom — and, quite possibly, the Everything Bubble. Around the world, nearly every asset class is expensive by historical standards. Stocks and bonds; emerging markets and advanced economies; urban office towers and Iowa farmland; you name it, and it is trading at prices that are high by historical standards relative to fundamentals. The inverse of that is relatively low returns for investors.

The New York Times Read full article at nytimes.com

May 15

2014

Meet the Father of the Modern IPO

In 1984, Eric Dobkin was working for Goldman Sachs (GS), selling stocks to professional money managers, when he was handed an assignment: The bank ranked a lowly ninth in underwriting new stock offerings. Fix it.

Dobkin, then 41, spent a few sleepless nights mulling the problem. At the time, initial public offerings were handled by thousands of regional stockbrokers peddling the shares to individual investors. It finally hit him one morning in the shower, he says. If Goldman Sachs could sell large blocks of equities to institutional investors, it could surely sell more initial offerings to them as well. Thus was born Wall Street’s new model for raising money for corporations, earning Dobkin credit as the father of the modern-day IPO.

Bloomberg Businessweek Read full article at businessweek.com

Mar 06

2014

Companies Rush to List Shares

Initial Public Offerings Hit Pace Not Seen in Years

Companies are launching IPOs at the fastest pace in years to take advantage of booming share prices and investor demand while they last.

The Wall Street Journal Read full article at wsj.com

Feb 10

2014

The information singularity is coming!

Whether you believe the collection and analysis of your personal data is trivial or intolerable, the age of Snowden has alerted us all to the coming of the information singularity, where near perfect portraits and detailed biographies of us all can be assembled if enough computer power is thrown at a big enough data set.

Reuters Read full article at reuters.com

Feb 10

2014

Tradeoffs in Cyber Security

In writing this essay, the breadth of tradeoffs in cyber security and that fundamental intellectual challenge in those tradeoffs caused me to choose to narrow my focus to one class of tradeoffs in cyber security rather than them all; looking at the state of the current world, I decided to focus on personal data and the government.

Dan Geer Read full article at geer.tinho.net

Jan 02

2014

Ebullience Over 2013 I.P.O. Market Spills Into New Year

The next 12 months may not prove as rich for initial public offerings as the last year. But to Wall Street bankers, 2014 still promises an abundance of opportunity.

The New York Times Read full article at nytimes.com

Dec 30

2013

We need to talk about TED

Science, philosophy and technology run on the model of American Idol – as embodied by TED talks – is a recipe for civilisational disaster

The Guardian Read full article at theguardian.com

Nov 30

2013

The micro-cap IPO disappearing act

In 2000, the SEC mandated that stock prices be “decimalized,” or traded in fractions of a dollar as small as $0.01. Prior to 2000, stocks traded in 1/16 dollar, 1/8 dollar, or perhaps even 1/4 dollar increments, depending on volume. The trading desk of an investment bank makes its money being a market maker in a particular stock — and the profit it makes is dictated by the bid/ask spread between the selling and buying prices for the stock.

Decimalization reduced the profit a bank can make at the expense of the shareholder, which is good. But, how much can a bank make on a thinly traded stock with only a few million dollars traded each day if the bid/ask spread is a penny? The answer is, not enough to stay in business and certainly not enough to support research that would stoke further interest in the company.

So, companies have to get to a scale where the banks can profitably be market makers, and that seems to be about a minimum $75 million offering, which means a much bigger IPO. But with fewer, larger IPOs, what is the path to liquidity for VCs and angels?

Reuters PE Hub Read full article at pehub.com

Nov 27

2013

More VCs bet on algorithms to mine for deals

It looks like analytics are becoming the crystal ball of venture capital.

An increasing number of firms are turning to algorithms to comb through tons of data to dig out the deals that will result in the big exits.

Reuters PE Hub Read full article at pehub.com

Aug 11

2013

With I.P.O.’s on the Rise, Analysts Get New Scrutiny

The market for initial public offerings has made a comeback, surging to levels not seen since before the financial crisis. At the same time, concerns have resurfaced over the role of Wall Street research analysts in these lucrative deals.

The New York Times Read full article at nytimes.com

Jun 24

2013

When Brevity Is the Soul of Wall Street Research

The gloom over Wall Street in recent days has prompted lots of commentary from analysts trying to make sense of the markets.

But for one analyst, a single word did the trick on Monday: “Sell.”

The New York Times Read full article at nytimes.com

Jun 01

2013

The Quantitative VC

To start competing for deals, VCs have to be prospecting people, companies and trends well before events like Demo Day [at Y Combinator]. And how are VCs trying to do this? Through complex data mining and pattern recognition.

TechCrunch Read full article at techcrunch.com

May 30

2013

Wall Street Turns to ‘Boot Camps’ to Train New Workers

When millions of dollars can be won or lost on one calculation, firms are finding it essential that their new hires can tell the difference between a pivot table and a header row. Enter specialized boot camps where — for fees that sometimes exceed $1,000 a day — would-be masters of the universe can perfect Excel modeling techniques and financial analysis.

The New York Times Read full article at nytimes.com

May 14

2013

ANDREESSEN: There Are No Exciting Tech IPOs Coming — Because We’ve Ruined The Public Markets

Don’t expect a game-changing tech initial public offering anytime soon. Private tech companies are steering clear of going public as long as they can manage, said Marc Andreessen, the co-founder of the venture capital firm Andreessen Horowitz, on CNBC’s “Closing Bell” Monday.

Business Insider Read full article at businessinsider.com

May 14

2013

Eventbrite Funding Slows Its IPO Chase

Eventbrite Inc., an event ticketing company, has raised $60 million from two investors, making it the latest example of a startup to raise significant private late-stage funding that puts off an initial public offering.

The Wall Street Journal Read full article at wsj.com

May 02

2013

Venture Capital’s Rocky Road for Entrepreneurs

In my previous Deal Professor column, I wrote about a Delaware lawsuit involving a venture capital company, Bloodhound Technologies, and how it exposed venture capital’s dirty little secret: in a sale, the founders are often left with nothing even if the venture capitalists profit.

The New York Times Read full article at nytimes.com

Mar 08

2013

Data Mining for Investors

It’s still a business based on gut and intuition, says Mr. Patil, the former chief scientist for LinkedIn. But data-mining techniques, he says, can help venture capitalists be more efficient and effective.

The Wall Street Journal Read full article at wsj.com

Mar 08

2013

New Money Ventures to Silicon Valley

“There’s an emergence of a new type of company that is private but should have been public, with scale and lots of revenue,” said Thomas Laffont, who leads Coatue’s new fund. “We want to identify these [companies] earlier and build relationships.”

The Wall Street Journal Read full article at wsj.com

Oct 05

2012

Silicon Valley’s Stock Funk

Sliding shares of newly public Internet companies are depressing employees—and their finances—after years of long hours and high expectations.

Rank-and-file workers at four of the highest profile Internet companies that began selling shares in the past 16 months have collectively lost about $9 billion on paper since their initial public offerings, according to calculations by compensation researcher Equilar Inc. and The Wall Street Journal.

The Wall Street Journal Read full article at wsj.com

Jul 16

2012

Marc Andressen: Unintended Consequences

MARC ANDREESSEN: …there’s this huge amount of retaliation against public companies in the form of Sarbanes-Oxley and RegFD and ISS and all these sort of bizarre governance things that have all added up to make it just be incredibly difficult to be public today.  So, the logical response has been many of the best new companies don’t want to go public.

Fortune CNN Read full article at tech.fortune.cnn.com

Jul 01

2012

Global IPO Market Keeps Shrinking

…the net result was a total of 201 deals worldwide in the second quarter [2012], half the 428 offerings seen during the same period in 2011… The outlook for global IPO issuance is uncertain at best, and grim at worst.

The Wall Street Journal Read full article wsj.com

Jun 07

2012

Facebook’s Early Buyers Burned, Too

Private markets have become increasingly important as the median age of companies backed by venture capital at their IPO rose to 8.3 years in 2011 from 4.3 years in 1999, according to the National Venture Capital Association and Thomson Reuters.

The Wall Street Journal Read full article at wsj.com

Apr 11

2012

Seeking ‘Second’ Life After Facebook

With Facebook preparing for an IPO in May, it isn’t clear the secondary market can retain enough depth and breadth to deliver large returns to a growing number of investors.

The Wall Street Journal Read full article at wsj.com

Mar 20

2012

For High Tech Companies, Going Public Sucks

When Facebook goes public this year, it will raise at least $5 billion, making it the biggest Internet IPO the world has ever seen. The day it debuts on the stock exchange, Facebook will be worth more than General Motors, the New York Times Company, and Sprint Nextel combined. The next morning, Mark Zuckerberg’s smiling face will appear on the front page of newspapers around the world.

But don’t be surprised if that smile looks like the forced grin of someone dragged to the altar. Truth be told, Zuckerberg is going public not because he wants to but because SEC rules have forced his hand. Once a company takes on more than 500 shareholders—a number that Facebook easily surpasses if you include all the investors and employees who have bought or received shares over the years—it must register its stock. That means shareholders can trade it in the OTC (over the counter) markets, out of the company’s control and without its consent or cooperation. No high-profile business wants its shares to be traded in that opaque purgatory of low valuations.

Wired Read full article at wired.com

Mar 01

2012

Tiger Global’s Coleman Gets Rich Off IPOs — Long Before You See Them

Coleman buys stocks in companies headed toward an initial public offering… and sells the stock at a huge profit to investors who can only buy in after the IPO. By trying to protect retail investors, in other words, the government has created a huge opportunity for hedge funds to make profits that would have flowed to ordinary investors if they’d been able to buy in earlier.

Forbes Read full article at forbes.com

Feb 29

2012

Silicon Valley tech companies struggle to describe themselves in comprehensible language

From unintelligible corporate mission statements and tech-job postings to incomprehensible billboards on Highway 101 that speak only to that small handful of geeks over in the slow lane, Silicon Valley is drowning in a linguistic riptide of seamless design functionality, end-to-end services and scalability truly without precedent.

San Jose Mercury News Read full article at mercurynews.com

Feb 12

2012

Rebuilding the IPO Market

Never mind Facebook: Small firms hurt by IPO drought.

Don’t be fooled by Facebook’s dazzling $100 billion IPO plans: The 14-year drought for small IPOs is not about to magically disappear. Big-brand companies such as Facebook have the recognition to stoke demand for their IPOs, but most companies wallow in the quagmire of anonymity.

Crain's New York Business Read full article at crainsnewyork.com

Dec 11

2011

Michael Moritz On Klarna’s $155M Round: “This Is The Public Financing Of Twelve Years Ago”

“This is the public financing of twelve years ago,” Moritz tells me, “it is just done privately.” The buyers in these “pre-public investment rounds” are the same investors who would have previously bought IPOs, funds like General Atlantic, DST, T. Rowe Price, Fidelity, Tiger and Wellington Capital.

Tech Crunch Read full article at techcrunch.com

Nov 22

2011

Private Markets Offer Valuable Service but Little Disclosure

Information is the lifeblood of capital markets…The value of stocks is based on information, which is why securities laws are intended to ensure that all investors have at least minimum amounts of information. Private, closed markets like SharesPost and SecondMarket aid in the cause of market transparency, providing platforms to trade shares of companies that have yet to go public. At the the same time, the limited amount of information available to investors in these markets raises some questions.

The New York Times Read full article at nytimes.com

Jul 12

2011

Hedge-Fund Investors Scout Out Web Firms

Spurred by their appetite for technology companies and seeking higher returns, a growing number of hedge-fund managers have started to invest more in private Internet companies.

The Wall Street Journal Read full article at wsj.com