The investors need to be wealthy ($1m+) and few (maximum 500) and the business too small to IPO. Facebook tore that last rule apart. What if the other rules are also eventually relaxed?
The IPO is looking like an endangered species. A ten year wait for a startup? Do we seriously imagine that any future tidal wave of industrial-strength startups is going wait ten years for anything? Is Zuckerberg really looking impatient or deprived? Is it possible that the whole ‘preparation for going public’ imperative is beginning to lose touch with market reality?
Here’s David Weir of SharesPost:
In the next video, a more in depth look at the 500 investor rule with Davis Polk‘s Deanna Kirkpatrick.
She gives an initial impression that one might need to employ caution in anticipating secondary markets‘ ability to overcome the very significant technical and legal obstacles that have confronted earlier efforts involving such things as private company employee share distribution.
Nonetheless, as you might have guessed, in the context of recognising, as she does, the sheer scale of self-evident demand and takeup, I think it is not unreasonable to conclude that the presumption that ‘where there’s a will there’s a way’ may need to be applied in order to at least temper any tendency to see the current upsurge in secondary market adoption as nothing more than a case of history repeating itself.