How To Split An Atom

Today’s journal comes from Jason Lorimer of Publicitr and Recon Labs.

For the first time in 30 years, zero venture-backed companies made initial public offerings during the second quarter, according to a report to be released today by the National Venture Capital Association and Thomson Reuters.

The Venture Problem

The blogger community seems to be making a big deal out of this fact, however the VC’s I talk to say it is simply a matter of stricter regulations combined with an abundance of private money being available.

One thing I didn’t see mentioned was the amount of public companies acquiring private start up’s, which essentially is the same thing as going public. (I couldn’t find hard stats on his but I read about a few every day, leading me to believe that there is a good deal of them.) It will however likely scare VC’s into cutting off funding to weaker companies which will likely kill off a good percentage of early stage start up’s with no real revenue model in sight.

I can’t really write with much expertise on this matter because we have never, nor do we intend to be doing any IPO’s in the future. The regulatory costs are extreme. So much so, that you are seeing public companies withdraw and go private to save the average half a million a year in costs.

It seems obvious, but for VC’s to be investing in companies that take an average of 8.5 years to be in a position to go public, is going to force them to close ranks on the huge portfolios they maintain.

The downside is that a lot of emerging technology companies will be cut off because they are still years from realizing their products.

The upside is that VC’s will likely begin to work with smaller investments, opening up a lot of room for new entrepreneurs.

The ideal solution in this market is a VC firm that specializes in lower investments as well as has the facilities to help properly incubate the ventures.

I know there are some out there, but I am not sure who they are. Please comment with any you know of and what you know about them, as well as any other thoughts on the subject.

How To Split An Atom’s Startup Reactor has been brought to you in part by the following sponsors -

ThemBid
IERSolutions

(Image) (RSS)