How Facebook's Private IPO Screws Other Entrepreneurs

[webb]

I don't see how Facebook trading privately would directly impact our access to capital. What is most important is that early stage investors are able to get attractive exits. SecondMarket allowed Accel to do exactly that. I view this as a great thing for us, because now those VC investors are unlikely to apply pressure for an IPO when the entrepreneur doesn't want one.

[awakeasleep]

Can't other companies compete because the restrictions and regulations actually protect investors?

Don't investors lose stability by operating in unregulated markets?

[fleitz]

Wireless and Mobile ventures attract 'limitless' capital because investors feel that it offers an attractive return/risk profile, often these are winner take all types of businesses and once a winner has been established money pours in.

If you feel it's unfair then start offering a more attractive risk/reward profile to investors. This FB IPO (initial private offering) doesn't screw other entrepreneurs it forces them to compete. Investors aren't under any obligation to fund your startup.

As my mom always said when I complained about things being unfair: life isn't fair.

[alex_c]

That's not the point of the article, I think. It's not that FB is unfair because it's a better investment opportunity. It's that by going outside the usual framework, such deals have an advantage - by virtue of less overhead due to regulation - over deals that play by the "rules".

I don't know enough about financial regulations to judge whether that's true, but that's the meaning I took from the article.

[reynolds]

Private IPO sounds kind of funny to me. IPO literally means Initial Public Offering.

[brown9-2]

Doesn't the SEC still have a hand in regulating these Goldman-type transactions?

[webb]

Yes, I don't think they have ruled whether Goldman's SPV will be viewed as a single investor. If it's not it may eventually force Facebook to go public.