More on the IPO Blockade

I’ve been writing about problems with the entrepreneurial system in the US for months now.

Some of that concern has come up in a recent post on TechCrunch and another by Fred Wilson.

Quoting one of my comments:

Thank you for this honest and transparent post on exits.

If people want to create a sustainable entrepreneurial community, the IPO problem has to be licked.

Many people are over-paying for legal services. I’m confident that costs can be slashed in that area with enough comparison shopping and intelligent outsourcing. The field of law in general is going through tremendous competitive pressures. Bid those prices down.

People have brought up the AIM market. I’ve also asked a couple VCs (no financial relationship, not pitching them) about going public overseas. Their response was a “lack of liquidity,” with specific reference to the AIM.

I’m also curious as to why you can’t just raise more money by going public overseas and issuing derivatives domestically. I may be totally off-base in that suggestion.

If there’s a lack of liquidity overseas, why not create it? The only way to encourage major overhauls in the legal system is through using the threat of capital flight. And not just talking about it, but actually doing it. There’s no reason to kill a fund or let a company waste away due to fear and inaction.

I’m confident that this problem can be solved without a doomed lobbying effort. Existing public companies with entrenched bases of influence in Washington LOVE the fact that it is so hard to create an effective IPO. It means that there’s more money going into their stocks than would be otherwise.

In effect, the regulatory system is running a blockade on fresh companies. You don’t try to rush head-first into that blockade, or you’ll get mowed down. Figure out a method to make that blockade irrelevant, and the rewards will be tremendous.

I’m trying to piece it out myself, but I’m really too out-of-the-loop, ignorant, and under-resourced to determine a solution.