June 21, 2013
JOBS' IPO Pushmi-Pullyu
Posted by Usha Rodrigues

 I've been thinking and researching a lot about the future of IPOs a lot lately.  Facebook went public because of the old 1934 Act 500-shareholder disclosure rule, and JOBS likely put an end to that pressure (on which more later).  So if companies don't have to go public any more, will they?  And if not, how do they placate early investors and employees looking to cash out?

I came across the story of Blackrock's investment of $80 million in Twitter in January of this year (forgive me for not noticing at the time, but I was a bit distracted around that time!). Apparently Twitter didn't need the money, but its employees did.  All of the $80 million went to selling shareholders, none to the company.   Especially because Twitter limits sales of stock on private secondary market sites like SharesPost and SecondMarket, speculation swirled that the sale was about tamping down employee lobbying for an IPO.  And that wasn't the first time the company, founded in 2006, helped its employees get liquid; half of an $800 million investment in 2011 from DST Global, went to employees and investors.  Apparently Pinterest did something similar, selling $30 million of early investor shares in January as well.

I expect we'll see more of this activity as big private companies try to stay private as long as possible while keeping employees and investors happy (if you know of more examples, please let me know).  Even as JOBS' emerging growth IPO option made going public easier, raising the 500-shareholder threshold means that a company that can fund its own growth with revenue will likely want to remain private for a long time.  

Hence the titular Dr. Dolittle shout-out.

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