92% of job growth in venture-backed companies occurs post-IPO

It is a double-edged sword to want better access to publicmarkets, as the venture capital community would like, and to loosen private company ownership rules. The SEC is currently considering loosening rules onprivate companies so that they can continue to grow as private companies and avoid reporting to the SEC past 500 shareholders.

Of course, this is not in the interest of the venturecapital community, of which I am a member. As a venture capitalist, my goal is to get companies to go public as fast as possible. Mainly for two principal reasons: 1/ the IPO process and the post-IPO reporting requirements force financial discipline on a company, and most importantly 2/ it gives the company access to capital, debt, mezzanine financing and even PIPEs.

The latter reason is the most fundamental as the capital markets at large are in the trillions of dollars, whereas the venture capital industry is at $20 billion annually. This is critical for a rapidly expanding company in need of working capital, capex and LT investment capital. It can access all the different pockets of capital out there. Venture capitalists on the other hand are only one pocket of capital, and it is an expensive one (~25%).

Statistics by the NVCA have clearly demonstrated that once a startup becomes venture-backed, its chances of survival increase 100-fold, and once a venture-backed company goes public, its chances of growing to massive levels increase 10.000-fold. Just look at Amazon, eBay, Dell, Staples, Starbucks, Microsoft etc.

As venture capitalists, we keep battling these non-sensical topics: Sarbanes-Oxley, carried-interest taxation, venture fund reporting, systemic risk reporting, and now private company ownership. Access to public markets is what the SEC needs to focus on if we want a strong and vibrant startup community that creates jobs in the hundreds of thousands. 

The recycling of venture capital through the IPO process allows the U.S. to continue its leadership in financing innovation.