Hacker News Reader

Comment by nostrademons | Hacker News Reader

Many of these rounds are replacements for what would otherwise be IPOs or other public financing rounds.

Flywire was founded in 2009 and in 2017 processed over $2B in payments. [1] Gusto was founded in 2011 with a rumored valuation of over a billion and $100M+ in revenues. Convene was founded in 2009 and was doing $18.6M in revenue in 2015 [2]. All of them have acquired other companies.

Before 2000 these would be public companies; hell, before 2000 there were public companies that were barely 2 years old and had virtually no revenue. The investors for these rounds are largely the same firms who would be playing in the public markets.

[1] https://www.flywire.com/pT/articles/how-two-boston-startups-...

[2] https://www.forbes.com/companies/convene/

View on HN

> what would otherwise be IPOs or other public financing rounds

The NYSE and Nasdaq do a lot of hype about how much money they raise for companies in IPOs and secondary offerings. But if you look at the numbers since World War II (and even before), very little of the money corporate America raises comes from the stock market. US corporations raise money via bonds, term loans, credit lines and so on. The stock markets facilitate stocks moving from one shareholder to another, but have (relatively) little involvement in raising cash.

As you note, companies are staying private much longer nowadays. Facebook didn't go public until it was worth $100 billion.

Indeed. It's a complete joke and a big reason why "the rich get richer". I, for example, believe that artificial meat will be one of the biggest industries in the world once governments outlaw the cruel and barbaric practice of producing the "real thing". I also want to support the beginning of that industry. But is there any way for me to do that? No. The deals are done in private with a few very rich individuals. If those companies ever go public it's just a way to cash out because they are already turning a profit.

There are certainly benefits to staying private; no pesky shareholders to potentially overthrow you, less stringent reporting requirements and regulations, etc.

Of course, the reporting requirements and regulation compliance could also be considered a feature and not a bug, but those things are generally not considered a good thing for startups.

Reply on news.ycombinator.com