Jeremy Hobson: If the Fed does announce some new stimulus today, it may give companies a little confidence about going public. This month alone, as the economy has stalled, at least 17 tech firms have put off initial public offerings.
Marketplace’s Jennifer Collins reports.
Jennifer Collins: Venture capitalists pour billions into startups every year. Facebook, Twitter, Groupon — all got healthy doses of venture capital. And eventually those investors want their money back.
Kathy Smith: So they’re anxious because they would like to get a good price for not such a long holding period.
Kathy Smith is with Renaissance Capital. She says when IPOs slow down — because the markets are unpredictable as they are now — it takes investors longer to cash out. Vikram Mansharamani teaches finance at Yale.
Vikram Mansharamani: Venture capitalists harvest their investments and then recycle that capital into new investments.
Mansharamani says if a venture capital firm doesn’t turn a profit, it won’t spend as freely.
Mansharamani: It’ll be hard for other startups to get money.
Kathy Smith thinks the IPO market could be slow for at least several weeks. An even if the chill becomes a deep freeze, she says it’ll probably only last six months.
I’m Jennifer Collins for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.