Tech companies shelve IPOs
Venture capitalists are less confident thanks to volatile markets, but the IPO chill probably won't last that long.
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.