Last week marked the 10-year anniversary of Google’s IPO. A $GOOG investment on August 19, 2004 would have returned 13x over the decade. Not bad. But a seed-stage investment in Google would have returned 10,000x.
Non-accredited investors never had easy access to early-stage growth companies, but now it is hard for retail investors to even access late-stage growth.
Growing companies are staying private.
Private financing rounds that valued U.S. venture-backed companies at $1 billion or more were four times as common through the first half of this year as billion-dollar IPOs. This is the widest gap on record between venture rounds and IPOs for billion-dollar companies.
The JOBS Act was intended to improve access to the public capital markets for emerging growth companies, but at the same time, the significant increase in the maximum number of shareholders that a private company may have without registering as a public company has given private companies more flexibility in timing their IPOs. As a result, companies are waiting longer to IPO, and are more mature by the time they emerge.
Growth companies can still gain access to capital, but can retail investors gain access to growth companies? Yes.