I think the current state of IPOs are a direct result of the over-egging of the pudding in the late 90s. The success of the Netscape IPO paved the way for later IPOs like Yahoo and Amazon, and then the floodgates opened and a lot of poor quality issues happened, and a lot of people lost of lot of money.
The hangover from this period is evident in several areas: the Sarbanes-Oxley act - which is the response of politicians to 'do something', shareholder lawsuits, which is the response of lawyers to try and get a slice of the action, and a general aura of fraud and shiftiness around the word 'IPO'. One of the reasons the Google IPO was handled in such a different way was a measured response to try and distance themselves from these connotations.
Time will tell whether the IPO can be restored as both a valid liquidity event, and a valid way of getting investment in a company. I don't want to have a world in which the only way to get liquidity for a company is to sell to a larger company. Otherwise we see the like of Microsoft and Apple get bought up by the IBMs and Xeroxes of the day, and while the founders still get rich, truly new and different companies are starved of the oxygen to grow into their unique way.
When the perceived worth of a piece of some 'internet action' was much higher, along with the 'barriers to entry' being perceived as much higher, of course IPOs did a lot better.
Now, it's easier to grab a tiny slice of pie, either through web-ads, or through selling a service based on cheap hardware, open software and sweat-equity, no IPO needed.
The hangover from this period is evident in several areas: the Sarbanes-Oxley act - which is the response of politicians to 'do something', shareholder lawsuits, which is the response of lawyers to try and get a slice of the action, and a general aura of fraud and shiftiness around the word 'IPO'. One of the reasons the Google IPO was handled in such a different way was a measured response to try and distance themselves from these connotations.
Time will tell whether the IPO can be restored as both a valid liquidity event, and a valid way of getting investment in a company. I don't want to have a world in which the only way to get liquidity for a company is to sell to a larger company. Otherwise we see the like of Microsoft and Apple get bought up by the IBMs and Xeroxes of the day, and while the founders still get rich, truly new and different companies are starved of the oxygen to grow into their unique way.