IPO Crossroads: Is It Too Noisy Or Expensive?

The time for us QE to exit is approaching step by step, which will further increase the cost of capital.

Zhang Ying, a well-known Vc firms developer of Jingwei venture, sent a letter not long ago, saying that the heat of the capital market is bound to turn cold. Regardless of whether the bubble is coming, we must be prepared and contrarian.

"Now it seems that blind optimism is very dangerous."

Marc Andreessen, the top US venture capitalist and Netscape Co founder, has always denied that there is a bubble in the technology market. But he warned 9 days about the status quo of the technology industry. "When the market changes, the merger and acquisition activities will basically stop, and no one will buy your money burning machine."

Then there will be no B plan. We can only wait for death.

U.S.A

It has been 203 years since its start in 1811, but how many listed companies are the United States as the world's largest capital market? By the end of 2013, there were only 5008. These 5000 families covered not only the top 95% enterprises in the US, but only a few outstanding family enterprises such as Marx and Koch, and many other listed companies in other countries.

In 2013, the capital market got warmer, with only 92 listed companies, and most of them were silent and unknown.

In other words, the real elite business is very limited.

Taking market capitalization as an example, up to yesterday, only 774 listed companies in the United States had a market value of more than 10 billion dollars, and only more than 3100 enterprises with a range of 1 billion dollars were relaxed.

Uber's valuation reached 19 billion dollars, AirBnb reached 10 billion dollars, you may feel very high, but it is already one of the less than 800 elite companies, less than 1/6 of the total number of listed companies, and it is only about 4 annually.

It is true that on average, 4 US companies with a market capitalization of $10 billion can be generated annually, generating about 15 or 16 companies with a market value of more than 1 billion US dollars.

How heavy is it?

It was a wonderful commodity.

In this case, the private market such as VCPE has developed greatly, and more and more mobile funds have been wandering in the market. They have raised their valuations voluntarily. Is it strange that these high quality enterprises are not eager to go public?

Winner takes all

There is an age in an era.

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Among those listed companies, Internet related enterprises are the main ones, and some innovative enterprises such as biomedicine, new materials and so on. There are fewer enterprises in traditional industries, because those industries have already been set up, and it is difficult to appear subversive enterprises unless they are subverted through the IT technology curve.

In the field of IT, it has a very strong characteristic, that is, winner takes all.

By the Internet stage, this characteristic has become stronger.

If it is not the first second place in a particular field, there will be no development opportunity. Conversely, if you have become the first second in the specific market, then you will become the overlord in the industry in the future. This rule is extremely difficult to break.

Therefore, many enterprises that have established network advantages are no longer anxious to go public, and can also obtain huge financing ability in the private placement market.

For example, Uber, whose market position is very stable and develops very fast, according to its claim that it can create 20 thousand jobs every month. Because of this, Ali and Tencent are willing to invest hundreds of millions of jobs in a month.

So, those unlisted companies that are waiting for the price to sell are just seeing this. They can be more relaxed. Many investors are sure that these investors are guaranteed, and they are more compressed than those with uncertain trends.

The 49 US $1 billion business is obviously not a big sum relative to trillions of dollars in investment funds.

Under such circumstances, the exit of QE will undoubtedly raise the overall cost of the market and reduce the overall valuation of the market. Recently, the Russell index representing small and medium capitalization stocks has already weakened earlier.

These high-quality unlisted companies may not be eager to finance at a lower price.

What's more, as you know, when the PE is full of walking, when the market conditions of the two tier market are not good, there are not many options for these funds. The risk of the fall in the two grade market is really lower than that of the quality enterprises in the primary market.