This hot-house atmosphere for a few great businesses and others clinging on for high valuations at listing means its harder for patient, longer-term capital to be efficiently invested in businesses for the overall health of the economy. In such conditions, insiders and intermediaries reap the benefits.
The corporate venturing-backed flotation of internet browser provider Netscape Communications in 1995 sparked a regrettable trend for badly overpriced flotations – potentially including recent deals, such as RenRen and Youku, that have damaged the stock market and capital allocation efficiency and limited the exit route for a broader range of private companies by setting a high bar of expectations.
Netscape, which had raised $18m from software provider Adobe Systems and five media companies as a private company, effectively sparked the…
