I was extremely pleased to see Congress pass and the President sign the JOBS Act, which will loosen the IPO process for emerging growth companies. A lot of ink (or is that pixels) was spilled talking about how this bill will help the economy, but I want to dig a bit under the covers to explain why having a robust IPO market is so critical to innovation, even in light of the current indigestion surrounding Groupon, Zynga, and Facebook. To do so, one needs to understand how and why most mergers fail and why growth companies are uniquely positioned to drive innovation.
There are natural inflection points in a private company’s lifecycle which drive financing or exit decisions. As companies cross into the $10 million to $20 million annual revenue band, the entrepreneur and his investors have often been in the business for five or more years. Classic software companies, which used to get 80 percent of their revenues up front, grew to this point a little faster; SaaS companies, despite repeatable revenues and their popularity as a delivery model, grow a little more slowly.
To read the full, original article click on this link: Why Innovators Should Still Aim for an IPO, Not An Acquisition | Xconomy
