Benchmark's Bill Gurley says the IPO system is 'rigged': interview - Business Insider

  • 📰 BusinessInsider
  • ⏱ Reading Time:
  • 61 sec. here
  • 3 min. at publisher
  • 📊 Quality Score:
  • News: 28%
  • Publisher: 51%

Ireland News News

Ireland Ireland Latest News,Ireland Ireland Headlines

Legendary tech VC Bill Gurley explains why the IPO 'game is rigged' and why Slack and Spotify's disappointing listings haven't shaken his faith that direct listings will become the norm

Legendary venture capitalist Bill Gurley has become something of an evangelist for the direct listing process, an alternative to traditional initial public offerings. BenchmarkThis story requires our BI Prime membership. To read the full article,Venture capitalist Bill Gurley thinks direct listings — a newer, more streamlined way for companies to go public — will eventually replace the traditional initial public offering.

He argues that traditional IPOs are "rigged" against regular investors and the companies that use the process.When Spotify and then Slack used an alternative method of going public, there was a lot of buzz in Silicon Valley that the traditional initial public offering process might soon go by the wayside.

In a traditional IPO, companies hire investment banks to underwrite their offering and help them prepare for it — paying them hefty fees for the service. The investment banks take the companies on a so-called roadshow, meeting with prospective investors. The banks then set a price for the companies' shares that's based on their sense of the demand for them. But they typically underprice the shares a bit so that they'll rise in trading on their first day.

To him, the debate over IPOs and direct listings has almost a moral dimension. Direct listings are democratic, allowing any investor to take part. They're fair and efficient, relying on market mechanisms used for pricing practically every other financial product. By contrast, the traditional IPO process is not just inefficient, it's skewed in favor of the banks and their favored clients.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 729. in İE

Ireland Ireland Latest News, Ireland Ireland Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Top 4 contrarian stock market bets from famed investor Bill Miller - Business InsiderBill Miller's mutual fund crushed the market for a record 15 straight years, and he's still beating his peers. He outlined for us the top 4 contrarian bets he's making right now.
Source: BusinessInsider - 🏆 729. / 51 Read more »

Jeff Bezos threw an extravagant party with Ivanka Trump, Bill Gates, and Ben Stiller - Business InsiderJeff Bezos hosted an extravagant after-party for a secret club whose members wear gold medals, and it was attended by Ivanka Trump and Bill Gates Not so secret now is it? Bet that made orange daddy mad to go to the mean guys house Illuminati confirmed
Source: BusinessInsider - 🏆 729. / 51 Read more »