Instead, their shares trade in the private secondary market. SharesPost and other exchanges of non-public shares have grown in popularity in recent years.
“It was once the case [that] if you wanted big sophisticated investors... you had to go through that whole IPO experience with all the hassle, the expenses, and invasive questions” said Max Wolff, partner and chief economist at Manhattan Venture Partners, a research-based merchant bank focused on the secondary market. But he said times have changed.
Wolff's firm boasts partners that have participated in private transactions in the late-stages of now-public technology companies including Facebook (FB), LinkedIN (LNKD), Tesla (TSLA), and Twitter (TWTR).
“There’s so much money and sophisticated investor money out there," said Wolff. "In the private space, companies can really chart their own course.”
He added companies that do go public take their time now, “companies go from after an average of 4 years in the last tech boom to an average of 11 years in this tech boom.”
For the companies trading on the secondary market, Wolff is concerned with a “mismatch” within that market as it grows in asset size but has “much less interest" from the investment community.
"We need IPOs to offer liquidity to fuel future private tech investments," Wolff said. But he suspects the trend to delay taking companies public is "temporary and the truly fearsome version of this occurs if the IPO window closes -- and we know that it eventually will."
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