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Comment by cromulent | Hacker News Reader

According to the FT it is simply part of a greater trend.

"This is a sign of US strength, not weakness. In many countries going public may be the only way to raise permanent capital, and banks the only way to finance investments, but the US has a sprawling venture capital industry, deal-hungry private equity firms, relatively healthy banks, a private placement market that is the envy of many other countries, and the most vibrant corporate bond market on the planet."

http://www.ft.com/intl/cms/s/0/534b5560-f7d1-11e5-96db-fc683...

https://www.google.com/search?q=IPO+market+decrepit+as+going...

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Not sure if I'd classify that as a strength though. All it indicates is that there's a lot of wealth concentration.

Agreed. The idea that it is a strength smells a lot like trickle-down economics.

FT writers are such free market fundamentalists they make WSJ writers look like Bernie Sanders supporters.

That's really not true. The FT is pretty varied but there is a lot of market criticism.

Wealth is tremendously concentrated into just a few countries, yes. Those countries consider that concentration a strength, because it allows them to do things that countries with a lower concentration of wealth cannot even contemplate.

By what definition can it be considered a weakness?

I think parent comment means the concentration of wealth to certain people within a country relative to others within that same country.

That is, already-wealthy VCs are still seizing lucrative opportunities on private markets (as pointed out). It's just the public that isn't able to participate because companies aren't going public.

Not trying to say VCs are holy, but... they are investing, in large portion, the public's money, just in the private marketplace. Pension funds, insurance, family offices, etc., are all active in venture, and that's all "our money" as well.

That may well be true but I was charitably assuming the poster was trying to be on-topic.

Depends. If they are holding back from IPOs because they don't believe they can match their private valuations, that would be a sign of weakness.

Or a bubble in private markets. There are plenty of "unicorn" private companies which would be worth far less in public markets

But IPOs allow the public to enjoy the proceeds from corporate profits, whereas privately held companies do not.

Publicly traded companies are one of the most important pro-egalitarian components of Capitalism.

>Publicly traded companies are one of the most important pro-egalitarian components of Capitalism.

Capitalism eventually buys the market. There has never been a different outcome.

At the same time, going public is usually one of the worst things a company can do for itself. With few exceptions, instead of being ok with mild profits, shareholders demand extreme amounts of profit and growth, and will bitch and moan and threaten to takeover if that doesn't happen.

True, but why don't more tech companies follow Amazon's lead of tempering shareholder expectations? Is Amazon somehow unique in being able to do this?

Amazon is in great financial position, but they reinvest all net revenue. So I guess they don't qualify as constant profit (now) but they count as growth, with eventual high profit

Kind of, because they're still making buttloads of money. I also don't know offhand what percentage of stock Bezos and Co own. Google is able to get away with a lot of this because 1). They still make buttloads of money, and 2). Larry and Sergei own the majority of stock (at least I'm pretty sure they do).

A strength or an indication of historically low interest rates? The money to pay off the VC's can be borrowed very cheaply, if not by the company itself then by other investors with an interest in a longer-term investment.

Beyond that, the reason private equity firms are so "deal-hungry" is low interest rates put a damper on returns from all sources.

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