In an interview today at TechCrunch Disrupt, Bill Gurley (partner at Benchmark Capital ) and Michael Grimes (MD Global Technology Investment Banking , Morgan Stanley) sat down to discuss the current IPO market trend. They emphasized Facebook, LinkedIn, Jive and Millennial Media are considering to making their companies public over the next few years, while GreenDot a fresh startup is filing for a $2 billion IPO today.
When asked if any one IPO will change the current market, Gurley believes in a joint effort rather than pinning hopes on any single IPO. Grimes added to the statement that more isn’t necessarily better when it comes to revenue. A $50 million run rate could work better than a $100 million run rate depending on the business model. Both the experts highlighted the fact that companies based outside Silicon Valley, like Greendot, are less hyped when going public in contrast to its competitors in the Valley.
Gurley also believes that there isn’t a need for a super high-quality company to go public to open up the IPO floodgate. For example, LinkedIn brought on public company veteran Skip Battle as a board member, signalling that the company is prepping for an IPO in the next year.
What’s the reasoning behind taking a company public? According to Grimes, it is the liquidity for founders and employees, increased capital for M&A and additional exposure to a brand are all positive results of an IPO.
Both Grimes and Gurley expect 40-50 companies to participate in IPO in the tech space over the next year, including Skype and LinkedIn.
[via Techcrunch]