December 2011

Some of the best known names in technology were able to conduct initial public offerings during 2011. These included technology companies like LinkedIn, Pandora, Groupon, Zillow, Demand Media and others. This will likely continue tomorrow as one of the most highly anticipated technology company offerings of the year (Zynga, a developer of online games for Facebook) is scheduled to price its IPO tonight.

The markets remained fairly receptive to these technology IPOs throughout 2011. This is impressive given the general poor state of the capital markets and the high degree of skepticism that greeted many transactions in other industries. Companies from many other industries found themselves either shut out of the capital markets or unable to easily access capital.

Many of these high profile technology companies have been able to maintain or show an increase from their IPO price. Based on recent information, LinkedIn, Groupon and Zillow are all trading well above their IPO prices. This is again impressive given the overall status of the capital markets. Not all technology companies have been successful in the public arena, however, as Pandora, Demand Media and others currently trade well below their IPO prices. The general feeling among investors seems to be that they are satisfied with most of these technology companies for now, but there is also an undercurrent of skepticism.

Of course, the most highly anticipated technology IPO (and one of the most highly anticipated IPOs in history) may occur in 2012 if Facebook elects to proceed with its offering. There is no way to tell if this will happen, but there have been an increasing number of signs that Facebook is going in this direction.

All of these public technology companies face some serious fundamental questions and issues, and the resolution of these questions and issues will determine the long-term success or failure of these technology companies as public entities. The questions surrounding these companies mainly relate to basic business issues such as the long-term viability of their business models and their ability to establish and maintain sustainable and profitable business operations over time. Even though investors Continue Reading Technology IPOs – Where Do We Go From Here?

If the U.S. House of Representatives has its way, big changes are on the horizon for private offerings.  In an effort to enhance the ability of small businesses to raise capital, the House has now passed four bills that reduce some of the restrictions.  The bills are as follows:

1)  Entrepreneurial Access to Capital Act (HR 2930) – This bill would allow businesses to accept and pool donations of up to $1 million (or $2 million in some instances) without requiring SEC registration.  This concept is known as crowdfunding, which involves the pooling of small contributions in an effort to help others attain a specific goal. If this bill were to become law, it would preempt state law, would permit access to capital sources that previously were untapped, and would prevent the new shareholders from being counted toward the SEC’s 500 shareholder limit for non-public companies.

2)  The Access to Capital for Job Creators Act (HR 2940) – This bill would remove the general solicitation and advertising ban from SEC Rule 506 under Regulation D.  This change would permit small businesses to solicit investments from accredited investors throughout the U.S. and globally.  Like the crowd funding bill, HR 2940 would provide greater access to capital sources.  It would also modernize the way Regulation D offerings are conducted by allowing businesses to directly advertise to accredited investors.

3)  HR 1965 – This bill with no name would increase the number of shareholders bank holding companies and banks may have before requiring SEC registration.  Currently, companies are required to go public if they have 500 or more shareholders and have $10 million or more in assets.  The bill would allow community bank holding companies to have up to 2,000 investors before requiring registration.  As such, community banks would have greater access to capital without requiring added SEC regulation. Continue Reading House Votes to Make Capital Raising Easier