The first half of 2014 saw 30 technology company IPOs in the United States, including such firms as software-as-a-service company Paycom Software, cloud-based software company Castlight Health, and UK-based interactive games company King Digital Entertainment King Digital Entertainment. The 30 first half technology IPOs are at an annualized rate of 60 deals, which would be the most since 2007. Yet, in spite of a stock market near record highs, this level of tech company IPOs is only about half of the 116 in an average year during 1980-2000, in spite of real GDP more than doubling from the early 1980s until now. Why aren't more tech companies going public?
The conventional wisdom is that public companies are suffering from excessive regulation, although the JOBS Act of 2012 attempted to lesson some of the burdens on Emerging Growth Companies, defined to be companies with less than $1 billion in annual sales that have been public for less than five years. The decline in small company IPOs started five years before the Sarbanes-Oxley Act of 2002 was passed, however. There is truth to the excessive regulation story, but I think that there is more going on that cannot be affected by legislators.
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