The Evolving Capital Markets – 2011 Revisited, 2012 Forecasted

Posted on January 5, 2012 | Leave a comment

It’s that time of the year again – when we weigh in on the events of the previous twelve months and make our forecasts as well resolutions for the next twelve.

Last year I made several predictions about how the private company marketplace (PCM) would evolve in 2011, and I’m proud to gloat that most of them came true. Unfortunately, the few that did not come to fruition will prohibit me from realizing my longtime dream of making a guest appearance on Dionne Warwick’s Psychic Friends Network.

In any event, here’s the weigh-in:

To summarize, I predicted, that in 2011, technology would accelerate (duh), that LinkedIn, Groupon, Zynga and Facebook would all graduate the private markets and list in the public markets (oh so close), and that it would be difficult for these companies to sustain their massive growth rates in the more treacherous public arena (spot on). I erroneously forecasted that more stringent regulation would be introduced to oversee the private markets and that the heaps of snow in the northeast would eventually melt. To my surprise and delight, it turned out that more lax legislation made its way through Capitol Hill. And in my defense, I don’t think even Nostradamus could have foreseen a blizzard pummeling NY during the month of October.

So what’s in store for 2012? Here are my predictions:

I envision 2012 being a break-out year for the Private Company Marketplace (PCM) in terms of organization, perception and adoption – all primarily attributable to the inter-correlation of a more favorable regulatory environment, increasing disdain for conventional Wall Street and a Facebook IPO.

Organization: I foresee the PCM developing a structured framework enabling it to function more as an organized “exchange” and less like a hodgepodge of unwitting brokers fighting over spreads in mythical Facebook transactions. I believe that in 2012 we will likely see the emergence of a much needed back office infrastructure that facilitates the depositing, clearing and settlement of private stock and related transactions. I also anticipate greater transparency with the materialization of research platforms and analysts dedicated to the coverage of private company shares.

Perception: As the back office infrastructure matures, the research universe expands and settlement timing condenses, a more favorable opinion of the PCM will ensue. Private companies will begin to view the PCM as a viable marketplace to list its shares. The investing community will increasingly look to the PCM for new growth opportunities. The private markets will feel less like the Wild West and more like the genesis of NASDAQ (read Farewell, NASDAQ. The Next Wealth Generator Has Been Unleashed).

Adoption: We started witnessing the initial stages of adoption in 2011 as accredited investors and lesser known private companies began looking at the private markets with curiosity and intrigue. I feel that 2012 will be the year when next-generation private companies enthusiastically employ the PCM for controlled liquidity events, maximizing shareholder value and increasing brand awareness. I also believe that new capital will flow into the private markets as investors ditch the volatile public markets for increased stability and greater opportunities for appreciation.

As the election draws nearer, prompting the occupy movement to take center stage in the media, legislators will be further compelled to vote in favor of job creation bills such as HR 2930, HR 2940, HR 1965 and HR 2167 – all of which are indisputably supportive of a fairer marketplace more conducive to innovation and expansion. The more rampant the public loathing of Wall Street, the easier it becomes to effect legislative change and the greater the odds of Facebook achieving success with an unconventional IPO (read How Facebook’s IPO Could Transform The Capital Markets).

Now skeptics would maintain that bucking the Wall Street establishment is a recipe for failure and point to Google’s “dutch auction” IPO in 2004 as a major disappointment. I would argue that the world has changed dramatically since Google IPO’d and that today’s amenable climate perfectly positions Facebook to succeed where Google could not. During the past eight years, technology has accelerated, the growth of the Internet has exploded, social media has transformed communications and Wall Street’s reputation has been irreparably damaged.

According to Internet World Stats, world internet users grew from 785M in March 2004 to over 2B in March 2011. With Facebook’s membership base of 800M and growing, more users are now on Facebook than were on the entire World Wide Web when Google went public. Furthermore, Facebook’s users are not simply “searching”. They are deeply engaging with brands, fellow users as well as with the platform itself. In my opinion, there is no other public company more capable of influencing buying habits. With an estimated 4 times the revenue Google had when it IPO’d, Facebook is much better poised for a lucrative public offering.

I truly hope that Facebook decides to make a radical IPO entrance. For with its global dominance, I believe it has the capacity to not only revolutionize the capital markets, but to save them. Now, only if it had the power to ensure a mild winter in the Northeast.

On a final note, regarding my new year’s resolution, I promised my old college friend, Jill, that in 2012 I would make a genuine and concerted effort to stop revealing to the world her most private and embarrassing college moments, like during her semester abroad when she fractured her buttocks slipping in the bidet.

Some resolutions are just destined to fail.

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How Facebook’s IPO Could Transform the Capital Markets

Posted on December 19, 2011 | 3 Comments

Everyone, from the thousands of small cap underwriters who were banished from the business to the tens of thousands of people getting high in tents and occupying the nation, would agree that Wall Street is seriously broken. And Wall Street’s integrity is just as damaged as its shattered infrastructure. But while the infrastructure can be rebuilt, a tarnished reputation is irreparable. No one knows this better than my old college friend Jill who will forever be remembered as the girl who slipped herself a ruffie and found herself waking up naked between her 60 year-old biology professor and the school mascot.

But I digress.

As an eternal optimist, I believe that something beautiful will emerge from this wreckage. While Wall Street is crumbling, something epic is brewing – something that has the predominance to forever alter the face of Wall Street. That something is a Facebook IPO.

Facebook has already ignited the private markets and changed the path of capital formation. But I believe that the company, famous for transforming global communications, will utilize its sphere of influence to next revolutionize the new issue market. I predict that Facebook’s IPO entrance will be anything but predictable.

There has been some speculation that Facebook will attempt an IPO without underwriters. Given Facebook’s larger-than-life stature, its history of raising capital under its own terms and Wall Street’s PR in crisis mode, I would not be surprised to find Facebook asserting, “F*&K You, Wall Street. We can make it fairer. We can do it better.”

It wouldn’t be the first time an issuer dictated its own terms. Seven years ago Google completed its IPO via the unconventional “Dutch Auction” process. Although Google did use underwriters, they were able to wrangle the banking fees down to a mere 2.8%. But, Facebook is not one to follow in Google’s footsteps. Instead, it is a company with the wherewithal to set an entirely new precedent for bucking the Wall Street establishment.

Theoretically, the social media giant can self-underwrite its IPO and employ a method called Direct Registration to sell its shares to the general public. This contemporary technique was implemented by the DTC to allow investors to purchase their shares directly from the issuer and hold their shares in uncertificated direct registration book-entry position on the books of the transfer agent. The shares are paid for by an ACH checking account debit, eliminating the need for the purchaser to open and fund a separate brokerage account.

With this approach, Facebook can utilize its own platform to facilitate every aspect of the IPO process from marketing to distributing offering documents to obtaining indications of interest to ultimately completing the transaction. And with investors already clamoring to purchase shares, Facebook won’t need to contend with the most arduous component of the IPO process – the road show.

According to Gene Massey, CEO of MediaShares, a company that furnishes patent-protected, fully SEC-compliant Direct Registration tools, “Not only would Facebook be able to bank hundreds of millions in unspent banking fees, a Direct Registration would also allow Facebook to gather privy shareholder information that would otherwise only be accessible to its underwriters. This information on top of the immense data it already possesses could propel Facebook into becoming the most powerful marketing company in history.”

Yes, I think I may have read somewhere about Facebook’s data obsession. But how much money can Facebook actually save with a self-underwritten IPO? If, like Google, Facebook enlists the help of underwriters and negotiates a 2.8% fee, on an anticipated $10B offering, Facebook could expect to pay $280M plus another $42M upon the exercise of the green shoe. For those doing the math, the total investment banking commissions would basically equate to the same dollar amount needed for Facebook to hire nearly 3,000 more software engineers and double its employee base.

I can’t see why a company that clearly needs no marketing and is accustomed to calling its own shots would suddenly choose to relinquish control of significant demographic data and pay unnecessary banking fees. It simply doesn’t make sense considering it already possesses the infrastructure as well as a member base of 800,000,000 potential investors. Think about this – if Facebook sold just 1 share of its stock to each of its members, it could raise in excess of $30B or three times the amount that its bankers would raise by placing it in the hands of their favorite institutional clients.[i]

Here’s another thought to ponder – should Facebook’s self-underwritten IPO be triumphant, it can very well usher in the era of the social stock market. Hmmm, disrupting Wall Street as opposed to occupying it? Now that is capitalism at its best.

[i] Based on recent press suggesting Facebook being valued at $100B at IPO – http://online.wsj.com/article/SB10001424052970203935604577066773790883672.html

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Bipartisanship Prevails for Job Creation

Posted on October 31, 2011 | 7 Comments

Long before Wall Street turned into a campground it was like a dependable machine that kept capital flowing to our greatest job creators – America’s small businesses. At the heart of the system was the Nasdaq engine that transformed sheer innovation into economic prosperity for an entire nation. Regrettably, a combination of over-regulation and greed shattered that foundation and led to the devastation of a once dynamic framework. What remained was a broken capital markets system impeding job creation and obstructing economic growth.

How magical life would be if only sleeping in tents, carrying disparaging picket signs and wearing funky t-shirts could miraculously repair a damaged Wall Street. With the exception of an occasional forest ranger, I have yet to see one job derive from pitching tents. On the other hand, framing a new capital markets infrastructure, championing innovative young companies, will indisputably produce jobs. In these remarkable times of technological achievement, there has never been a more opportune moment for early stage companies to capitalize on innovation. Today’s ingenuity in conjunction with a supportive capital markets structure can be the impetus for renewed economic prosperity.

For more than a decade, our capital markets have been in dire need of a Nasdaq replacement. But one that differentiates itself by encouraging growth not speculation, thus attracting shareholders not traders. During the past two years, we have been witnessing the rapid evolution of such a market, the Private Company Marketplace (PCM), also known as the secondary markets, where our fastest growing private companies are currently traded. By furnishing a fair and more liquid market for emerging private companies to thrive, the PCM has become an integral part of the capital formation process. It is creating a more efficient path to growth capital for young companies and enabling them to once again innovate, expand, compete and most importantly, hire.

Lawmakers are finally beginning to realize the immense potential of this nascent marketplace. Last week, in a rare but refreshing show of bipartisanship, the House Financial Services Committee approved three bills that would facilitate capital raising for small businesses, giving them new resources and ample time to flourish as a private company.  All three bills were approved by a voice vote, with two (H.R. 2940 and H.R. 1965) passing through without a single amendment. And all three will undoubtedly foster the growth of the PCM. The House is likely to approve the bundled bills by unanimous consent later this week.

I had the privilege of interviewing Vincent Molinari, the Founder and CEO of Gate Technologies, one of the leading trading platforms in the PCM. As one of the expert witnesses during the congressional hearings that led to the creation of this proposed legislation, Vince has agreed to discuss these bills and provide key insight into how these regulatory changes could impact the entire capital markets landscape.

According to Vince’s summary, H.R. 2940, sponsored by Rep. Kevin McCarthy (R-Calif.), consists of a unilateral removal of the general solicitation and advertising ban for unregistered securities so long as all purchasers of the securities are accredited investors. Under the current law, companies issuing unregistered securities are limited to only marketing to investors they already know. By allowing a company to broaden its marketing efforts, it increases its likelihood of raising capital by reaching new potential investors.

What’s more, had McCarthy’s bill been implemented earlier this year, Goldman Sachs would not have been compelled to place Facebook stock internationally, resulting in U.S. investors relinquishing $20+ billion thus far in appreciation. To put it into perspective, what might have been a sizeable capital gains revenue opportunity resulting from a Facebook IPO, will instead most likely end up being a tax increase, spending cut or additional debt to China.

Rep. Patrick McHenry (R-N.C.) sponsored another bill that would allow companies to raise capital via “crowd funding,” a method that allows smaller investors to collectively pool money together, usually via the Internet. Under the bill, an investor would be able to invest the lesser of $10,000 or 10% of his annual income in a company. Companies would be able to raise up to $1 million in this manner or up to $2 million if they provide audited financial statements. Not only would this bill provide the much needed funding for start-ups, it would also give smaller investors an opportunity to invest long before a company’s growth has peaked.

“People are frustrated with Wall Street largely because they perceive it as an
exclusive club where the rich get richer and where smaller investors are not
afforded similar opportunities to create wealth,” said Molinari. “McHenry’s
bill levels the playing field by giving smaller investors a chance to invest in
a company at the same stage as a VC or Angel would.”

Another bill, sponsored by, Rep. Jim Himes (D-Conn.), would increase the limit to 2,000 shareholders from 500 for banks, helping community banks raise the capital needed to lend to local small businesses.

“Our public markets have experienced far too much volatility and uncertainty in recent times. Small companies simply cannot thrive in this environment. By increasing the opportunities for private companies to access capital, they can “buy” the time needed to properly cultivate their business and prepare for a public exit. This legislation, coupled with the new liquidity alternatives made possible by the PCM, will empower our entire capital markets. It will result once again in the flow of capital to small businesses, fueling America’s most vigorous job-creation machine,” concluded Molinari.

In a bleak environment where small IPOs are effectively non-existent and banks are refusing to lend, the passage of these bipartisan bills will render newfound hope for entrepreneurs as well as smaller investors. While this is a promising start, there is so much more we could emend such as H.R. 2167: Private Company Flexibility and Growth Act sponsored by Rep. David Schweikert [R-AZ] which unfortunately will not make it to the floor this week.  This bill, increasing the shareholder threshold to 1,000 from 500 without triggering an SEC filing, is another important piece of legislation that will enable private companies to capitalize from longer gestation periods.

Furthermore, in the current ecosystem, even small Broker/Dealers and investment banks have been virtually forced out of the seed raising process. Regulatory burdens have made it nearly impossible for them assist earlier stage companies. The American entrepreneur is in desperate need of help and cannot afford to leave even one stone unturned. If appropriately incentivized, B/Ds could once again become an invaluable resource, particularly in unity with a fresh marketplace comprised of exciting growth companies and long-term investment philosophies.

In the meantime, I commend these lawmakers for putting the people before party and for supplying us with the necessary tools to begin reconstructing the system. Now, isn’t rebuilding is a lot more productive than revolting?

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Farewell, NASDAQ. The Next Wealth Generator Has Been Unleashed

Posted on August 30, 2011 | 1 Comment

So far this year, there has been a great deal of media attention surrounding the private company marketplace (PCM) or what is commonly called, the secondary marketplace due to the nature of shares it currently trades. While there are some who feel that this marketplace is nothing more than a thorn in the SEC’s side or a means for dead grandmothers to acquire shares of hot social media companies, many, like myself, believe that we are witnessing the embryonic period of the next big stock market.

To substantiate this theory, I spent the last few months delving into stock market history. I discovered that once upon a time, not long after my old college friend, Jill, used her first protractor, there was a little-known marketplace about to blossom into one of the world’s most recognizable brands. If I would have stated back then that this marketplace, once branded a “moribund backwater of the security industry”,[i] would go on to exceed the New York Stock Exchange in global dominance and even make an offer to purchase it outright, you would have presumed I was I dipping into Charlie Sheen’s premium stash. But, as history has revealed, the marketplace we all know as NASDAQ, had emerged from relative obscurity and became the most powerful stock market in the world.

Unbeknownst to most, NASDAQ’s road to iconic status is strikingly similar to the one presently being paved by today’s private company marketplace. Its ancestry dates back to the earlier part of the last century when regulators searched for a way to oversee over-the-counter (OTC) trading of smaller companies whose shares were not welcomed on the New York Stock Exchange (NYSE). Analogous to today’s nascent marketplace for private company stock, the marketplace for OTC stocks was, for much of its existence, a fragmented one residing in a completely alternative regulatory universe. In the pre-NASDAQ years, when listing requirements and real-time quotes were essentially non-existent, most firms that made markets in OTC stocks did so without the knowledge of an issuer’s financial condition or even an accurate bid-ask spread.

In fact, according to The SEC’s Special Study of the Securities Markets in 1963, 25% of OTC issuers did not furnish any financial information whatsoever, and that the data supplied by the remaining 75% was appallingly deficient. Without privy to even the most basic fundamentals, share prices were quoted purely in response to order flow. The 1964 Securities Acts Amendments, following the Special Study, unexpectedly led to a boost in share prices of OTC securities as a heightened level of integrity and investor confidence penetrated the marketplace. Most notably, though, this legislation unwittingly laid the groundwork for NASDAQ to emerge and forever revolutionize the way securities are traded and capital is created across the globe.

NASDAQ was officially born on February 8, 1971. By 1982, it had grown to encompass 25 percent of all market trading. From 1983 to 1993 NASDAQ grew from $153 billion in annual trading volume to $1.3 trillion, and in 1994 it had surpassed the trading volume of the NYSE. By mid-1995 the market capitalization of listed NASDAQ companies exceeded $1 trillion. Today NASDAQ lists 3,600 companies from 46 countries worth $5.4 trillion in market capitalization and has more trading volume than any other electronic stock market in the world.

While the regulators may have furnished the fuel, it was technology that ignited the NASDAQ rocket. Computers made it possible for a diffused network of dealers to obtain price and volume data on a real-time basis; setting the stage for NASDAQ to transform the OTC marketplace into the first fully automated stock exchange operating without a trading floor. Interestingly, the same technological ingenuity that made it possible to build NASDAQ’s trading platform is ingrained in the companies that went on to embody its composite. And just like the NASDAQ itself, its listed companies came to epitomize both innovation and growth.

It was NASDAQ, not the long established NYSE, that unveiled behemoth’s like Microsoft, Intel, Dell, Adobe, Cisco and Amazon. More importantly, NASDAQ introduced us to these darlings of Wall Street, not when they were billions of dollars in market capitalization, but when they were promising young companies about to make their mark on the world. Fortunes were made because NASDAQ presented investors with the opportunity to invest in a company prior to its greatest growth spurt – not after it had already passed. While the brick-and-mortar exchanges traditionally barred these smaller companies from listing, thereby obstructing their access to capital, NASDAQ would enthusiastically seek them out. Embracing our most innovational during their most crucial expansionary phase not only distinguished NASDAQ from the other exchanges, but enabled it to become the greatest wealth producing engine the world had ever seen. As a result, it did not take long for that “moribund backwater of the securities industry” to morph into, “the crown jewel of American capitalism”. [ii]

In the beginning, the issuers listing on NASDAQ viewed it as a stepping stone to the conventional exchanges. Then, as time went on and the multi-market-maker approach proved to be a more favorable liquidity system, most of the higher profile companies such as Apple, Intel and Microsoft chose to remain with NASDAQ, despite strong persuasion from NYSE. As NASDAQ aged, it became evident that pandering to larger caps, even at the expense of America’s smaller cap, was its new mantra. With more stringent listing requirements, NASDAQ started looking less like NASDAQ and more like the traditional exchanges. Not surprisingly, its role evolved from an intermediary platform to a more competitive one. The marketplace that once incubated young companies to large cap stardom, today, idly awaits their maturation alongside the other major exchanges. By deserting small caps, NASDAQ left the financial markets with a gaping void in capital formation.

With NASDAQ’s motor at a grinding halt, the birth of a new capital creation machine was not only inevitable but critical to the entire capital markets ecosystem. Today, NASDAQ’s most important function, grooming young innovational companies, is being replaced by cutting-edge private company platforms such as Gate Technologies, SecondMarket, Sharespost and Xpert Financial. The same principles and innovation that once propelled NASDAQ to unforeseen heights is now energizing the private company marketplace as an aggressive new generation of technology companies, able to create value far faster than was ever possible before, remain private longer.

As we embark upon this next evolution of our capital markets, it is worthy to note a few significant distinctions. Because there is no way of shorting or margining private company shares, the PCM, unlike NASDAQ, is not conducive to leverage, derivatives or manipulation. Instead, it is a marketplace that encourages shareholders not traders; growth not speculation. Whereas the public markets breed volatility, the private marketplace upholds stability. Although what NASDAQ accomplished during the last technological revolution was unarguably momentous, it was not without its flaws. This next iteration of the OTC markets is not only given a clean slate, but the gift of hindsight. By preserving NASDAQ’s greatest attributes and improving upon its shortcomings, we have an unprecedented opportunity to unleash the most superior wealth generator the world has ever encountered. Imagine the economic impact of an untarnished, less volatile, pro-small-cap marketplace, rising today, during the most remarkable era of technological achievement. With this alignment, the possibilities are limitless.

Join us at upcoming SoHo Loft Capital Creation Events in cities across the globe for an opportunity to learn more about the private company marketplace and meet some of the pioneers who are developing it.

[i] NASD’s President Gordon S. Macklin
[ii] Chinese premier, Zhu Rongji

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Is Groupon’s IPO Doomed?

Posted on July 27, 2011 | 2 Comments

It was reported today that Groupon’s IPO is delayed until September while the SEC looks into some of its “fancy” accounting metrics.

According to sources, the SEC is focusing on one metric in particular, CSOI, not to be confused with CSI, the popular television crime series. Even though both are draped in mystery, CSOI does not begin with an overplayed “Who” song.

According to Groupon, whose IPO is expected to value the company in excess of $10 billion, CSOI or “consolidated segment operating income” is a way of measuring operating income that excludes a range of expenses that Groupon considers inconsequential such as, oh, marketing fees.  Dismissing those pesky little marketing fees, Groupon claims to have generated $81.6 million in the first quarter of 2011. However, taking its marketing costs into consideration, Groupon would have lost $98 million.

Today’s news comes two weeks after Groupon brought in 11 new underwriters. Eleven new underwriters? Sounds to me like the institutions just aren’t biting at a $10 billion plus valuation. Perhaps Groupon believes that retail investors, like Mikey from the old Life cereal commercials, will eat anything.

I have no doubt that Morgan Stanley, Goldman Sachs, Credit Suisse, JPMorgan, Allen & Co, Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank Securities, William Blair & Co, Citadel Securities, Loop Capital Markets, RBC Capital Markets and the Williams Capital Group will all work together as a great underwriting team to get this deal done!

On another subject, I recently heard that someone paid $150,000 for a virtual house. ONE HUNDRED AND FIFTY THOUSAND REAL DOLLARS FOR A HOUSE THAT LIVES ONLY IN ONES IMAGINATION! It leads me to wonder why we are even wasting time pondering Groupon’s IPO when we should just be saving all of our money for Zynga’s…

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Did Pandora IPO Too Early?

Posted on June 17, 2011 | 4 Comments

Pandora (NYSE: P), the unprofitable Internet radio company brazen enough to demand a single letter trading symbol, made its public debut on Wednesday.

At $16 a share, or $2.6B, Pandora was priced at about 19X last year sales. On its first day of trading, its shares rose as much as 63% from its IPO price to a high of $26, giving it a whopping $4.2B market capitalization. Not too shabby considering its nearest competitor, Sirius XM (Nasdaq: SIRI) is trading at only 2.6X revenue and Pandora’s own board appraised its stock’s value at $3.14 a share, or approximately $500M, a mere six months ago, according to documents filed with the SEC.

Pandora’s tune quickly changed from partying like it was 1999 to singing the blues as its shares progressively declined over the next two trading sessions.  But the real shocking blow arrived this morning when BTIG analyst Rich Greenfield slapped it with a sell rating and initiated coverage with a $5.50 price target.

Also in agreement is Anupam Palit, Senior Equity Analyst at GreenCrest Capital, a cutting-edge research provider of late-stage private companies, who recommends that investors, “Stay away until the price comes back down to earth.” Palit has a $7.50 a share price target on Pandora – a still respectable $1.2B valuation.

To add further salt to the wound, Pandora had put only about 9% of its shares on the public market. Playing the low-float game couldn’t even sustain this one. Oh well, at least the VCs were able to exit at $16.

“With Pandora competitor, Spotify raising $100M this morning at a $1B valuation, it is indeed a great time to be private,” added Palit.

Perhaps we should view Pandora’s lackluster public performance as affirmation that companies lacking profitability simply need more time in the private company marketplace to nurture their business. What do you think?

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Proposed Legislation in Support of the Private Company Marketplace (PCM)

Posted on June 16, 2011 | 1 Comment

It has been reported this week that new legislation is being introduced that would revise The 1964 Securities Acts Amendments which held companies with at least $1 million of assets and 500 shareholders to the same mandatory disclosure requirements as the 1934 Act imposes on securities traded on the major stock exchanges.

The proposed revisions, which include raising the shareholder threshold to 1,000 as well as exempting employees and accredited investors from the shareholder count, would undoubtedly tempt companies into staying private longer.  This rule change, coupled with the new liquidity options made possible by cutting-edge private company platforms such as Gate Technologies, SecondMarket, Sharespost and Xpert Financial will allow private companies to properly cultivate their business and become better prepared for an eventual public exit. As a result, stronger companies will emerge.

“Clearly this indicates congressional support for updating the rules and regulations to be consistent with the developing market and current technologies,” says Vince Molinari, CEO of Gate Technologies. “The positions of regulators and Capitol Hill will foster additional expansion of capital while maintaining oversight and investor protection.”

The passage of the Private Company Flexibility and Growth Act will certainly provide the regulatory impetus to further bolster the rapidly expanding private company marketplace (PCM), the nation’s sole “long-only” marketplace. But what has yet to be discussed is how this act will transform a company’s shareholder base. The PCM attracts an entirely different echelon of investor – the longer term common stock purchaser – to the small cap company at its most pivotal growth stage. As opposed to prematurely going public and risk placing stock in the hands of manipulators, traders and shorters, issuers will be able to more effectively control its liquidity and manage its shareholder base. Imagine a company’s growth potential if its stock is placed with investors whose interests are actually aligned with the company’s. Now, envision the economic impact of an entire marketplace comprised of these companies.

Outstandingly, the bill has garnered bipartisan support and it’s so nice to see everyone finally getting along. I guess with a big election on the horizon, both democrats as well as republicans want to claim credit for a introducing a bill that could potentially resuscitate the U.S. economy.

Please let your local Congressman and Senator know that you support this bill – click here to find your local representative.

NowStreet Media, voice for the rapidly emerging private company marketplace, prides itself on being on the cutting-edge of capital formation enhancement and introducing new and innovative ways for companies to tap into the capital markets and cultivate their businesses. To learn more about NowStreet Media, please visit us at http://nowstreetjournal.com/about-2/.

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