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Is Going Public Going Out of Style?

The number of publicly traded companies continues to decline.

Alix Stuart, CFO Magazine
May 1, 2011

Out of ideas? Throw money!

"...Treasury Department is looking to put $1.5 billion in the hands of state officials..." I'm all for federalism, States rights and even a limited Federal government (see my book "The Next 10 Amendments" for evidence) but there are times when the Federal government throwing money at a problem (even to the States) is nothing more than an abdication of their responsibility to facilitate results congruent with the principles of free market capitalism. In 10 minutes I can lay out a program superior to the Treasury Department's. Ready? Time me. Go! Create a website called Investment.gov, fill it with the $1.5B, allow business owners (of various sizes and types) to apply using a form with a combination of multiple choice, fill in the blank and short answer questions. Who decides who gets the money? (Glad you asked.) Taking a cue from the free market enterprise system (something too rarely done by governments in this citizen's opinion), Angel Investors review and bid on projects they want all or a piece of. (See how I snuck in a little competition there?) Where do the Angels come from? Same place they are now, all over the place. They apply to join Investment.gov for a few reasons, not the least of which is that the "demand" is going to join! But more importantly, the Angels (aka supply) are applying for matching funds (from the $1.5B pool). Here's a riddle: How do you turn $1.5B of dumb money into smart money? Match it with smart people who have their own brilliant money at stake too (well, brilliant as far as they are concerned and if they earned it, they get to label it!). Who picks the Angels? The State the Angel lives in (primary residence) approves or denies. (Thought I forgot about the States, didn't you??). Every State picks their own Angels (w/o Federal interference). And States review the deals on the table according to the residency of the business (not the Angel) to approve the one best ones. This is important. Unlike today's mostly old-fashioned investment landscape when the Angel and the future mogul probably only met because some networking group hosted a rubber chicken meal in a hotel ballroom, the Angel and the business could live anywhere. They met online, on Investment.gov because the Federal government was doing it's job - facilitating. If the States do a bad job matching? They lose investment, growth, businesses, jobs, tax revenue, Angels, on and on. But guess what, there are plenty of other States to pick from! Pack up the truck and move to a better State. How would you know "better" from "worse." Investment.gov! But wait, how much money does each State get from the pool? You know the answer.. they compete for it! There are caps and throttles and what-not to prevent a pig at the trough, but the most important device of all may be sunlight. A State making an investment error (or 10) may well trigger a "regime change," if you know what I mean. States compete. Angels compete. Entrepreneurs compete. Money attains vastly improved smarts and velocity so that everyone wins. Well, almost. There are a some important details I'll keep off this website at this time. People serious about bringing America's investment landscape into the 21st century (investors, investment houses, governments, entrepreneurs who want a piece of THIS action. Seriously, if you were Goldman, PIMCO or Blackrock wouldn't you want cash in this along side the government's for your clients?) can easily reach me. Ask me what a "startup ETF" is also. Best 10 minute read of your day? I did my best to compete against everything else you read today. :-) @DanFarfan

Posted by Dan Farfan | May 08, 2011 02:32 pm

It might help

It might help the position of those who decry the lack of new public listings if they'd publish a list of companies that they think "should" go public, and explain why they "should."

Posted by Roland Cycan | May 05, 2011 09:40 am

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