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• undermining:
– private companies
– jobs
– innovation
– U.S. competitiveness
– national security
• trouble began before the Dot-Com Bubble reached its peak
S&P 500
NYSE Composite
NASDAQ Composite
100
90
Transactions raising at least $50 million
80
70
60
50
40
30
20
Transactions raising less than $50 million
10
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
thru 6/30
U.S. stock markets need 360 new listings per year just to tread water, and 520 per year to
keep pace with 3% annual GDP growth — levels we have not realized in nearly a decade.
Number of new listings required to maintain “replacement” levels on all U.S. stock markets
Listings lost
“Replacement” Level to match GDP growth = 520
1,000 IPOs gained
Average “Replacement” Level = 360
800
Average IPOs 2004-2008 = 209
600
400
200
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Capital Markets Advisory Partners, World Federation of Exchanges, Dealogic, NYSE Euronext, The NASDAQ Stock Market. Excludes funds.
The lack of a functional IPO market may have cost the United States 22 million jobs over the last decade.
Calculations based on actual 1996 IPO levels of 803 and number of employees at IPO of 1,372.
22.7 million potential jobs lost
(17.8% annual employee growth rate)
Each color band represents the
progressive effects of “lost” IPOs
on job growth potential. For
example, the loss of 10 IPOs in 1997
translates into the potential loss of
20,000,000 83,167 jobs in 2008.
Job costs
15.0 million potential jobs lost from 2008 lost IPOs
(10.0% annual employee growth rate)
from 2007 lost IPOs
15,000,000 from 2006 lost IPOs
11.6 million potential jobs lost from 2005 lost IPOs
(5.0% annual employee growth rate) from 2004 lost IPOs
from 2003 lost IPOs
from 2002 lost IPOs
10,000,000 from 2001 lost IPOs
from 2000 lost IPOs
from 1999 lost IPOs
from 1998 lost IPOs
from 1997 lost IPOs
5,000,000
Millions of jobs would have been created if we had maintained even modest IPO levels.
Historical IPO levels
Annual
employee Number of 361 IPOs 568 IPOs 803 IPOs
growth rate employees at IPO (1998 actual) (1991-1996 average) (1996 actual)
• Pascal Levensohn
– founder and managing partner of Levensohn
Venture Partners, board member of the National
Venture Capital Association (NVCA), and member
of the Council on Foreign Relations
INNOVATION
Thrives In an Environment Which:
Encourages Collaboration and Diversity
Academic and
Funding Breakthrough Research Incremental
Innovation Institutions R&D
Government Corporations
Innovative Solutions
for Next Generation
Infrastructure
Core Building Development
Blocks Venture of IP
Entrepreneurs
Capitalists Process
Knowledge &
Best Practices
© Grant Thornton LLP. All rights reserved.
Why is American Innovation in Crisis and at Risk of
Why is American
Long-Term Decline? innovation in crisis and at risk of long-
term decline?
0.48%
• Barry Silbert
– founder and CEO of SecondMarket, the industry
leader in private company stock transactions
• hybrid marketplace
• offices in NYC and
Silicon Valley
• 5,000 participants
managing over $1
trillion
• ~$25 billion for sale
• ~$2 billion in
transactions in 2009
… drives capital
(equity plus credit) into
the private market
• key considerations:
– amend general solicitation rules: vetting should occur before
purchase, rather than before marketing
– amend 144A rules to include both QIBs and accredited investors
– review investment intent rules to allow for more active “market
making”
– add exemption to 500 shareholder limit for accredited investors
Visit www.GrantThornton.com/WakeupCall
for the complete study.
David.W eild@gt.com
Edward.Kim@gt.com
Pascal@levp.com
BSilbert@secondmarket.com
© Grant Thornton LLP. All rights reserved.
© Grant Thornton LLP. All rights reserved.