notsosiimple

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    • Wed Jul 2nd 08:10 AM
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      The 'Crisis' in Venture Capital
      It's not QUITE that simple. It's not a matter of disclosure, but the amount of administrative hoops that companies must jump through to meet S-O requirements. The number of lawyers, accountants & consultants that a small company must employ simply becomes cost-inhibitive.

      The percentage of revenue paid to comply with these rules make it much harder for a company to be profitable... This is why S-O is seen as restrictive.

      Oh - and it's not that S-O inhibits Venture Capital RAISING - companies can get the VC money because these expenses are associated with PUBLIC companies. It's the VCs EXITING the investment by IPOing the portfolio company that's hard. A profitable company may not be profitable once you layer on the expense for S-O compliance. (Of course, the increased difficulty in exiting the investment probably means that VCs are more discriminating when it comes to funding early stage companies....)
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