Innovation will stay, but Silicon Valley IPOs will go to Hong Kong, Singapore, Shanghai or Bombay

Last weekend I got to meet several start-ups from Yale and learned more about the Yale Entrepreneurial Institute (YEI).  Although Yale's start-up ecosystem is decades behind those of  Stanford and MIT, I'm sure Yale will graduate several entrepreneurs of note.

Columbia and NYU also have major efforts underway to foster entrepreneurship as a respectable and obtainable profession.  Last year more Columbia MBAs said they wanted to peruse a career in entrepreneurship than wanted to pursue a career on Wall Street!

The Yale event was a microcosm of why Americans should continue to be optimistic about entrepreneurship.  Our risk-taking culture, critical mass of self-made-entrepreneurs, and acceptance of failure virtually guarantee a steady stream of innovation.  Although many young companies will fail, others will go on to improve the world while simultaneously creating thousands of new jobs.

Unfortunately, the innovation coming out of Yale and all other universities is threatened by the current state of the American IPO.  Mid-stage funding is critical to both timely returns for early stage risk capital and, more importantly, scaling innovative businesses.  As I have said before, we are seriously lacking  “Ten Million Dollar IPOs.”  Tech IPO's will move offshore if America does not remedy its mid-stage capital markets. 

Der Spiegel agrees, and further argues about the risk and expense of listing in the United States:

With expensive accounting rules, an increased threat of litigation and hundreds of millions of dollars in fines for some firms, the once prestigious New York Stock Exchange and other American markets have become unattractive to companies. Daimler and Deutsche Telekom have fled this year and the few remaining are likely to follow. 

It looks as if American Entrepreneurs, Angels and VCs need to start familiarizing themselves with the “non-NASDAQ” IPO process in order to scales and remain competitive.   Some already have.  This week Sequoia-backed SKS Microfinance will raise over $350,000,000 in an IPO on the National Stock Exchange of India and the Bombay Stock Exchange. 

A changing of the Guard - This is not the 80s or 90s

Recently, New York has passed Boston as the number two city on the planet for creating and launching technology start-ups (both take a back seat to Silicon Valley).   But New York could be losing its dominance in facilitating mid-stage capital.In the 80s and 90s, technology companies from all over the world turned to New York and US investors to fund their mid stage growth.  Wouldn't  it  be ironic if future US entrepreneurs turned their back on Wall Street to fund their mid-stage capital needs?