Merchant Innovation

Google Investments Head Thinks Firms Taking Too Long To IPO

Are Silicon Valley’s startups dawdling when it comes to bringing their products to the public markets and pushing for IPOs?

The head of Google’s venture capital arm, Bill Maris, thinks so. He is now warning that firms are taking “way too long to go public.”

“They’re setting the bar so inordinately high they’re making life difficult for themselves,” he said in an interview with the Financial Times. “There’s going to be some fallout: some of them will lose a lot of money,” Maris noted.

The problem, the head of Google Ventures (soon to be known as GV) explained, is that these long-term lingerers in the private markets could be faced to accept lower valuations if the private market cools even slightly.

And the evidence indicates that investors, once spurred on by the avalanche of Ubers, Airbnbs and Snapchats have seem a bit more cautious as the public exits of some very high-profile players has failed to garner deep market enthusiasm.

“There’s less money, more fear, more caution,” Maris said.

And if the Fed raises rates as expected, those private money markets will be even less flush with cash.

“Suddenly, being a public company is going to look a whole lot more exciting.”

Marris’ statements are indicative of a growing rift in the Valley between some who are becoming skeptical of the conventional wisdom of staying private and financing big growth as being the smart path to success. But that model has notable proponents, with Marc Andreessen being prominent among them.

Last month, Andreessen noted he would be happy for the companies his firm backed to stay private for 15 years.

Maris, however, said such a path is bad for everyone involved.

“I don’t see many examples of fast-growing companies that have stayed private for 15 years,” he said. “Let’s not ignore shareholders and employees. It’s hard to see how you give them what they need and deserve without having a market price.”

“They’ll do better with the scrutiny of the public market,” he said.

Asked about Uber — one of GV’s more prominent picks — and if the company intended to go public, Maris was vague if positive sounding.

“I’m sure they’re thinking about it because I know people ask them all the time,” he said. “They’re obviously a prime candidate, they have a great business.”

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