Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

by Chris Burniske

Ben Evans, an analyst at Andreessen Horowitz—one of the most famous venture capital firms in the world—published a report in 2015 that clearly laid out the value shift toward private markets. The median time for a tech company to IPO in 1999 was four years, whereas in 2014 it was 11 years,4 meaning the average investor now has to wait nearly three times as long to get access to company shares. Although there’s less enthusiasm for IPOs than there was during the tech boom, much of the delay is due to regulatory changes as a result of that tech and telecom boom, as well as the financial crisis of 2008. In the late 1990s, companies used to IPO with $20 million in annual revenue, whereas in 2014, the median annual revenue was just shy of $100 million, which had come down from a peak of nearly $200 million during the financial crisis.5 While this trend has resulted in more stable IPOs and reduced risk for capital market investors, with less risk, there’s often less reward. As Ben Evans wrote in his report, “Almost all the returns are now private. Old world tech giants returned plenty in public markets—new ones have not.” By old world tech giants, he’s referring to companies such as Microsoft, Oracle, and even Amazon, all of which have provided much more value creation for public markets than private markets. Meanwhile, with companies like LinkedIn, Yelp, Facebook, and Twitter, the clear majority of returns have gone to private investors. For example, while Microsoft grew private...