Venture capitalists are concerned. SiliconValley.com reported Wednesday there wasn't even one venture-backed initial public offering in the previous fiscal quarter. Such a drought has not occurred in three decades, the story says, and there's no hint of improvement on the horizon.
I'll leave it to the experts to analyze whether the slowdown represents the crisis that the National Venture Capital Association thinks it does. What interests me most are the culprits that NVCA members blame for the problem. According to last month's survey of 662 members, "skittish investors," "the credit crunch" and Sarbanes-Oxley are the top three contributors to the crisis. As a result, SiliconValley.com says, the group is putting together a committee to lobby for reform of "corporate governance and accounting laws."
On one hand, the corporate world is making progress. Sarbanes-Oxley isn't first on the blame list. But it's funny that many seem to run to Sarbanes-Oxley reform or other legislative measures as a cure-all of sorts. I agree that certain reforms might help, but changing Sarbox isn't going to make investors less skittish in our current economic environment. And it's not going to correct the credit crunch, either. What's more, even if legislative reforms would make a huge difference, they don't happen overnight. They take time.
And the argument that the prospect of Sarbanes-Oxley compliance keeps startups from going public doesn't hold much water if the startups are small enough. The SEC just approved another compliance deadline delay for public companies with market capitalizations of $75 million or less.