I've noticed that fundraising and liquidity are common problems for startup founders, and it seems to me that the public stock market could solve many of those problems. What if all startups were publicly traded entities right after incorporation?
Some of the benefits you would gain as a founder:
- A larger pool of potential investors. You would have access to investment from anyone instead of just accredited investors. For example, it would be interesting if early adopters could invest in startups that they support just as easily as they can buy stock in Apple because they love Apple products.
- Liquidity. You could buy and sell your shares of the company at any point. If you're a startup founder investing 100% of your time and capital into a business, it makes sense for you to diversify your assets at some point and not put all of your eggs into one basket.
- Better incentives. If your company was publicly traded from Day 1, you would still be incentivized to raise the value of your business because you still own shares. Better yet, now you don't have to worry about building a billion dollar business to satisfy the economics of your investors, you can sell shares of your $20M business so you're not worrying about your exit strategy all the time.
There's been a lot of activity in this space with the new crowdfunding bill, the SEC loosening up requirements for small companies, and things like ICOs. Has anyone else ever considered doing this with their startups? Just curious to hear what others think.