It isn’t as radical change as it seems, but direct listings will become much more common.
Now we have 2 big successes (Spotify + Slack), and 0 failures here.
In the Age of the Unicorn, more and more start-ups will raise IPO levels of capital before an IPO. This is a new phenomenon, relatively speaking.
Assuming their burn rate is also low, and the brand is strong enough to jump start liquidity without an IPO … why sell any primary shares and take the dilution from a traditional IPO?
There’s no reason anymore, in many cases.
AMAZING execution today on the Slack direct listing. $WORK closed within 1% of the initial open pricing (compared to 50-100% recent mis-pricings with standard IPO). Congrats to Slack, Morgan Stanley (advisor to DMM), and Citadel (DMM). Well done.
— Bill Gurley (@bgurley) June 20, 2019