Fledgling companies used to set their sights on IPOs. Today, 90% of VC-backed companies seek acquisition.
The first reason companies choose not to IPO is simple: It ain’t cheap. IPOs cost an average of $4.2m in fees (plus 5% of fundraising proceeds) -- and a recurring $1.5m in annual fees after that.But, more importantly, there are other readily available ways to raise money: Private investment assets rose from $1T in 2000 to more than $5T last year. So, when a hot new scooter startup needs a quick $300m, all it needs to do is ask a VC like Sequoia.