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Where have all the small IPOs gone?

Posted by admin on July 17, 2020

Looking up at buildings and the sky

The decline in small IPOs has already done untold amounts of damage to the potential growth and innovation of the United States as small companies continue to perish due to lack of capital.

Small IPOs have been on a downward trajectory for almost two decades. This decline of small IPOs (IPOs raising less than $50 million in gross proceeds) has been well documented in the public press and academic literature. The Dream Exchange’s analysis shows that during the year of 2017 there were only 5 completed small IPOs utilizing data from a company called Dealogic. To put that number in perspective, in 1997 there were 169 exchange-listed IPOs for companies with a market capitalization at the IPO stage of less than $75 million, whereas in 2012, there were only seven such IPOs utilizing data from, Davidoff and Rose (2016). Further, penny stock IPOs almost disappeared by 2006 according to data gathered from the Securities Data Corporation (Floros and Shastri, 2009).

The Dream Exchange is creating a venture stock exchange to revive this marketplace and create an auction style stock exchange specifically designed for these small companies providing the needed access to a transparent, liquid, stock exchange.

Read more about the solution to creating more access here.