Technology companies have come up with new financing methods to kick the Wall Street away.

category:Internet
 Technology companies have come up with new financing methods to kick the Wall Street away.


NetEase news on April 25th, according to foreign media reports, the recent line wrote that the introduction of innovative ways and methods, the introduction of Spotify type direct listing, Uber type lending and TelegramICO, the whole technology industry is kicking off Wall Street bankers and their traditional financing. These are just the latest examples of long-term trends: if you are a successful technology company, the conventional rules of Wall Street do not apply to you. In fact, if you condescend to acknowledge its existence, Wall Street should be lucky. For example, when Spotify was listed on the New York stock exchange, its CEO still stayed in Sweden instead of flying to New York to ring the bell. Instead, he wrote a blog article saying that the whole thing was meaningless. Its just another day of our journey. Technology companies have done a good job in reducing Wall Streets work. This not only means that large banks have less capital, but also means less power to the company, less influence, and fewer opportunities at the negotiating table. Bankers always like to be buried in any industry that is changing the world - but in the field of technology, they are still out, just as we do, but their nose is close to the glass walls. This is not a fresh story. As early as 2004, a new Holland auction technology was adopted when Google was listed, and Silicon Valley is increasingly trying to avoid the use of many services traditionally provided by investment banks. For example, in initial public offerings, these banks usually carry out a carefully designed brochures process, a lengthy process that stimulates the publics demand for stocks and allows banks to issue a mouth watering stock quota to the popular customers. (the kickbacks are unavoidable.) In contrast, in the open Holland auction, stock prices will be determined, bankers discretion will be less and the cost will be lower. Similarly, Spotify enters the stock exchange with its revolutionary direct listing, which does not sell any stock itself, so it does not have to pay a 7% Commission for the Bank of Wall Street. Evading the cost of listing is just the tip of the iceberg. The bigger story is that companies backed by venture capital completely shun IPO. They have been raising money by selling their shares, but they do not use the public capital market, so they do not need to deal with banks that are the gatekeepers of these markets. In the first three months of 2018, venture capitalists injected an astonishing $28 billion 200 million into the Private Companiess stake, which was far more than the $17 billion raised in the public market in the same period, and it represents the almost no continuing capital flow in Wall Street. So, why do you want to issue securities? Google has raised $1 billion 670 million for itself. To get the money, it needs to sell 19 million 600 thousand shares at a price of $85 per share. Today, however, technology companies have other ways to raise funds. Earlier this year, the Russian chat application Telegram raised $1 billion 700 million through the first ICO to sell its own encrypted currency to the public. The ownership shares of its founders are not diluted, nor do they need to produce any board seats, nor do they need to repay the money. Of course, they no longer need to send large amounts of money to Wall Street. In an efficient modern economy, banks no longer have a reason to dominate. In the S & P 500 index, the financial sector is the second largest market after science and technology. The technical side of the standard & Poors 500 index. It can be said that one dollar per seven dollars in the capital market will disappear in Wall Street pocket in one way or another. This means inefficient for a department, just like what Adair Turner, a former banker and a bank regulator, called AdairTurner, useless society. So it is not surprising that some technology companies have found ways to retain most of their value for themselves and investors. Surprisingly, others did not follow the footsteps of technology companies. This is a subversion that does not surpass the technology industry. Why did Googles Holland auction listing method not spread? Why are there very few companies outside the technology sector that do not raise funds or go public directly, like Spotify? Why is there no bank loan like Uber or ICO like Telegram? The answer lies in the balance of power. Without all kinds of financial services provided by managers of highly professional relations of large the Wall Street firm, large companies will not be able to operate. Banks know that they are necessary and will take good care of you as long as the company continues to provide business for them. But if you annoy them, they will not hesitate to punish you. By contrast, technology companies are younger, no longer need the old systems that assume that banks will perform their functions forever, and that the relationship with banks is shallow and will not annoy banks because they are excluded from transactions. From this point of view, from energy to health care, the whole economic field can learn a lot from Silicon Valley. Kicking Wall Street is not just a dream. In this respect, other industries can be bolder as the technology industry. (Han Bing) source: NetEase science and technology report editor: Wang Fengzhi _NT2541 Surprisingly, others did not follow the footsteps of technology companies. This is a subversion that does not surpass the technology industry. Why did Googles Holland auction listing method not spread? Why are there very few companies outside the technology sector that do not raise funds or go public directly, like Spotify? Why is there no bank loan like Uber or ICO like Telegram? The answer lies in the balance of power. Without all kinds of financial services provided by managers of highly professional relations of large the Wall Street firm, large companies will not be able to operate. Banks know that they are necessary and will take good care of you as long as the company continues to provide business for them. But if you annoy them, they will not hesitate to punish you. By contrast, technology companies are younger, no longer need the old systems that assume that banks will perform their functions forever, and that the relationship with banks is shallow and will not annoy banks because they are excluded from transactions. From this point of view, from energy to health care, the whole economic field can learn a lot from Silicon Valley. Kicking Wall Street is not just a dream. In this respect, other industries can be bolder as the technology industry. (Han ice)