Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Sarah Grillo/Axios

There is a revived push to allow mom-and-pop investors to buy shares in private companies, something from which they have been generally prohibited.

The state of play: At issue is how a lot of startup value creation has become over-weighted to the private markets, with fewer gains being generated post-IPO.

It wasn't always this way. Amazon, for example, went public in 1997 with a market cap of just $382 million. Google took the plunge 8 years later at a $23 billion market cap, still just a fraction of its subsequent worth.

  • Combined, the two companies raised less than $100 million in venture capital — in a pre-cloud era of higher fixed IT costs.
  • Today, 4 different startups announced $100 million+ rounds.

The current environment was created by 3 main factors:

  1. Low interest rates. This forced investors to search for yield, in order to beat the benchmarks, and that leads to increased interest in alternative assets like venture capital and growth equity. Included in the rush have been startup "tourists" like mutual fund, hedge fund and sovereign wealth fund managers.
  2. Bull public equity markets. Even if a public pension maintains a stable allocation to venture capital and growth equity, it represents more actual dollars.
  3. The JOBS Act of 2012. When passed with bipartisan support, most of the attention was on how it would permit equity crowdfunding for startups. Plus the advent of "confidential" IPO submissions and some new general solicitation provisions. But it also eviscerated the so-called 500 Shareholder Rule, which basically forced startups (including Google) to go public once they reached a certain scale.

The big picture: SEC chair Jay Clayton has regularly bemoaned how Main Street investors are being shut out of private capital formation, saying in a speech last week that his agency will "take a fresh look" at enabling retail access. It's possible this would increase a relaxing of accredited investor rules, which conflate wealth with sophistication.

  • Also last week, the House Financial Services Committee held a hearing on the matter. This was the one in which Rep. Alexandria Ocasio-Cortez mistakenly suggested that retail investors had access to WeWork, and therefore got "fleeced" by its recent valuation drop.

Bipartisan consensus is that D.C. must make it easier for startups to go public, so that they'll no longer want to remain private.

  • But it's not filing costs or reporting requirements that are creating "unicorns" on the sidelines.
  • It's broader market conditions, which only have been exacerbated by recent policy pushes: White House pressure to lower interest rates even further, corporate tax cuts juicing public equities, Clayton and the SEC's refusal to revisit the 500 shareholder rule change.

The bottom line: D.C. can help mom and pop, but only if it first comes to grip with how it hurt them.

Go deeper: The 55 minotaur companies

Go deeper

37 mins ago - Technology

Exclusive: Facebook's blackout didn't dent political ad reach

Photo: Valera Golovniov/SOPA Images/LightRocket via Getty Images

Americans saw more political ads on Facebook in the week before the 2020 election than they did the prior week despite the company's blackout on new political ads during that period, according to Global Witness, a human rights group that espouses tech regulation.

Why it matters: The presidential election was a key stress test for Facebook and other leading online platforms looking to prove that they can curb misinformation. Critics contend measures like the ad blackout barely made a dent.

Wall Street wonders how bad it has to get

Illustration: Aïda Amer/Axios

Wall Street is working out how bad the economy will have to get for Congress to feel motivated to move on economic support.

Why it matters: A pre-Thanksgiving data dump showed more evidence of a floundering economic recovery. But the slow drip of crumbling economic data may not be enough to push Washington past a gridlock to halt the economic backslide.

3 hours ago - Health

Moderna to file for FDA emergency use authorization for COVID-19 vaccine

Photo illustration by STR/NurPhoto via Getty Images

Moderna announced that it plans to file with the FDA Monday for an emergency use authorization for its coronavirus vaccine, which the company said has an efficacy rate of 94.1%.

Why it matters: Moderna will become the second company to file for a vaccine EUA after Pfizer did the same earlier this month, potentially paving the way for the U.S. to have two COVID-19 vaccines in distribution by the end of the year. The company said its vaccine has a 100% efficacy rate against severe COVID cases.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!