"And Then We Sell to Google"

[HT:BW]
"Washington Is Killing Silicon Valley," describes the continuing effects of the Sarbanes-Oxley financial regulations imposed during the Enron hysteria in 2002.

In effect, this law has suppressed the venture capital process that serves as an engine for creating innovative new companies, particularly in high technology. Sarbox discourages independent new startups and instead solidifies the dominance of a few giant companies that are big enough to deal with the regulatory hassles imposed by government.

"Faced with crushing reporting costs if they go public, new companies are instead selling themselves to big, existing corporations. For the last four years it has seemed that every new business plan in Silicon Valley has ended with the statement "And then we sell to Google." The venture capital industry is now underwater, paying out less than it is taking in. Small potential shareholders are denied access to future gains. Power is being ever more centralized in big, established companies. "

Read the whole article for a lot of sobering details about the government's smothering of the "entrepreneurship-venture capital-IPO cycle." Particularly telling is the anecdote about how new venture-capital proposals all end with "and then we sell to Google"—substituting one company as the financial engine of Silicon Valley, in place of a large, vibrant financial marketplace.

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