Enough is enough, says Paul Deninger. VCs must either plan for it or accept the consequences if and when the time comes to go public.
Jefferies' Paul Deninger minces no words: "I'm sick and tired of hearing about Sarbanes-Oxley." He continues by asserting that the VC industry refuses to invest in the accounting systems needed to support Sarbox until companies are ready to go public, which is the reason it costs so much.
If a private company waits six to eight years, building itself into $30 or $40 million in revenue operations in a couple of countries, Sarbox compliance will be expensive, to say the least. However, since 2000, only about 10% of companies exit by IPO. With 90% of VC-funded companies exiting via M&A, most VCs see investing in Sarbox in anticipation of an IPO as just wasted venture dollars.
