My partner Wayne and I recently were in Europe and England (that’s the correct way to think about them, too) raising money for Apex VI. We came away with some impressions that may be relevant for the coming year or two. While the growth rate in Europe has been anemic for the past decade, it is now showing signs of robustness (for them) with Germany leading the way projecting a 1.4-1.8% GDP growth rate for the coming year (as witnessed by the extraordinary spending by consumers) and, on the investment side, surplus funds to invest.
With the Euro being strong, they are looking toward the US to place their bets. In the alternative asset area, this especially means Venture, because most European fund managers have gotten their fill of large buyout funds, so they are turning to Venture and Middle-Market buyouts.
London is reminiscent of Silicon Valley in the mid-90’s, only instead of programmers driving Ferraris, we have Russians driving Bentleys. London is now the world’s largest and wealthiest financial market, with New York coming in a declining second. The excessive regulations on the US equity markets are making the London exchanges even more attractive. Combine this with the very large influence on currency and commodity trading, and it looks as though London will be the city of choice for new money (such as the Russians) to park their cash and clog up West End restaurants. The strength of the Pound makes this even more pronounced, which is why there were a lot of Brits shopping in New York this Christmas—prices looked very cheap to them.
All of this leads me to conclude that these market forces have finally been noticed in New York—witness Senator Schumer and Mayor Bloomberg’s op-ed piece in The Wall Street Journal regarding Sarbanes Oxley and other regulatory burdens on US Exchanges. They know that NYC is losing business to London and if something is not done, their tax base will be eroded. There are very few companies in NYC that are not financial services companies, whereas in the 50’s there were bunches of them.
So, look for even more pressure for regulatory relief and maybe we will have a Tech IPO market afterall.