Facebook to IPO in 2012?

Maybe so.

From the link:

To be sure, Facebook has focused on increasing its membership, and it has been wildly successful on that score: the number of Facebook accounts is now nearing 500 million. So the sheer size of the Facebook audience is attractive to advertisers and app makers; and as a bonus, Facebook provides data tools to advertisers that help them make meaningful impressions on members of that audience.

But the company is deeply indebted to its venture capital backers, who, while already seeing dividends from Facebook’s current business, are looking forward to a big payday (investment plus return) at some visible point in the future. For now, Facebook’s investors are giving Zuckerberg and company plenty of time. People familiar with the situation say that you won’t see a Facebook IPO this year or next year, but you probably will see one in 2012.

Risk-taking and Wall Street

This BusinessWeek article is actually about the demise of risk-taking in Silicon Valley, and it does a great job of identifying some of the players who’ve collectively killed risk in the one-time land of starry-eyed entrepreneurs.

The final culprit — Wall Street — and the indictment against it is interesting, true and really applies across the spectrum of business sectors as a succinct reminder of the myriad problems facing the Street and what has become business as usual. Particularly the point about Sarbox and why entrepreneurs might shy away from IPOs.

From the first link:

WALL STREET

Wall Street hasn’t played as direct a role in Silicon Valley since the late 1990s, when analysts like Mary Meeker and bankers like Frank Quattrone knew as much about new startups in the Valley as the VCs did. That’s part of the problem.

Startups have to want to go public in order to go for the home run. And most entrepreneurs today just don’t. Blame it on bankers and analysts who no longer care about a company with a sub-$500 million capitalization; blame it on Sarbanes-Oxley; blame it on activist hedge funds who don’t give CEOs the leash to innovate; blame it on scars from companies going public in the 1990s that had no business going public and paid the price.

But too many great entrepreneurs sell early not because they’re lazy, not because they want a quick buck, but because the idea of running a company all the while trying to meet quarter-by-quarter Wall Street estimates is antithetical to risk-taking.

Verdict: There’s got to be a reward for all that risk, and until the public markets become a place great entrepreneurs aspire to get to, that risk-reward equation is hopelessly lopsided.