I have a friend who works at a small but very well-known company in online entertainment. He just forwarded me this exchange from an internal discussion list:

Subject: Re: NYT article - "Venture Investors Wrap Up an Unusually Bleak Quarter"

Yes, I spam misc lists with articles from the NYT.

Key paragraphs in this week's Fwd: "In the second quarter of this year not a single company backed by venture capitalists has gone public. It is the first time that has happened since 1978, according to a venture capital industry group."

"Nancy Pfund, a veteran venture capitalist with DBL Investors in San Francisco, said the absence of venture-backed offerings in the quarter was surprising, but the reasons behind it were not hard to understand.

"She said there were two overriding factors. Wall Street is being very selective in taking companies public, and blessing only those with particularly high revenue and growth projections. And venture capitalists are wary because they worry that their returns will be limited in a depressed market."

The ginormous costs inflicted by Sarbanes-Oxley have killed going public for many startups. Companies now face a couple million bucks a year in new compliance costs and pervasive controls over just about everything they do on top of all the other headaches of going public. That increases the temptation for going the buyout route and lessens interest in initial startup funding. Surely the last couple years' changes in stock option accounting rules have hurt startups' ability to pull talent, too.

This is the pattern with all such regulations. The bigger corporations support them, quietly or not, because they can bear the costs and thereby eliminate competition from "below." And the Marxoids say that unregulated capitalism has a natural tendency toward monopoly…

The Left loves small markets, small merchants, small businesses, but then does everything they can to promote the bigness of business — in the name of fighting Big Business.

This is exactly what Karen De Coster was saying (1, 2, 3) Sarbanes-Oxley would do, back when it was a recent development.