Bill Gurley talks about his drive to persuade more tech startups to choose direct listings, instead of traditional bank-led IPOs, to enter public markets
- Gurley said he met with partners from 25 venture firms before his direct listings summit this week and they all signed on with their support.
Context & Ripple Effects
Gurley has been building toward this for years: his warning that FOMO in the 'private IPO' market was fueling inflated valuations framed late-stage private funding as a problem of illiquidity and distorted pricing, not a feature. Direct listings are his proposed fix — a way for startups to go public without banks setting the price or taking the underwriting cut.
The summit is the organizing step. After Benchmark's huge 2017 wins from the Snap and Stitch Fix IPOs, Gurley has the credibility to convene peers, and getting partners from 25 venture firms to sign on converts a one-firm opinion into an industry bloc. The SEC's later approval of NYSE's plan to let companies raise new capital via direct listings shows the regulatory door opening behind the push.
First-order effects
- Startups backed by the 25 signatory firms now face internal pressure to consider a direct listing over a bank-led IPO, since their own investors have publicly endorsed the cheaper path.
- Investment banks' IPO underwriting fees — the direct target of Gurley's campaign — are at risk of losing deal flow if the venture community steers its portfolio companies to exchange-run listings.
Second-order effects
- Exchanges gain a new competitive front against banks: the SEC's approval of NYSE's capital-raising direct listing format gives NYSE a product to market directly to startups, positioning it as the venue that replaces the underwriter.
- Banks are pushed to defend or reprice their underwriting value proposition — pricing, allocation, and research — rather than assume the IPO mandate by default.
Third-order effects
- If the VC bloc holds, going public shifts from a bank-intermediated event to an exchange-operated service, eroding the underwriting oligopoly's grip on tech exits and making price discovery by the market, rather than book-building, the norm for high-profile listings.
The trend: Tech companies are moving from bank-underwritten IPOs toward exchange-run direct listings, with venture capital consolidating behind the shift and regulators clearing the path.