The investor behind companies like eBay and Allbirds says IPOs give startups the freedom to escape domineering VCs

Five years ago most entrepreneurs wanted to stay private as long as possible. But investor Dan Levitan thinks there’s a good reason for companies to go public.
Levitan, speaking at the Milken Institute Global Conference on Monday, said going public is a great way for companies to diversify who has a say in what happens in the company. In short, it leads to better governance, he said.
As more companies take large checks from ultra-late stage investors like SoftBank, they also give up more control. "What I’ve talked to some founders about is, do you want to be captive to one investor?" he said.
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BEVERLY HILLS — Looking for a reason to take your company public? Consider the benefits of getting out from under your VC’s thumb.

So says Dan Levitan, co-founder and partner at the consumer venture capital firm Maveron. Levitan, whose investments range from Allbirds to eBay, said he sees the tide changing from five years ago when entrepreneurs were fully committed to staying private.

Now, Levitan wants more entrepreneurs to see an IPO as a way to escape domineering investors or conflicts on the board level, he said Monday at the Milken Institute Global Conference during a panel looking at the current wave of tech IPOs. A public governance model is the best way to do that, in his view.

"We’re five years into this experiment of large firms like SoftBank and others taking outsized platforms and putting in hundreds of millions if not billions of dollars," Levitan said. "What I’ve talked to some founders about is, do you want to be captive to one investor?"

Levitan said to look at Uber as a classic example of a "highly dysfunctional" private governance structure.

"The IPO, bizarrely, is an attractive thing to the management team because they’re being pulled in different ways," Levitan said.

Axios editor Dan Primack, who moderated the panel, then asked whether Levitan thinks IPOs improve governance in the case of dual class public listings, which give founders and early board members high-vote stock and disproportionate decision-making powers compared to public investors.

"I think it’s better governance than being private," Levitan said.

Kara Nortman, partner at UpFront Ventures, had her own take on mega late-stage investors to share during the panel: she thinks they’re less loyal to the founders.

"I think that is the value of a longterm early stage investor. Our job is to help you build the team, help you get capital, and be your sparring partner. I don’t think that ever goes away," Nortman said.

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