Benchmark Capital General Partner Bill Gurley organized a meeting of private companies to advocate the direct listing model over the IPO.
Gurley told CNBC that direct listings provide more open and equal access to shares and ensures market-based pricing. While an IPO may be appealing for a company that wants to raise capital, Gurley said the group discussed late stage capital fundraising options at Tuesday's meeting.
Companies that go public through the more traditional IPO process pay hefty fees to underwriters so that new shares can be created and sold to the public, ideally with a first day pop. Gurley said this process has caused new listings to be increasingly underpriced. With a direct listing, firms can bypass underwriting fees, but no new shares are created.
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