Morning Must-Read: Bill Gurley: Investors Beware: Today’s $100M+ Late-stage Private Rounds Are Very Different from an IPO

…Companies and their board of directors agonize over whether or not they are “ready” to go public. Auditors, bankers, three different sets of lawyers, and let us not forget the S.E.C., spend months and months making sure that every single number is correct, important risks are identified, the accounting is all buttoned up, and the proper controls are in place…. Late-stage private rounds have no such pageantry or process. There is typically just a single PowerPoint deck presentation…. Investors are assuming that the numbers they see in the fund-raising deck are the same as those they might see in an S-1. However, many of these private companies will wait up to twelve months after the end of a fiscal year to complete their audit…. Startups commonly highlight “gross revenue”…. A good banker in a normal IPO process would get this straightened out…. [And] the very act of dumping hundreds of millions of dollars into an immature private company can also have perverse effects on a company’s operating discipline…