If the IPO process is like a debutante ball, the top investment banks are akin to a finishing school. They help gussy up companies, teach them proper manners like how to do GAAP accounting, and bring them around to call on prospective investors and eventually debut to society.
This is the role investment banks have played for decades, but in recent years this dynamic has begun to break down. Not in all sectors—in most sectors investment banks still occupy the same role—but in tech, the importance and role of investment banks has shrunk and commoditized.
Historically, raising capital was difficult and public market investors had little awareness of the companies going public. Investment firms were not focused on tech companies. And especially for enterprise startups, retail investors had no exposure or familiarity with them. In this environment, it was the idiosyncrasies of the capital markets that mattered, not the uniqueness of each company. In this model, the company is not that special. Instead, what matters is the standardized process for making the co
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