(Adds details from the meeting and CEO quote)
By Jane Lanhee Lee
SAN FRANCISCO, Oct 1 (Reuters) - Venture capitalists and executives from more than 100 startups including Airbnb Inc and Poshmark gathered on Tuesday to bash traditional initial public offerings and promote direct stock exchange listings, according to two people who attended the meeting.
Airbnb, which in September announced plans to go public in 2020, is looking at a direct listing, a venture capitalist who attended the meeting said.
The lodging platform operator is considered a good candidate for a direct listing because it is already profitable and well known. Airbnb did not immediately comment.
Poshmark in September delayed plans for an IPO until next year, according to a report by Bloomberg. Poshmark did not immediately respond to a request for comment.
Other participants included data storage firm Cohesity, which also did not immediately comment, and product analytics platform Amplitude whose CEO Spenser Skates confirmed he was at the event and would strongly prefer direct listing over an IPO.
Advocates of direct listings, the route taken by Spotify Technology SA and Slack Technologies Inc, say they offer companies a better alternative to the traditional initial public offerings underwritten by investment banks.
In a direct listing, companies list existing shares on the stock exchange without issuing new shares or raising new funds.
Benchmark Capital partner Bill Gurley, one of the organizers of Tuesday's event, said investment banks have long been “fleecing” companies by pricing shares low so that they pop on their first trading day. That pop benefits institutional clients who buy at the offer price and can flip their shares when they soar.
But underpriced IPOs provide the company less capital and diminish valuations for early investors such as venture capital backers, and any investors or employee stockholders who sell in the offering do not realize full value for their stakes.
Gurley and others pointed to research by Jay Ritter, professor at the University of Florida, which shows the average first-day gain for 88 IPOs priced at $5 or higher so far this year is 24%, the highest since 2000.
David Golden, a former investment banker at JP Morgan who is now managing partner at Revolution Ventures and not involved with the conference, said first-day price moves do not tell the whole story.
"If in the first few days of trading it doubles because there's all this retail sentiment ... and then it trickles down over the next two, three months, maybe even four months, then they probably priced the deal right," said Golden.