Going public is the new so-called "down round" for private technology companies, the chair of a top Silicon Valley venture capital (VC) firm, told CNBC on Monday.
A "down round" is an industry terms for financing a company where shares are purchased at a lower valuation than in the previous round. When it comes to initial public offerings (IPO), this means that the public valuation of the company's stock is below its private valuation.
When asked if IPOs were a down round for tech firms, Michael Moritz, the chair of Sequoia Capital, agreed.
"That's a nice way of putting it," Moritz told CNBC in a TV interview at the TechCrunch Disrupt conference in London.
"Like everything it's not a universal truth. But the public and private markets have a way of adjusting and over time they will come into equilibrium and some private companies obviously in their private valuations have been priced above where today's public investors are prepared to price them."
Moritz's comments come after a rocky time in the stock markets for tech companies going public. French music streaming firm Deezer pulled its IPO, whereas Square (NYSE: SQ), the payments firm run by Twitter (NYSE: TWTR) CEO Jack Dorsey, priced its flotation at a 30 percent discount to its last private valuation before it started trading.
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