I loved Chris Dixon‘s post about a few ways the internet can disrupt Wall Street the way it has disrupted the publishing and advertising businesses.
He cites several potential areas for the web to hit The Street where it’s making its money (trading, research, banking). I’d like to expand on one of his ideas, specifically the raising of capital without going through an i-bank.
Think about this for a moment: A company like Twitter decides to go public.
Unlike that absurd dutch-whatever Google attempted or even the Wit Capital example cited by Dixon, what if Twitter simply set up a site to take indications of interest along with your brokerage account information? You could ask for an allocation based on the total being raised and then be in a cue for at least a proportional share amount based on your request.
There would need to be suitability waivers of course so that Twitter itself is not doing the soliciting, but with a bit of staffing and coordination with DTC, they could certainly handle the distribution of stock.
Rather than pay bankers 10% of what they will raise (billions most likely), they can simply bring the capital raise process in-house using the web and save a hundred million or so for shareholders rather than forking it over to the i-banking cartel.
Even if the process were messy, the money would still come pouring in and it would be the ultimate symbol of Web 2.0’s arrival: A socially-placed deal offered to investors who are also customers and users of the company’s technology.
It would start off primitively, but it’s definitely doable. Once that cat is let out of the bag, forget about it.