Coming to America? Venture Capital, Corporate Identity and U.S. Securities Law

This article explores the links between a country's venture capital industry, the location of the IPO exit option and U.S. securities regulation. I argue that one observes two interestingly different models of IPO exit: the Taiwan model in which IPO exit is on the domestic stock exchange; and the Israeli model in which IPO exit is on the NASDAQ. For countries that choose or end up with the NASDAQ exit route, U.S. securities regulation facilitates the process in an interesting but little noted way. By drawing a distinction between "U.S. issuers" and "foreign private issuers," and by imposing reduced disclosure obligations on the latter, the regulatory structure provides a clean way of self identifying as an American company, even when the company's main centers of activity are off-shore. As I detail, Israeli venture capital fueled companies take full advantage of this regulatory option and are viewed by the investor community as regular, Silicon Valley technology companies.