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US startups flee overseas

world Updated: Jun 08, 2011 23:35 IST
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Reva Medical, a maker of medical devices in San Diego, wanted to go public last year to raise money to satisfy impatient venture capitalists and finance research for its heart stents.

But it found little investor interest in the United States for an early-stage medical device company that had not yet made a profit. Reva Medical did what a small but increasing number of young American companies are doing — it looked abroad for money, in Reva’s case the Australian stock exchange.

After an eight-month road show, meeting investors and pitching the prospects of a biodegradable stent, the 12-year-old company sold 25% of its stock for $85 million in an initial public offering in December.

Reva’s example shows that nearly three years since the financial crisis began, markets in the US are barely open to many companies, leading them to turn to investors abroad.

Nearly one in 10 American companies that went public last year did so outside the US. Besides Australia, they turned to stock markets in Britain, Taiwan, South Korea and Canada, according to data from the consulting firm Grant Thornton and Dealogic.

The 10 companies that went public abroad in 2010 — and 75 from 2000 to 2009 —compares with only two US companies choosing foreign exchanges from 1991 to 1999.

(The New York Times)