Back in 1999, I witnessed about 250 Internet companies go public. Thankfully, we’ll never see those halcyon days in the near future. But eight years later, we’re not seeing enough companies go public, according to Paul Denninger, Vice Chairman of Jefferies & Co, a boutique investment banking company. 

This drought is taking away opportunities for investors, and creating an imbalance in the corporate ecosystem, he suggests.

"The problem is the number of public companies has shrunk every year for the last eight years,” said Paul, who sat down with me for a brief chat at the AlwaysOn Stanford Summit event recently. “That means fewer buyers every year… It puts more power in the hands of select buyers.”

To this end, it's one of the reasons an IPO market is needed, he explained. “We need to repopulate the buyer base.” If the IPO market doesn't open up for companies with valuations in the $250 million range, and VCs don't encourage these type of transactions, then the VC industry will break down, said Paul.

VCs are selling the family silver to keep their lifestyle going, he suggested. Why? "They're [VCs] consuming the wealth of the generation of VCs that preceded them, that created the companies that are buyers that are in place today, and they’re not repopulating the system, the ecosystem with more buyers.”

Paul also shares thoughts on Sarbanes-Oxley (SOX), the U.S. federal law enacted in 2002, that raised accounting and financial disclosing standards for public companies. He also comments on whether companies like Slide, Ning and LinkedIn, and other private companies with high valuations of $500 million will have a chance to go public next year.