In fact, despite numerous attempts, few direct public offerings over the Internet have been successful. In early March 1999, the Web site featured documents from 26 companies that were attempting to raise capital without the use of underwriters. The Internet has not created revolutionary change in public offerings by start-up companies because investment banking firms add value as intermediaries that the Internet cannot replace. The underwriter adds its prestige to an offering and in this and other ways provides selling expertise. Moreover, investors prefer to invest in securities in which a trading market will develop so that they will be able to liquidate their holdings at a later date.
Underwriters often serve as market makers to create such an after market.
Attempts to create issuer sponsored bulletin boards and other non-traditional means of liquidity have not been particularly successful so far. The Internet has been somewhat more successful at matching small businesses with venture capitalists.