Unicorns Everywhere: Renée Jones on Why Startups Are Staying Private Longer and What to Do About It

Haoxiang Zhu MIT GCFP - Briefs and Blogs

September 30, 2026

Key takeaways

In a conversation with GCFP Co-director Haoxiang Zhu, former Director of the SEC’s Division of Corporation Finance Renée Jones discusses her new book, Untamed Unicorns: Why Startup Finance is Broken and How to Fix It, and how the rise of private markets has reshaped startup finance.

Jones argues that regulatory changes have allowed startups to stay private longer and fueled the rise of unicorns.
She links recent startup frauds and failures to greater founder power and weaker investor oversight.
Jones calls for stronger disclosure requirements for large private offerings and tighter rules on when startups must register with the SEC.

Author's Note

Renée Jones is Professor and Dr. Thomas F. Carney Distinguished Scholar at Boston College Law School. Her scholarship focuses on securities regulation, corporate law, corporate governance, startup financing, and the federal–state relationship in corporate regulation. From 2021 to 2023, Renee served as Director of the Division of Corporation Finance at the US Securities and Exchange Commission (SEC), and I had the privilege of working with her closely.

She is also the author of a new book, Untamed Unicorns: Why Startup Finance is Broken and How to Fix It (Harvard University Press, August 2026), which I very much enjoyed reading. Below is my lightly edited conversation with Renee about the key messages of her book and her take on reforming America’s capital markets.

HAOXIANG ZHU: In your book, you outlined four decades of deregulatory changes that at the time looked incremental but collectively caused the tremendous growth of the private market, including venture capital (VC), at the cost of the public market. Remind us of the key regulatory decisions and their impact over the last 40 years.

RENÉE JONES: Let me highlight three legal changes that contributed significantly to the expansion of private securities markets over the past four decades. First, a 1979 ruling by the Department of Labor (DOL) made clear that pension fund investments in risky assets did not necessarily violate the prudence standard established by the Employee Retirement Income Security Act (ERISA). The DOL’s ruling opened the door for pension funds to increase their investments in private market securities. After this guidance, assets under management by private funds, including private equity, venture capital, and hedge funds, grew dramatically. Specifically, annual commitments to private equity expanded from $97 million in 1975, one year after ERISA’s adoption, to $2.1 billion in 1982, three years after the new DOL guidance. Private market fundraising continued to grow exponentially over the ensuing decades.

Next, in 1996, Congress adopted the National Securities Markets Improvement Act (NSMIA), which eliminated the cap on the number of investors a private fund could have before it was required to register with the SEC as an investment company, commonly known as a mutual fund. After NSMIA, net assets under management in private funds soared from less than $200 billion in 1997 to $15 trillion by 2024, which increased the amount of capital available for investing in startups. This allowed startups to raise most of the money they needed in private markets, and startups like LinkedIn and Groupon did just that.

Finally, in 2012, Congress enacted the Jumpstart Our Business Startups Act, or the JOBS Act, which eliminated the rule that had once compelled large startups like Google and Facebook to pursue their IPOs. Specifically, the JOBS Act amended Section 12(g) of the Securities Exchange Act, changing its 500-shareholder threshold for mandatory SEC registration to a 2,000-shareholder threshold, and excluding employee-held shares from the count. After the JOBS Act, startups could stay private indefinitely, and the median age at IPO expanded from 9 years in 2012 to 13 years in 2024, while the number of billion-dollar startups, the so-called unicorns, grew from only 40 in 2013 to more than 1,500 today.

HZ: One observation that stuck with me is that the tables seem to have turned in founders' relationships with their investors. We used to think that investors had strong bargaining power because they provided the capital. In the last two decades, it seems that charismatic founders have had the upper hand. Many made reckless decisions and even committed fraud, with little oversight from investors. Why did venture capital investors fail to rein in their portfolio companies?

RJ: The current system of founder control at startups is directly linked to NSMIA, which, as I mentioned, unleashed a flood of new capital into private securities markets. With so much money available for private market investing, VCs had to compete for access to the most attractive deals.

New firms run by former startup founders, such as Peter Theil of Founders Fund and Marc Andreessen of Andreessen Horowitz, and other nontraditional investors, such as sovereign wealth funds, corporate venture capital, and mutual funds, began to offer startups financing on “founder-friendly” terms. In this founder-friendly model, now prevalent in Silicon Valley, founders receive shares with super-voting power, typically 10 votes per share, which gives them control over a startup’s board. This makes it difficult for VCs to discipline or dismiss ineffective or misbehaving founders—once a traditional role for VCs that ensured a measure of accountability in the startup ecosystem.

HZ: Your book offered several ideas on how to reverse the deregulatory trend and rebuild the separation between the public and private markets. Do you have a favorite item from this list? Is there any low-hanging fruit in terms of policies with broad support that could pass today's Congress or SEC? Or do you think only a real crisis could reverse the trend?

RJ: Reinstating Section 12(g)’s 500-shareholder threshold for Exchange Act registration would be the most effective way to restore an appropriate balance between the public and private securities markets and to ensure a measure of public accountability for unicorns and their founders. Although Congressional action would be required to restore the 500-shareholder rule, the SEC has the power to close the loopholes, which startups and their investors rely on, to facilitate trading in startup shares while evading the current 2,000-shareholder threshold for SEC registration.

Lower-hanging fruit includes requiring minimum disclosure to investors for the largest private offerings. Under current rules, if a startup limits its stock offerings to accredited investors only, no disclosure is required at all. This contributes to the opacity shrouding private securities markets. In addition, the SEC should adjust the accredited investor definition to account for the inflation that has occurred since 1982. If these standards had been adjusted, the $200,000 income threshold for individual accredited investors would now be more than $600,000, and the $1 million net worth standard would be over $3 million.

HZ: The burden of public disclosure is often cited as a reason companies are not going public. You have run the Division of Corporation Finance at the SEC. Does that argument have any merit at all? Is there anything that can be simplified or streamlined in the current disclosure regime for public companies?

RJ: The short answer is that startups are not going public because they don’t have to, and because market conditions are unfavorable—meaning they can’t achieve exits at their stated valuations. They are not staying private because of excessive regulation. If that were the case, we would not have seen a surge of initial public offerings (IPOs) in 2020 and 2021, a time when public company regulation had not significantly changed.

That said, the existing disclosure rulebook for public companies could probably be streamlined without significantly detracting from information investors need to make sound decisions. For example, even though investors overwhelmingly opposed the SEC’s proposal to eliminate mandatory quarterly reporting—more than 99% of the 200K+ public comment letters opposed the change—some institutional investors expressed support for the idea of scaling back the nonfinancial disclosures required in quarterly reports. Eliminating duplicative or immaterial 10-Q disclosures could reduce compliance costs and “information overload” without depriving investors of critical information.

Executive pay is another area where we could streamline disclosure to make it more coherent and more useful to investors. We now require disclosures covering “say on pay,” pay vs. performance, and the ratio of median worker pay to CEO pay, in addition to executive compensation tables, compensation committee reports, and performance graphs. These disclosures could be reorganized so that they are less repetitive and less costly to prepare. I would add that any efforts to streamline the SEC’s disclosure rules should be informed by investors’ views about what matters to them when making investment decisions.

HZ: It's been about a month since your book came out. What have you heard from your readers?

RJ: So far, the response has been very positive. It’s rewarding when a journalist or policy expert tells me that my book changed the way they think about the startup ecosystem and how it has evolved over the past few decades. It’s also nice to hear that the book filled in gaps in their understanding of how the securities laws have changed, helping them to see more clearly the impact of decades of incremental deregulatory reforms.

Learn more about Renee's book: "Untamed Unicorns Why Startup Finance Is Broken and How to Fix It"

About the Authors

Renée Jones

Professor, Boston College Law School

Renée Jones is Professor and Dr. Thomas F. Carney Distinguished Scholar at Boston College Law School. Her scholarship focuses on securities regulation, corporate law, corporate governance, startup financing, and the federal–state relationship in corporate regulation. From 2021 to 2023, Renée served as Director of the Division of Corporation Finance at the US Securities and Exchange Commission (SEC).

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Haoxiang Zhu

Gordon Y Billard Professor of Finance, MIT Sloan School

Haoxiang Zhu is the Gordon Y Billard Professor of Finance at the MIT Sloan School of Management, a Research Associate at the National Bureau of Economic Research, and a Co-Director of the MIT Golub Center for Finance and Policy. From 2021 to 2024, Zhu served as the Director of the Division of Trading and Markets at the U.S. Securities and Exchange Commission.

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Authors’ Disclosures: Renée Jones is the author of Untamed Unicorns. Haoxiang Zhu reports no conflicts of interest.
The views expressed in this article are those of the authors and do not necessarily reflect the views of the MIT Golub Center for Finance and Policy, MIT Sloan, or the Massachusetts Institute of Technology.