From an interesting new article in Investment Dealers’ Digest:
As of March 5, 2005, there has been a 13.4% increase in the number of companies that lost sell-side coverage completely since January 2002, according to Reuters. Some 685 companies lost coverage, 98% of which have market capitalizations of less than $1 billion. Looking just at small-cap companies, these have seen a 19% decline since 2002.
Given that many small-cap companies are recent arrivals to the public markets (i.e., recent IPOs), it is just another reason why venture capital folks are nervous: There is no-one to follow newly-public stocks, so no-one trades ’em, so no-one wants ’em, so VCs can’t take ’em public.