IPO (Initial Public Offering)

Also known as: Initial Public Offering, Going Public

The process of offering shares of a private company to the public for the first time on a stock exchange.

Full Definition

An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time on a stock exchange. It's one of the primary "exit" events for startup investors, allowing them to sell their shares on the public market.

IPO Process

Select investment banks as underwriters
File S-1 registration with the SEC
Conduct investor roadshow presentations
Set IPO price and allocate shares
Begin trading on the stock exchange

Alternatives to Traditional IPOs

Direct Listing: Company sells existing shares directly without underwriters (Spotify, Slack)
SPAC: Merging with a Special Purpose Acquisition Company for a faster path to public markets

IPO Readiness

Companies typically IPO when they have $100M+ in revenue, predictable growth, strong governance, and the ability to meet quarterly reporting requirements.

The IPO Process

🏦Select Underwriters

📋File S-1 with SEC

✈️Investor Roadshow

💲Set Price

📊Begin Trading

Real-World Example

A startup that raised $200M over five VC rounds files for an IPO at a $5B valuation, offering 10% of its shares to public investors.

Frequently Asked Questions

What does IPO stand for?

IPO stands for Initial Public Offering. It's the process of offering shares of a private company to the public for the first time through a stock exchange listing, allowing anyone to buy and sell the company's stock.

How much revenue do you need to IPO?

While there's no strict minimum, most companies IPO with $100M+ in annual revenue, predictable growth, positive unit economics, and strong governance. Some high-growth tech companies IPO earlier, but investors expect a clear path to profitability.

What is the difference between an IPO and a direct listing?

In a traditional IPO, a company issues new shares with the help of underwriter banks who set the price and buy shares to resell. In a direct listing, the company sells existing shares directly on the exchange without underwriters or new share issuance — saving on fees but without guaranteed price support.

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