Fund Structure
IPO
Initial Public Offering — the process by which a private company sells shares to the public on a stock exchange for the first time.
An IPO (Initial Public Offering) is when a private company lists its shares on a public stock exchange, allowing the general public to buy and sell shares. For VC-backed companies, an IPO is a liquidity event that allows investors and employees to eventually sell their shares. IPOs are expensive (investment banking fees of 3.5-7%) and time-consuming (the S-1 registration process takes 3-6 months minimum), but historically command premium valuations. The IPO process involves hiring investment banks, conducting roadshows to institutional investors, setting an offering price, and listing on Nasdaq or NYSE. Lock-up periods (typically 180 days post-IPO) prevent insiders from immediately selling. Alternative paths include direct listings (Spotify, Coinbase) and SPACs.