IPO

TL;DR

Initial Public Offering — the first sale of a company's shares to public investors, transforming the company from private to publicly traded.

An IPO sells newly issued shares (and sometimes existing shares) to public investors through a regulated process underwritten by investment banks. The traditional IPO involves filing an S-1 with the SEC, marketing the offering through a roadshow, pricing the shares, and listing on an exchange. Direct listings and SPACs are alternative paths.

IPOs typically happen at $200M+ in revenue with strong growth and clear path to GAAP profitability. They unlock liquidity for employees and early investors, raise primary capital for the company, and impose ongoing regulatory and reporting obligations.

Worked example

A SaaS at $200M ARR files an S-1, prices the IPO at $24/share for 12M new shares ($288M primary raise) plus 6M secondary, lists at $36 (50% pop), and trades to a fully-diluted market cap of $4.2B at end of day 1. A 6-month lockup follows.

Common pitfalls

• Pricing the IPO too aggressively and trading down on day one.
• Underestimating the cost and time of public-company readiness.
• Failing to plan for the lockup expiration's pricing impact.

When this shows up in a pitch deck

IPO is the implicit destination of most VC-backed companies; growth-stage decks reference it as part of the long-term plan.

Related terms

• SPAC — A publicly listed shell company that raises capital to acquire and merge with a private company, offering an alternative route to the public markets.
• Lockup Period — The post-IPO window — typically 90–180 days — during which insiders are contractually prohibited from selling their shares on the public market.
• Secondary Sale — A sale of existing shareholder stock (founders, employees, or early investors) to a new investor, providing partial liquidity before an IPO or acquisition.
• Tender Offer — A company-organized program letting employees and early investors sell a portion of their shares back to the company or to outside investors at a set price.
• Series D — Late-stage funding round, often a final pre-IPO round or a 'bridge to liquidity' for companies that have grown past Series C.

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