Definition
IPO (Initial Public Offering)
The process by which a private company first offers shares to the public.
An Initial Public Offering (IPO) is when a private company lists its shares on a public stock exchange for the first time. IPOs allow companies to raise capital from public investors and allow founders and early investors to monetise their equity. An IPO is often the event that creates billionaires: founders who own large stakes in private companies suddenly see their wealth crystallised at a public market valuation.
Frequently Asked Questions
How does an IPO create billionaires?
When a company lists publicly, its market cap is set by investor demand. If a founder owns 20% of a company that lists at a $20B valuation, their stake is worth $4B — making them an instant billionaire (on paper).
Can a founder sell their shares at IPO?
Usually only partially. Most founders are subject to a lockup period (typically 90–180 days) during which they cannot sell shares after the IPO.