Why companies IPO if they're doing fine running privately?

New
zLfC23

New

zLfC23
Dec 25, 2021 17 Comments

Looking at Reddit for example. Are they not profitable privately? What makes them choose to IPO vs just stay private? Pros and cons of each?

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TOP 17 Comments
  • Money for founders and employees.
    Dec 25, 2021 3
  • Brex
    xxxyyyzz

    Go to company page Brex

    xxxyyyzz
    Also, VCs don’t invest hoping to collect a “small” dividend payout every year. They work with huge cashouts, they don’t want to hold forever.
    Dec 25, 2021 4
    • Brex
      xxxyyyzz

      Go to company page Brex

      xxxyyyzz
      I think that depends, the CEO (assuming being a founder) might still have control, otherwise, the CEO is just another employee that answers to the board of directors (the investors).
      Dec 25, 2021
    • Uber
      hfHH16

      Go to company page Uber

      hfHH16
      Depends on how many board seats investors own. Just look at Uber, Travis didn’t want to IPO, investors are frustrated, some dirt on Travis “accidentally” gets leaked and it’s all history.
      Dec 25, 2021
  • Affirm
    cjsidnh3

    Go to company page Affirm

    cjsidnh3
    Generally ipo being on the roadmap attracts talent
    Dec 25, 2021 0
  • Roblox
    edzn45

    Go to company page Roblox

    edzn45
    Companies go IPO for varieties of reasons, the main ones (can be combination of any): 1) fund raising , when public funding is cheaper than private funding; 2) liquidity for existing shareholders, be investors, founders or employees; and 3) branding, whether for business expansion, recruiting etc
    Dec 25, 2021 0
  • Uber
    hfHH16

    Go to company page Uber

    hfHH16
    How are your employees and investors going to cash out if you don’t have liquidity event? If it’s a small business where you don’t pay employee in stock and only family/friend investors it could make sense.
    Dec 25, 2021 0