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Yep, IPOs are the new down rounds. The founders/early investors sell shares on the private secondary market pre-IPO, leaving the public and the employees holdin
by w1ntermute 11y ago
Yep, IPOs are the new down rounds. The founders/early investors sell shares on the private secondary market pre-IPO, leaving the public and the employees holding the bag after the IPO.
- shostack 11y agoAre there other instances of this happening in the secondary markets?
- rdl 11y agoSquare, Box.
- edanm 11y agoWhy would that leave "the public" holding the bag? The IPO itself is a down round, which means the public is buying at a lower and, by that view, more "correct" price. But the drop in value has already happened - the public isn't losing out unless there's a further price drop, which is not what is being talked about and won't necessarily happen. The ones losing out are, in some cases, the employees, and in some cases, the last stage investors. But the investors are usually investing in ways that more closely mimic debt than equity, and usually have ratchets to protect themselves.