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I continue to be surprised by the trend of companies who have fallen short of profitability filing for IPO's. So often i find myself asking "is this the best fo

I continue to be surprised by the trend of companies who have fallen short of profitability filing for IPO's. So often i find myself asking "is this the best for the company and its employees or is it best for the investors who want a faster return, at the expense of the company and its employees?"

dragonwriter 10y ago
The company is a tool to serve the interests of the investors, there is no "good for the company" distinct from "best for the investors". (Good for the employees is a thing, but it's quite often not the same thing, and not what the company exists to serve outside of, e.g., labor coops.)
rory096 10y ago
We can't complain about individual (non-accredited) investors getting locked out of fast-growing tech companies and simultaneously complain when companies IPO when they've reached significant revenue but not yet hit profitability. IPOs are a capital-raising event; if companies only did them when they were profitable they'd be no more than VCs cashing in after they've milked out all the good upside potential.
- deleted 10y ago
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stanleydrew 10y ago
Why would an IPO be bad for the company and employees? It's just another fundraising round, with new shares issued. I guess you're suggesting that an IPO exposes a company to more of a herd mentality regarding immediate profitability which it wouldn't be exposed to in a private round of financing, and that it might be punished for it?
- toomuchtodo 10y ago
  > I guess you're suggesting that an IPO exposes a company to more of a herd mentality regarding immediate profitability An IPO exposes a company to ruthless financial scrutiny, which doesn't exist when they're private. Going public and having your share price drop below expectations is the most epic of down rounds.
  - vasilipupkin 10y ago
    That statement assumes that private late stage investors aren't ruthless and don't scrutinize the companies they invest in ?
    - toomuchtodo 10y ago
      My assumption (based on the last few tech IPOs) is that late stage investors are putting lipstick on a pig and trying to get out the door before the music stops. https://mattermark.com/2015s-tech-ipos-performing-even-worse-thought/ https://mattermark.com/2015s-tech-ipos-performing-even-worse... And Steve Blank: > Steve Blank on the Tech Bubble: 'VCs Won't Admit They're in a Ponzi Scheme' http://www.inc.com/zoe-henry/steve-blank-tech-bubble-burst-ponzi-scheme.html http://www.inc.com/zoe-henry/steve-blank-tech-bubble-burst-p...
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wonnage 10y ago
there is no trend
pbreit 10y ago
Don't be surprised, the whole point of an IPO is to raise money to fund business growth.
mikeryan 10y ago
Traditionally an IPO was a mechanism for raising funds for continued growth. I know VC backing has been the more favorable mechanism of late, but being profitable has never really been a trigger for an IPO.

dragonwriter 10y ago

The company is a tool to serve the interests of the investors, there is no "good for the company" distinct from "best for the investors". (Good for the employees is a thing, but it's quite often not the same thing, and not what the company exists to serve outside of, e.g., labor coops.)

rory096 10y ago

We can't complain about individual (non-accredited) investors getting locked out of fast-growing tech companies and simultaneously complain when companies IPO when they've reached significant revenue but not yet hit profitability. IPOs are a capital-raising event; if companies only did them when they were profitable they'd be no more than VCs cashing in after they've milked out all the good upside potential.

deleted 10y ago
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stanleydrew 10y ago

Why would an IPO be bad for the company and employees? It's just another fundraising round, with new shares issued. I guess you're suggesting that an IPO exposes a company to more of a herd mentality regarding immediate profitability which it wouldn't be exposed to in a private round of financing, and that it might be punished for it?

toomuchtodo 10y ago
> I guess you're suggesting that an IPO exposes a company to more of a herd mentality regarding immediate profitability An IPO exposes a company to ruthless financial scrutiny, which doesn't exist when they're private. Going public and having your share price drop below expectations is the most epic of down rounds.
- vasilipupkin 10y ago
  That statement assumes that private late stage investors aren't ruthless and don't scrutinize the companies they invest in ?
  - toomuchtodo 10y ago
    My assumption (based on the last few tech IPOs) is that late stage investors are putting lipstick on a pig and trying to get out the door before the music stops. https://mattermark.com/2015s-tech-ipos-performing-even-worse-thought/ https://mattermark.com/2015s-tech-ipos-performing-even-worse... And Steve Blank: > Steve Blank on the Tech Bubble: 'VCs Won't Admit They're in a Ponzi Scheme' http://www.inc.com/zoe-henry/steve-blank-tech-bubble-burst-ponzi-scheme.html http://www.inc.com/zoe-henry/steve-blank-tech-bubble-burst-p...

deleted 10y ago

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wonnage 10y ago

there is no trend

pbreit 10y ago

Don't be surprised, the whole point of an IPO is to raise money to fund business growth.

mikeryan 10y ago

Traditionally an IPO was a mechanism for raising funds for continued growth. I know VC backing has been the more favorable mechanism of late, but being profitable has never really been a trigger for an IPO.