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>Every company at this stage loses money This is the most retarded silicon valley vc tech bubble comment I have ever. There are 11million companies in the US,

>Every company at this stage loses money This is the most retarded silicon valley vc tech bubble comment I have ever. There are 11million companies in the US, many will fail making money let alone being 'strong' companies that drop $10 mil a year. If the numbers are so great and they have so much money at hand why are the people who run the business selling some of their share? Possibly due to high market valuations of all kinds and a very attractive price to dump a well established business that you have milked the most out of to date?

ZephyrBlu 5y ago
This is a liquidity event. Why are you surprised that people are selling? Even if the IPO didn't pop as much people would still probably be selling because their equity has likely been illiquid for years, especially if they were a founder, early investor or early employee.
- Sightline 5y ago
  He didn't say anything about being surprised.
  - shapefrog 5y ago
    No shock at all this is how the game works! You slap out a float, ideally small enough so that the supply and demand inbalance pushes the price up. So 3.7mil shares were issued at $102, and opened at $140, so that is a 'cost' to the company of $140 million + underwriting fees etc (probably another $30mil + the 700k shares they have options on at issue price). Additionally insiders dumped out 1.4mil shares at the issue price. Now execs + VC's have a 'liquid' market to sell or short against without paying the high costs for goldmans to price you up a private hedge which is the whole point of an IPO. Its litterally writting into the offering - 'The principal purposes of this offering are to increase our capitalization and financial flexibility and to create a public market for our Class A common stock.'
    - ZephyrBlu 5y ago
      What I meant is that regardless of the financial situation of the company or whether shareholders still believe in it, don't you think insiders would be selling at IPO because it is probably the first major liquidity event ever? Even if you completely believe in the future of the company, locking in returns and getting some liquidity (Even if the stock didn't pop heaps) would be nice for people who have been illiquid for years.
      - shapefrog 5y ago
        And this is why the IPO market is broken. VC's are riding startups through multiple rounds of funding for way longer than before then dumping the late stage mature companies onto the public markets. Those that locked in their returns, recieved the proceeds of thier 1.4million shares of $142.8 million into their accounts just before the bell rang for the market open. The bell rang everyone cheered and the shares they just sold are worth $196 million. Regular joe with a robin hood account makes the money and the CEO/VC loses money ... who knows more about the company though? > Even if you completely believe in the future of the company, locking in returns and getting some liquidity Worth it if you get $10 a share instead of $100? All about value. Why not dump some out in the previous 8 funding rounds? The reason is not many VCs would be in there cashing out the guys from the previous rounds, or would only do so at a heavy discount or to gain control over the company.
  - ZephyrBlu 5y ago
    You're right. The notion of "if they believe in the company so much why are they selling?" implied to me that it was unexpected for people to be selling their shares. That is what I meant by "surprised", though in hindsight my choice of wording was poor.

ZephyrBlu 5y ago

This is a liquidity event. Why are you surprised that people are selling? Even if the IPO didn't pop as much people would still probably be selling because their equity has likely been illiquid for years, especially if they were a founder, early investor or early employee.

Sightline 5y ago
He didn't say anything about being surprised.
- shapefrog 5y ago
  No shock at all this is how the game works! You slap out a float, ideally small enough so that the supply and demand inbalance pushes the price up. So 3.7mil shares were issued at $102, and opened at $140, so that is a 'cost' to the company of $140 million + underwriting fees etc (probably another $30mil + the 700k shares they have options on at issue price). Additionally insiders dumped out 1.4mil shares at the issue price. Now execs + VC's have a 'liquid' market to sell or short against without paying the high costs for goldmans to price you up a private hedge which is the whole point of an IPO. Its litterally writting into the offering - 'The principal purposes of this offering are to increase our capitalization and financial flexibility and to create a public market for our Class A common stock.'
  - ZephyrBlu 5y ago
    What I meant is that regardless of the financial situation of the company or whether shareholders still believe in it, don't you think insiders would be selling at IPO because it is probably the first major liquidity event ever? Even if you completely believe in the future of the company, locking in returns and getting some liquidity (Even if the stock didn't pop heaps) would be nice for people who have been illiquid for years.
    - shapefrog 5y ago
      And this is why the IPO market is broken. VC's are riding startups through multiple rounds of funding for way longer than before then dumping the late stage mature companies onto the public markets. Those that locked in their returns, recieved the proceeds of thier 1.4million shares of $142.8 million into their accounts just before the bell rang for the market open. The bell rang everyone cheered and the shares they just sold are worth $196 million. Regular joe with a robin hood account makes the money and the CEO/VC loses money ... who knows more about the company though? > Even if you completely believe in the future of the company, locking in returns and getting some liquidity Worth it if you get $10 a share instead of $100? All about value. Why not dump some out in the previous 8 funding rounds? The reason is not many VCs would be in there cashing out the guys from the previous rounds, or would only do so at a heavy discount or to gain control over the company.
- ZephyrBlu 5y ago
  You're right. The notion of "if they believe in the company so much why are they selling?" implied to me that it was unexpected for people to be selling their shares. That is what I meant by "surprised", though in hindsight my choice of wording was poor.