We have all heard the term IPO before, but what is it and how do you participate?

An Initial Public Offering (IPO) is the process by which a private company transitions into a public entity by offering its shares to the general public for the first time. It is a critical milestone, allowing a company to raise significant capital from institutional and retail investors to fund growth, research, or debt repayment.

Through an IPO the company’s stock gets listed on public exchanges (like NASDAQ or NYSE) and everyone can buy those shares at the market price through brokerages and investment accounts.

The listing process comes with many regulations and the company becomes required to post business metrics publicly, usually on a quarterly basis. These include revenue, profits, debt and other important financial metrics to help the public make decisions about whether they will invest or not.

A Brief History

While modern IPOs feel like a product of the high-tech era, the concept in the United States dates back to the Bank of North America in 1781. Amidst the Revolutionary War, the bank held the country’s first IPO to help finance the war effort, marking the beginning of the American tradition of public equity participation.

Today, many large companies still use the IPO. One of the main reasons companies offer this is to raise large funding practically overnight to fund scaling at the highest level and staying ahead of the competition, while not taking on additional debt.

For example, recently we have seen major cap-ex spend from many companies related to AI and with the upcoming SpaceXAI (SPCX) IPO we see an example of a company that fought hard to remain private this long, making the tough decision to tap into the public well.

The “Lock-Up” Phenomenon: Why Stocks Often Dip post IPO

For those tracking new listings, the 90-to-180-day window is a critical observation period. This is due to the lock-up period—a contractual restriction that prevents company insiders, founders, and early venture capital investors from selling their shares immediately after the IPO and cashing in.

Why the dip?

● Increased Supply: As the lock-up period expires, a flood of previously restricted shares hits the open market. According to basic supply and demand, this sudden increase in available shares often exerts downward pressure on the stock price.

● Profit Taking: If the stock has performed well since its debut, early investors may be eager to “cash out” and realize their gains, leading to a wave of selling.

● Signaling: The behavior of insiders at this moment is closely watched. If executives and founders dump large portions of their holdings, it can signal a lack of confidence in the company’s long-term prospects, potentially triggering further retail selling.

Conversely, if insiders choose to hold their positions, it acts as a “vote of confidence” that can sometimes stabilize the stock price, even despite the influx of new supply. Understanding this cycle is essential for any investor looking at the “post-IPO” performance of a company.

Getting in - The Three Main Retail IPO Pathways

1. Retail Brokerage IPO Access Programs

Several major brokerages now team up with Wall Street banks to grab a slice of the IPO pie for their everyday users (traditionally ranging from 5% to 10%). To participate you need to file an “Indication of Interest”(IOI) with your brokerage telling them how many shares you want and making sure you have the funds available for the purchase.

2. Private Secondary Markets (Pre-IPO Marketplaces)

For investors seeking to buy equity in high-growth startups months or years before an SEC Form is filed, private secondary market platforms serve as an essential channel.

Platforms such as Forge Global, EquityZen, Hiive, and Rainmaker Securities connect interested buyers and sellers, matching selling founders and early employees with incoming private capital.

Regulatory Floors: The catch? This sandbox is strictly for accredited investors (individuals holding a net worth exceeding $1M USD excluding primary residences, or consistent annual incomes over $200,000 USD) and deal minimums remain substantial, generally starting between $10,000 and $50,000 USD.

3. Indirect Access (Specialized ETFs and Public Proxies)

For non-accredited individuals looking to get involved without high minimum balance thresholds, secondary market proxies offer a highly diversified, regulated alternative:

1. Private Tech Mutual Funds: Vehicles like the Fundrise Innovation Fund allow everyday retail accounts to build exposure to prominent private unicorns for as little as $10 USD.

2. IPO-Focused Exchange Traded Funds: Specialized ETFs like the Renaissance IPO ETF (Ticker:IPO) systematically buy newly public companies shortly after their trading debut and cycle out older assets dynamically.

The Enterprise Angle: Corporate Venture Capital

Large companies like Intel and Google often make investments in other companies through a Corporate Venture Capital (CVC) model or similar structure. Unlike traditional venture capital firms, which strictly chase financial returns, these tech giants have a dual motive: strategic alignment and innovation scouting.

By investing in agile startups, they gain early access to cutting-edge technologies, unlock new markets, and build a broader ecosystem around their own core products. For the startup, partnering with a CVC isn’t just about securing capital; it’s a gateway to the enterprise’s massive scaling expertise, technical infrastructure, and global distribution networks.

Well, thanks for making it to the end, your attention is my reward and I don’t take it for granted.

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With love,
J

Disclaimer: Educational & informational purposes only. Does not constitute investment, financial, legal, or tax advice.

Allow me to introduce myself. My name is Jacob Sabol and I provide consulting services for businesses in need through my company Southpaw Consulting.

I am going to be writing up my thoughts on some business strategies or financial related topics, these are just ideas and are intended to bridge the gap from zero knowledge or understanding, to a better general concept of things.

When asked what my goal for this will be, I was slightly caught off guard, did I need to have a goal for this before beginning?

What I am, is a friend who has a passion for sharing what I know with friends and family and now into the void. I will try to give a somewhat succinct take based on the research I have done, but ultimately: I simply took the fourteen minutes to research this a little more or read the article you may have skimmed or skipped altogether after reading the headline.

So what topics have you always wondered about but never had the time to research further?

This page is intended to be for educational & informational purposes only.

It would be irresponsible to give out specific advice without knowing details about your situation along with your risk tolerance and plans for both the short and longer term, as those factors would significantly alter any strategies or advice given.

Reach out to a professional before putting any business or investment strategy into effect.

The thoughts expressed here are meant to make you think a little more broadly, or act as a starting place for you to begin learning about something new.

I want to thank you for taking the time to read this to the end, your attention is my reward and I don’t take it for granted.

With love,
J