What is an initial public offering (IPO)?
one Initial Public Offer (IPO) It is the basic process for a private company to sell its shares to the public for the first time and to include it on regulated stock exchanges such as the New York Stock Exchange or the Nasdaq. This significant event marked a transition from private ownership by the company, allowing it to raise a large amount of capital from a wide range of investors.
Essentially:
- Before IPO: Ownership is concentrated among founders, early investors (such as venture capitalists) and employees.
- After the IPO: Anyone with a brokerage account, including retail investors, can buy and sell the company’s shares on the open market.
This public offering is not only a sign of the sale of shares. It represents a huge shift in corporate structure, governance and its access to capital. This is a strategic move to fuel expansion, increase brand prestige and provide liquidity to early stage stakeholders.
How does an IPO work?
The journey of an initial public offering (IPO) is a meticulous and regulated process that transforms private companies into public companies. It starts with a decision made by a company that openly, which is a driving force for capital or enhanced visibility. This leads to the choice of underwriters (investment banks) that will manage the product. These underwriters then oversee rigorous due diligence and prepare comprehensive regulatory archives (such as S-1 for SEC) to ensure full transparency and compliance.
Once the regulatory approval is about to be obtained, the company begins a roadshow, a marketing journey to institutional investors. This critical phase helps to underwrite demand and build a “book” of interest. This is crucial for products that balance their capital balance with investors’ appeals. The goal is usually to create positive momentum on the first trading day.
Finally, with the price and SEC approval, the stock was allocated. The company officially lists and begins trading on stock exchanges such as NYSE or NASDAQ. This marks its debut where individual investors can buy and sell stocks. Following the IPO, the company faces ongoing responsibilities, including regular financial reporting and strict compliance with SEC regulations. This highlights the strict nature of traditional capital raising compared to cryptocurrencies’ generally more agile approach.
In short, the IPO process usually involves
1. Decide on disclosure and underwriter choice
2. Due diligence and regulatory filing
3. Road exhibitions and book construction
4. Pricing products
5. Public: Listing and trading begins
IPO process in India. Source: University Hive
IPO-style events in Crypto
Although traditional IPOs (IPOs) operate within strict legal and regulatory frameworks, the rapidly growing crypto world has developed its own similar events to enable widespread allocation and fundraising.
In a strict legal sense, cryptocurrency does not have an IPO, but it has a unique fundraising mechanism that has a similar purpose:
- Initial Coin Products (ICO)Popular in 2017-2018, projects involving selling utility tokens directly to users often lack strong regulations but provide extensive accessibility.
- As a more selectable alternative, Initial Exchange Product (IEOS) and Launch platform Appears, cryptocurrency exchanges or platforms can facilitate token sales, often due diligence and listing immediately.
- Security Token Product (STOS) Representing an important step towards compliance, involving digital tokens designed to represent traditional securities in blockchain, aiming to combine blockchain benefits with existing securities laws.
- Unlike sales, Token airflow Freely distribute tokens to users to establish community and decentralized governance.
- Finally, one Token Generation Activity (TGE) is the formal creation and release of the original token of the project, which can be marked in these distribution methods or effectively mark its public availability. Together, these mechanisms enable the agreement to raise funds and allocate ownership in the decentralized space.
Why is the company (or agreement) public?
The company conducts IPOs for a variety of strategic reasons, focusing mainly on growth and liquidity.
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Entering capital: The most important benefit is raising a lot of capital. indeed, The IPO hit a large number of public investors. This provides funds For expansion, development, repayment or acquisition. at last, This influx of cash has promoted positive growth, with private funding difficulties.
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Enhanced public image and reputation: Being a publicly traded company will greatly improve credibility and visibility. often, This leads to increased brand awareness. This also leads to A stronger competitive position among stakeholders and a greater trust. also, This reputation attracts top talent and opens up new business opportunities.
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Early investors and employees’ liquidity: For founders, early investors and employees, IPOs offer exit strategies. Specifically, It converts liquid private stocks into liquid, publicly tradeable assets. therefore, They can be aware of the return on investment.
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Employee motivation: Publicly traded stocks are strong employee incentives. It provides Success through stock options or direct RSU joint-stock companies. This promotes Loyalty and keep employee rights aligned with shareholder value.
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Acquisition of currency: Publicly traded stocks can also serve as valuable currency for mergers and acquisitions. so, Companies can use stocks to acquire other businesses, not just cash.
Risks and disadvantages of IPO
Despite the charm of an IPO, it presents significant challenges and responsibilities.
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High cost: this IPO process Very expensive. It involves a large amount of expenses for investment banks, lawyers, accountants and marketing. These costs can reach millions. This will affect the net capital raising.
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Regulatory Review and Compliance Burden: Listed companies face strict regulations. Body like the United States Second Impose these. This includes extensive reporting (quarterly, annual reports) and public financial disclosures. Corporate governance rules are also required. This ongoing compliance uses many resources. It can also shift management focus.
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Loss of out-of-control: Publicity means losing some control. Listed companies must answer many shareholders. Their interests may conflict with the management’s vision. Public scrutiny and investor pressure can influence strategic decision-making.
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Market fluctuations: The stock prices of listed companies change with market power. It may fluctuate significantly. Poor performance, negative news or market downturn will lead to a sharp drop in prices. This will affect shareholder value and company morale.
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Short-term pressure: Public markets often require consistent short-term results. This can drive managers to prioritize immediate benefits. Such decisions may hinder long-term strategic growth
Famous IPO and token releases
Understanding the successful public offerings in traditional finance and cryptocurrency sectors provides valuable context for how to raise funds and allocate ownership. Despite their mechanisms, growth and gaining widespread adoption a common thread.
Famous traditional IPO
These companies make headlines for their transition to the public market, often raising billions and becoming household names, and highly anticipated or well-known recent lists:
- Saudi Aramco (2019): Having the world’s largest IPO record, raising an astonishing $25.6 billion (later $29.4 billion).
- Alibaba Group (2014): The Chinese e-commerce giant raised $25 billion when it went public on the New York Stock Exchange.
- Facebook (now Meta, 2012): One of the most vulnerable technology IPOs, raising over $16 billion, was a decisive moment for social media.
- Visa (2008): Its $17.9 billion IPO has achieved great success, demonstrating resilience in the financial crisis.
- Google (now letters, 2004): A key IPO in the tech industry marks the arrival of a company that will fundamentally change the access to information.
- WeWork (2021 SPAC merger): After a highly publicized IPO attempt in 2019, the workspace company was publicly valued at a $9 billion stock valuation in 2021 through a SPAC merger.
- Robin (2021): The popular committee-free trading platform was released in 2021, symbolizing a surge in retail investment.
- Reddit (2024): The social media giant made a long-awaited public debut in March 2024, worth about $6.4 billion.
- Circle (2025): The issuer of USDC Stablecoin set its IPO at $31 per share on June 5, 2025, raised more than $1 billion and listed on the New York Stock Exchange.
- Databricks (expected 2025): A major artificial intelligence and data analytics company, expected to be one of the largest technology IPOs in 2025, with a valuation of $62 billion.
- Krana (expected 2025): “Buy now, pay later” fintech giants are reportedly preparing for a major IPO in 2025, after a valuation of $14.6 billion.
- Stripes (expected): Payment processing behemoth is one of the most anticipated private companies, with no IPO date yet, focusing on private liquidity, with a valuation of $91.5 billion as of early 2025.
- Disharmonious (expected): The mass communication platform is widely speculated to be released by the end of 2025, with a past valuation of about $15 billion.
- Brain system (expected): The AI chipmaker’s goal is to conduct an IPO, although it faces delays due to national security comments related to foreign investment.
Source: Chart
Famous crypto token release
Crypto Space has seen its own groundbreaking set of fundraising activities that showcase alternative ways to project funds and token allocation:
- Ethereum (2014 ICO): One of the most successful coin products in the first place, raising over $18 million in Bitcoin, the foundation of smart contracts.
- Filecoin (2017 ICO): Its decentralized storage network raised more than $200 million, one of the largest token sale of the time.
- Polkad (2017 ICO/TGE): The interoperability-focused “blockchain blockchain” raised more than $140 million.
- Atside (2020 Token Sales/CGE): Its high transaction speed gained significant traction and rapidly developed into a major blockchain.
- Axie Infinity (2020 TGE/AXS token Release): The pioneer of the game to Irving game showcases the potential of tokens in the gaming ecosystem.
These examples illustrate various ways companies and projects can acquire funds and build funds in public markets, whether traditional or decentralized.
Source: Cryptologist
While your focus is on Defi, NFT, and Metaverse, understand what an IPO is? Still very relevant. In fact, the line between traditional finance and Web3 is blurry. For example, major financial institutions are now interacting with blockchain. Therefore, successful Web3 companies may eventually be public. Therefore, providing the fundamentals of mastery of interests provides a key context for this integration.
The crypto space has rapidly innovated fundraising. However, many models borrow concepts from the past. Therefore, recognizing the advantages and disadvantages of IPOs will help Web3 develop better investor mechanisms. In addition, regulatory landscape is also key. The existing securities laws govern traditional public products. It is worth noting that these are usually cited as encryption. In turn, a solid grasp of traditional financial IPOs clarifies future crypto market supervision trends.
Ultimately, strong financial knowledge covers traditional and decentralized systems. As a result, understanding how an IPO works will enhance your overall understanding. Furthermore, it makes you a more well-known economic player. Finally, as the industry matures, it also prepares you for future investments in publicly traded cryptocurrency companies.
