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| Name | Understanding IPOs: Definition, Process, Advantages and Disadvantages |
| Video Uploader | Video From Backstage with Millionaires |
| Upload Date | This Video Uploaded At 01-10-2020 04:30:05 |
| Video Discription | In today's video of Startup 101 series, we will be talking about Initial Public Offering (IPO). We will understand what is an IPO, how to take a company public, and what are the advantages and disadvantages of an IPO. 00:00 Introduction 00:47 What is Initial Public Offering (IPO)? 02:10 Why Do Startup Remain Private in the Early Days? 03:02 Advantages of IPO 04:32 Disadvantages of IPO 06:39 Process of Going Public What is an IPO? An Initial Public Offering (IPO) is the process of which helps to transform a private company into a public company. This is done by selling the shares of the private startup or a company to the general public instead of angel investors or venture capitalists (VCs). And when a company starts selling its shares to the public for the first time, this process is called an IPO. To understand this lets first understand what we mean by a private company and a public company. A private company is the one which is owned by a certain set of people and the general people like you or me might not be able to invest. Which means that only a few people have the right to invest or own shares of the company and they are not accessible to the general public. Since there are a few owners or investors, each of them has to invest large sums of money so that the startup or a company can raise the amount of money they need. And large investments spread across a small group of people means more risk for every investor. However, a public company is any company that is listed on the stock exchanges like Bombay Stock Exchange (BSE), National Stock Exchange (NSE), New York Stock Exchange (NYSE) or NASDAQ. Since a company is listed on these stock exchanges, anyone can potentially invest in these companies even people like you or me. Why do startups remain private in the early days? During the early stages of a startup, a company doesn’t really have a lot of revenues or it might not even have a product if it’s still in the idea stage. And since there is a lot of risks associated with early-stage startups, not a lot of people like you or me might be willing to put up large sums of money into a company that may or may not succeed in the future and we could end up losing all our investment. So, as it is difficult for these startups to raise funds from the general public, they chose to stay private and raise money from institutional investors like the VCs. Advantages of IPO The biggest advantage of a public company is that you have access to potentially millions of people who invest in public companies listed on different stock exchanges every day. And this can help the company to raise its market cap within a matter of minutes or a few months. This is completely different from a private company as there will be no change in the valuation of the company unless it goes on to raise more funds. Disadvantages of IPO Like we said that a public company’s valuation can jump within a matter of minutes, it also means that it can also go down or even erase the valuation of your company within minutes as well. This is something we saw with Yes Bank recently. And one of the reasons companies also chose to remain private is that they don’t really have to share their financial data with anyone but their investors. And now that a company is public, it will have to make their financial data available to the general public every quarter, hold board meetings and also make all your decisions public. A private company might have been only accountable to a few investors, a public company might now be answerable to potentially millions of investors. The Process of Going Public The process of taking any company public can change based on the where it is located as every country has its own rules and regulations. Talking about India, Securities Exchange and Board of India (SEBI) is responsible for formulating the rules and regulations of taking a company public in India. So, if a startup is looking to go public, they will first have to get their approval. Here are a few things to keep in mind before a startup thinks about going public. Firstly, Indian companies are required to be profitable before they can raise their IPO in India. This is one of the biggest reasons Indian startups like Paytm, Ola, Flipkart and OYO have failed to go public. To find out more about the rules you need to follow to take your startup public, you can check out SEBI’s website: www.sebi.gov.in Give us a like and subscribe to Backstage with Millionaires if you liked our video. Let us know what you think about this video in the comments below. Follow Backstage with Millionaires to remain updated with our latest developments. LinkedIn: https://www.linkedin.com/company/backstagewithmillionaires/ Twitter: https://twitter.com/bwmillionaires/ Instagram: https://www.instagram.com/backstagewithmillionaires/ #IPO #backstagewithmillionaires #bwm eJE9aGm9oUc |
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| Tags | Initial public offering | ipo | what is initial public offering | what is ipo | ipo process | ipo in stock market | initial public offering explained | startup funding | ipo process explained | ipo explained | advantages of ipo | disadvantages of ipo | initial public offering (ipo) explained | startup 101 | startup fundraising | startup fundraising 101 | startup fundraising in india | startup fundraising explained | india | startupgyaan | intellectual indies | pranjal kamra ipo | understanding ipo |
