Does the price at which a company goes public matter, or only catching the right market window?

Eric Paley · Sep 20, 2023

The obsession with first-day IPO pricing is silly and reflects the short-term interests of transactors rather than the long-term interests of the builders creating value

If you're going public because you believe you can build value over a very long period, an unfriendly market in the first three months is irrelevant

56:29 20VC Roundtable: Is the VC Model Broken? The Biggest Disconnect Ever Between TVPI & DPI, Why Market Size is Dangerous, Why "Go Fast" is Terrible Advice, The Dangers of Raising Large Rounds at High Prices & Why Next Year Will See the Biggest Hiring Spree i

Dominik Richter · Dec 1, 2023

First-day share price is irrelevant; the price after two to three years is what a CEO should optimise for

History is littered with companies that tried to squeeze the last 10% out of the first day, missed the window, and had to do emergency fundraises or accept structure and ratchets

Scope: price after 12 months starts becoming relevant

41:26 20VC: HelloFresh CEO on Why When You Raise VC You Only Have Two Options, Why Your IPO Price is Irrelevant, Why Timing is So Important in Going Public & Why D2C is Not Dead with Dominik Richter

Dominik Richter · Dec 1, 2023

The price at which you go public is irrelevant; what matters is catching the IPO window

Almost nobody sells at the IPO price because everyone is locked up, so only the price when lockups expire and beyond matters; macro windows for a given business model open and close unpredictably

39:29 Ipo price is irrelevant only catching the market window matters

Harry Stebbings · Dec 1, 2023 · hedged

IPO price does matter, because a bad first day compounds into bad sentiment, a narrative that the category is bad, and demoralised employees leaving

Perception can lead to reality: a poor debut creates a knock-on effect through weeks and months of negative sentiment and team morale

40:33 Ipo price matters because a bad debut creates negative sentiment and morale effects

Eric Paley · Sep 20, 2023

An investor who bought Stripe at $100B has no good reason to oppose the company going public at $20B; the only real question is whether the company will eventually return their capital

The overpayment is already a fact you're captive to, and access to liquidity is better than being private forever; opposition is really about embarrassment

58:34 Investor opposition to a lower priced ipo is about embarrassment not substance