this post was submitted on 24 Feb 2024
1021 points (98.9% liked)
Technology
59421 readers
2822 users here now
This is a most excellent place for technology news and articles.
Our Rules
- Follow the lemmy.world rules.
- Only tech related content.
- Be excellent to each another!
- Mod approved content bots can post up to 10 articles per day.
- Threads asking for personal tech support may be deleted.
- Politics threads may be removed.
- No memes allowed as posts, OK to post as comments.
- Only approved bots from the list below, to ask if your bot can be added please contact us.
- Check for duplicates before posting, duplicates may be removed
Approved Bots
founded 1 year ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
What's an IPO?
Public means it's open to anyone, right? Not just institutional investors?
Correct, this means anyone will be able to buy/sell shares on the open market.
It's also why the financials are actually open to the public. They have to publicly disclose all financials/risk factors/etc before they invite the public to buy shares The idea is that institutional/wealthy investors are savvy enough to figure that out on their own.
No, the idea is that there are few enough owners that the owners communicate with the operators directly. If you owned 30% of a privately held company and the other owners lied about the financials to you that would still be a crime.
Not sure why you brought up lying, that's totally different (and still illegal, public or private).
The difference between raising public vs private money is whether or not you are legally required to actively disclose your financials/risks/business plans/etc. I can (legally) raise money from a wealthy family office with nothing but a phone call (basically how most angel investments work). I can't do the same if I'm trying to raise money from a random Joe off the street, that will land me in jail.
Again, like I said, it's because it's assumed that they have a direct connection to you to ask about the company and make decisions.
Thanks for the response. But on this:
Do what on their own? I don't quite follow what you are alluding to here.
Assessment of the company, its current finances, its past finances, and hopefully that will give them a decent forecast of the company's future viability.
In reality it's all just gambling.
Public fundraising laws exist to protect the average Joe from losing his life savings to fly-by-night hucksters while trying to ensure companies can still raise capital.
If you're a wealthy/sophisticated investor, the expectation is that you're already capable of assessing investment risk on your own (including, if you think necessary, getting your own lawyers, direct access to a company's financial reports, due diligence, etc). Average Joe, on the other hand, is required to be given audited financials, a prospectus that's vetted by regulators, explicit statements of share rights, etc etc.