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<div type="image" title="In 2024, India has seen around $12.2 billion worth of IPOs, including mainboard and SMEs" msid="113878163" hostid="261" sizebytes="45300" caption="&amp;lt;p&amp;gt;In 2024, India has seen around $12.2 billion worth of IPOs, including mainboard and SMEs&amp;lt;/p&amp;gt;"></div> Missing some action, adrenaline rush, and thrill in your life? Are the good old, albeit mundane money investment avenues like mutual funds and fixed deposits not making the cut for you? Want to experience a heart-pounding, financial rollercoaster that will constantly keep you and your portfolio on tenterhooks? Well then, welcome to the world of initial public offers (IPOs), especially those brought to you by SMEs, or <keyword id="6375845" type="General" weightage="20" keywordseo="Small-and-Medium-Enterprises" source="Orion">small and medium enterprises</keyword>. Truth be told, <keyword id="19938687" type="General" weightage="20" keywordseo="sme" source="keywords">SME</keyword> IPOs have been all over the bourses this year. So far, 2024 has seen 206 SMEs debuting on both BSE and NSE, out of which 146 listed in gains and 46 listed in losses. Odds seem good, right? In contrast, the year has only seen 63 IPOs from the elder brother i.e. mainboard, only 48 of which managed to post any listing gains. And getting an allotment has also been a major uncertainty, given the unusually high demand this year. <h2 style="margin-bottom: 0.7em; line-height: 1.3; color: rgb(0, 0, 0); font-size: 24px; background: 0px 0px; text-rendering: optimizelegibility;">So, what's an <keyword id="5559702" type="General" weightage="100" keywordseo="SME-IPO" source="Orion">SME IPO</keyword>, you ask?</h2>Think of a mainboard company as Shah Rukh or Salman Khan—well-established, financially stable, strong legacy of profitability, and fairly well-known. On the other hand, SMEs are your Prateek Gandhi (Harshad Mehta, Scam 1992), Siddhant Chaturvedi (MC Sher, Gully Boy) or Avinash Tiwary (Majnu, Laila Majnu). While they are doing super well, they are yet to make it big like the Khans. They’re currently underdogs, lesser known, but who knows? They can be the next big thing in the future! And SME IPOs are getting a stellar reception. In 2023, 182 such IPOs had raised a substantial Rs 4,967 crore. In 2024, more than 200 companies have already raised over Rs 7,500 crore, and we have four months to go. This, with one quarter of the year still remaining. <div type="image" title="In 2024, India leads IPO activity in the Asia-Pacific region" height="900" width="1200" msid="113875643" hostid="261" caption="&amp;lt;p&amp;gt;In 2024, India leads IPO activity in the Asia-Pacific region&amp;lt;/p&amp;gt;"></div> But what does it take for a company to be classified as a small enterprise? The company has to have an annual turnover/income of up to Rs 50 crore, and for a medium enterprise to be called so, its annual income has to be up to Rs 250 crore. When such companies go public, in a bid to raise funds from investors and expand their operations, they launch an <keyword id="19898327" type="General" weightage="20" keywordseo="ipo" source="keywords">IPO</keyword>, but not on the main exchange, but separately, on NSE’s Emerge and BSE’s SME platform. As of September 2024, <keyword id="4484133" type="General" weightage="20" keywordseo="NSE-Emerge" source="Orion">NSE Emerge</keyword> has 147 listed participants, while <keyword id="1885131" type="General" weightage="20" keywordseo="BSE-SME" source="Orion">BSE SME</keyword> has 155 market makers. Mounting an SME’s IPO is comparatively less stringent than their mainboard counterparts, as far as regulations are concerned since their DRHPs (draft red herring prospectus) are not filed with SEBI. So, wouldn’t a lenient treatment make them inherently riskier? Why are they so appealing, you ask? <a href="https://www.businessinsider.in/stock-market/news/a-company-with-8-employees-looking-to-raise-12-crore-ended-up-getting-applications-worth-over-4700-crore/articleshow/112824522.cms">Delhi firm with just 8 employees seeks ₹12 crore via IPO, gets ₹4,700 crore worth of investor applications!</a> Well, for one, some of them have delivered exceptional returns—we’re talking 100%, 200%. Consider this—Owais Metal and Mineral Processing, which launched its IPO in February this year, delivered a whopping listing gain of 201%. Another SME, Maxposure, whose IPO was out in January 2024, had earned its investors listing gains worth 317.40%! Apparently, higher risks also mean higher returns, and also super high investment. Most SME IPOs need a minimum investment of Rs 1,00,000 or more, as opposed to mainboard IPOs, where you can buy one lot of shares for anywhere between Rs 14,000-15,000. Even the minimum trading lot size for SME shares is about 10,000. In short, you’d have to potentially empty your pockets to invest in an SME IPO. And still, there’s no guarantee that the listing will fill your wallets. For all you know, your pockets before and after the IPO is listed might stay the same - EMPTY! There's also the question of whether or not these SMEs are able to maintain their listing day mojo, or do they just fizzle out thereafter? Data from Prime Database highlights more instances of the latter. As of August 2024, about 166 SME IPOs had made it to the exchanges. Around 72 of them, or close to 50%, could not sustain their momentum going ahead, and were trading below their listing day prices. Consider this. The post listing gains of Medicamen Organics, whose IPO came out in June 2024, earned its investors massive listing gains of over 300%, by listing at Rs 137.85, significantly higher than its price issue price, which was set between Rs 32-34. But as of October 1, 2024, the stock was trading at Rs 64.2. Talk about falls. Additionally, risks of pump-and-dump, and illiquidity, among others makes SME IPOs dangerous See, you're largely venturing into unknown, pitch-dark territories, without much light to guide you. For starters, SME IPOs face less scrutiny from market watchdog SEBI. This also means they are able to list quickly, just 3-4 months. On the other hand, mainboard IPOs can take upto a year before they are cleared for listing. Also, there is far less information and disclosures available about their financials, fundamentals and performance to investors for making an informed decision, as compared to mainboard stocks. Then there’s the issue of illiquidity. Once purchased, you might find it hard to sell off your SME stocks, since they are not traded as frequently in the market, which means lower liquidity. Trivesh D, COO, Tradejini explains that liquidity is a major concern for such stocks. “These stocks typically have a smaller free float, and are traded in lots, which can lead to volatility and sharp price swings. This means it can be challenging for investors to buy or sell shares without significantly impacting prices. Additionally, speculative trading practices, like 'pump-and-dump' schemes, can inflate stock prices, leaving retail investors vulnerable to sudden drops”. Recently, SME IPOs have gained notoriety for price manipulation via showing fictitious sales and revenue in their books of accounts, selling of promoter holdings at inflated prices, and being the facade for many infamous pump and dump schemes. This is where select people create frenzy, or mass euphoria over a particular stock or company, causing its prices to soar, and then dumping them, or selling their shares at this massive price to make a killing! Infact, it's not just the promoters, but also the investment banks floating these IPOs. At present, SEBI is investigating around 6 investment banks which have allegedly charged SMEs a staggering 15% of funds raised via IPOs as fee, as opposed to the standard 1-3%. In March 2024, SEBI chairperson Madhabi Puri Buch had also highlighted witnessing signs of manipulation in the SME space. “We do see signs of manipulation in the SME segment. We are able to see certain patterns.” Buch had observed back then. Adds Kresha Gupta, Founder &amp; Director, StepTrade Share Services, “Investing in SME IPO comes with significant risks, despite their impressive returns in recent years. Limited participation from institutional investors and public in some SME IPOs also mean that those companies may lack the support and stability that comes with larger-scale investments” “Additionally, many SMEs may not have strong fundamentals to justify their valuations. High P/E ratios can be misleading, and while some IPOs have delivered impressive returns, they often come with significant volatility, continues D of Tradejini. <h2 style="box-sizing: border-box; border: 0px; outline: 0px; padding: 0px; margin: 0px 0px 0.7em; font-family: &quot;Open Sans&quot;, sans-serif; font-weight: 700; line-height: 1.3; color: rgb(0, 0, 0); font-size: 24px; list-style: none; background: 0px 0px; text-rendering: optimizelegibility; text-transform: none; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;">So, should I stay away?</h2>Yes, and No. Yes, if you don't want to do your homework of researching the company thoroughly beforehand. Anand K. Rathi, Co-Founder of MIRA Money suggests asking a couple of questions before investing your hard earned money: <ul><li>What is the company's financial performance over the past 3-4 years?</li><li>What is the company's governance structure?</li><li>Is the financial success driven by the IPO, or is it a result of consistent performance?</li><li>Does the company have what it takes to scale its operations to the next level?</li><li>Are the company’s promoters trustworthy, capable and experienced?</li><li>What is the level of participation by large, institutional investors?</li></ul> But staying away completely? Not necessary. Gupta adds that retail investors, in particular, should avoid viewing SME IPOs as quick money-makers based on their short-term performance, as this can certainly lead to poor investment decisions. “To mitigate risks, investors should always focus on long-term fundamentals rather than just short-term price movements. Key indicators include the participation of institutional investors like DIIs and FIIs. This often signals confidence in the stock”, she continues. A red flag you should look out for is if a company is only offering OFS, or Offer for Sale. This can indicate early investors looking to exit, potentially signaling weaker future growth. That's why it is better to look for companies which are raising capital for expansion purposes. This is a sign of healthy business growth prospects and improving fundamentals. In conclusion, backing the underdog, or SMEs, is not a bad proposition, but not without its risks. Investing in SME IPOs is like riding a unicorn—but you don't know whether you're riding it to rags or riches! So, take your pick.

SIMPLY PUT: Why investing in SME IPOs should not be on top of your adventure to-do list!

Missing some action, adrenaline rush, and thrill in your life? Are the good old, albeit mundane money investment avenues like mutual funds and fixed deposits not making the cut for you? Want to experience a heart-pounding, financial rollercoaster that will constantly keep you and your portfolio on tenterhooks? Well then, welcome to the world of initial public offers (IPOs), especially those brought to you by SMEs, or <keyword id="6375845" type="General" weightage="20" keywordseo="Small-and-Medium-Enterprises" source="Orion">small and medium enterprises</keyword>. Truth be told, <keyword id="3704207" type="General" weightage="100" keywordseo="SME-IPOs" source="Orion">SME IPOs</keyword> have been all over the bourses this year. So far, 2024 has seen 206 SMEs debuting on both BSE and NSE, out of which 146 listed in gains and 46 listed in losses. Odds seem good, right? In contrast, the year has only seen 63 IPOs from the elder brother i.e. mainboard, only 48 of which managed to post any listing gains. And getting an allotment has also been a major uncertainty, given the unusually high demand this year. <h2>So, what's an SME <keyword id="6354763" type="General" weightage="20" keywordseo="IPO" source="Orion">IPO</keyword>, you ask?</h2>Think of a mainboard company as Shah Rukh or Salman Khan—well-established, financially stable, strong legacy of profitability, and fairly well-known. On the other hand, SMEs are your Prateek Gandhi (Harshad Mehta, Scam 1992), Siddhant Chaturvedi (MC Sher, Gully Boy) or Avinash Tiwary (Majnu, Laila Majnu). While they are doing super well, they are yet to make it big like the Khans. They’re currently underdogs, lesser known, but who knows? They can be the next big thing in the future! And SME IPOs are getting a stellar reception. In 2023, 182 such IPOs had raised a substantial Rs 4,967 crore. In 2024, more than 200 companies have already raised over Rs 7,500 crore, and we have four months to go. This, with one quarter of the year still remaining. <div type="image" title="In 2024, India leads IPO activity in the Asia-Pacific region" height="900" width="1200" msid="113875643" hostid="261" caption="&amp;lt;p&amp;gt;In 2024, India leads IPO activity in the Asia-Pacific region&amp;lt;/p&amp;gt;"></div> But what does it take for a company to be classified as a small enterprise? The company has to have an annual turnover/income of up to Rs 50 crore, and for a medium enterprise to be called so, its annual income has to be up to Rs 250 crore. When such companies go public, in a bid to raise funds from investors and expand their operations, they launch an IPO, but not on the main exchange, but separately, on NSE’s Emerge and BSE’s SME platform. As of September 2024, <keyword id="4484133" type="General" weightage="20" keywordseo="NSE-Emerge" source="Orion">NSE Emerge</keyword> has 147 listed participants, while <keyword id="1885131" type="General" weightage="20" keywordseo="BSE-SME" source="Orion">BSE SME</keyword> has 155 market makers. Mounting an SME’s IPO is comparatively less stringent than their mainboard counterparts, as far as regulations are concerned since their DRHPs (draft <keyword id="12225712" type="General" weightage="20" keywordseo="Red-herring-prospectus" source="Orion">red herring prospectus</keyword>) are not filed with SEBI. So, wouldn’t a lenient treatment make them inherently riskier? Why are they so appealing, you ask? <a href="https://www.businessinsider.in/stock-market/news/a-company-with-8-employees-looking-to-raise-12-crore-ended-up-getting-applications-worth-over-4700-crore/articleshow/112824522.cms">Delhi firm with just 8 employees seeks ₹12 crore via IPO, gets ₹4,700 crore worth of investor applications!</a> Well, for one, some of them have delivered exceptional returns—we’re talking 100%, 200%. Consider this—Owais Metal and Mineral Processing, which launched its IPO in February this year, delivered a whopping listing gain of 201%. Another SME, Maxposure, whose IPO was out in January 2024, had earned its investors listing gains worth 317.40%! Apparently, higher risks also mean higher returns, and also super high investment. Most SME IPOs need a minimum investment of Rs 1,00,000 or more, as opposed to mainboard IPOs, where you can buy one lot of shares for anywhere between Rs 14,000-15,000. Even the minimum trading lot size for SME shares is about 10,000. In short, you’d have to potentially empty your pockets to invest in an SME IPO. And still, there’s no guarantee that the listing will fill your wallets. For all you know, your pockets before and after the IPO is listed might stay the same - EMPTY! There's also the question of whether or not these SMEs are able to maintain their listing day mojo, or do they just fizzle out thereafter? Data from Prime Database highlights more instances of the latter. As of August 2024, about 166 SME IPOs had made it to the exchanges. Around 72 of them, or close to 50%, could not sustain their momentum going ahead, and were trading below their listing day prices. Consider this. The post listing gains of Medicamen Organics, whose IPO came out in June 2024, earned its investors massive listing gains of over 300%, by listing at Rs 137.85, significantly higher than its price issue price, which was set between Rs 32-34. But as of October 1, 2024, the stock was trading at Rs 64.2. Talk about falls. Additionally, risks of pump-and-dump, and illiquidity, among others makes SME IPOs dangerous See, you're largely venturing into unknown, pitch-dark territories, without much light to guide you. For starters, SME IPOs face less scrutiny from market watchdog SEBI. This also means they are able to list quickly, just 3-4 months. On the other hand, mainboard IPOs can take upto a year before they are cleared for listing. Also, there is far less information and disclosures available about their financials, fundamentals and performance to investors for making an informed decision, as compared to mainboard stocks. Then there’s the issue of illiquidity. Once purchased, you might find it hard to sell off your SME stocks, since they are not traded as frequently in the market, which means lower liquidity. Trivesh D, COO, Tradejini explains that liquidity is a major concern for such stocks. “These stocks typically have a smaller free float, and are traded in lots, which can lead to volatility and sharp price swings. This means it can be challenging for investors to buy or sell shares without significantly impacting prices. Additionally, speculative trading practices, like 'pump-and-dump' schemes, can inflate stock prices, leaving retail investors vulnerable to sudden drops”. Recently, SME IPOs have gained notoriety for price manipulation via showing fictitious sales and revenue in their books of accounts, selling of promoter holdings at inflated prices, and being the facade for many infamous <keyword id="10663340" type="General" weightage="20" keywordseo="Pump-and-Dump" source="Orion">pump and dump</keyword> schemes. This is where select people create frenzy, or mass euphoria over a particular stock or company, causing its prices to soar, and then dumping them, or selling their shares at this massive price to make a killing! Infact, it's not just the promoters, but also the investment banks floating these IPOs. At present, SEBI is investigating around 6 investment banks which have allegedly charged SMEs a staggering 15% of funds raised via IPOs as fee, as opposed to the standard 1-3%. In March 2024, SEBI chairperson Madhabi Puri Buch had also highlighted witnessing signs of manipulation in the SME space. “We do see signs of manipulation in the SME segment. We are able to see certain patterns.” Buch had observed back then. Adds Kresha Gupta, Founder &amp; Director, StepTrade Share Services, “Investing in SME IPO comes with significant risks, despite their impressive returns in recent years. Limited participation from institutional investors and public in some SME IPOs also mean that those companies may lack the support and stability that comes with larger-scale investments” “Additionally, many SMEs may not have strong fundamentals to justify their valuations. High P/E ratios can be misleading, and while some IPOs have delivered impressive returns, they often come with significant volatility, continues D of Tradejini. <h2>So, should I stay away? </h2>Yes, and No. Yes, if you don't want to do your homework of researching the company thoroughly beforehand. Anand K. Rathi, Co-Founder of MIRA Money suggests asking a couple of questions before investing your hard earned money: <ul><li>What is the company's financial performance over the past 3-4 years?</li><li>What is the company's governance structure?</li><li>Is the financial success driven by the IPO, or is it a result of consistent performance?</li><li>Does the company have what it takes to scale its operations to the next level?</li><li>Are the company’s promoters trustworthy, capable and experienced?</li><li>What is the level of participation by large, institutional investors?</li></ul> But staying away completely? Not necessary. Gupta adds that retail investors, in particular, should avoid viewing SME IPOs as quick money-makers based on their short-term performance, as this can certainly lead to poor investment decisions. “To mitigate risks, investors should always focus on long-term fundamentals rather than just short-term price movements. Key indicators include the participation of institutional investors like DIIs and FIIs. This often signals confidence in the stock”, she continues. A red flag you should look out for is if a company is only offering OFS, or Offer for Sale. This can indicate early investors looking to exit, potentially signaling weaker future growth. That's why it is better to look for companies which are raising capital for expansion purposes. This is a sign of healthy business growth prospects and improving fundamentals. In conclusion, backing the underdog, or SMEs, is not a bad proposition, but not without its risks. Investing in SME IPOs is like riding a unicorn—but you don't know whether you're riding it to rags or riches! So, take your pick.

Why investing in SME IPOs should not be on top of your adventure to-do list!

Market regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords">SEBI</keyword> has issued notice to fintech firm <keyword id="20253123" type="General" weightage="20" keywordseo="One97-Communications" source="keywords" meta.keywordsubtype="org" meta.entityname="One97 Communications" meta.hostid="261" meta.entityid="One97 Communications">One97 Communications</keyword>, which owns the <keyword id="19898109" type="General" weightage="20" keywordseo="Paytm" source="keywords">Paytm</keyword> brand, for the employee <keyword id="20410988" type="General" weightage="20" keywordseo="stock-options" source="keywords">stock options</keyword> (<keyword id="20043663" type="General" weightage="20" keywordseo="ESOPs" source="keywords">ESOPs</keyword>) allocated to MD and CEO <keyword id="20004114" type="General" weightage="20" keywordseo="vijay-shekhar-sharma" source="keywords">Vijay Shekhar Sharma</keyword>, according to the company filing on Monday. In response to a query from stock exchanges, Paytm said the notice is not a new development, and it is in regulatory contact with the market regulator to make required representations. According to Paytm's financial year 2024 annual result filing, it had issued 2.1 crore employee stock options (ESOP) to Sharma in the financial year 2022. SEBI had issued a show cause notice to Paytm on ESOP issued to Sharma. "This is not a new development, as the Company had already made relevant disclosures on this matter in its financial results for the quarter and year ended March 31, 2024, as well as the quarter ended June 30, 2024. The Company is in regular communication with the <keyword id="19970553" type="General" weightage="20" keywordseo="securities-exchange-board-of-india" source="keywords">Securities Exchange Board of India</keyword> (SEBI) and making necessary representations regarding this matter," Paytm said in response to a stock exchange query. The disclosure made on May 22 and July 19 said that Paytm has submitted its preliminary response and is in the process of seeking further information from the regulator in this regard. "Based on an independent legal opinion obtained by the management, it believes that the Company is compliant with the relevant regulations. Accordingly, there is no impact on the financial results for the year ended March 31, 2024," the filing said. Shares of One97 Communications Ltd, which owns the Paytm brand, on Monday dropped over 4% amid reports that SEBI has issued show-cause notices to Vijay Shekhar Sharma and board members who served during its IPO in November 2021 for alleged misrepresentation of facts. The stock tanked 4.41 % to settle at Rs 530.05 apiece on the BSE. During the day, it plunged 8.88 % to Rs 505.25. On the NSE, shares of the firm dropped 4.47 % to Rs 530. Intra-day, the stock tumbled 8.88 % to Rs 505.55. The company's market valuation declined by Rs 1,534.23 crore to Rs 33,731.56 crore. Earlier in the day, BSE sought clarification from One 97 Communications Ltd with reference to news that Vijay Shekhar Sharma, Paytm directors face SEBI show-cause notices over initial public offering (IPO) breaches, particularly on ESOPs allotted to MD and CEO Vijay Shekhar Sharma. In response to a query from stock exchanges, Paytm said the notice is not a new development, and it is in regulatory contact with the markets regulator to make required representations.

SEBI issues notice to Paytm on ESOPs given to CEO Sharma; firm says disclosure already made

Artificial intelligence (<keyword id="19899640" type="General" weightage="20" keywordseo="AI" source="keywords">AI</keyword>) became a buzzword in the tech industry with the launch of ChatGPT in 2022. The emerging technology is now being used in various industries and more and more sectors are trying to find ways to use the technology to their benefit. Now, AI might come to your rescue even if you are struggling with <keyword id="21423322" type="General" weightage="20" keywordseo="IPO-filings" source="keywords">IPO filings</keyword>. <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords">Sebi</keyword> chief <keyword id="19922107" type="General" weightage="20" keywordseo="Madhabi-Puri-Buch" source="keywords">Madhabi Puri Buch</keyword>, during a conference, said that <keyword id="19898327" type="General" weightage="20" keywordseo="ipo" source="keywords">IPO</keyword> filing will get faster and even easier with the help of AI. She also elaborated on how AI is already being used for processing of public documents and does 80 percent of the job. <h2>Sebi chief on AI making IPO filing quicker</h2>According to an Economic Times report, Buch talked about plans to process IPO documents using AI during an <keyword id="22645005" type="General" weightage="20" keywordseo="FICCI-conference" source="keywords">FICCI conference</keyword>. She revealed that a fill-in-the-blanks template form is in the works which will simplify the process of IPO filing for companies. As a result, the entire process can be fast-tracked as only the final approval will come from an officer. For young companies, this could mean that filing an IPO is not just quicker, but easier as well as there could be set templates that they will just have to fill in. The report quoted Buch saying, "The normal track (of processing of IPO applications) would be so fast that you won't need fast track." <h2>IPO process in India</h2>In India, the process of filing an <keyword id="19913114" type="General" weightage="20" keywordseo="initial-public-offering" source="keywords">Initial Public Offering</keyword> (IPO) involves several steps. Firstly, the company hires an underwriter or investment bank to guide the process. These financial experts analyze the company's financial health and sign an underwriting agreement detailing the deal, the amount to be raised, and the securities being issued. Next, the company prepares a registration statement and a draft prospectus, known as the Red Herring Prospectus (RHP), as mandated by the Companies Act. This document includes definitions, risk factors, use of proceeds, industry and business descriptions, management information, financial statements, and legal details. The RHP must be submitted to the registrar of companies three days before the public offering and must comply with SEBI regulations. Following this, the company applies to SEBI for IPO approval. SEBI then verifies the company's disclosures. If approved, the company announces the IPO date. Subsequently, the company applies to the stock exchange to list its shares. The pricing of the IPO can be done through a Fixed Price Offering or a Book Building Offering, where a price range is announced, and investors bid within this range. The booking period usually lasts three to five working days, during which investors can revise their bids. After bidding, the final price, or Cut-Off price, is determined. Finally, the company, along with the underwriters, allocates shares to investors. In cases of oversubscription, partial allotments are made. The shares are typically allotted within ten working days of the last bidding date.

Struggling with IPO filing? AI might come to your rescue soon

<ul class="summary-list"><li>A public offering can lead to sudden wealth creation and leave founders wondering how to manage it.</li><li>A top Goldman Sachs wealth advisor shared key considerations for startup founders.</li></ul>In 1987, Bill Gates became the world's youngest billionaire at 31. His fortune had already ballooned the year prior when his brainchild, Microsoft, went public on the Nasdaq.Like many founders who have taken their companies public, Gates saw a sudden windfall of wealth transform his life and vault him into a new tax bracket. The bank that led Microsoft's initial public offering was Goldman Sachs, the <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-investment-bank-leaders-lay-out-winning-strategy-2024-6">Wall Street behemoth</a> famed for its leading position in terms of both advising on public issuances and <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-2q-earnings-david-solomon-investment-banking-forecast-2024-7">handling private merger transactions</a>.Goldman executives <a target="_blank" href="https://www.goldmansachs.com/insights/articles/dealmaking-and-ipos-are-poised-for-a-revival-in-2024">have forecast in recent months</a> an increase in public offerings this year after a <a target="_blank" class="" href="https://www.businessinsider.com/wall-street-bake-offs-back-morgan-stanley-2q-ted-pick-2024-7">slow past two years for IPOs</a>. The <a target="_blank" href="https://www.ey.com/en_us/insights/ipo/ipo-market-trends">accounting and tax giant EY found that IPOs were rebounding</a> this year and has tracked 82 public offerings in the US market throughout the first half of 2024, which have collectively generated $18.6 billion in proceeds. It puts this year ahead of last year's tally, at 63 deals producing slightly more than $10 billion in proceeds.So far in 2024, Goldman Sachs' IPO team has worked on 16 public offerings in the US, which generated more than $1.5 billion in value, according to deal-tracking firm Dealogic; that's up from last year's eight IPOs, which resulted in $930 million in value.Founders who go through successful IPOs may find they have a host of new money-management needs, according to Kerry Blum, the global head of the equity-structuring group within private-wealth management at Goldman Sachs."When someone has invested a significant amount of their life in creating a company and establishing a leadership team, we appreciate that there is a lot of emotion tied to that asset," Blum told Business Insider in an interview. "We understand that the decisions they're making are both economically and emotionally important."The team reporting to Blum — a more than 20-year Goldman veteran who was elevated to the <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-partners-share-investment-banking-oral-histories-2024-7">bank's elite partnership in 2022</a> — supports family offices and high-net-worth clients like the founders of big-ticket companies. Blum's team is separate from the equity-capital-markets group, which advises companies in IPOs and is situated within the investment-banking division.Through the bank's One Goldman Sachs program, which unites various business lines to cross-sell services to clients, Blum and her team share referrals with their colleagues in the firm's investment-banking division. That could mean investment bankers referring clients doing IPOs or mergers to their private-wealth counterparts who work with Blum, or vice versa, for instance.The team is equipped with a tool kit of strategies to help clients with their money-management goals — from trust and estate planning to strategizing when and how founders should sell equity.Blum shared her advice for founders who may be on the cusp of successful IPOs and how they could work with wealth advisors to set themselves and their families up for prosperous financial futures.<h2 id="bbd45c66-0556-42e4-ba5c-85e785043026">Start the conversation early</h2>If you're considering a public offering, it's never too early to broach the topic with an advisor, Blum said.Many pre-IPO founders will have a relationship with a wealth advisor, she said, and it's not unusual for them to have initial discussions several years before an IPO.About three to six months before the IPO listing date, conversations between a founder and their advisor tend to ramp up substantially, according to Blum."We'll be more engaged with clients on a more regular basis to help them understand: What does the landscape look like? What should they be expecting? And what does that final to-do checklist look like as they approach the IPO?" Blum told BI.<h2 id="80043aae-d0fe-44e4-a2f8-8a7b7504176a">Think about messaging and signaling</h2>For many founders who go through an IPO, the milestone may represent the first time they contemplate selling off big stakes of equity in a business they've built from scratch. It's important to be mindful of what such decisions can indicate to other investors and to handle the process accordingly.Indeed, founders' equity sales often come with additional rites like issuing securities filings, "so we want to make sure that we're being mindful of the messaging and signaling considerations," Blum said."You get to take a company public once. You get to make your first sale as a founder once as well," she added, pointing to the importance of being thoughtful and deliberate when making such moves.Her team tracks other companies' regulatory disclosures and information about Goldman's own client portfolio to learn what other founders are doing.With that information, Blum's team can answer clients' questions such as:<ul><li>How do their peers in the founder community think about themselves?</li><li>When are they selling?</li><li>How are they selling?</li><li>How much are they selling?</li><li>Where are they selling?</li></ul><h2 id="a1890d80-961a-40aa-8869-1ddb64c4a409">Know what your priorities are</h2>Managing your money post-IPO is in some ways like managing your portfolio as it's always been, but with more considerations to contend with and more resources at play, Blum said.That means diversification across asset classes becomes even more important, as do other choices, like which philanthropic initiatives a founder may wish to support."We also spend some time helping clients make sure that they've thought through what could their impact and legacy look like," Blum said. "And although it's 10 or 15 years out, it's never too early to think through how to optimize for those events."

A Goldman Sachs financial advisor shares 3 strategies for founders preparing to cash in on IPO wealth

<ul class="summary-list"><li>Louis Lehot, a Silicon Valley law-firm partner, specializes in taking companies from startup to IPO.</li><li>Lehot gave his suggestions for how to prepare, like hires to make and risks to consider pre-IPO.</li></ul>The IPO market is expected to pick up later this year, so Business Insider emailed Silicon Valley lawyer Louis Lehot, a partner at Foley &amp; Lardner, for advice on how startups should prepare for life as public companies.Lehot has more than 25 years of experience advising businesses, financial sponsors, venture capitalists, investors, and investment banks on topics including equity offerings, mergers, acquisitions, and spinoffs. His work often involves helping startups prepare for initial public offerings.The following has been edited for brevity.What's the environment like for IPOs?2023 was the toughest year for IPO activity in more than two decades. The IPO outlook for the second half of 2024, or at least the first half of 2025, can only get better.Riskier assets, such as Bitcoin, have rebounded strongly, suggesting risk appetite is a lot higher. The Fed is expected to make at least one rate cut later this year. The after-market performance of some recent IPOs has been stronger. Earnings reports from public companies are improving.There's a substantial backlog of companies preparing to go public as soon as the window opens, and the outcome of important federal and state election races should bring greater clarity.Which sectors are most likely to be successful in an IPO?<ul><li>Healthcare and Biotech: These companies go public as part of their venture financing path, often before they have a product in the market. As a result, they are heavily risk-driven, and the opportunity to make alpha with smaller amounts of capital invested is real. If risk appetite is truly back, we can expect investors to pile into biotech, life sciences, and medical device IPOs. New tech, enabled by CRISPR and AI, should increase the speed and accuracy of clinical trials.</li><li>Green Energy: As the effects of climate change spread, we expect industrial policy to favor renewable energy companies and the ecosystem that they enable, maybe even nuclear energy. Renewables and related technologies are gaining traction with a growing focus on sustainability.</li><li>Enterprise software and fintech: There's a solid backlog of late-stage private companies whose venture capital and private equity investors require a public market exit to return capital to limited partners and raise new funds. As a result, we expect a bumper crop of enterprise software (B2B solutions, cloud services, and cybersecurity) and fintech companies (digital banking, payments, and financial services) to come to market when the window opens later this year or next.</li></ul>Are public market investors generally keen to invest in IPOs, or are they focused elsewhere?Public market investors are selective, focusing on established profitability and sustainable growth over speculative, high-growth stories. Many investors are diverting their attention to safer, more predictable assets due to market volatility and economic concerns.What are IPO investors expecting in the current climate?<ul><li>Profitability, or a clear path to profitability: Unlike previous periods focused solely on growth, profitability is now critically correlated to a successful IPO.</li><li>Sustainable revenue growth: Consistent and predictable growth trajectories</li><li>Robust metrics: Strong KPIs and unit economics</li><li>Valuation discipline: More conservative valuations compared to the frothy markets of past IPO booms</li></ul>Should tech startups want to go public right now?If you have a choice, you stay private.For example, if you're the CEO of a successful startup with more than $100 million in revenue that's growing in excess of 30% at over 40% gross profit margins, every door is open to you.There's ample private capital to finance your company's scaling needs. There is likely a robust secondary market for your personal shares if you need to take some chips off the table. You have no obligation to report your compensation and equity holdings publicly or your company's quarterly results, much less live under the public microscope and the constant glare of Wall Street analysts who are focused on reporting on any short-term event that might drive trading.Fringe benefits include more control over business decisions, fewer regulatory requirements, and the ability to focus on long-term growth.The choice is not even close. Any CEO-founder would want to stay private. Look no further than the example of the <a target="_blank" class="" href="https://www.businessinsider.com/how-collison-brothers-built-stripe-most-valuable-us-startup-2021-3">Collison brothers at Stripe</a>.However, the characteristics that drive a transformational CEO-founder to achieve this level of commercial success are not necessarily driven by the same logic.The vision of a transformational CEO extends far beyond the perceived short-term benefits of a quick exit. I'm surrounded by mission-driven CEO's with the burning ambition to achieve global market ubiquity, which usually means an IPO is a necessary step on their long road.What are the most important hires to make before an IPO?<ul><li>Chief Financial Officer: A CFO with public company experience is crucial for navigating financial reporting and investor relations.The CFO of a public company is the first or second line of communication with Wall Street, key long-term investors, auditors of your financial statements, and financial regulators. In addition, the finance department will quickly need someone who can manage internal controls over financial reporting and write public financial reports. This person is usually a "controller."The CFO will also need someone who can forecast, model, and plan ahead and ensure that the company, when going public and forever thereafter, accurately telegraphs its future performance on a forward-looking, one-quarter, and one-year-ahead basis. This is usually a vice president for forecasting, planning, and analysis, or FP&amp;A. For larger public companies, a chief accounting officer is also on the road map.</li><li>General Counsel: Whereas 20 years ago, a general counsel was not hired until just before an IPO, nowadays, a company with $10 million of revenue or more may consider hiring a head of legal in-house to control costs, particularly for rote, repeatable tasks. But an IPO puts the company under a microscope of regulatory, investor, employee, and public scrutiny where the stakes get large enough that an experienced general counsel is usually hired, and if large enough to support the cost, even a deputy general counsel for securities law compliance to manage the more hours intensive processes of making the company ready for IPO and maintaining compliance thereafter.</li><li>Investor Relations Officer: About a year ahead of the big day, a forward-thinking CFO will try to hire a vice president of investor relations who has been through the process of managing a syndicate of analysts before, during, and after an IPO. Particularly for larger companies who garner analyst coverage from six or more sell-side and buy-side analysts, making sure the analysts are getting adequate information to build quality models will ensure higher quality coverage and greater liquidity for the company once public, which is a critical indicator of success.</li><li>Audit Committee Chair: While a pre-IPO company will seek to hire a majority-independent board of directors, the audit committee chair is one key role to fill on the board.The audit committee chair is usually a former CFO who has deep knowledge of the IPO process and the interplay of a board of directors and its independent registered public accounting firm, which is a critical relationship at every stage of an IPO and beyond.The audit committee's role is to oversee the production and auditing of the financial statements and the financial integrity of the company's public disclosures and compliance with regulatory standards. The audit committee chair will want to make sure there are at least two other directors who can serve independently on the audit committee who are financially literate and expert enough to assist them.</li></ul>What are the biggest changes startups must go through to be IPO-ready?To consider a successful IPO, a tech company will need to have line of sight to $100 million in revenue with eight quarters of historical growth and line of sight to eight quarters in the future of predictable growth. For a tech business, annual growth in GAAP revenue will need to be in excess of 20% (and ideally double this amount) at gross margins of 40% or more. These are herculean feats that few businesses will ever achieve.There also has to be some other ingredient, which some call the "sizzle," to inspire long-term fundamental investors to believe that growth can be significantly greater than what the models show over the next eight quarters.Historically, that sizzle could be explained by exposure to international markets that would be enabled by the scaling capital provided by the IPO.Today, revenue from a US tech business may well be evenly split between US and international markets from the outset, so the "sizzle" will need to come from planned advances in technology, new product releases, and new product enhancements that will unlock new and significant branches of growth.What are the key process changes companies need to make ahead of an IPO?<ul><li>Leveling up the company's financial reporting function: Enhanced accuracy and transparency in financial statements is an absolute necessity, both historically and forward-looking for eight quarters in both directions.</li><li>Corporate governance: Companies need to recruit an experienced, independent, and supportive board that can provide wisdom to management during the IPO process and beyond.</li><li>Operational scalability: Ensuring systems and processes can support growth and compliance requirements. Have you installed a world-class ERP software system? Do you have a contract management system and CRM software? Do they all work together?</li><li>Compliance and risk management: Implementing robust controls to meet regulatory standards is a playbook that a new CFO and new General Counsel can implement with the help of outside advisors.</li></ul>

How startups can get in top shape for an IPO, according to Silicon Valley lawyer Louis Lehot

<ul class="summary-list"><li><a target="_blank" href="https://www.businessinsider.com/reddit-ipo-valuation-price-range-sec-wallstreetbets-meme-stocks-2021-2024-3">Reddit's upcoming public offering</a> could value the company at $6.4 billion.</li><li>Advance, the parent company of Condé Nast, owns about a third of Reddit</li></ul>It's easy to write gloomy stories about the state of the media business. The media business is often pretty gloomy!So let's try to break the mold with an upbeat take. This one is about a very Old World Media Company that has struck gold in digital media — one of the very few times that has ever happened.Here goes: When <a target="_blank" href="https://www.businessinsider.com/reddit-ipo-shares-loyal-users-ai-steve-huffman-sam-altman-2024-2">Reddit goes public</a> this week, it will ask investors to value it at $6.4 billion. And if that happens, one of the chief beneficiaries will be Advance, the privately held company that owns magazine giant Condé Nast — the people who bring you titles like Vogue and The New Yorker. Advance, which isn't selling any shares in the offering, will end up owning 26.5% of <a target="_blank" href="https://www.businessinsider.com/reddit-ipo-redditors-stock-wallstreetbets-meme-2024-2">Reddit after the IPO</a>.So if the pricing pans out the way <a target="_blank" href="https://www.businessinsider.com/why-reddit-loses-money-ipo-research-development-revenue-2024-2024-2">Reddit</a> and its bankers are hoping, Advance's stake will be worth $1.7 billion — and even more if the stock "pops," as Wall Street still expects out of public offerings.Even better for Advance: That $1.7 billion was generated by an initial investment of around $10 million, which is what it paid to buy Reddit back in 2006.That's an amazing return! And one that's very welcome at Advance — which, like many other traditional media companies, has been dealing with <a target="_blank" href="https://www.axios.com/2023/11/01/conde-nast-to-lay-off-5-of-staff">long-term systemic challenges</a>. And even more impressive when you compare it to the track record of other Big Media companies who have bought or invested in digital properties, and almost always live to regret it.A very incomplete list of those: News Corp.'s purchase of MySpace; Disney's acquisitions of gaming company Club Penguin and YouTube network Maker Studios; the hundreds of millions that Disney, Fox, Time Warner, and Comcast/NBC put into digital media startups like BuzzFeed, Vice, Vox Media, and others during the Facebook boom of the last decade. Almost all of those deals ended up as write-offs and shut-downs. (Vox Media, my previous employer, is still motoring along — but at half the valuation it was at its peak.)(While we're in disclosure mode, I should note that Business Insider itself is a digital media company acquired by German media conglomerate <a target="_blank" href="https://www.businessinsider.com/business-insider-sale-to-axel-springer-2015-11">Axel Springer</a> in 2015. And we're still around.)<a target="_blank" href="https://www.businessinsider.com/reddit-survival-2012-9">Reddit's success</a> has been anything but an up-and-to-the-right line, and if you want to know more about the ups and downs of the company there are <a target="_blank" href="https://www.wired.com/story/inside-reddit-protest-ipo/">plenty</a> of <a target="_blank" href="https://www.nytimes.com/2024/03/13/technology/reddit-public-offering-stock-market.html">places</a> to learn more.And while we're at it, it's worth noting that Advance's success comes with some caveats as well: In 2021, for instance, it invested an additional $26 million in Reddit in a funding round that valued the company at a reported $10 billion. So for the moment, those shares are underwater.But it appears that the most important thing Advance's managers did at Reddit, other than buying it, was spinning it out as a stand-alone company in 2011.That did at least two things: It meant that when Reddit was undergoing one of its many controversies and challenges, very few people wondered about the connection between the site and the publisher behind publications like Vogue and The New Yorker. And it meant that Reddit could succeed, or stumble, without much meddling from its owners.Maybe a worthwhile playbook the next time — and there will be a next time — a big media company opens its wallet for a digital upstart again.

Why the big winner in the Reddit IPO is ... a magazine publisher

<ul class="summary-list"><li>Reddit plans to go public later this month at a targeted share price of $31 to $34.</li><li>Sam Altman, the CEO of OpenAI, has a sizable stake in the company.</li></ul><a target="_blank" href="https://www.businessinsider.com/reddit-ipo-valuation-price-range-sec-wallstreetbets-meme-stocks-2021-2024-3">Reddit, which is set to go public</a> later this month, announced its target share pricing on Monday — and <a target="_blank" href="https://www.businessinsider.com/the-scope-of-sam-altmans-future-ai-empire-open-ai-2024-3">Sam Altman</a> stands to reap a sizable windfall.While his personal shares aren't worth the nearly half a billion dollars that has been reported, they do amount to a fortune.Business Insider estimates that the <a target="_blank" href="https://www.businessinsider.com/sam-altman-chatgpt-openai-ceo-career-net-worth-ycombinator-prepper-2023-1">OpenAI CEO</a> owns a maximum of just about 1.66 million shares of Reddit. With the company's estimated price per share at $31 to $34, <a target="_blank" href="https://www.businessinsider.com/sam-altman-investory-reddit-stock-worth-value">Altman's stake in Reddit</a> could be worth between $51.4 million and $56.4 million.Neither Reddit nor Altman would comment on the exact number of shares that Altman owned.Altman has several ties to <a target="_blank" href="https://www.businessinsider.com/reddit-ipo-shares-loyal-users-ai-steve-huffman-sam-altman-2024-2">Reddit</a>: He served on its board, had an eight-day stint as its CEO, and has invested in the company through five of his investment vehicles.The company's S-1 says "entities affiliated with Sam Altman" own an 8.7% stake in the company, made up of 789,456 class A shares and 11,369,103 class B shares.News outlets, including BI, were quick to say that Altman owned all these shares when Reddit filed an earlier version of its S-1 in late February. But the truth is far more complicated.The company's registration statement says Altman "disclaims beneficial ownership of these shares except to the extent of his respective pecuniary interest therein."Basically, just because the shares are affiliated with Altman doesn't mean they are his. Instead, they belong to his various funds, such as Hydrazine Capital II, a venture-capital fund, and Apollo Projects SPV-B, a special-purpose vehicle.For instance, Hydrazine Capital II owns nearly 9.9 million shares of Reddit. But the fund's disclosure form indicates that Altman owns, at most, 5% of these shares — or about 500,000 — with the rest presumably belonging to the fund's limited partners, whose identities are unknown.Applying this method to all of Altman's investment vehicles with ties to Reddit finds that Altman, the individual, owns as much as 1.66 million shares in the company.His ties to Reddit point to Altman's long history as an investor.While he's best known as the <a target="_blank" href="https://www.businessinsider.com/sam-altman-openai-staff-loyalty-power-chatgpt-microsoft-2023-11">CEO of ChatGPT's maker, OpenAI</a>, Altman poured both his own money and that of at least one Silicon Valley power broker (<a target="_blank" href="https://www.businessinsider.com/who-is-peter-thiel-svb-facebook-trump-biography-2023-3">Peter Thiel</a> is reportedly the backer of one of his VC funds) into everything from a <a target="_blank" href="https://www.businessinsider.com/helion-energy-fusion-company-backed-by-sam-altman-and-microsoft-2023-5">nuclear-fusion company</a> to a bioscience upstart looking to delay death.He has made over 155 investments since 2010, according to PitchBook data, and announced his investment in Reddit in 2014."I have been a daily reddit user for 9 years — longer than pretty much any other service I still use besides Facebook, Google, and Amazon," Altman wrote on his <a target="_blank" href="https://blog.samaltman.com/reddit">blog</a>. "I was probably in the first dozen people to use the site, and I shudder to imagine the number of hours I have spent there."

How much Sam Altman stands to gain from a Reddit IPO

<ul class="summary-list"><li>The <keyword id="11898795" type="UNKNOWN" weightage="60" keywordseo="sec" source="Orion">SEC</keyword> put forward <keyword id="11908250" type="UNKNOWN" weightage="60" keywordseo="spac" source="Orion">SPAC</keyword> rules aimed at giving investors protections similar to those around traditional <keyword id="11961450" type="UNKNOWN" weightage="60" keywordseo="ipos" source="Orion">IPOs</keyword>. </li><li>They call for disclosure of conflicts of interest and an end to overly optimistic language about future results.</li></ul>The US securities regulator has put forward a clutch of new rules for SPACs, including a measure that would limit backers' ability to make too-rosy projections about revenue growth. But critics — including one of its own commissioners — have said the changes amount to a crackdown canceling out SPAC advantages over traditional IPOs, threatening to bring them to a halt.The <keyword id="11898794" type="UNKNOWN" weightage="60" keywordseo="securities-and-exchange-commission" source="Orion">Securities and Exchange Commission</keyword> released the <a href="https://www.sec.gov/news/press-release/2022-56">proposed new rules</a> Wednesday, calling for SPAC shareholders to be given more details around conflicts of interest between sponsors and investors, and around share dilution.Those disclosures from SPACs are similar to those required for IPO applications, a move that would tighten investor protection.On changes to marketing rules, the SEC proposed parties involved shouldn't over-promise or use "overly optimistic" language to attract investors."The SPAC target IPO is being used as an alternative means to conduct an IPO. Thus, investors deserve the protections they receive from traditional IPOs," SEC Chair <keyword id="11896276" type="UNKNOWN" weightage="60" keywordseo="gary-gensler" source="Orion">Gary Gensler</keyword> said in a statement.SPACs — special purpose acquisition companies — provide an alternative route for private companies looking to go public. They typically secure a stock-market listing, then <a href="https://www.businessinsider.com/how-do-spacs-work-get-created-costs-guide?r=US&amp;IR=T#:~:text=A%20SPAC%20stands%20for%20%22special,take%20a%20private%20company%20public.">acquire the private company</a>, in a strategy seen as a quicker alternative to the traditional IPO.These shell companies quickly became one of the hottest trends on Wall Street. The number of blank-check companies filing to go public via a SPAC rose from 248 in 2020 to 613 in 2021. But activity has cooled so far this year, according to data from<a href="https://spacinsider.com/stats/"> SPACInsider</a>.For a while now, the SEC has been concerned about investors not receiving the same protections around SPACs as they do around IPOs, or initial public offerings.Wednesday's proposal aims to close that gap, as the new rules seek to closely align the financial requirements for private companies merging with SPACs with those for an IPO. The rules would also strengthen disclosures regarding SPAC projections and their takeover target, also called the "de-SPAC." It calls for the sponsor's view on the fairness of the deal, and whether it has been scrutinized by a third party. These disclosures would have to be issued at least 20 days prior to a shareholder vote on the proposed transaction."Companies raising money from the public should provide full and fair disclosure at the time investors are making their crucial decisions to invest," Gensler said.SEC Commissioner Hester Pierce<a href="https://www.sec.gov/news/statement/peirce-statement-spac-proposal-033022"> pushed back against the changes</a>, saying the rules are "designed to stop SPACs in their tracks." She suggested the agency wants to turn SPACs exactly into traditional IPOs, therefore limiting companies looking to go public."Today's proposal assumes that the traditional IPO process works just fine as is, that it provides the optimal level of investor protection, and that it generates the right number and the right type of public companies," she said.The SEC is open to public comment for 60 days before working to finalize the proposed rules.Read more: <a href="https://www.businessinsider.com/real-estate-investing-will-the-housing-bubble-burst-overvalued-cities-2022-3" target="_blank" rel="noopener noreferrer">Are we on the verge of a housing-bubble bust? An economist advises buyers to sit out the current 'irrational' market and lists the 11 most overvalued cities in the US</a>.

The SEC is taking aim at SPACs with proposed rules to make disclosures more like those in a traditional IPO

<ul class="summary-list"></ul>Halfway to the weekend! Here's a video of Mark Zuckerberg <a style="text-decoration: underline;" href="https://www.businessinsider.com/mark-zuckerberg-spars-mma-fighters-floating-barge-video-2023-9">sparring with MMA fighters</a> on a floating barge, proving that reality is always better than fiction. Speaking of fighting, the IPO market has been KO'd since 2022. But that could change with one company's <a style="text-decoration: underline;" href="https://markets.businessinsider.com/news/stocks/arm-ipo-softbank-apple-nvidia-google-stock-market-debut-chips-2023-9">upcoming public debut</a>. More in today's big story. What's on deck: <ul><li>Markets: Bad news for <a style="text-decoration: underline;" href="https://markets.businessinsider.com/news/commodities/oil-prices-russia-saudi-arabia-production-cuts-opec-supply-demand-2023-9">your gas tank</a>.</li><li>Tech: Getting <a style="text-decoration: underline;" href="https://www.businessinsider.com/apple-iphone-15-will-require-usb-c-charger-lightning-2023-9">Apple's new iPhone</a> means new chargers.</li><li>Business: What's fueling the <a style="text-decoration: underline;" href="https://www.businessinsider.com/loneliness-epidemic-decline-in-third-places-friends-parks-community-2023-9">loneliness epidemic</a>.</li></ul>But first, an initial important public offering.If this was forwarded to you, <a href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><a href="https://www.businessinsider.com/subscription/newsletter/insider-today"></a><a href="https://markets.businessinsider.com/news/stocks/arm-ipo-softbank-apple-nvidia-google-stock-market-debut-chips-2023-9" target="_blank" rel="noopener"></a><div type="image" title="arm ipo semiconductor chipmaker" height="768" width="1024" msid="103438907" hostid="261" sizebytes="33312"></div>The big storyA company's upcoming IPO will likely be the biggest US stock debut of the year and a bellwether for the fate of the wider market.But no pressure, Arm!The Softbank Group-owned chip designer filed paperwork Tuesday <a style="text-decoration: underline;" href="https://markets.businessinsider.com/news/stocks/arm-ipo-softbank-apple-nvidia-google-stock-market-debut-chips-2023-9">with plans to go public</a>, writes Insider's Phil Rosen. To put it simply, it's a big one.The British company, which designs chips used in most smartphones, is looking to raise up to $4.87 billion with a valuation as high as $52 billion. Even if it slightly misses those numbers, it'll still be the largest public debut in the US since <a style="text-decoration: underline;" href="https://markets.businessinsider.com/news/stocks/rivian-stock-price-ipo-debut-valuation-100-billion-ford-gm-2021-11">Rivian's IPO</a> in late 2021.But this isn't your run-of-the-mill large IPO. The market for companies going public has been all but dead since 2022. The lack of public offerings since March of last year is the worst IPO drought since 2009, according to Bloomberg data.However, the crux of the issue with IPOs dates back well before 2022. As is often the case, things took a turn at the onset of the pandemic. When the market collapsed in March 2020, plans to go public were put on hold. The stock market recovered in record time, but then something else held up IPOs: VC money. Rich with cash, venture investors were happy to keep pouring money into startups. The public markets suddenly didn't seem appealing when a startup could wait six months for its valuation to double from another round of funding. That formula suited startups well until 2022, when cracks started to show in the market. Cash wasn't cheap anymore — thanks a lot, Fed! — which meant no more eye-popping funding rounds. Meanwhile, IPOs weren't an option since public investors wouldn't support the puffed-up valuations startups were clinging to.Which brings us to Arm's IPO. A successful public debut, especially such a large one, would open up the floodgates for other companies on the fence about an IPO. Cleaning out the backlog of companies waiting to go public over the past three-plus years would also have some significant knock-on effects. More IPOs mean VCs get to cash out those early-stage investments. That means more cash for future investments, something the startup community desperately needs, save for those in AI. Of course, there are no guarantees. Should Arm's IPO fall flat, it could spell disaster. Arm has indicated interest in its IPO from the likes of Google, Apple, and Nvidia.But if a company in a buzzy sector with big-name backers can't crack the IPO drought, who can?<a href="https://markets.businessinsider.com/news/stocks/arm-ipo-softbank-apple-nvidia-google-stock-market-debut-chips-2023-9">Read the full story here.</a>3 things in markets Before the opening bell: US stock futures fall <a style="text-decoration: underline;" href="https://markets.businessinsider.com/premarket" target="_blank" rel="noopener">early Wednesday</a> as investors await the release of more economic data <a href="https://markets.businessinsider.com/news/commodities/oil-prices-russia-saudi-arabia-production-cuts-opec-supply-demand-2023-9" target="_blank" rel="noopener"></a><div type="image" title="oil rig" height="540" width="810" msid="103438909" hostid="261" sizebytes="64786"></div>1. Oil prices just surged thanks to Russia and Saudi Arabia extending production cuts. Brent crude surpassed $90 a barrel for the first time since November. The production cut, which will last until December, <a style="text-decoration: underline;" href="https://markets.businessinsider.com/news/commodities/oil-prices-russia-saudi-arabia-production-cuts-opec-supply-demand-2023-9">surprised industry experts</a>.2. Private equity is finally opening up to the public cloud. From improving dealmaking capabilities to boosting their portfolio companies, <a style="text-decoration: underline;" href="https://www.businessinsider.com/private-equity-apollo-eqt-approach-public-cloud-generative-ai-2023-9" target="_blank" rel="noopener">here's how companies like Apollo and EQT</a> are using the public cloud. 3. China can't catch a break. More bad news for the country that is struggling to revive its economy and is battling a property crisis. Bloomberg Economics predicts <a style="text-decoration: underline;" href="https://www.businessinsider.com/china-worlds-largest-economy-slowdown-growth-property-crisis-bloomberg-economics-2023-9">China's GDP</a> will only briefly surpass the US's in the mid-2040s before "falling back behind." The economists had previously believed China could overtake the US in the 2030s.3 things in tech<a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-tech-sector-dominance-sp500-apple-microsoft-amazon-2023-9"></a><div type="image" title="Workers at big tech companies like Apple (left), Amazon, and Meta may be leaving after two years because of workplace dissatisfaction. " height="1500" width="3000" msid="103438911" hostid="261" sizebytes="317260"></div>1. RIP to Apple's lightning cable. The iPhone maker is set to change its charging cable for the first time in more than a decade. The iPhone 15 — set to come out this month — will reportedly <a style="text-decoration: underline;" href="https://www.businessinsider.com/apple-iphone-15-will-require-usb-c-charger-lightning-2023-9">use the new cord</a>.2. Why tech is positioned to dominate the stock market. Tech has already led the stock market for about a decade — starting when Apple became the biggest company in the world. But tech like AI is going to <a style="text-decoration: underline;" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-tech-sector-dominance-sp500-apple-microsoft-amazon-2023-9">solidify the industry's dominance</a> even more.3. Cofounder of Google's AI division says everyone will soon have their own AI-powered "chief of staff." Mustafa Suleyman predicted that within the next five years, everyone will have access to <a style="text-decoration: underline;" href="https://www.businessinsider.com/google-deepmind-cofounder-mustafa-suleyman-everyone-will-have-ai-assistant-2023-9">an AI assistant</a>. It'll be super smart and even understand your personal history.3 things in business<a href="https://www.businessinsider.com/loneliness-epidemic-decline-in-third-places-friends-parks-community-2023-9"></a><div type="image" title="Amid a midnight blue background, bright red and orange lonely faces wander among shuttered buildings and structures" height="1200" width="2400" msid="103438912" hostid="261" sizebytes="604852"></div>1. Loneliness is a design flaw. The amount of third places — social spaces we regularly visit that aren't our home or work — is on the decline. This is a catastrophe for our communities and for us, Insider's Eliza Relman<a style="text-decoration: underline;" href="https://dev.insider.com/author/eliza-relman" target="_blank" rel="noopener"></a> writes. It's so bad that the US Surgeon General Vivek Murthy calls this <a style="text-decoration: underline;" href="https://www.businessinsider.com/loneliness-epidemic-decline-in-third-places-friends-parks-community-2023-9">an epidemic of loneliness</a>.2. Inside the secretive world of superyachts. The rich are buying superyachts in record numbers. They're the ultimate symbol of wealth and allow the rich to relax — <a style="text-decoration: underline;" href="https://www.businessinsider.com/inside-the-secretive-world-of-superyachts-2023-8">and broker deals</a> — without so many prying eyes. Their staff onboard even have to sign comprehensive non-disclosure agreements.3. NYC is having an Airbnb reckoning. A new short-term rental law is going into effect this week. It impacts around 40,000 listings and includes restrictions like a reservation cap of two people and <a style="text-decoration: underline;" href="https://www.businessinsider.com/nyc-airbnb-crackdown-squeezes-hosts-and-renters-starting-september-5-2023-9">banning entire-unit rentals</a>.In other news<a href="https://www.businessinsider.com/how-more-than-quadrupled-salary-career-pivoting-2023-9" target="_blank" rel="noopener"></a><div type="image" title="headshot of Christian Lovell outside" height="3126" width="4160" msid="103438913" hostid="261" sizebytes="299022"></div><ul><li>United Airlines is back in the air after a <a style="text-decoration: underline;" href="https://www.businessinsider.com/united-airlines-ground-stop-nationwide-flights-2023-9">nationwide ground stop</a>.</li><li>China is reportedly planning a <a style="text-decoration: underline;" href="https://www.businessinsider.com/china-planning-41-billion-semiconductor-fund-chip-war-heats-up-2023-9">$41 billion boost</a> to its semiconductor industry.</li><li>Mercedes claims <a style="text-decoration: underline;" href="https://www.businessinsider.com/mercedes-says-new-sedan-beats-any-tesla-on-mileage-range-2023-9">its new EV</a> can beat any Tesla's driving range on a single charge.</li><li>From student loans to Social Security benefits, <a style="text-decoration: underline;" href="https://www.businessinsider.com/social-security-benefits-student-loan-repayment-congress-funding-budget-fight-2023-8">here's what's at stake</a> during the budget showdown.</li><li>This 30-year-old career strategist revealed how she <a style="text-decoration: underline;" href="https://www.businessinsider.com/how-more-than-quadrupled-salary-career-pivoting-2023-9">quadrupled her income</a>.</li><li>These are the 17 most affordable US cities, <a style="text-decoration: underline;" href="https://www.businessinsider.com/top-us-cities-real-estate-investing-rent-and-price-increases-2023-9">including Nashville and Las Vegas</a>.</li><li>Brands are <a style="text-decoration: underline;" href="https://www.businessinsider.com/brands-making-film-tv-demand-more-audience-data-sharing-streamers-2023-9">pouring money</a> into film and TV content.</li></ul>What's happening today<ul><li>Fit for a Queen: Freddie Mercury's personal belongings are up for auction. Around 1,500 items from his London home are up for sale — they've been untouched for 30 years. They include jewelry, stage-worn outfits, a grand piano, and manuscripts.</li><li>He's the one — Lil Wayne is honored at the BMI R&amp;B/Hip Hop Awards. The event celebrates 50 years of hip hop. And Lil Wayne will receive the BMI icon award — the organization's highest honor.</li><li>Earnings today: American Eagle, Dave &amp; Buster's, <a style="text-decoration: underline;" href="https://markets.businessinsider.com/earnings-calendar">and other companies</a>.</li></ul><div type="image" title="Elaine LaLanne" height="683" width="1024" msid="103438914" hostid="261" sizebytes="70876"></div>For your bookmarksElaine LaLanne and her husband shaped the healthy-living movement. She's worked out for decades and revealed her <a style="text-decoration: underline;" href="https://www.insider.com/elaine-lalanne-97-does-these-exercises-every-day-2023-9" target="_blank" rel="noopener">daily 20-minute routine</a>.The Insider Today team: <a href="https://www.businessinsider.com/author/dan-defrancesco">Dan DeFrancesco</a>, senior editor and anchor, in New York City. <a href="https://www.businessinsider.com/author/diamond-naga-siu">Diamond Naga Siu</a>, senior reporter, in San Diego. <a href="https://www.businessinsider.com/author/hallam-bullock">Hallam Bullock</a>, editor, in London. <a href="https://www.businessinsider.com/author/lisa-ryan">Lisa Ryan</a>, executive editor, in New York.

Insider Today: IPOs' make-or-break moment

<ul class="summary-list"><li>The <keyword id="11898795" type="UNKNOWN" weightage="60" keywordseo="sec" source="Orion">SEC</keyword> is demanding new disclosures from <keyword id="11938774" type="UNKNOWN" weightage="60" keywordseo="chinese-companies" source="Orion">Chinese companies</keyword> seeking to list in New York.</li><li>The regulator wants to illuminate the risks tied to investing in Chinese companies' IPOs.</li><li>The SEC has been ramping up pressure on US-listed Chinese companies for a while.</li></ul>US market regulators have started sending out new disclosure demands to Chinese companies seeking to go public in New York, aimed at clarifying the risks of investing in those types of IPOs, <a href="https://www.reuters.com/business/finance/exclusive-sec-gives-chinese-companies-new-requirements-us-ipo-disclosures-2021-08-23/">Reuters</a> first reported late on Monday. The <keyword id="11898794" type="UNKNOWN" weightage="60" keywordseo="securities-and-exchange-commission" source="Orion">Securities and Exchange Commission</keyword> has asked some Chinese companies to explain details around their use of offshore vehicles, also known as variable interest entities or VIEs, sources told Reuters. One of the letters requested an explanation of how a <keyword id="11938773" type="UNKNOWN" weightage="60" keywordseo="vie-structure" source="Orion">VIE structure</keyword> might affect investors and the value of their investment, how it might be less effective than direct ownership, and the potential costs of enforcing it, Reuters said.Companies often use VIEs to passively hold financial assets, sometimes as a way to keep securitized assets off their balance sheets, or for research and development purposes. Investors in VIEs do not have voting rights, nor do they directly own stakes in the company. Instead, individual contracts outline the percentage of profits that they can receive, along with other conditions.In contrast, investors who buy shares typically get a direct claim to a company's equity, a vote on major corporate decisions, and can buy and sell their stock at the prevailing market price.Earlier this month, SEC chief <keyword id="11896276" type="UNKNOWN" weightage="60" keywordseo="gary-gensler" source="Orion">Gary Gensler</keyword> <a href="https://markets.businessinsider.com/news/stocks/china-stocks-warning-gary-gensler-investing-risks-chinese-regulation-2021-8">gave his most direct warning yet about investing in US-listed Chinese stocks</a>. He explained that the Chinese government often doesn't allow foreigners to own or invest in domestic companies, spurring them to set up overseas vehicles such as VIEs. "So when you think you're investing in a Chinese company, you're more than likely actually investing in a shell company in the Caymans or another part of the world," Gensler said in a <a href="https://www.youtube.com/watch?v=6dKrR0U4O_k">video message</a> at the time. In July, the <a href="https://markets.businessinsider.com/news/stocks/sec-china-ipo-freeze-didi-vie-regulatory-crackdown-2021-07?utm_source=markets&amp;utm_medium=ingestgest">SEC froze US listings of Chinese companies</a>, announcing they would need to meet new disclosure requirements before going public. For example, they would have to outline the structure of the proposed IPO, and the potential for the Chinese government to meddle in its affairs.The Chinese government has been cracking down on key sectors, <a href="https://markets.businessinsider.com/news/stocks/china-competition-rules-tech-industry-crackdown-alibaba-tencent-regulation-2021-8?_ga=2.99903390.1820417264.1629808463-1115877191.1629808463">including tech and internet companies</a>, in recent months and has outlined a <a href="https://markets.businessinsider.com/news/stocks/china-tech-regulation-crackdown-tougher-legislation-key-industries-2021-8?utm_source=markets&amp;utm_medium=ingestgest">five-year plan that includes further tightening of regulations</a>. The changes have hammered US-listed Chinese companies and caused major volatility in their share prices.

You Searched For "ipo disclosure" and got 11 results

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Insider Today: IPOs' make-or-break moment

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