When one of your portfolio companies decides to pursue an initial public offering (IPO), it can be an exciting time for a private market investor. After a long holding period, potentially even since the ground floor, the prospect of an exit event and possibly achieving some liquidity may spark investor interest. But what does the IPO process actually look like for a startup? In this blog, learn more about understanding the IPO process, a sample IPO timeline, and the benefits and limitations of a portfolio conducting an IPO.

Understanding the IPO Process

What is an IPO?

An IPO is the first time that a company offers stock in the company to the general public. Before an IPO occurs, stock in the company may have only been available to accredited investors in the private market, or those that meet specific income, net worth, and/or knowledge criteria. An IPO typically marks a significant milestone for a company, enabling it to raise capital and potentially creating liquidity for employees and early investors. For private investors, an IPO can represent a potential exit opportunity.

The IPO Process

The process for conducting an IPO can take months to even years before the actual IPO occurs. The following are some of the major steps a company goes through before, during, and even after its IPO.

Pre-IPO Preparation

Financial Audits & Compliance

One of the first steps a company undergoes is financial audits and compliance adherence. The company should ensure its financials are audited and compliant with the SEC or other regulatory body standards.

Corporate Governance Restructuring

Many public companies operate with a central governing body, allowing for the major decisions the company makes to represent the interest of shareholders and aligns with long-term company plans, upholding ethical and legal standards. Some companies choose to establish a formal board of directors as part of their pre-IPO preparation.

Selecting Underwriters

There are many moving pieces when it comes to a company conducting an IPO. Companies typically choose investments banks, like Goldman Sachs, Morgan Stanley, or J.P. Morgan, to lead the IPO process. Underwriters help facilitate the process, determining valuation, structuring the offering, and marketing the shares.

On average, pre-IPO preparation can take anywhere from 6-12+ months to complete.

Initial Filings

There is a lot of paperwork involved in the IPO process, and one of the first pieces that is filed is an S-1 registration with the SEC for the U.S., or an equivalent form for international companies. The S-1 registration statement contains information such as:

• Business Overview: Company history, business model, competitive landscape
• Financial Statements: Revenue, profits, losses, cash flow, and balance sheets
• Risk Factors: Potential risks investors should consider like competition, regulatory challenges, etc
• Use of Proceeds: How the company plans to use the IPO funds, like for research & development, debt repayment, acquisitions, scaling operations
• Shareholder Dilution: Details on how many shares will be issued and how existing shareholders’ stakes may be diluted

SEC Review

After the S-1 is filed, the SEC reviews the documentation and either accepts, requests changes, or conducts investigations. This period is also called the “quiet period”, where the company cannot make promotional statements that could influence the future stock price.

The SEC filings and review can take 2-6 months on average to complete, but recent market conditions have pushed the timelines further out. For example, StubHub filed to go public in January 2022, Navan filed in September 2022, SeatGeek filed in April 2023, and Panera filed in November 2023, but none of those companies have conducted their IPOs as of June 2025.[1] [2]

IPO Roadshow

Once the S-1 or equivalent document has been approved, the company and underwriters begin the IPO roadshow, a series of presentations to institutional investors marketing the IPO. During this period, the underwriters propose an initial price range, assess investor demand, and generate interest for the offering.

The IPO roadshow period typically takes about 10-14 days to complete.

Pricing the IPO

Generally the night before the IPO, the underwriters and the company set the final IPO price, based on factors like investor demand from the roadshow, market conditions, and negotiations between the company and underwriter. Once this number is set, that becomes the initial price at which shares are offered in the IPO.

IPO Day

On the morning of the IPO, shares are allocated to institutional investors and begin trading on a stock exchange like the New York Stock Exchange (NYSE) or NASDAQ. There are a few key dynamics that people typically look at during IPO day:

• Open vs IPO Price: The first trade on IPO day might be higher or lower than the IPO price, reflecting the true demand of the public debut. People may also look at the highest trade and the closing trade to determine how the IPO performed.
• Volatility: There may be sharp price swings due to heavy trading volume on the first day. For the first few weeks to months after an IPO, investors may be getting a feel for the true demand of the shares as pricing changes.
• Media & Hype: High-profile IPOs may have attracted significant media attention, which could influence short-term price movements.

Lock-Up Period

Many IPOs come with a lock-up period (typically 90-180 days) where insiders like founders and C-suite employees and pre-IPO investors are prohibited from selling their shares to help mitigate the impacts of share price volatility in the time following an IPO. Lock-up periods can help the market find the stock’s “true” value. After the lock-up period has expired, insiders and pre-IPO investors can liquidate their shares on the open market.

Post-IPO

Finally, the company enters a new phase as a public entity. As part of being a public company, it will now have to file regular reports with the SEC, including quarterly earnings and annual reports along with monitoring news and volatility of the stock. Prices can change based on market sentiment, earnings, and other factors.

Final Thoughts

An IPO represents a large milestone for a company and also can allow an investor the opportunity for liquidity after what may have been a long holding period for pre-IPO shares. It’s important to understand the IPO process as a pre-IPO investor, as aspects like market conditions and lock-up periods can influence the value and timing of liquidating shares. By understanding this process, pre-IPO investors can make informed decisions about the companies held in their portfolios.

Want to learn more about investing in startups? Check out the following blogs to learn more:

• 2025 IPOs: Is the IPO Market Thawing?
• What Happens When a Startup is Acquired Before an IPO?
• Navigating Exit Strategies: IPOs, M&A, and Secondary Buy-Outs
• IPO Lock-Up Period: What is it, and Why Does it Matter?

Are you looking to invest in startups? Sign up for a MicroVentures account to start investing!

 

[1] https://accessipos.com/navan-ipo-stock

[2] https://accessipos.com/upcoming-ipos/

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.