How does an IPO work for a startup?

An initial public offering lists a company's shares on a public exchange, raising primary capital and creating liquid stock. Preferred shares convert to common at IPO, extinguishing venture preferences; insiders are typically locked up for about 180 days.

IPO is an exit door more than an exit: investors realize returns by distributing or selling shares afterward. Direct listings and SPACs are alternative routes with different mechanics for lockups and primary capital.