Whether it is crypto or other investment, retail investors are the targeted victims. Here we are going to discuss how the IPO game is planned against the retail investors. In India venture capital and private equity are increased a lot. Everyone invests in private companies. In the old time, it was very difficult to get funds but now that is no more issue. Since the VC and PE money arrived a lot, the IPO game is totally changed.
In earlier times, companies used to bring IPO to collect money from the public. But now they bringing IPO to make money. First when the company is small then it is called a startup and then it becomes a private company last when the IPO come then it becomes a public company.
Startups Getting Funded By VC And PE
When startups launch, they got funds from VC and PE because as I said, both of them have lots of money and sometimes angel investors arrive before VC and PE. Angel investors target entrepreneurs who come up with business ideas and that's why they get early access to any company. Now let's company is getting big but they want more funds to expand the services then VC comes and invests.
Now company reach an extent and the company wants to scale global level, then in the last private equity comes. So this is company reach nationally and globally. You know when startups get funded then the company valuation starts increasing. So now the company's share price is increasing. After completing all the processes IPO come in the last. so this is the journey of startups to IPO.
Funding stops as valuations rise
Image source
This is the journey from angel to PE investors. So let's say when the startup was launched its share price was $10 but when the company get funded the share price increased and it is increase up to $200. And as I said, the funding stops as the valuation rise. Big investors not going to invest at a high price so in the end they bring the IPO.
They sell shares at extremely high prices to the public which is called IPO. Venture capital, private equity, and angel and rest of the other investors will wait for the IPO and sell their shares at high prices, and exit from the company. So this is how retail investors suffer in this game and they are literally doing big scams here and this is legal so we can say it's a legal scam.
Similarly, in the cryptocurrency, there was an ICO (initial coin offering), and the same game was planned there. It is better to avoid new cryptocurrencies and focus on old and valuable crypto. For example, if you have invested in bitcoin and the price dropped from your buying price then here you have the option to hold the bitcoin and later you can sell bitcoin at a high price. and if you have patience then you will definitely come out of the worst situation but this is not possible in the stock market and IPO. That's why crypto is better than anything.
Hope you get valuable information from this post you can share and reblog this post.
Thank you, everyone.
Lucky Ali
Image source
○_________________○___________________○
| 👇 | ||
|---|---|---|
| Hi I am lucky ali from gujarat, india. I am a crypto enthusiast, blogger, and SEO developer. I am always interested to learn new things and getting new experiences. You can find me on hive, twitter and discord (Lucky Ali#6343). Sharing is caring, Thank you hive family ♥ |