[gonehome]

Banks rip off companies in IPOs by underpricing the stock so their investors get a kickback.

That's the least charitable way to write it, but it's somewhat close to the truth (the other part of the truth is that pricing is hard which is why we have markets).

DPOs allow companies to list at a reference price without losing out on money - they can sell at the true price later.

Banks naturally make up a bunch of reasons why this is bad, but it's mostly nonsense.

When one side does many of these types of transactions per year (banks) and one side may only do one or two in a lifetime (founders) expect the side with more experience to both tilt the deal in their favor and to have a compelling narrative of why it's actually better for you.

See: https://podcasts.apple.com/us/podcast/bill-gurley-direct-lis...

There's a funny story (I searched briefly, but couldn't find) that when Elon took Tesla public via an IPO and the bankers told him the initial price he just said "no, at least $XX or no deal". I think the bank price was $17 and he said at least $19, but I could be off on the numbers. They did his price and that price was still too low.

It's a mistake for any company to IPO from now on imo, SPACs are even worse really (unless you're running a fraud in which case SPACs are great).

[u678u]

DPO is the same though right? If you do the capital raise before the DPO or a capital raise in an IPO there isn't much difference.

[gonehome]

If you're doing a capital raise privately before the public offering then you can set the terms you think are fair, but this isn't really required for a direct listing unless you need to raise money.

You can list and put up shares on the market later.

I think there's something new where you can list directly and then sell to the public too without the bank underwriting rip off thing, but that's the edge of my knowledge. I'm not super confident here, so definitely possible I'm wrong about specifics.