[Retric]

That reduces but doesn’t eliminate this preference. A private company going public in 1 months is still one month where you have less liquidity than investing in a public company for that month. Everything else being equal liquidity makes public companies more attractive.

[ComputerGuru]

Well, most people would be betting that by investing pre-IPO they can cash out upon or shortly after IPO with nice gains. Of course none of that is guaranteed.

[Retric]

You still need to find someone to take the other side of that investment.

Taking a company public is generally profitable because of people’s liquidity preference. Companies will sell shares to an investment bank directly before an IPO as both a form of payment and a hedge. It’s a very nuanced transaction that might otherwise seem dumb on the surface.

[ComputerGuru]

Thanks for the additional info. I feel like I need to read up on this some more to make more sense of all the conflicting bits I have accumulated.