The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
[0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-...
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
Ultimately the IPO price is driven by supply and demand with a limited supply: price will go down (a bit) when the lockout period ends and more supply comes online.
Raising capital can be done "democratically" if the founders want to. They can use direct listing. IPO is an option, not an obligation.
Not everything, sure. But this one more than most, needs to be democratic. If you don't see the wealth inequality today in which the 1% own 50% of the worlds wealth, and you don't see where this is inevitably going to lead, then I don't know what to say.
Stay woke at r/latestagecapitalism
With that said, lots of options exist for a company like Figma doing a public listing: when you're the belle of the ball you can list how you want. Google did a pretty unconventional Dutch Auction thing IIRC.
In this instance the Figma folks decided they wanted an IPO pop and had the underwriters set it up that way. They were paying some premium (to institutional investors) to get one of many intangibles that are attached to that (like a bunch of press about how hot the stock is).
In a world where it was a no-brainer that this was going to be another mediocre Adobe product line rent seeking from here to the horizon, I'm pretty OK with how this turned out.
Because when Google did it, it was a disaster?
https://www.cnbc.com/2014/08/18/pisani-googles-ipo-was-a-dis...
And “rent seeking” isn’t “The company is selling a product or service they make in a manner I don’t agree with”
…you need money to be a small investor.
Ignore the haters, keep being right about books.
What do you propose? A speculative free-for-all like with crypto meme coins?
Yes, an ipo is volatile, it should be! You are literally pricing a company.
Sigh, regardless, Thisnis again one of these ways where free markets are being smashed by monopolistic behavior - you can only be a part of the game if you already have enough.
You can buy VTI which takes about 7% allocation in every IPO, but I heard there is research by some folks at Harvard and practiced by dimensional fund advisors‘ funds that buying IPOs ~two years later is slightly better?
You also sometimes need to tactically trade with worse brokers so they will feel nicer during an IPO.
Most companies without such expert advice could step into some pitfalls. Just a guess, I am not an expert, but if my company were doing an IPO I would prefer it not to play financial games to eke out a percent of IPO price and instead focus on long term price stability to become a solid stock. My 2c.
The company wants to avoid sharp drops after the IPO, as those encourage employees to get out ASAP, which increases the volatility and discourages large, stable investors.
We all knew the Switch 2 MSRP, but we had to wait for launch to see the eBay Buy it Now price.
In this case, the banks are Best Buy. They sold out quickly! Other market players are eBay sellers: the ones that knew what they were doing made a killing selling to consumers.