The IPO Process Explained: From S-1 Filing to First Day of Trading

The IPO process is not a press release. It is a 6–18 month operational gauntlet that will consume leadership bandwidth, require dozens of advisors, and demand you open every corner of your business to SEC scrutiny.

Most founders experience it once. Here is what actually happens — and in what order. Track current IPO filings and market conditions on the Tech IPO Dashboard.

When Companies Decide to Go Public

The decision to IPO typically requires three conditions to align simultaneously: the company has at least $100M in revenue (or ARR for SaaS), growth is still strong enough to command a premium public market multiple, and the IPO window is open. VC-backed companies historically go public 7–10 years after founding — Snowflake at 9 years, Airbnb at 12, Palantir at 17. Timing is part strategy, part market.

Stage 1: Selecting Underwriters and Drafting the S-1

The first real step is hiring investment banks as lead underwriters — the bookrunners who manage the deal. Goldman Sachs, Morgan Stanley, and JPMorgan handle the majority of large tech IPOs. The underwriting fee is 3.5–7% of gross IPO proceeds: roughly $35–70M on a $1B offering, $10–20M on a $300M deal. Underwriters earn their fee by building institutional demand and pricing the deal.

Simultaneously, the company works with outside counsel — typically Latham & Watkins, Cooley, or Wilson Sonsini for tech companies — to draft the S-1 registration statement. The S-1 runs 200–500 pages and discloses three years of audited financials, detailed business description, risk factors, management compensation, and related-party transactions. Getting the financials audit-ready alone typically takes 2–3 months.

Companies that qualify as Emerging Growth Companies (EGCs — under $1.235B in annual revenue at time of filing) can submit a confidential S-1 to the SEC before making it public. This is almost universally used today: it gives you 15+ days before competitors can read your numbers, and lets you test SEC appetite before committing publicly to the process.

Stage 2: SEC Review and the Comment Letter Gauntlet

After the S-1 is filed, the SEC has 30 days to issue its first comment letter. In practice, expect 2–3 rounds of comments over 45–90 days total. The SEC scrutinizes revenue recognition policies, non-GAAP metric definitions, risk factor disclosures, and related-party transactions. Every comment requires a formal written response, which your outside counsel drafts and files publicly.

Legal fees for the SEC review process alone typically run $2–5M. Add accounting fees of $1–3M, printing and filing costs, and the total IPO bill reaches $10–25M before you count underwriting. Ongoing public company compliance — Sarbanes-Oxley (SOX) controls, quarterly SEC filings, investor relations — then adds $3–8M per year in perpetuity.

During this period, the "quiet period" restricts what executives can say publicly. You cannot make forward-looking statements or promotional claims about the company that could be construed as conditioning the market. This has caught out founders who continued posting aggressively on social media during the SEC review window.

Stage 3: The Roadshow

Once the SEC declares the S-1 effective, the roadshow begins. For 10–14 days, the CEO and CFO will pitch 150–250 institutional investors — asset managers, mutual funds, hedge funds, and sovereign wealth funds. In the pre-2020 era, this meant flying to New York, Boston, San Francisco, London, and sometimes Singapore in a single week. Virtual roadshows (standard since 2020) have reduced the travel but not the intensity: six to ten one-on-one meetings per day, every day, for two weeks.

Investors submit indications of interest (IOIs) that the underwriting banks aggregate to build the order book — mapping demand at various price points. The target is 8–10x oversubscription, which gives the company pricing leverage and signals to the market that demand was strong. Oversubscription also lets the bankers be selective about which institutional investors get allocations, preferring long-only funds over fast-money hedge funds that might flip the stock on day one.

Stage 4: Pricing Night and First Day of Trading

The night before the IPO, the company, bankers, and lawyers gather — now typically by video — to set the final share price. The price is deliberately set 10–15% below where the bankers believe the stock will trade to create a planned "pop" that rewards IPO investors and generates positive press. Average first-day returns ran 25–35% in 2020–2021; in normal markets, 8–15% is more typical. In weak markets, deals get pulled entirely at this stage.

Trading begins the next morning. The underwriters' stabilization desk actively manages early price action — if the stock falls below the IPO price, they can deploy the greenshoe option (an overallotment option allowing them to purchase up to 15% additional shares) to support the price. This protection lasts 30 days post-IPO.

The IPO Process Timeline

The Lockup Period: When Insiders Actually Get Liquid

After the IPO, founders, early employees, and VC investors face a 180-day lockup during which they cannot sell shares. This is a contractual restriction in the underwriting agreement — not an SEC rule — negotiated to protect the stock price by preventing immediate insider selling. Some companies negotiate partial lockup releases at 90 days or graduated schedules, but 180 days is the standard.

Lockup expiration dates are widely tracked by institutional investors as potential selling pressure events. Many stocks experience weakness in the 30 days before lockup expires as investors position defensively. For employees who have waited 7–10 years for liquidity, the lockup expiration is often more emotionally significant than the IPO day itself.