IPOs are expensive and cumbersome – Try a direct listing, like we did at Spotify
The banks backing spotify made about as much from their &quot;non IPO&quot; compared to what they would have made from a traditional IPO so I don&#x27;t think too many bulge bracket banks are worried about this trend.<p><a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2018-03-26&#x2F;spotify-listing-disrupts-the-ipo-but-keeps-the-costs" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2018-03-26&#x2F;spotify-l...</a><p>&gt; Avoiding the lock-up period was a very important part of our decision to list Spotify directly, but there were also clear financial benefits.<p>This was listed as, I think, a positive but I see it as an extreme negative.  Why invest in your company if you don&#x27;t have the conviction that it will be worth more 3-6 months from now.<p>&gt; Think of it this way: the bigger the first-day gain in the closing price of your newly-issued stock, the higher the “cost” of your IPO. The investors who bought shares before the market opened pocket the gain in the stock price, instead of the company.<p>I think they are right but they really have no proof that they avoided the IPO pop discount.  They actually opened trading at $165.90 and closed at $149.01.<p>What&#x27;s to say that if they followed a traditional IPO the wouldn&#x27;t have gone public at the same price but had a bank to back stop their share price at that level.  The counter argument would be that they might have sold shares lower and had it float at $165.90 but we&#x27;ll never know:)<p>one other thing they mention but should be highlighted is that most companies that go public sell  new shares to the public,  ie they raise money. Spotify didn&#x27;t, as they didn&#x27;t need money.  This is more common these days due to the huge amount of money sloshing around looking for returns &gt; 4% but its still the exception for most companies that go public while still loosing money.