You don't understand the IPO process.
Normally, it is a company with more opportunity than capital. So it creates additional shares and then sells it during the IPO. This process is just like raising capital with VCs, except the term sheet is effectively between the new investors and the company, with the SEC adding all sorts of post-its with additional conditions.
Only since bubble v1 was it seen as some sort of "achievement" for a company; An IPO is nothing more than a poor company begging for money and willing to cause dilution in order to fill its tin cup.
>Normally, it is a company with more opportunity than capital.
Although this was of course the original rational for IPOs, this looks more and more like a historical footnote these days. Now that so many IPOs are late-stage it's hard to see them as anything other than liquidity events for founders and investors and employees.
Ahem. Like I said,
>If you don't need a large infusion of capital,
It's my money and I need it now!
Employees know what deals are on the table waiting to close, and new product announcements, and all sorts of things related to the stock.
If they think the stock is going to double in the next 6 months, do you still think they'd sell? Even if they say "It's my money and I need it now!" brokers would be happy to offer a loan using the shares as collateral for any immediate money needs.
If somebody is selling, they don't think the shares are about to double, plain and simple.
Again: If you know the stock is about to double, you go get a loan against the shares. Sellers do not believe this.
The reason lies on the technical shores of the federal securities laws. The
Securities Exchange Act of 1934 sets forth certain requirements for companies to
register their shares with the S.E.C.
Specifically, Section 12(g) requires that a company register its securities with
the S.E.C. if it “has total assets exceeding $1,000,000 and a class of equity
security … held of record by five hundred or more … persons…”