Furthermore, the Founders/VCs/Employees just don't have the reach or the technical know-how to appropriately price the stock to maximize their potential gains - the investment banks have both but, as you read in this article, they often use their expertise to their own advantage.
Lastly, the Founders/VCs are in fact able to sell off their shares during the IPO for their own personal benefit so long as there is no clause in their IPO terms stating that they cannot. This will enrich them personally BUT it is highly advised that they don't because the signal they're sending to the market is "cash out early!"
There is no such thing as information symmetry between any person, or in any trade. No two people on the planet have the same information.
> which means someone will always get "screwed".
Both parties always benefit from the trade, or the trade would not have taken place. Unless someone is deliberately misrepresenting information (fraud), then nobody gets "screwed" by trade.
Both parties always benefit from the trade, or the trade would not have taken place
How can you say these two things, right at the same time? Does the former not contradict the latter?
Why not just divide the shares up amongst the existing shareholders, and just let them sell them normally on the market? Then the company/founders/vcs can just sell shares at whatever pace they want to, at whatever fair market value is.
It seems like the only possible outcome of a single day sale is information asymmetry, which means someone will always get "screwed".