An IPO or an initial public offering allows the shareholders of the company to sell their shares through a listing on a stock exchange. IPOs typically allow for two things. The existing investors can sell some or all of the shares they hold, the proceeds of which goes to the shareholders, and the company can also create new shares to be sold outside the existing ring of shareholders through the IPO, which will raise capital for the company. It's not possible for the VC fund investors to exit their entire position through the IPO. This is not normal. There is typically a predetermined lockup period, three to six months, within which the founders, early seed investors and VC fund investors are not able to sell their shares. Once the lockup period has passed the VC fund, investors will be able to sell their shares on the open market. However, this may take time so that the VC investor does not create any substantial decrease in the company's share price from their stock disposal. It's common for VC investors to have fully exited their position one to two years after the IPO. During this time, the VC investors are exposed to the risk of their shares being publicly traded. They may reduce in price. However, on the upside, should the company deliver above expected revenue or profitability growth, the VC investors will benefit from the associated increase in the company's share price.

While startup companies can choose to go public at different valuation points, a reasonable rule of thumb is that companies choose to delay any IPO until they've reached a private pre IPO valuation of at least $1 billion, which is referred to as unicorn status. Unicorns typically have revenues greater than a hundred million dollars. However, due to the costs of developing products and scaling the business, they may not be profitable yet. Industry data suggests that unicorns achieve an exit after a median of eight years in business. For example, Twitter iPod seven years after its founding in 2006, whilst Facebook, LinkedIn, and Zoom each exited with an IPO after eight years, it's worth noting that this is not the case for all tech IPOs as can be seen from this chart. This indicates that the median IPO for tech companies has shown an increasing trend since 2012, reaching a median time to IPO in 2022 of 14 years. Despite the desire by entrepreneurs that dream of building a unicorn and leading the company towards a successful IPO. From 2010 to 2020, the majority of exits in the us, approximately 74% were through sales.