Possible risks of a pre-mature IPO?

I'm interviewing with a fund that invests in later-stage companies. This question popped up. I believe they look for the risks in near future once the IPO gets through, not those of failing the IPO.

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Best Response

Is your question, what are the risks associated with a company that goes public too early?

If that's the question, there are lots of risks. The company could fail to scale as anticipated and never make money, their product or technology could fail or be out competed, they might not raise enough money in which case they will have to be go through the distraction of raising more capital in the relative near-term. There's also competitive risk to the extent that the company now has to file a bunch of details about their business that competitors can read. And so on.

 

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