An initial public offering (IPO) occurs when a private business decides to allow their corporation to get traded on the public market in the form of stocks. This is generally done as a strategy to raise money in order to fund various projects including new products, expansion, growth, and more. Many startups reach this important transition at some point in their development.

In order to qualify for an IPO, companies have to meet strict requirements set forth by the Securities and Exchange Commission (SEC). When judged correctly, an IPO is a great way for investors to get in on the ground level by investing in a stock of a company that is destined to perform well over time.