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The Short Answer

What Is an Initial Public Offering?

We look at what it means for a company to “go public.”

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Editor's note: This article originally published on Sep. 23, 2020.

An initial public offering, or IPO, is a process a private company undertakes to become public. Almost all companies start as privately funded, receiving money from founders, friends, and family. Once the company has a strategic business plan, it can apply for small-business loans and venture capital funding.

Sachin Nagarajan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.