Investing in an IPO bound startup can feel a bit like getting in line for a brand-new smartphone. There’s excitement, there’s hype, and there’s always someone saying, “This one’s going to change everything.” But just like buying the latest gadget, it helps to know what you’re getting into before you swipe your card. IPOs might look tempting from the outside, but the real game is knowing how to spot the good ones from the not-so-great ones.
If you’re thinking about putting your money into an IPO, take a moment. In this blog, we’re taking a closer look at the top 5 IPO investment tips and strategies that can help you make smarter and more confident choices.
Top Investment Tips and Strategies For IPO Bound Startups
1. Always Start with Proper Research
Before you invest in any IPO Bound Startups, take some time to understand what the company does and how strong it is financially. Here’s what you should look at:
- Go through the company’s financials. Are they earning good revenue? Is the business growing? What does the profit trend look like?
- Read the IPO prospectus carefully. It tells you why the company wants to go public, what risks are involved, and how they plan to use the money they raise.
- Take a look at the industry. Is the company ahead of its competitors or just getting started?
- Try to understand what happens when a company goes from private to public. It’s a big move, and there are many steps and challenges involved.
- Don’t forget to learn about Pre-IPO shares. These are shares that exist before the company lists on the exchange. Knowing how these work can help you see the bigger picture.
2. Watch the Market Mood
The success of an IPO doesn’t just depend on the company. The market plays a big role.
When market conditions are stable and there’s good demand for new listings, IPOs often open at strong prices. But when markets are shaky, companies might delay their listing or end up with lower-than-expected returns. So, keep an eye on interest rates, investor confidence, and current market trends before you apply.
3. Understand the Lock-In Period
A lot of people miss this part, but it’s important to understand. When a company gets listed, early investors like promoters and big institutions can’t sell their shares for six months. That’s the rule set by SEBI.
But here’s what you should know. When that lock-in period ends, many of these investors might start selling their shares. This can cause the stock price to fall. If you’re holding shares, that drop can affect your returns.
So always find out when the lock-in period ends. It helps you plan better, especially if you’re thinking of staying invested for a few months after listing.
4. Don’t Put All Your Money in One Place
Even if an IPO looks promising, it’s still just one type of investment. Stocks in general can move up and down quickly, and IPOs are often more volatile.
To reduce your risk, it’s better to spread your money across different types of investments. That way, even if one of them doesn’t do well, the others can balance it out. IPOs can be a good addition, but they shouldn’t be your entire plan.
5. Exit or Stay? Plan It From the Start
A common question is, “Should I sell on listing day or stay invested?” The right exit strategy can make all the difference.
If the stock opens well and you’re happy with the gains, it might be wise to book profits. Many IPOs face selling pressure later, especially when the lock-in period ends and early investors start selling their shares.
That doesn’t mean you can’t re-enter the stock later. But having a clear plan before you invest helps you avoid confusion after the listing. Decide early whether you’re in it for short-term gains or long-term growth.
Closing Thoughts
IPOs can be exciting, but they’re not a guaranteed win. A little patience, some research, and a clear plan can go a long way. Don’t rush into it just because everyone else is. Make sure the decision fits your goals, not the noise around you.
