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What is an IPO?An IPO is an acronym for an “Initial Public Offering”. An IPO is a process by which a private company becomes a public company.So what is the difference between a public and a private company?A public company is one that has equity that members of the public (i.e. you and me) can buy and sell. A private company, on the other hand, has equity that is closely held by the founders of the company or professional investors like Venture Capitalists and Private Equity Companies. Public companies have a requirement to publicly file quarterly financial statements that update investors on the companies operations. There are other requirements for public companies that are put in place to protect investors, but these are the main ones that public investors will care about. Private companies may produce such documents for their own private investors, but they usually don’t make it public.So an initial public offering is simply the term used to describe the process by which a company goes from being a “private” company to being a “public” company.Why do companies “go public” or “IPO”A privately owned company may choose to file for an IPO for three reasons.The company wants to raise money for expansion, to make an acquisition or to have some money in the bank for “general corporate purposes”.The existing private shareholders want to “exit” and sell their shares to other shareholders.A combination of #1 and #2. The company may want to raise money and the existing shareholders may want to sell some of their equity to other investors.It is important to understand in #2 above that the company itself isn’t raising money. The company may actually not see any money from the IPO. The only purpose of the IPO was that the founders of the company and the investors wanted other people to buy their equity.I wrote an answer to a follow up question that you may want to read next - How do you research an IPO?

An IFS officer cannot start a business in India. It is against the Central Civil Services (Conduct) Rules, 1964, which applies to IFS officers, too. Also read my answer to a similar question:Are diplomats allowed to run a business as long as it’s not in the country in which they work?Investment in stock market is allowed so long as it is not speculative in nature. According to Rule 16 of the Central Civil Services (Conduct) Rules, 1964:(1) No Government servant shall speculate in any stock, share or other investment: Provided that nothing in this sub-rule shall apply to occasional investments made through stock brokers or other persons duly authorised and licensed or who have obtained a certificate of registration under the relevant law. Explanation – Frequent purchase or sale or both, of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule.(2) (i) No Government servant shall make, or permit any member of his family or any person acting on his behalf to make, any investment which is likely to embarrass or influence him in the discharge of his official duties. For this purpose, any purchase of shares out of the quotas reserved for Directors of Companies or their friends and associates shall be deemed to be an investment which is likely to embarrass the Government servant.(ii) No Government servant who is involved in the decision making process of fixation of price of an Initial Public Offering or Follow-up Public Offering of shares of a Central Public Sector Enterprise shall apply, either himself or through any member of his family or through any other person acting on his behalf, for allotment of shares in the Initial Public Offerings or Follow-up Public Offerings of such Central Public Sector Enterprise.It is clear from the Rule above that the restriction is not just limited to the officer but extends to her/his family, too.

LinkedIn sold for $26 billionFacebook is worth $470 billionSnapchat IPOed (initial public offering) for $24 billionDropbox is worth $7 billion.It’s all the media talks about. Young entrepreneurs who are making billions.They also see this on social media being posted by their entrepreneur peers.The cars:The houses:The vacations:The cars:You have to understand that a large group of entrepreneurs were socially awkward. They weren't the cool kids in high school and college. They were the ones the cool kids ignored or made fun of.As an entrepreneur, they have an opportunity to rub shoulders with the rock-stars and athletes.Yes, Bill Gates was a geek.They believe their ideas are worth billions because:They’ve never built a real business before so have no idea what it takes to make a dollar - let alone a billionThey see it being done all around themThey ignore many things because they want that lifestyle.And because sometimes - every now and then - their idea is really worth billions.Percy outFollow me on Quora to get my other answers