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In my understanding, the shares issued to the public during IPO is from a different set of pie and the shares issued to VCs during series round of funding is from a different set of pie. So after IPO, when a VC sell some of the stocks they own, will the number of shares in the market increase?

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In my understanding, the shares issued to the public during IPO is from a different set of pie and the shares issued to VCs during series round of funding is from a different set of pie.

Not always. SMART Technologies' IPO years ago had shares from insiders according to the Globe and Mail:

The IPO was driven largely by Smart Technologies' two external investors, chip giant Intel Corp. and private equity firm Apax Partners.

"We were looking to provide some liquidity to Intel and Apax," Ms. Knowlton said, adding that Intel invested in the firm in 1992.

Of the total proceeds of $660.1-million raised in the IPO, $483.7-million will go to Intel and Apax, $141.7-million to the company itself and the remaining $34.7-million to the underwriters.


So after IPO, when a VC sell some of the stocks they own, will the number of shares in the market increase?

Yes, the numbers of shares making up the float will increase as insiders sell their shares.

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First point: when we talk about shares outstanding, we frequently talk about the 'floating' shares, which are those not held by insiders. You can also get the total shares outstanding sometimes. When an insider sells shares, the floating share do increase but the total shares do not. It sounds like you understand this, and have the right intuition.

There are also lots of other things that happen some time after IPO. For example, the VC's and other insiders very likely received convertible shares and/or warrants at some point along the way. Exercise of either of these will create new shares outstanding. For a new firm, sometimes these effects can be somewhat large and noticeably change the shares outstanding.

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