There are two basic needs. The IPO add cash to the company (which you are aware of). You can raise money buy sharing the opportunity/risk and the most common way is doing it for stocks. The alternate way is to raise from banks, and this is good for short term only. When considering raising for stocks, IPO is usually the best way since the the money raised per share/percentage is usually much higher that private investment. But there is also the other reason. IPO makes the company shares much more trade-able. If you look at used cars, those that are highly trade-able have a better value since you agree to pay more when you know you can sell it easily. But making the shares easily trade-able, it's value increase.