Reasons for taking the online route:

• It is justifiable to know more about the firms that choose to distribute a portion of their IPOs through the online investment bank route. Findings show that the online investment banks employed by the Internet IPOs are more reputed than those used by traditional distribution methods. Also their CEOs are significantly younger.
  
  
• Internet IPOs have larger market value than those distributed by traditional distribution methods.
  
  
• The firms that go public via the traditional distribution methods miss out a lot of money. This is because conventionally the investment banks bought the entire offering and under priced it by 15-20% below the estimated market value. This helped them make a quick profit. Also they had a huge 7% (non-negotiable) fee for carrying out the whole process. Online investment banks have revolutionized the unfair IPO game. They charge a fee of 4-5% as against the egregious 7% and the procedure of selling th IPO is also a lot fairer. A computer ranks the bids submitted by investors for a fixed number of shares and then the shares are allocated to the highest bidders . This helps the market, not the investment banks to set the prices.
  
  
• Online investment banking helps to prevent 'spinning' i.e. allocating shares to favored or potential customers thus precluding the average investor from some securities of his interest. Spinning was practiced by traditional investment banks to win future business from large institutional investors.
  
  
• It is imperative that firms employ esteemed online investment banks. This is because people have more faith on online IPOs distributed via eminent banks.
  
  
• E-auction by online investment banks lowers the cost of investors to obtain information about the reputability of the company issuing shares and the price of shares. Also a tech-savvy investor can go through all the IPOs available in the market and select his preferred mix quickly. Creating an electronic market place has thus reduced the cost and enhanced the quality of information.