Who drives the price of a stock down during an IPO?

As a small investor, I really can't afford to lose money. Losing even $10 is, well, a meal to me. Losing even more on investments, taking weeks, months, even years to recover is a bad, bad strategy. Yet, at the same time, I'm no different than anyone else. That is, I cannot merely NOT invest because our dollars are continuously devalued even in a “normal” climate, and they lose value MUCH faster when the Fed stimulates us.

So, all of that aside, I remember the days when you'd call up your broker and tell them you knew of a growing company that was about to go public, to have an IPO. If you got in early, there was a good chance that your dollars would help provide the funds necessary to grow the company, and naturally the founders would capture some of those fund, but employees who helped create and grow the company and it's products would also own a share, and common shareholders would also “win” when the company truly did use the funds to expand, innovate, and grow.

Now, it seems very different. And IPO quite often will enrich just the people at the top. Even employees are cut out from the rewards, but executives and fund managers and accountants and board members will become instant millionaires or even more. Then, the company's stock valuation begins to plummet, and common shareholders lose their asses… err, excuse me, they lose their assets. The losses can be HUUUGE. And because I've seen that happen so many times in recent years, I've steered clear of IPOs.

Anyhow, it had me thinking. I imagine a lot of small investors still pour in as common shareholder, hoping they'll experience some success for the same reasons us old timers did back in the day. And, it seems reasonable that as they get into the IPO, they get trapped. They aren't going to bail out, sell at a loss, when the rapid bleed down starts. So if the common shareholders aren't letting the price slide. Who is? Who has so many shares that they can sell off and bleed down the valuation, they're willing to let their shares go for less and less and less. Who can afford to take on such losses? Or are they really even losses? Who is driving the valuation down on IPOs?