Cornerstones de-risk a deal. Naming a well-known fund that has committed to a quarter of the offering tells other investors the price has been validated, which makes the rest of the book easier to build. In return the cornerstone accepts a holding period, often 90 to 180 days.
The trade-off is float. Shares locked with cornerstones are not available to trade, so the free float on day one is smaller than the headline deal size and the stock can be more volatile than expected.
Example: a $600M IPO with $250M of cornerstone commitments leaves $350M of genuinely floating stock on debut, about 58% of the deal.
Related: ipo, ipo-allocation, lock-up-period, float, roadshow