What are the steps a start-up must traverse in the IPO process?

A complete case on why and how start-ups can become IPO ready and ace their game.

While the coworking unicorn start up WeWork Initial Public Offering (IPO) debacle of August 2019 is fresh in the minds of start -up founders, it has also made them watchful and wary now. In a dramatic turn of events, WeWork brought down its valuation from a whopping $47 billion to a paltry $10 billion and removed its maverick CEO, Adam Neumann. 

The global start up economy contributing to a behemoth $3 trillion in value has been tossed about during the pandemic crisis with a severe drop in VC funding and consumer appetite, leading to several closures and layoffs. It is common knowledge that start-ups in the Travel and Tourism and Automotive industries have taken a severe beating while Technology start-ups have manged to keep their heads above water. 

The flip side is that the start-up sector is still eyeing the IPO as a coming-of-age sign in their growth trajectory. Many are making a beeline to the Wall Street, very recently Airbnb made waves with raising $3.7 billion after it priced at $68 per share. Digital transformation has been the game changer catapulting many start-ups focusing on cloud computing, analytics an artificial intelligence to float for IPO.


The flip side is that the start-up sector is still eyeing the IPO as a coming-of-age sign in their growth trajectory.

Why should start-ups go in for an IPO?

Apart from raising the obvious ‘capital’ for the enterprise, seeking an IPO establishes fairly and squarely its merit worthiness. If you are a start-up operating with a long-term vision, it affords you cash flow, liquidity, employee shares, investors to exit and overall stature increases manifold. And one of the other key elements here, is the market exposure, because once public, the chances of expansion is more likely with people from across the globe finding and investing in you. And this is a fillip for the start-up brand. The rigour involved in getting listed can be enormous making the start-ups not just be satisfied in projecting numbers but also be rooted in firm – market and business fundamentals along with differentiated business models with high margins. Not to say that once publicly listed, there will be a loss of autonomy, perennial pressure for performance, mandatory compliance requirements, nevertheless, it is a dream moment for every start-up to cement their position in the world of business.

What are the 3 keys that tell you that your business is ready for an IPO?

  • The Core of Your Business

The very fact that you have a dependable product/service, you have the best team to continually improve it, you have the customer problem in the central, and you go all out to provide lasting solutions for this – is what will make you tick in the public eye. It can be tempting to put some quick runs on the board and resort to short term growth strategies, but public opinion resides on slow and steady, and in start-ups being a consistent performer with an enviable track record. As a start-up knowing this core, staying true to it, ensuring that this is driving every expansion tentacle is the first key that will demonstrate your readiness to go public.

  • The Agility of Your Business

Business decisions will play a humongous role, either it is playing pivot to change directions, or diversifying quickly into related areas, or entering new geographies to expand, or bringing in the requisite specialized talent, or deploying the necessary technologies to scale, a sharp business acumen to be on top of the game is crucial in your journey towards IPO. Start-ups will need to double or triple business volume in two to three years, so determine that goal and work towards it to make strategic moves that take you towards it. As a start-up your immense business knowhow and adaptability to market dynamics and customer demands will be the next key that will show you in unequivocal terms your readiness to go public.

  • The Reliability of Your Business

When you are in a pre – IPO state there are many things that you are expected to do. Simply because the public is not satisfied with one of your hallmarks, they want you to be hot, leading the race, gathering momentum, rolling out cool products, partnering with reputed names in the industry and so on. So, you must earn their trust, and through it all be original and genuine. It could be giving back to the society, or standing up for your employees, or connecting with employee families, little acts can do wonders to establish you as a trusted and reputed start-up in their mind. As a start-up your brand persona is being built every second and this the third key that puts you on the path to IPO.
The above keys are interrelated and act as cornerstones in providing you an honest report on your eligibility criteria to go public. And gives you a chance to insulate your start-up from the market dynamics that you cannot control.

What are the tenets that prepares you for an IPO?

The run up to the IPO can be laborious and long drawn process that can quash the groundswell of enthusiasm of any start-up, but if a plan is ready with the right team – then it becomes a largely a doable accomplishment. And what exactly makes this doable?

  • Financials form the fulcrum of this trek up, getting a trusted committee in place replete with specialists spanning risk, finance, audit, legal, taxation and regulatory body, banking, underwriting will be the first and foremost activity that a start-up should undertake. And this is a committee that has a significant exposure to IPO guidelines and must have experience in handling large scale IPO deals and clearly steer the start-up in the direction of going public.
  • Technology will be the next step that aid the reporting of financials. Large amounts of data, history, present and predictions will have to be dynamically generated. Manual reporting, Excel spreadsheets and simple data analysis is not only not scalable but is prone to error and drags the process. Smart use of technology that integrates quickly with other systems and can dynamically populate data dashboards for analysis will be the need of the hour.
  • Process rigour internally can be instrumental in assuring a clean house. Regular auditing, controls and checks must be implemented and conducted based on a set cadence. This will unearth financial irregularities and enable a quick course correction instead of a massive financial quagmire later.
  • Transparency is another pivotal piece in the IPO pie. Conducting frequent roadshows to meet investors, analysts, bankers and sharing start-up financials establishes credit worthiness. Honest and frank reporting on earnings, cash flows and outlook can turn out to make the start-up be seen favourably in the public eye. The start-up needs to be perceived as an entity in control of the affairs with access to large acquisitions that will open avenues for cash. And this will ensure that as a public company you can swim in deeper seas and not just in safe shallow waters.
  • Risk is another force that the start-up will have to mitigate. Insider trading, false representations, misrepresentation of financial data, employee speaking out of turn and fraud are some of the risks involved. Start-ups will need to address these litigation hurdles and be prepared to fix them and ensure quick corrective measures so that they don’t dent the start-up image. Also, as a public company it is more exposed to market volatility and the public will not hesitate to jump out and board another bus. So, preparedness to handle sudden and abrupt plunge in stock prices is paramount.
  • Timing can make or break a successful IPO. While start-ups may have all the above in perfect order, if they miss to market watch and roll out the IPO when the market is not bullish it will lead to aborted or unsuccessful IPOs. So, working with analysts and experts and assessing the market and launching when the demand is high with public in full support can make the journey seamless.

As a start-up knowing this core, staying true to it, ensuring that this is driving every expansion tentacle is the first key that will demonstrate your readiness to go public.

What exactly steps should a start-up take to go public?

The below list comprises milestones that lead up to the IPO and once public.

  • Have you selected an investment bank associated with the regulatory body? They collaborate with the start-up to provide underwriting services in issuing the IPO. Careful selection based on reputation, network, expertise will be helpful in staring on the right note.
  • Have you methodically scoured through the due diligence paperwork that the underwriter draws up, ensuring the clauses and contracts are accurately documented?
  • Have you partnered with the underwriter to conduct roadshows to glean information on the demand to prepare number of shares to offer?
  • Are you ready to Go Live after ensuring the above aspects are ticked off along with the under writer to launch the shares in the market?
  • Have you monitored and used wisely the period following the listing where there are no rules determining the price?
  • Finally enter the market, after which it is only the market conditions and the start-up performance that ascertains the share price.

The IPO Floats from around the world


Some of the recently concluded and much anticipated IPOs of 2021 globally are Compass, UiPath, AppLovin, Joann, Thoughtspot, Rivian, Coursera, Instacart, Robinhood, Databricks, Nextdoor and Ascencus.


While Silicon Valley has hogged the limelight in start-ups venturing ahead with IPO, in Europe start-ups looking to be listed are Moonpig, Deliveroo, Transferwise, WorldRemit, Draktrace, Music Magpie Trustly, Kahoot, Trustpilot, Truecaller, Epidemic Sound and Valuer.


In China, a large crop of start-ups went public in 2020, and the pace seems to be only growing with Megvii, Yitu Technology, CloudWalk Technology, and talks of ByteDance’s Douyin and Toutiao and Didi Chuxing making the foray as well.


Signs are encouraging with several companies filing for IPO and expecting to raise $10 billion. A gold mining organization GV Gold, recently announced plans for an IPO, while the Russian eCommerce firm Ozon was listed on Nasdaq in November 2020.

Middle East

As for Middle East, Saudi Arabia leaped ahead with a spate of IPOs such as Dr Sulaiman Al Habib’s $700m IPO, Amlak International, BinDawood Holding and the gargantuan Aramco. And UAE is likely to go public with MAG Development and Seafood Souq General Trading.

Done right, start-ups can make it to the big league with an IPO, however, that can be the start of another major journey. And here, the responsibility of conducting business operations as a public company is steep and start-up owners need to be cognizant of this expectation.

Bhuvana Rajaram
Bhuvana Rajaram
Bhuvana is an industry veteran with 30 years of experience, she writes on startup ecosystems, entrepreneurship, marketing literature and internal communication. Her stint includes Cognizant and TAFE.

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