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Break a Leg! It's Showtime! 

An IPO marks the realization of an investment, and whether it bursts through the gates or flounders can affect the rate of return. There are no tell-all or by-the-books signals that will immediately point to a startup going public, but we try to shed some light on IPO indicators that we've seen in the past. 

 

 

Whoa, hold your horses there. It’s not quite time to file that S-1.

We’ve historically tracked several indicators of startup IPO-worthiness, as we discuss below.

The Initial Test

A typical startup today will wait until they’re an “established” company, with the ability to prove its business model from a revenue or profitability standpoint. This usually translates to $100mm or more in revenue. Today, IPO-worthy startups are also much older than in the past. According to CB Insights, the median time between first funding and IPO for startups was 10.1 years in 2018, compared to 6.9 years in 2013. They’ve also typically raised several rounds of private capital and upwards of hundreds of millions of dollars.

However, for most late-stage startups, an IPO is still a daunting milestone.

 

 

To help wade through the waters (sorry, Marky Mark, unfortunately we can’t help you), a company will also typically hire a high-profile CFO with public company experience to navigate the required regulatory and financial disclosures. A CFO hire will also usually be accompanied by job postings for other legal, investor relations and finance roles, signaling an IPO may be on the horizon.

95% Confidence Interval

Furthermore, startup CEOs will often directly hint that the company is considering an IPO (see Uber). In other words, keep up to date on any company news! You can generally expect companies to go public during bullish markets, since companies want to pursue IPOs in receptive market conditions. Finally, keep in mind that because private companies can keep their intentions of going public a secret, it is impossible to predict for certain whether a company is seriously pursuing an IPO until it files its S-1 publicly.  However, the above represent some leading indicators of just that.

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