INSUBCONTINENT EXCLUSIVE:
Ajay Chopra co-founded Pinnacle Systems in his living room and grew it to a multi-billion dollar public company before becoming a venture
did it as a founder and also vicariously as a VC via my incredible founders who have taken their companies public
According to PitchBook, only 3% of venture-backed companies in the last decade eventually went public
I once had an employee mad at me for not telling him to sell when I knew we were going to have a weak quarter
That would have been illegal! Also, IPOs come with a burden of public scrutiny; the administrative hassles take up precious time, and 90-day
reporting cycles often conflict with long-term strategic planning
Public stock offers clearly valued, tangible cash value to candidates and employees who are either weighing competitive offers or who need
While private companies can provide one-off private liquidity events via secondary sales, public companies have a far greater ability to
engage and retain valued team members though the continuous, orderly disbursement of stock-based compensation.IPOs can facilitate a
million to a multibillion-dollar valuation
IPOs boost employee morale and job satisfaction
Employees who help shepherd their company from its early stages through IPO feel accomplishment and camaraderie, and achieving this
milestone contributes measurably to corporate culture
As complicated as it is to manage a public company, public scrutiny often makes companies more disciplined on execution, which helps them
build more predictable businesses
IPO windows can sometimes close for several years, so floating your stock when the window is open is an important consideration
In addition, due to the decline in number of publicly listed companies over the last decade, there is a pent-up demand for fast-growing tech
IPOs, as demonstrated by the positive reception that Beyond Meat, CrowdStrike and Zoom received from public investors.For those founders
Use this capital wisely and keep some in reserve just in case the markets turn
We had to survive on the cash we had in the bank for a full two years before we successfully went public.Consider vertical integration
A lot of the businesses going public today or on track to do so in the next few years have adopted business models that encompass every
element of the user experience and allow companies to capture a large share of the value stack
We Company (WeWork), expected to IPO this year at a rumored $47 billion valuation, has vertically integrated every element of physical
Extraordinarily capital intensive, this type of vertical integration creates tremendous value and deep competitive moats
Importantly, these businesses only can be built in environments such as now, where plenty of capital is available with reasonable
dilution.Consider broadening your product capabilities
With plenty of cash on hand and your company sitting at a nice revenue multiple, it may be wise to consider broadening your offering while
you are still private; both via investment in internal development resources and by acquiring companies with complementary products but less
significant market traction
This is particularly relevant for enterprise companies where the cost of customer acquisition is high
With a broader product offering, you can sell more to existing customers, amortizing your acquisition costs and hopefully improving
retention with a more complete product offering.Scale as quickly as possible
Because capital is available so cheaply, the IPO-bound companies that win have become the companies that grow quickly, leveraging capital to
capture market share faster than their competitors
managers are perfectly capable of growing into the public market executive role
They just need to be aware of the rules and regulations, and they need to be advised to use proper judgement
such as investor relations
The right board structure for a public company is equally important
public this year feel the same way
