Initial Public Offering

An IPO is the step to transfer a private company into a public company, by listing it on a stock exchange. There are millions of articles about this on the Internet. Wikipedia is a good starting point if you need the basic insights.

When does an IPO become an option?

You will need a valuation of at least a few hundred million USD to do an IPO at a traditional stock exchange such as Nasdaq. The requirements and cost just don’t make any sense if this is not the case.

However, there is a number of stock exchanges around the world where it is possible to do an IPO much earlier. Requirements are typically reduced, and structures adapted to the needs of much smaller companies. In some cases a valuation as low as USD 10m can be enough to consider this.

Having said this, keeping a company private during the teenager years – where iterations and unexpected events are frequent – is usually the right thing to do. An IPO becomes attractive once the company reaches substantial revenues, demonstrates that it can generate attractive margins (now or in the near future), and is able to solidly predict key financials over 4-8 quarters.


While the market for conventional IPOs is booming, there are new trends to be considered for startups. First, a direct listing as pioneered by Spotify in 2018 can be a simpler and cheaper way to enter the public stock market.

Second, SPACs (Special Purpose Acquisition Companies) enable a faster and cheaper way to enter public markets, through the “backdoor” of a shelf company that is already listed. Unlike direct listings, this enables raising funds at the time of the listing. However, the startup team will not be able to ring the bell – which after all is the point of an IPO (you will be rich anyway).

Bill Gurley has written a very insightful article about these trends. A must read once an IPO starts to become an option for your company.

Further readings

While an IPO is the dream of many startup founders, trade sale is a much more typical exit for tech startups. This page provides an overview of the different exit options.