What you should know about prepping your startup for the public markets

The last four quarters have seen a flurry of technology IPOs. If you go back to Q4 2020, we have seen a slew of megawatt public debuts from tech companies of all stripes. Airbnb rebounded from its COVID-19-induced lows to list, while Roblox postponed its IPO and instead went public directly. The company DoorDash went public. Late last year, C3.ai released an amazing offering as well. Freshworks, Toast, and, most recently, filings from GitLab, Rent the Runway, NerdWallet, and others have all debuted in 2021, with IPOs taking place during the first and second quarters.

Many startup founders aspire to go IPO, even if the average time horizon for the liquidity event has now lengthened due to increased capital flows into the private tech market. However, discussing how to get a firm ready for an IPO is not standard fare in startup discussions – it is akin to discussing your 21st birthday in middle school. Sure, it will happen eventually, but it is not a major problem right now. At the very least, you would assume so. If done correctly, the process of going public can take a long time, therefore startups may need to start preparing their operations for the public markets sooner than they expect. I discussed a subject with Lux Capital Partner Deena Shakir, Madrona Managing Director Hope Cochran, and CrowdStrike CFO Burt Podbere during TechCrunch Disrupt 2021.

The entire conversation is included below, but I have highlighted a few crucial points for those of you who prefer to read rather than watch videos. Subheadlines follow the topics, with the video at the bottom. Enjoy! I anticipated seeing three people nodding wisely and saying in unison that companies cannot start preparing for an IPO too soon. That is not what I got out of it. Following my query regarding how early a firm should start preparing for its public debut, Cochran said:

Many people say things like, “Oh, you need to start thinking about going public really, really early,” and that rigor is important. I am more of the type that says, “Let the company run and be agile for a while, then add processes as needed.” You will arrive in a reasonable amount of time.