Tech IPO - Should You?
There’s a huge spotlight on tech IPO’s right now and a stirring debate about Nasdaq versus London (Stock Exchange), v Singapore, Hong Kong or wherever. NYSE Euronext has just leaked that it plans to launch a new pan-European stock exchange for entrepreneurs.
Facebook’s saga has made this hot business topic all the more sizzling - at least it’s not European debt for once!
It got me thinking about what really matters to growing tech/media/creative-tech ventures and whether this debate will help them understand any more about how they should grow their business. (Disclosure: at blur Group we care loads about this community, see Innovate).
After all, an IPO is a fund raising event. A bigger, broader, more advanced version of an Angel, VC or debt deal - but none the less a cash raising exercise. So which of these flavors is right for you?
It strikes me that once you get passed the noise and bluster and VC’s trying to lobby the press, er markets, to promote their portfolio companies then the options are simple.
1. You want to sell your business: If you do and do not need extra capital to pull it off then hire an M&A boutique - and get on with it. If you do need capital then get in bed with a VC and he/she will sell it for you - ideally within 3 years.
2. You do not want to sell your business: If you want it be a quality, niche player then keep it private. Period. Use cash flow and debt to finance its progress -use dividends to reward investors. If you want it to grow really big then use Angel financing followed by an IPO. The latter could be the new way - particularly on the smaller European or Asian markets.
Sorry if this is a bit simplistic but for those of you starting out or deliberating options it might be best to keep it simple.