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ScaleUp Handbook for IPO Readiness

Byron Lichtenstein, Mark Botros | December 21, 2021| 1 min. read

Preparing for IPO starts now – even if you don’t go public for years to come. 

Your leadership team is gathered around a podium. The rest of the company is crowded into meeting rooms and event spaces around the globe. Everyone’s eyes are on the live stream as you count down to one of the most exciting ScaleUp milestones the company has navigated in recent years. Five, four, three, two, one… the streamers explode over the crowd and every employee, investor, and partner of the company cheers in celebration. You are now a public company – you’ve successfully executed an Initial Public Offering. 

If you’ve been through an IPO as an entrepreneur, executive, or employee this scene brings back indescribable feelings of pride, fulfillment, and a touch of exhaustion. If you have not, you’ve probably dreamed about the moment. 

Many times, we focus on the moment of the IPO and don’t take stock of the path to get there or calibrate the hard work that underpins the ‘day of’ celebration. 

The ScaleUp software companies that Insight Partners invests in spend every day thinking about building world-class technology while scaling their teams to grow revenue rapidly. However, when they become public companies – there are a new set of things to additionally think about, namely disclosure requirements, investor communication programs, and quarterly earnings calls. These require business and operational rigor since maintaining investor confidence as a public company rests on growth, predictability, and consistency. 

The run up to an IPO requires building, brick by brick, a strong and sustainable business. That’s our fundamental focus at Insight – deploying our people and resources to support leadership teams as they create strong businesses. With a solid foundation, companies have options: whether you decide to stay private with our continued support, or move towards an IPO, the outcome is the same! You’re in a winning position. 

What type of business is a good IPO candidate? 

  1. You’re addressing a large market opportunity. As Teddie Wardi, Insight Managing Director and Board Member of the newly-minted public company, SentinelOne, notes, “public companies must address a market large enough to support many years of continued growth. Whether that be growth through geographical or product expansion, your investors will expect consistent growth so you want to make sure that market is available for you to chase.” 
  2. You have a strong competitive advantage. There is a reason successful companies spend years focused on product excellence or driving a durable edge that sets them apart from the competition. When you go public you want that moat to be wide and defensible enough to prove to investors that you have what it takes to remain a sought-after business by customers and investors alike.  
  3. You have consistent high growth – at scale! Investors are typically looking for over $100M in ARR with a track record of 40%+ growth over several years. Best-in-class SaaS businesses have net retention greater than 120%. There’s a reason Insight invests not only capital but also shoulder-to-shoulder support with our portfolio of ScaleUps – we know it takes operational excellence to sustain these metrics at scale.  
  4. You have a clear path to profitability. Most tech companies are not yet profitable when they go public because their strategy of high growth at scale requires significant investment in customer acquisition. Public investors can find comfort in this strategy if there has been a strong track record of past performance, and the unit economics are strong (e.g., customer lifetime value; net retention; gross margin). By focusing on unit economics at scale, you’re painting a clear picture to your investors that your cash usage is fueling efficient growth that will generate profits over time.  
  5. You have an exceptional team ready to take on the challenge of an IPO and being a public company. To successfully IPO, you need an all-star team at the helm of each of your functional areas within the business, some of whom already have experience navigating the IPO process. While an IPO is a financing event, it is importantly a major marketing event for your business; the most successful & enduring public companies are able to articulate their story continuously, consistently, and with the type of conviction needed to stand out from the pack.  

What does it take to be IPO-ready? 

At Insight, we run a full exit prep program to help ensure our late-stage ScaleUps are set up for success throughout the IPO. Often this work will begin in earnest up to two years before a company executes its listing, and we’ve worked with the foremost IPO experts to provide our portfolio with the resources to guide them along the journey.  

ScaleUp IPO Handbook

We encourage you to download our "ScaleUp Handbook for IPO Readiness" by completing the form below. If you are an Insight portfolio company, you can access the entire guide on the GO portfolio platform

Here are a few items to ensure are checked off before going public: 

  • You can clearly communicate your category & strategic positioning as the foundation for the company story and S1 registration filing. To learn more about building a well-articulated strategy in the market, we recommend that you watch our webinar, Be in the Room Where it Happens: CMO's Role in IPO
  • You’ve executed several quarters of accurate and consistent financial revenue and cost reporting. Accuracy is critical; the public markets are not kind when companies miss targets soon after IPO. We encourage you to watch this webinar, Preparing Your Finance Team for Exit (IPO, SPAC, M&A).
  • You have your audit and reporting processes set. This is often cited as one of the biggest surprises of public company executives. In preparation, it is often the “long pole in the tent”. Set up the team & processes well ahead of going public so that you have a well-oiled function in place before the first due date.  Accurate & timely monthly/quarterly close is a must, and there may be a need for re-auditing of prior financials, etc.
  • Your technology systems are robust and ready for the scale & investor scrutiny of public markets. Financial management tools should enable timely close & granular reporting. IT systems must support the enhanced governance, security, and compliance requirements of a public company.  
  • You have proper governance and have operationalized policies firm-wide. Governance is critical to maintaining public confidence and institutional investment. ESG, HR, and communications policies and procedures should be bolstered heading into IPO. The company has put in place a board that meets listing requirements (e.g., independence, diversity).  

There are many more best practices to think about as the IPO date approaches. At Insight, we focus on laying the right foundation for a strong, enduring, and sustainable high-growth business. Whether you decide to go public or remain private longer, everything outlined here sets your business up for success. Insight is here to be your partner on this journey… cheers to your future IPO! 

Note: Insight portfolio companies can access the entire "ScaleUp Handbook for IPO Readiness" on the GO portfolio platform

Download the Guide


Complete the form to download the “ScaleUp Handbook for IPO Readiness.”