1 July 2021|Business Growth, Fundraising, Latest Posts, Launching a business
By Chris Jeffries, CEO and founder of Launch Your Career and Dev Clever. If your business made it through the hardships and volatility of 2020 and is tentatively coming out the other side, you may well be considering whether now is the right time to take it to the next level. And you wouldn’t be alone.
This year has seen a record-breaking number of international initial public offerings (IPOs). With an 85% increase on last year, it’s the highest figure in twenty years.
With many investments put on hold during the first year of the pandemic, an IPO frenzy is currently underway. If you are looking to secure financing, you may also be ruminating on the possibility of floating your business. But as a founder, what are the pros and cons of going public?
In 2019, I floated my company, DevClever, on the London Stock Exchange. My journey from start-up to stock exchange was full of highs and lows. There were challenges and a great deal of personal risk throughout. But it was the right path for me and my business and I’d like to share some insight from that process.
IPO advantages and disadvantages
The main reason for going public is to help entrepreneurs raise capital and expand their business at a rapid pace. The injection of funds is a game changer and can be used to reduce debt, finance research, develop or buy new technology and hire the best staff.
However, it’s worth noting that the IPO process itself is a costly one.
Lawyers, investment bankers and accountants are all required and they’re not cheap.
On top of that, you need to factor in the time required to prepare for an IPO. Months that could be spent developing and promoting your product or negotiating deals.
Business owners on the IPO journey must make their peace with the many changes to their company. Like the scrutiny that comes from very regular and public financial reporting. Or the differences in the decision-making process now that there are shareholders and a board of directors. This can be a real cultural shift for many start-ups.
On the flip side, it can bring many benefits. Having a board of directors also opens the door to extensive business expertise that can catapult your company to the next level. I know I have benefitted greatly from my board’s experience of growing and scaling international businesses. They have seen it, done it all before and got the T-shirt. They save you from costly mistakes and prepare you for unexpected risks.
An IPO can also lead to more publicity as analysts and news agencies report on the business. This can attract new clients as well as help the company to build strategic business relationships.
When I was considering whether to float my business on the London Stock Exchange, it came down to two things: credibility and international reach.
Fundraising was not my main goal as I had already invested heavily in the company to give it the initial impetus.
I’d parted ways with my former business partner who wasn’t keen on investing and sold my house and my cars to put £1.5 million of my own money in the business. This took my initial small-scale careers advice product and transformed it into an end-to-end careers guidance platform.
My next step was to make the shift from a local Midlands-based company to an international one. To do this I needed to show I was a credible and committed business ready to play on a global scale. And that meant getting listed.
The process of going public on the London Exchange took a whole year ending in January 2019. Floating the company did improve my credibility and indeed paved the way for global partnerships with technology company Lenovo and NISA, the independent schools alliance in India that represents over 70,00 schools.
It also enabled us to acquire technology and skills which led to rapid development. We can take advantage of changes in the market more quickly than if we were backed by private investment. Further investment funds have been easier to access too and this has meant I have been able to realise my vision of changing the way careers advice is offered in schools.
So for that reason it has all definitely been worth it.
My golden rules if you are considering floating your business
If you are an entrepreneur considering an IPO, here is what I would advise.
· Get your head down and just do it.
Prepare for late nights and ridiculous deadlines. Don’t take your mind off the end goal or waiver from it. Just accept that it will be a lot of work but there will be an end in sight.
· Get help. Lots of it.
It’s hard work doing it on your own. Get the support you need and not just the legal kind. You will need the support of your friends and family too. A business network is also essential as their help will be invaluable.
· Focus on your business vision
What kept me going was an unwavering belief that I knew careers advice for young people could be drastically improved and my team and I had the ideas and product to achieve that. That’s where the energy came from, that’s what ensured others came on board with the journey and that is what keeps me motivated to this day.
About the author
Chris Jeffries is CEO and founder of Launch Your Career, an online and virtual reality experience for young people which provides careers guidance based on a student’s personality. Launch Your Career is the brainchild of digital innovation experts Dev Clever. The careers personality quiz is available free to all students at www.launchyourcareer.com @launch_careers