IPO readiness: Lessons from the field
Here’s how to navigate the route from private to public — from those who’ve done it
At Shenzhen-based XtalPi, a quantum physics–based drug R&D company, one of the primary considerations was the credibility that comes along with being a public company. “We’re a global company,” Tam said. “Many of our peers, mostly in the U.S. and Europe, were already pursuing their IPOs.” But choosing to go public wasn’t just about benchmarking against others. “We wanted to be well-capitalized and ahead of the game,” Tam said. “We also wanted acquisition currency to potentially pick up distressed but synergistic assets in the context of M&A in a volatile market.”
As part of those efforts, investing in financial controls is critical. “In U.S. companies, a robust controls environment and SOX compliance are critical,” said Govil. “It’s often an area private companies need to invest in.” A proficient and timely forecasting capability is another must-have. “Every quarter as CFOs present financial results, the goal is to ‘raise and beat,’” Govil said. “Without real-time forecasting from a best-in-class FP&A team, this is next to impossible.”
Roadshow and investor relations
Similarly, Delhivery had been refining its story for a decade pre-IPO. Co-founder and CEO Sahil Barua created opportunities for other senior leaders to get out and tell Delhivery’s story, and they proved critical to the process. “That helped us when it came time to write our document,” Agarwal said. “You can hire a lawyer to write it for you, but we took a different approach. We wrote it by collaborating internally, and then shared it with our lawyer.” He’s proud of the result. “When you read our document, it’s the result of how we at Delhivery are thinking and talking about our company.”
When it came time for their roadshow, “we split ourselves into a few different teams,” said Agarwal. “Sometimes we’d merge the teams together depending on the investors.” Since this process happened during the pandemic, travel was fairly restricted. “It was an intense roadshow, where we met more than 100 investors one-on-one, and another 200 in group settings, mostly online.”
At XtalPi, Tam and team prioritized their most supportive, longest-running, and strategic stakeholders. “We knew we could not please the whole world,” he said. “It was another balancing act.” He also considered how to speak to various levels of investors, whether peers with a sophisticated knowledge of quantum physics, or potential partners in materials science. “We also did a lot of education and communication for those investors who needed it,” he said.
