Scaling a simple startup from an MVP to an IPO comes with overwhelming challenges for most people. The process can have major setbacks, but any well-developed MVP can lead to an IPO.
All the startups go through a similar lifecycle, so it’s easier to understand what you need to do to scale your MVP to IPO. Before we dive into the subject matter, let’s look at a few things you need to consider before taking the IPO route.
Things To Consider Before Taking The IPO Route
You can ask yourself a series of questions before taking the IPO route. The answers will determine the feasibility of you taking the steps of scaling your product.
1. Is Your Financial Growth Predictable?
When planning any business strategy, the best thing you can do is have an efficient financial and business plan. You can review your plan to determine your organization’s current financial standpoint and plan your next moves accordingly.
Suppose your company has a steady financial growth rate over an extended period. In that case, investors will be more likely to put money into your company for more growth.
2. Do You Have A Great Team By Your Side?
When planning to scale a company to go public, you need a strong extended team who can handle all the digital aspects of making your company go public.
3. Are Your Reports Audit-Ready?
To ensure complete transparency, your quarterly reports should always be detailed and ready to be proven authentic under any audit. With consistent reports, you establish yourself as a credible organization that investors can trust.
4. Do You Have A Strategic Roadmap?
Your strategic roadmap is the blueprint of the future potential growth of your product and your company. Investors prefer organizations with strategies that can bring in profitable returns.
5. Do You Have A Backup Plan?
Going for the IPO route can have a huge effect on any startup. But if you are planning to raise funding via IPO, you will also have to keep a backup plan in case the IPO is delayed and doesn’t take place.
Startup Development Stages For Scaling MVP To IPO
As we mentioned, all startups go through a similar route when improving MVP into IPO. Here’s the list of stages you will need to go through
- Stage #1: Brainstorm The Perfect Idea
- Stage #2: Research The Market To Validate Your Idea
- Stage #3: Choose A Reliable Development Partner
- Stage #4: Begin Prototyping
- Stage #5: Develop Your MVP
- Stage #6: Find Investors Who Can Fund Your Plan
- Stage #7: Test, Launch, And Market Your Product
Stage #1: Brainstorm The Perfect Idea
Finding any idea that you can scale to IPO can take a long time. It would be best if you had an idea that can be sustained over a longer period via constant development and improvement.
The trick here is to find a balance between what you’re interested in working on and a problem you can solve regarding that subject matter. In short, you need to:
- Find a field of expertise that you are interested in
- Find a problem within that field that you can solve with your expertise
- Find the unique changes you can bring to your customer experiences by solving that issue
Stage #2: Research The Market To Validate Your Idea
Now that you know what you’re working on, it’s time to understand your audience.
This step is overlooked by many, but getting to know your customer base can help you develop a product that the potential user base will always find more relatable, whether you’re targeting private markets or public ones.
Also, market research helps you identify your competitors who already have similar products in the market. Knowing your competitors can also give you unique ways to present and design your product to attract more users, potential customers, and investors.
Stage #3: Choose A Reliable Development Partner
Before you start developing your product, you need to assemble a development team that you can rely on completely. The key to a great product is to have a professional team of experts by your side to create the initial version of your product.
Your app can be just how you want it when you have a reliable development team—worrying about where you will find such a perfectly balanced team? maybe consider talking to us?
Stage #4: Begin Prototyping
Prototyping can give your idea a tangible form with which your users can interact. A prototype takes a basic shape of the product that can help the users get a feel before it has been appropriately designed or launched.
Prototyping also helps you set your development goals for the product. With the feedback you can get from your prototype, you can decide which features you and your team want to spend time on for development.
To leave no stone unturned Impala helps you refine your Proof of Concept (POC) as well.
Stage #5: Develop Your MVP
Now that everything is set and you finally know which direction you want to take, it’s time for your development team to start creating your MVP. The development time mostly depends on the number of features you are trying to implement.
To get the most out of your MVP, you can share the development progress with your target market base to get feedback. That way, you can optimize and update your development route.
Stage #6: Find Investors Who Can Fund Your Plan
Once you have a minimal product under development, you have something solid that you can attract investors with. When you are planning to attract investors, they will always look for the potential core pain points your product can solve.
If you have a great UVP pitch ready when showing your product off, there’s no doubt that you will be able to secure seed funding for further development.
Having connections in the community can also help you a great deal in these cases. When you are good at explaining why money should be spent on your product, you will have eager investors backing you up with additional funding in no time.
Stage #7: Test, Launch, And Market Your Product
Now that the product is ready, it’s time to test if all the functions are operating how you want them to and eliminate any bugs.
Then comes the publishing and continuous marketing of your product. This will attract more investors as well as an increased audience. It can also help you prove your product market fit.
When your product is constantly growing bigger and better in the market, you can take the IPO route easily and secure public investors in no time.
Key Benefits of IPO
Going IPO may seem lucrative initially. Still, there are quite a few benefits of going from MVP to IPO. Here are a few:
- Fundraising Becomes Easier
- You Gain Publicity And Credibility
- Your Overall Capital Cost Is Reduced
- You Can Use Company Stock As Means Of Payment
1. Fundraising Becomes Easier
Fundraising becomes a much simpler process when your company goes the IPO route. When you raise money through IPO, you can hire additional staff and acquire more capital for further investments, paving the way for more funds.
That way, your company’s growth trajectory changes dramatically within a short time.
2. You Gain Publicity And Credibility
When a company goes public, it gains a lot of media attention, serving as extra publicity. Also, for going public, companies have to go through extensive scrutiny to ensure that they are representing themselves properly.
So if your company is allowed to go public, it means your company is a credible one, and it translates into more market opportunity and funds.
3. Your Overall Cost Of Capital Is Reduced
Many companies must take loans and pay hefty interest to raise their capital. But when going for an IPO, your overall capital-gaining cost is significantly reduced, and the abundance of capital can cover any expenses you need.
4. You Can Use Company Stock As Means Of Payment
When your company goes for IPO, you can use the company stocks as payment. The reason? Public company stocks can be bought and sold anytime at the current stock market price.
That way, you can use the company’s market share as payment for any compensation or when you are acquiring other smaller businesses as a parent company.
Challenges of IPO
IPO comes with a few of it’s challenges as well. Since the process is a lengthy one that can shift the demographic of your entire company, here are the top 3 challenges of IPO.
1. The Process Can Be Expensive And Time-Consuming
Scaling MVP to IPO can be long-running and expensive since there are fees for different legal procedures and documentation that you will have to pay.
The choice of going IPO is entirely personal. Still, it’s an idea you should never avoid, even when it’s expensive.
2. You Must Disclose All Financial Details
When your company is going for IPO, you will always have to be 100% transparent about the financial status of the company at all times.
When you are revealing your financial insider information to the public, your company’s competitors can use this information to gain the upper hand on you in your target market.
3. Loss Of Control Might Take Place
When turning your company public, you will have to be very careful about the general opinion of your organization. Most of the time, a company pursuing an IPO has to be very careful of public opinion to keep the company afloat.
That way, the actual control of the company goes to the public instead of the owner.
To Wrap It All Up
IPO investment may feel risky initially, but the results are well worth the risks and the wait. A survey shows that funding pre-IPO stage products greatly maximizes profit returns.
Are you planning to create an awesome MVP that can be scaled to IPO in today’s competitive market? Our team at Impala Intech will always be ready to help. We’re just a single email away!
To offer the target audience the services of your product, you must have a product that can serve the customers by solving their issues. With a ready minimal product, you are ready to make an initial offering of your services.
You can test the viability and feasibility of your idea in the target market with an MVP. When the product has a demand, it is sure to make a good product offering to the public.
An MVP should be developed within the minimal time to reach the market so that it’s ready to be scaled to IPO.
A well-crafted MVP can take care of the problems the target users are looking to solve. If you have an exceptionally good MVP, it can lead to a great IPO.
The market may not find the product appealing, or the idea may not resonate with everyone. As a result, the MVP might fail and you may have to abandon the plans of scaling your MVP to IPO.