February 14, 2012
An IPO like Facebook is essentially the white whale of liquidity events for a startup. But it is one outlier among many in a sea of companies trying to find exits.
A Sustainable Startup is built not with an exit in mind, but around the fundamentals of solving a problem. When it comes to exits, and in this case IPO’s, so much is dependent on what your startup is i.e. the specific space you play in and the stage you are at in your Sustainable Startup.
However, regardless of your space and stage there are three basic areas that will always impact your startups ability to move toward liquidity.
1.) Your Valuation – A large and prolific IPO will set the tone for what the sophisticated and broad market is going to value the future potential of an entire industry at. If the IPO is very successful then in general it will be a good time to attract new investors to your Sustainable Startup. The startup ecosystem (and especially industry verticals) are intrinsically linked, what’s good for one is good for all.
2.) Your Access to Capital – If the IPO is successful then in general it will be a good time to attract new investors to your Sustainable Startup. At the very least it should be a time for you to gain exposure in the investment community.
3.) Your Business Model – One of the more interesting facts about Facebook has been the healthy margins and EBITDA it has. What can you learn, adjust, and leverage from the data collection, advertising and payment transactions model they have that can be applied to your Sustainable Startup?