Introduction:
Any startup company goes through a similar challenge of finding product-market fit, improving its offering, and scaling its business from MVP to IPO. This can be a grueling process fraught with setbacks.
However, the pressure is even greater on companies that offer an equity stake in the MVP business to their early investors or employees. This is because they need to stay one step ahead of the competition and continue innovating until they achieve a dominant position in their niche.
Have you already decided to become an entrepreneur? Great move! Probably one of the best decisions that you could have made in your life. But, starting from scratch will be a tough decision to make. That’s why it is essential that you know what steps you have to take to start your business from MVP to IPO and reach success.
If you are also planning to start your entrepreneurial journey and scale your business from MVP to IPO, you need to go through the various startup development stages to achieve your goals:
1. Brainstorming idea:
Finding a good idea for IPO is not an easy task. It requires patience, discipline, and creativity. It might seem challenging from the beginning, but it truly isn’t. You just have to figure out your own passion, then ask yourself: “What problems do people face that I can solve?”
2. Market research and idea validation:
Whatever is your idea, you should test it to validate if it has potential in the market. Before sinking a lot of time or money, you should know the potential of your website business.
3. Hiring a reliable development partner:
As more and more businesses make the switch to mobile app development, it’s becoming increasingly necessary for small businesses to make sure they have the right development partner.
A mobile app development company can help your MVP business in many ways. They’ll take your idea to IPO and turn it into reality by developing a high-end, functional app that users can easily access from their phones or tablets.
4. Prototyping:
Prototyping is an important stage of every project to scale MVP to IPO. It is crucial for developing a new navigation concept, building a design concept, and documenting core features. Using a prototype for usability testing gives you enough time to make corrections to the design issues.
Often prototyping reveals new opportunities and confirms the optimal direction to take during development.
5. MVP development:
Once you have a prototype, it’s time not to move to the next stage – MVP development. Minimum Viable Product is a simplified version of an original concept that has the core functionalities needed to test product-market fit. It helps entrepreneurs check whether their idea of MVP to IPO is worth pursuing or not
By quickly and cheaply delivering the first draft of their product, MVP business prevents unnecessary expenses and risks associated with developing new features.
6. Funding:
It’s time to look for investors who are diverse in experience and have the right contacts to market your product before introducing it to larger players in the market, such as large chain stores like Walmart or Target, online merchants such as Amazon or eBay, or main street retailers such as Bed Bath and Beyond, Kohls or Macy’s.
7. Testing and launching:
You must realize the importance of testing and launching when you are about to launch your app. This is because it may otherwise lead to loss of reputation and a lot of time and money on your part. So, go ahead and test your app thoroughly and then get it launched in the market.
Related Reading – Best Innovative Mobile App Ideas for Startups in 2022
Should your business take the IPO route?
IPO is undoubtedly an important milestone for a company and it can be a very valuable experience for the startup when done properly. However, only a handful of companies have been able to go public.
It takes 5-7 years of effort from the time you decide to go public till the time you get listed on stock exchanges. So, before you embark on this journey, make sure that you’re ready.
Here are a few factors that you can consider for your startup ipo:
1. Predictable financial growth
2. Having the best executive team
3. Reports are always audit-ready
4. Having a strategic roadmap
5. Backup plan for delayed or no IPO
When it comes to raising additional funds for a business venture, there are many options available. Businesses or startups IPO can choose from various funding sources depending on the stage of their business and requirements.
One of the most popular options is going for an IPO, commonly known as Initial Public Offering. There are some key advantages and disadvantages that a business must consider before wondering how to start an IPO.
Key Benefits of IPO:
1. Fundraising:
An Initial Public Offering is the first time a company will be publicly traded, and it can change the trajectory of its growth. By raising money through an IPO, a company can have the funds to hire new employees, acquire new technology, reduce its debt, and more. An IPO helps transform the growth trajectory of a company.
2. Publicity and credibility:
In the investment world, an initial public offering, or IPO, is used as a means to gain more customers. After a company goes public on the stock market, it receives immense media attention and credibility.
Through intense scrutiny of publicly traded companies, potential new customers are exposed to current products sold by that company.
3. Reduced overall cost of capital:
An IPO is one-way companies can raise additional capital, which reduces the difficulty of getting additional funds over the long run.
4. Stock as means of payment:
As companies get larger, they often lose some of the benefits of working with a small business. The desire for stability, diversification, and liquidity can destroy the feeling of family and camaraderie.
With an IPO, employees can take part in purchasing shares of stock while owners maintain greater control over their company than they would with an acquisition.
Challenges of IPO:
1. Expensive and time-consuming process:
The choice to pursue an Initial Public Offering for your startup is one that is deeply personal. We don’t take it lightly either, especially when considering the challenges that come along with a successful IPO investment.
The costs associated with printing, legal fees, accounting fees, and other overhead expenses are significantly high and are to be paid regardless of whether or not an IPO is successful.
2. Disclosure of financial details
Revealing all business information is just one of the many challenges facing new companies that go public. The investor does not have all the details prior to investing in the company.
3. Potential loss of control:
When a startup decides to make an initial public offering, they have a high chance of losing control of their company. Once a company is public, they need to make sure that the public is happy in order to keep their business alive.
Therefore, it is important for founders to understand why IPO’s present challenges before making the decision so they can be better prepared and avoid the risks that are brought along with going public.
Related Reading – How to launch an app?
Which are the companies that went public?
1. Doordash:
The company, which has a 55 percent market share in the US, completed its IPO in early 2020 and its stock price surged 85 percent on the first day of trading. The company, valued at $6.1 billion, has developed proprietary technology for restaurants to use and make fast delivery a priority.
These efforts have helped DoorDash win over big chain restaurants including Taco Bell, KFC, Wendy’s, and Chipotle.
Related reading: Doordash Business Model and Revenue Sources
2. Airbnb:
It was a tough time for Airbnb as the world grappled with the worst-ever pandemic. Nonetheless, amid growing global headlines about the economic implications of a travel ban on long-distance flights, Airbnb’s IPO still hit the market in December 2020, and the stock price doubled on opening day.
Final Words:
It’s never possible to tell how your company will grow when you will take off, and what your business will be worth. IPO isn’t a perfect option but it offers more options than the full scaling of your business from MVP to IPO.
Building an MVP is no doubt a great way to start out and identify the potential of your product in the market before starting up with your own business. It’s also a good way to get investors on board as they can see your hard work and efforts in making your product stand out from the crowd.
We hope that this article is able to bring you a broad outline of the startup process, from MVP to IPO. There will always be some differences, depending on the industry and what stage your venture is at in the process. Regardless of industry, however, you need a strong MVP business (minimum viable product) before you can scale for a big IPO (initial public offering).
