Fintech or financial technology firms are trending today. Most fintechs are doing well, which is why many of them are planning to go public with an IPO (Initial Public Offering). When should a fintech go public? Read on to know the answer to this question.
Cancelled IPOs
A leading Fintech startup was supposed to go public this year. It seems that this plan is dropped. Another digital bank from UK, was also supposed to go public, but they have shelved the plan. The reason for this is the economic situation prevalent in countries across the world. The downturn in the economy due to the Ukraine war has led to IPOs being cancelled.
Companies want the ideal time for their IPO to hit the market. The IPO happens once and every company wants to capitalize on it. The wrong timing can hurt the market potential of the company. This is why the timing plays a very important role in IPOs especially for fintech companies.
When the market situation is uncertain, it is definitely not the time to go public. When the economy is stable and the markets on the upturn, then the time is the right. According to experts, there are costs involved in going public. Once a company goes public, there are ongoing costs related to compliance, disclosure, and reporting.
A public company would be subject to stringent scrutiny by investors and regulators. This calls for a strong communication strategy to be put in place. It is important to introspect on the reason for going public.
Some companies want to go public to give an exit strategy for early investors. Instead of an IPO, a private sale is better in this scenario. If the aim is to get capital, then debt financing is an alternative to consider.
When you go public, your financial processes need to be robust and also scalable. Many firms that have postponed their IPO are now realizing that they were actually not ready to go public. The economic downturn has helped them to re-evaluate the situation.
To sum up the views of experts:
- The reason for going public must be understand and properly evaluated.
- An assessment is needed to ensure all the core requirements for going public are met.
- Once a company goes public, they need to increase their standards to ensure compliance.
- They also should review where they want to go public (country).
- Before even going public, the company needs to start functioning as though they are a public company.
The article has been published by the editorial board of the Fintek Diary. Happy Reading. For more information please visit www.fintekdiary.com
