More and more FinTech companies and startups are flooding the market, but what’s the end goal? For many, it’s going public via an Initial Public Offering, e.g. “IPO.” While going public sounds like the ultimate dream for any startup, in reality it’s a long and arduous process that takes careful consideration and some serious skill when it comes to the communications involved with such a move.
FinTech companies are in an especially unique situation as their value seems to be diminishing. The Wall Street Journal recently reported that mutual funds, which once helped fuel the technology boom with their investments into “unicorns,” (startup companies whose valuations exceeded the value of $1 billion), are now cutting the value of their startup investments. So what does it mean for FinTech firms looking to issue an IPO? Private financing markets aren’t much different from public markets anymore, and they won’t shield companies from market turmoil. Ultimately, this makes strategic and effective communications – both pre- and post-IPO – that much more critical for businesses looking to succeed in the crowded FinTech bubble.
Communications with potential investors, the media and other centers of influence, can play a huge role in making it to the marketplace, and the market is currently more flooded, and less valued than ever before. According to a Silicon Valley Bank Startup Outlook report, 17 percent of entrepreneurs said their long-term goal is to IPO. The report surveyed both tech and life science startups, but the same trends can be seen in the FinTech space as well. Unfortunately for these ambitious startups, 2016 has been an incredibly difficult year for IPOs. There were no IPOs issued during the month of January in the U.S. in fact, something we haven’t seen since September 2011. While this may be driving a shift in perceptions for entrepreneurs, there are still plenty of businesses that are gunning for their IPO.
So what does the road to becoming a publicly traded company look like? The team at NYSE Big Stage breaks it down in the most simple of terms in the below infographic.
There’s one common denominator when it comes to working your way through the IPO process – communication. Any business, FinTech or otherwise, gunning for an IPO needs to seriously consider their communications strategy before even thinking about beginning the IPO process. Here are our expert tips for getting started and strategically working you way through the above phases in the hopes of successfully taking your company public.
Assess your Communications Capabilities
There’s no better time to make a determination of whether you can handle communications internally or if you need a strategic partner than in your preparations for an IPO. While your communications and marketing teams may have handled your PR, investor relations and other external communications successfully, going public includes new challenges and requires more time and expertise than your day-to-day communications strategy. Make sure your team can handle it, and if you’re not confident they’re up to the task, find an agency that can as soon as possible.
Map out your Timeline
An IPO is NOT a short process. It can take months or even years of preparation to get a company ready for public offering. As such, you need to start mapping out the timeline and developing the corresponding communications strategies well in advance.
We recommend breaking out the process into phases, or an offering timeline, to include the following items:
Pre-Filing Period (6-12 months)
Waiting Period (3-4 months)
Post-Filing Period (1 month)
While each of these phases includes incredibly technical and detailed events, developing three communications strategies based on the above will help you set yourself up for success.
Pre-Filing Period Communications
This is arguably the most important phase of an IPO. While the media, potential investors, analysts and regulators likely won’t hear about your business until just before your IPO, the development of strong communications in the pre-filing stage can lay the groundwork for your company’s success down the road.
The best time to put together your strategic communications plan is once you begin to internally discuss the potential for an IPO, especially if you don’t have an existing strategy in place. Before getting into all of the regulatory paperwork, and certainly before you start shopping your company around to investors, you need to determine what story you want to be telling. What is your value proposition? What makes you different? Who do you want to be telling the story as your company gains momentum in national and industry media? Who is your target audience? These considerations should be part of your communications plan, in general, and start to take on even more meaning if you think there is an IPO in your future.
An IPO is an invaluable branding opportunity for any FinTech firm, especially when the marketplace is so crowded. Make sure you’re taking advantage of the time that you have pre-IPO and you won’t be sorry.
Waiting Period Communications
The waiting period, as you can guess from its name, is fairly quiet when it comes to communications. During this time you’re in the middle of regulatory requirements, receiving and responding to SEC comments and filing required forms. This is a critical time in the traditional filing process for any IPO and will give your communications team time to develop their strategy for generating investor interest and ultimately for the public offering itself.
The most critical stage of the waiting period is the investor roadshow, when management travels from potential investor to potential investor, sharing the story of your firm. There are two critical communications points to consider here: have you laid a successful groundwork prior to the roadshow? Does your presentation reflect who you are and what your plan is for the future?
If your communications team did their job in the pre-filing phase, then these investors will already have you on their radar, before your first meeting. Hopefully, they’ll have an idea of what your company does, how you plan to tackle your IPO and what you expectations are for growth in the future because you’ve used the media and other centers of influence as a vehicle to communicate your messages to the public.
When it comes to your roadshow presentation, this is your one chance to effectively communicate how you fit into the crowded FinTech space and why institutional investors should choose YOU, when there are so many other businesses vying for an IPO. Make sure you take the necessary time to perfect this presentation so that it tells your story in an effective, succinct and engaging manner.
Post-Filing Period Communications
While strategic communication is critical in each phase of the IPO process, the post-filing period is often the most hectic and arguably the most important to the eventual success of your public offering. While your communications strategies should be designed to build momentum ahead of your IPO, this phase will focus heavily on honing in on your story with key media outlets. This is when analysts and the media will be discussing every nook and cranny of your company, with the hopes of providing the public with the most accurate data and outlook for your IPO.
Ahead of the post-filing period, make sure you have a designated spokesperson and that you are well-prepared with talking points and messaging for key questions that may come up in media interviews. Make sure that you are doing your best to control the story and work to find unique angles that will set your firm apart from your competitors.
Strategic and effective communications can make all the difference for businesses looking to grow, but especially for those eyeing an IPO. Taking the time to craft a strategy for each critical phase of the process is an invaluable exercise in setting your company up for success and setting yourselves apart in today’s crowded FinTech marketplace.
Now that you understand the art, value and importance of communications, do you have what it takes to build out winning IPO communications strategy? Subscribe to our blog to receive industry insights and tips for best practices in communications.
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