Are there quantifiable numbers that can say whether a start-up or a company is doing well and will have successful IPO or exit in the near future?
Ask HN: What are some indicators that a company will have an IPO or exit?
1–10 of 34 posts
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#2Businesses are pretty simple. It's about consistently growing revenue and healthy cash flow.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#3It is complex, but the rule of thumb is that you get to a point in which you have consistent and predictable revenue. The "magic" number for software companies in the US is around 100MM.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#4For an IPO, expect to see the company redoing the entire finance system - public companies have very strict reporting requirements that startups don't implement. Also, if they start withholding more information, there's a lot of things that you can't announce as a public company(or becoming one). Of course, that could be the opposite and the numbers are so bad they wont talk about them. One last thing is auditors could indicate either - due diligence in an acquisition, or prepping for an IPO.
In terms of raw numbers, there's not as clear a thing - I've been in companies that were acquired for doing really well, and others that might not have been able to pay payroll in a month.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#5Number of years since initial VC investment.
After 7-12 years in VCs will want to get their money out to pay out their LPs. Around this time they will start pressuring management to find a buyer or prepare for an IPO. Though this pressure depends a lot on the company's financial situation and how willing the VCs are to wait for an exit.
It's not the best indicator but it still is one.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#6All of the employees suddenly stay.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#7Background info: https://news.ycombinator.com/item?id=13688591
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#8Companies shopping the business, or going public almost always hire a CFO.
This is probably the top indicator IMHO.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#9Yes. When a company is 'operationally cash flow positive' which is to say they make enough money that not only does their bank account balance increase each quarter, but also their future spending to refresh their equipment and offices etc would not cause their cash balance to go below its current point. That company will have the opportunity to 'exit' (sell themselves to another company) or IPO.
To quote the former CFO of Blekko, "Every month we have a number of dollars in the bank, that number is bigger than last month, 'Bueno', its smaller than last month 'No Bueno.'"
Easy and quantifiable.
Also, if the company is losing money, and each month the bank balance goes down, divide the rate of loss by the balance, at the zero intercept the company will 'exit'.
Also easy and quantifiable.
Between those two 'easy' versions, lays the challenge. But for your question which included the caveat "... in the near future" only the easy ones apply.
Re: Ask HN: What are some indicators that a company will have an IPO or exit?
#10-3 years of audited financial records
-SOX compliance