Ask HN: What are some indicators that a company will have an IPO or exit?

There are signs a startup is doing well (e.g., growth), signs that an exit may be necessary (e.g., capital requirements beyond another VC round), signs an exit may be desired, signs a company is ready for an IPO, signs a company is preparing for an exit, signs that exit will be "successful", etc.

You'd have to chain all those together to answer your question as posed.

Generally, look for $100M+ revs, strong growth, institutional investors, and a reasonably-new CFO with a track record in sales/IPOs.

Let's assume you're meaning an exit with a high multiple on returns, rather than an acquihire. In this case there are 2 models:

1) Game changing technology. These are very hard to measure, especially from the outside. You have to ask yourself, "Is this technology for real?" and "Could a large company monetize this?" This is what's happening in the autonomous car market. Let's step aside from this.

2) Companies that are growing well and fast on their own. In this case there are 3 metrics that matter: Revenue, Revenue Growth (new business minus churn) and Margins. Revenue is the base for valuation, and Growth and Margins determines the multiple. A weak rule of thumb that answers your question is that once a SaaS business hits 50mm in ARR, Growth Plus Margins should equal 50%. (It's ok to lose 10% of revenue in margins if you're growing 50% per year. If you're only growing 20% per year, you should have 30% profitability.) If it has this it's trending towards a positive exit.

Three caveats:

1) In case 2, if the company has external venture money, they are more likely to exit. (The VC funds need to return money to investors) If they are self-funded, they can stay private much longer.

2) Very few companies pull off the high multiple exit or IPO. It is hard to maintain growth, and hard to eventually turn a profit when you are growing fast.

3) There are a small subset of VC firms and specific VC partners with disproportionately outsized success. In the absence of other information, an investment by them is a good signal. (But smart money won't help a bad business)

Profitability. IPOs for money-losers went out in the first dot-com boom.

The scale of the business has to be reasonably large. Market cap in at least 8 figures.

I have been thinking about the GitLab IPO for a while now. GitLab is not in Canada and it might be years before they IPO, but one thing I dislike is the CSA's position that is more strict than SEC: https://www.theglobeandmail.com/report-on-business/social-me...

I've been with two companies that have IPO'd recently - Twilio and Okta - but nothing here reflects those organizations.

If a company is heading towards an IPO, they MUST already have a CFO in place, probably 3-5 years in advance. While there are financial systems required, there are practices, reports, etc etc that require day after day, month after month, and quarter after quarter monitoring. It's not something that can just be "cleaned up" at the last minute.

Profitability is not a hard requirement but certainly helps.

The "magic number" used to be $100MM ARR but that doesn't appear to be the case anymore. I'd wager this is in part because of the increased private/VC valuations the last few years.

Strong growth is good. Strong growth among the more profitable product lines is even better. Margins should be high, potentially increasing as the cost of delivering the product goes down. If the team can put $X into Sales and Marketing and get 3-5X revenue out, that's a good sign.

If you can determine LTV, CAC, and churn, those are GREAT indicators but unless you're senior management, odds are you won't see those.

Regardless, it is NOT something you can bet on because even if it does happen, it can be YEARS down the line and if you're an insider, there are complex rules on when you can do or say what.