What Makes a Successful IPO?

Investability clients raised a total of $352 million in 2021. Of this, $61 million was Initial Public Offers (IPO). Dannika Warburton, Principal of Investability, was interviewed by Paydirt Media on the factors she thinks contribute to a successful IPO. 

Following a record-breaking total of 2388 IPOs globally in 2021 the bar was lifted – however the unseen consequence of deal fatigue was rife. As of June 30, 2022 there has been a dramatic slowdown in global IPO activity. Only 630 IPO’s globally had been listed raising US$95.4b in proceeds, reflecting a decrease of 46% and 58% respectively from 2021 figure. This demonstrates the need to stand out and stand apart in in a space where it has become vital to have a compelling and unique story… with sizzle.

Defining your unique selling points, and then making sure you can deliver them in a convincing way, is a good place to start.

“If you can’t differentiate why someone should invest in you over somebody else, then it’s going to be a hard sell to get investors excited”, Dannika said.

Of course, playing in the success of recent listings was an element of “nowness”.

We saw Firebrick Pharma Limited (ASX:FRE) – an antiviral and antibacterial nasal spray float that hit the ASX during the peak of the pandemic – soar 165% on day 1. Similarly, battery metals companies are riding the wave of interest in electrification and decarbonisation as we transition towards a carbon neutral future. Indeed, out of the top preforming mining floats last year, 40% of them were lithium companies or had lithium projects.

This is not to say that companies in sectors that are not “in favour” won’t do well, but relevance certainly provides a nice tailwind.

 Another key to the success of new listings is ensuring that your new shareholders and investors remain engaged with your company.

 A low cost and effective way to engage investors is via digital marketing and compelling contact. As digital marketers, we only have an average of 1.3 seconds to gain audience attention – so your opening line needs to be captivating.

“This fast-paced environment is evolving our expectations of what we consume in News Feed—we want to be drawn in by content native to its environment. This is becoming particularly important for video. From the initial impression to a complete view, we’ve seen that every moment of video drives value.” – Facebook IQ

Studies conducted by the ASX in 2020 show that investors are increasingly finding their investment ideas online, and using channels like Twitter and Linkedin to conduct research; with 18% using social media as an information source, and 41% preferring YouTube as a source for investor education.

Companies that have a strong digital presence prior to listing have a competitive advantage in that they already have an audience that can support the stock in the secondary market. Social media channels, like LinkedIn, Twitter and YouTube, can provide colour outside what is contained without regulatory announcements. Additionally, these channels provide a direct line to investors who can provide instant feedback that can be fed back into the marketing strategy. As coverage by traditional media dwindles, we believe neglecting the “new wave” of digital investor marketing channels presents a communications risk.

Now you can never fully predict the outcome of an IPO, but combining these three things – a compelling story, relevance, and engagement strategy – will certainly place you in good stead for a successful IPO.

Needing assistance with your IPO strategy? Read more about Investability’s Pre-IPO and IPO Marketing services to find out how we can help.