IPO Marketing

The Indian IPO market is thriving. In 2023, 57 companies went public, the second-highest in over a decade. The competition will intensify with 20+ late-stage startups expected to go public in the next 12 to 24 months.

These are certainly good signs for the ecosystem, but how does one crack the all-crucial marketing before the big day?

In this newsletter, we explore that!

Dive in to find out:

• What does an IPO campaign look like, and where does the marketing team fit?
• How is IPO marketing different from your current marketing?
• The importance of the founder's image.
• How to craft a compelling narrative?

Ingredients for a successful IPO campaign?

An IPO marketing campaign is a different beast, unlike anything a startup marketer/founder has done before. It involves shifting your focus from ‘What is my product’s USP vs. my competitors?’ to differentiating your company’s narrative from other listings, even if they are from different sectors.

Why, you ask? You might think, ‘I’ve come so far and built my brand; the financials are healthy; what more do public investors need?’

Sadly, not everyone may know you, especially if you're a B2B company. If your category isn’t well understood, you’ll face a big hurdle in building a narrative - not having comparable companies to show investors future returns. And that’s just the start.

So, what does it take to ace an IPO campaign?

1. Involve marketing early - at least 6-12 months before the IPO.

This allows marketing to contribute to the draft red herring prospectus (DRHP) and ensure the business section effectively communicates the company's story and value proposition.

Also, you can build your narrative more flexibly before filing your DRHP because strict regulations limit what you can say afterwards.

"I got involved 3 months before listing, but if I had to do it again, I'd get involved at least 9 to 12 months earlier," said Ankit Chaturvedi , VP of Marketing, RateGain .

2. Investors judge you differently from customers.

Investors will scrutinize your story, category, projections, and ability to generate returns. A well-crafted narrative highlighting your value proposition, using relevant comparables and integrating sector tailwinds/headwinds, is crucial.

For example, RateGain used the well-understood IT services sector to explain SaaS and its advantages—better operating leverage, lower scaling costs, and faster margin growth, as SaaS is not mature in Indian public markets. They used data from reports to show how a SaaS company can become like TCS or Wipro in the long run with better returns.

Equally importantly, be pragmatic, know your weaknesses, and prepare responses to objections investors can raise. The aim is not to be overly optimistic but to show understanding of the sector, competition, and gain investor trust.

"Initially, we said, 'Oh, we are unique and have no competitors,' which didn't attract investors. They want to know how you compare to their current investments and if you can generate X% returns," said Ankit.

3. The founder(s) are at the center of the campaign.

Public market investors are more conservative than private investors and judge founders differently. The founder's perceived trustworthiness, skin in the game, accountability, vision, and ability to lead a public company can make or break the IPO campaign's success.

"If you're going public in India, the money is asked on behalf of the founder(s)," said Ankit.

It's crucial to prepare founders for media interactions and investor meetings, as not all are media-savvy or comfortable with analysts/investors. Providing training and coaching can bridge this gap and help the founder transition from a startup CEO to a listed company CEO.

“The founders, Varun and Ghazal, led communication about the parent company. They understand media and are closely linked to Mamaearth. Their presence helped establish Honasa's identity as the company that owns not only Mamaearth but 5 other sub-brands,” said Tripti Pandey , AVP of Corporate Communication and Influencer Marketing, Honasa Consumer Ltd. (holding company for Mamaearth ).

4. Marketing must collaborate closely with legal after DRHP filing.

After the DRHP filing, strict regulations govern company communication. Legal validation is necessary for all communication—print, TV, digital, events, brochures, and even flyers. Be prepared for lawyers to scrutinize your website and remove unsubstantiated claims.

Even something as simple as the number and names of customers will be scrutinized. If you haven’t asked a customer formally to use their logo on your website, the legal team will ask you to remove it.

5. Be judicious in handling negative online chatter during the IPO process.

Online controversies could damage the brand's image and affect the listing. So, it's important to track social media for negative sentiments towards the company or its founders. In most cases, the ‘72-hour rule’ helps as social media crises usually blow over within three days as attention shifts elsewhere.

The smart thing to do is to closely monitor the situation for the first 12 hours of any crisis and consider if a public response will help or worsen it.

6. View the IPO marketing budget as an investment, not an expense.

The IPO marketing budget is usually finalized as a percentage of the issue size, generally ranging from 0.3% to 0.8%. This may seem significant, but effective IPO marketing is an investment that paves the way for a successful public listing and long-term growth as a public company attracting quality investors.

You can go deeper into the nuances of IPO marketing in our Founder’s Guide to Successful IPO Marketing Campaign.