What advice would you give companies that consider doing an IPO?

What advice would you give companies that consider doing an IPO? That's a question I have gotten quite a few times following the successful listing of Penneo A/S at Nasdaq First North:

1.      Is your company mature enough? There is a huge risk of disappointing the market if you list a startup that is not properly de-risked. For IT-companies this is typically about securing product-market-fit. For biotech-companies it’s mainly the technical risk of failure you need to de-risk (via very strong preclinical- or even clinical data). Both takes time and money, and that’s why you would normally not list your company until you have secured significant funding from other sources.

2.      Do you have the right financial backers? A very important part Of the prospectus is where you disclose which investors that have already committed to participate in the IPO. In the case of Penneo we were so lucky to have Michael Moesgaard Andersen as investor who joined just before the IPO, and we managed to get pre-commitment from two well-respected investment funds (BankInvest and Fundamental Invest). This is essential and gave Penneo the needed credibility to raise the remaining funds from other (smaller) investors.

3.      Do you communicate realistic ambitions? Nasdaq First North is full of startups that have not lived up to their own goals. This is a result of getting listed when they were not mature enough (see point 1) and/or to have set unrealistic ambitions. Remember that the IPO is only the absolute first step in the journey as a publicly listed company. Instead you should set realistic ambitions, which you can achieve.

Nicolaj