Adapting The IPO Roadmap For Today’s Market

By Carl Niedbala 

The IPO roadmap used to be clearly paved. It typically involved your team charging through a few successful funding rounds to eventually ring the opening day bell. The path is different now — namely, slower and more arduous.

Investors are highly selective. Who’s to blame them, with the IPO market left craving pre-pandemic levels? Neither rising interest rates nor a fresh change of command in the U.S. government help fortify confidence in our economy, either.

Still, as the path to IPO shifts, leaders of high-growth companies must learn the new route and rewrite their traditional IPO playbook to prioritize the following.

Get a handle on cybersecurity

The “what ifs” are countless when it comes to the dangers lurking in a digital environment. This landscape is uncharted territory, after all. And investors know this, which is one significant factor impacting the new rules of the IPO game.

To make matters worse, IBM reports the global average cost of a data breach in 2024 was $4.88 million, a 10% increase over the previous year and the highest total ever. Third-party disruptions were another major takeaway from 2024, with the CrowdStrike outage still fresh.

Plus, cybersecurity risks and management liability now intersect. With business email compromise attacks increasing daily and AI-powered phishing becoming more sophisticated, executives face heightened pressure to strengthen cybersecurity defenses. Investors and stakeholders may hold executives accountable for failing to protect company assets adequately.

In short, the path to IPO is now paved with strong cybersecurity measures and an insurance safety net consisting of cyber liability and directors and officers coverage. Now is the time for organizations to assess their current cybersecurity resilience and make changes accordingly. Also, they must evaluate the personal liability risk faced by directors and officers. Stay protected and remain posed for the future.

Prepare for late-stage fundraising

It’s now common for companies to stay private longer, fueling growth and achieving significant scale by raising multiple rounds of funding (Series A, B, C, D, etc.) before going public. This extended private market stay is trending for several reasons.

For starters, delayed IPOs motivated investors in 2020 through 2022 to widen their investment scope and diversify their portfolios by backing more private late-stage companies. With such an availability of private capital from venture capitalist firms, private equity funds and other investment vehicles, many companies weren’t as compelled to go public.

Unsurprisingly, venture capital funding for U.S. and Canadian startups at the seed to growth stage totaled $61.9 billion in Q4 2024, bouncing back from a 2023 lull. More of this private capital is flowing into late-stage companies than seed or early-stage companies.

Despite the added mileage, this strategy worked for many companies, such as Databricks and SpaceX, which have chosen additional funding rounds in the private sector for now — but have kept an IPO in their sights.

To sum up, market dominance is attractive to institutional investors, and late-stage companies can achieve that with all the capital at their fingertips nowadays. This stage of the game was once reserved for newly public companies, but it’s now the final leg of the pre-IPO path.

That said, valuations are increasing from the low points of 2023. Startups with increased valuations are in the bullpen for 2025 IPOs. They could include Chime, GrubMarket and Arctic Wolf (among others) — signaling the importance of market dominance.

Set a course for sustainable growth

Lastly, leaders with IPO goals must plan for sustainable growth by sharpening their risk management. We’re not only talking about spreading an insurance safety net, although that is a large part of mitigating vulnerabilities.

True risk mitigation requires a holistic approach that involves creating a strong cybersecurity culture and prioritizing environmental, social and governance factors. Leaders must proactively assess (and address) risk in all areas of business and build a strong compliance framework. Risk management extends far and wide, shifting with a company’s ever-changing needs — and the payoff can be massive.

Venture-backed companies are increasingly attractive to investors due to their robust risk management frameworks and strong valuations. These companies often possess several advantages for public market insurance.

• Established D&O insurance: Many have existing D&O insurance towers designed to protect both the company and its board members (including investor representatives).
• Robust cybersecurity posture: They typically meet stringent cybersecurity requirements and conduct regular employee training, and true leaders here will also have strong AI data governance frameworks ready to scale from private to public. This proactive approach demonstrates a commitment to security and can facilitate a smoother transition to public market insurance coverage.

We must acknowledge that the IPO roadmap has been redefined. Leaders need to be ready to fight cybercriminals, opt for a longer runway, and intensify risk management strategies to achieve IPO success in the future.

Carl Niedbala is the COO and co-founder of Founder Shield, to which he brings a unique perspective, having previously navigated the venture ecosystem from multiple angles. His experience spans venture due diligence, portfolio company growth strategies and M&A negotiations, giving him a deep understanding of company success and failure. Niedbala is energized by the possibility of rethinking the way the insurance industry works through technology, best-in-class customer service, and cutting-edge marketing and branding. In 2021, Founder Shield joined The Baldwin Group, where Niedbala is now leading digital product strategy and innovation.