Co-founder and chief executive officer of AvidXchange, a leading provider of accounts payable and payment automation technology.
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Last year was a record year for IPOs—more than doubling the previous record set just one year earlier, as it was a unique “IPO Window” that many later-stage private companies that built proven business models took advantage of.
If your organization is considering joining the ranks, my advice is this: Don’t rush it. Durable, industry-leading companies that truly matter don’t get built overnight.
It took AvidXchange more than 20 years to become a publicly-traded company in October 2021. Patience, careful planning and execution paid off—all of which enabled us to draw more than $600 million to invest in our business and empowered us to beat analysts’ expectations since our IPO. While every company is unique and none can accurately predict the temperament of the market before filing an S-1, there are valuable lessons to help guide this arduous process.
Here are five lessons I learned along the way—shared in hopes that they will help aspiring public companies prepare for a possible IPO and better maximize the opportunities it brings.
1. Survive Before You Strive To Become Public
An initial public offering is an impressive milestone, but at its core, it’s simply a financing event that positions a company for the next step in its evolution. It’s that next step—executed under the public eye—that is needed to ensure readiness.
At AvidXchange, we started planning for the IPO after a significant financing round in 2015, which accelerated us into a new realm of possibility. That year, we were a $30 million in-revenue, privately held business aspiring to become a $100 million revenue software company.
To get there, we set metrics and addressed people, processes and products that would help us evolve and scale to better meet our customers’ needs. In 2021, we achieved an average of over 30% year-over-year growth for more than 10 consecutive years, along with over 7,000 middle-market customers standardizing on AvidXchange to automate their Accounts Payable (AP) and Payment processes. In addition, we had created a strong balance sheet, among the most important indicators of momentum and IPO readiness.
2. People Are Your Leverage
Research proves what every successful business owner knows: People pave the way to success.
Before going public, companies should evaluate their leadership and key employee bench strength and ensure they have the expertise needed to publicly operate and pursue future opportunities, such as acquisitions and strategic initiatives, in addition to continued product development and innovation.
In the 18 months before AvidXchange’s IPO, we strategically hired more than 20 senior leaders to ensure a public company-ready leadership team. We added to our C-suite, including a chief product officer and a chief information officer. This expanded our bench and our total headcount to more than 1,600 people.
3. Think Like A Customer
It’s easy to get distracted by the prospect of becoming a publicly traded company and become disconnected from customers. Organizations must stay true to their purpose and remain passionate about customers’ success throughout the IPO journey because the company’s success depends on it.
To do this, companies have to think like their customers. Are solutions being built that truly deliver what customers need? Do those solutions solve a big enough problem that customers will be willing to pay us to fix? Are they evolving along with customers’ business goals?
Before going public, AvidXchange focused on enhancing products to help our customers digitally transform their businesses while ensuring a robust customer base across middle-market companies. As a result, we secured more than 8,000 customers and earned the trust of more than 825,000 suppliers, processing more than 62 million transactions in 2021.
These efforts should also continue even after a company’s public debut.
4. Build An Intentional Ecosystem, With A Culture That Embraces Growth And Change
In the current business environment, riddled with job-hopping and tight competition for talent, culture is a powerful differentiation tool and a competitive advantage.
I urge business leaders to build a collaborative, engaged culture that embraces change. This can be achieved through open, honest two-way communication, dedicated development programs and by giving people purpose to why they should come to work every day. Ensure that all teams feel they are a valuable component of something bigger, including the company’s IPO.
At AvidXchange, we included our people in the IPO process, educating them on what to expect and how to operate as a public company. Together, at an all-hands meeting live-streamed nationwide, we rang the bell to mark our first trade and celebrated the hard work and contributions that helped us achieve the important milestone.
Companies must also carefully build an ecosystem to support a public evolution. In addition to internal teams and customers, board members, business advisors, bankers, lawyers, auditors and investors are all vital to IPOs and beyond. Prior to moving into our next phase as a public company, we added several new board members and advisors, expanding our leadership and strengthening our banking and payments expertise to help us expand our product offering, as well as position us to enter into new verticals and make bold decisions about our future of continued durable growth.
Ultimately, leaning on the expertise and experience of these individuals can help guide important decisions about if, and when, to move to the next phase, help assess risks and build an equity story, as well as help spearhead the highly regulated IPO process, all to ensure long-term performance.
5. Embrace The Ongoing Journey To Building A Healthy, Sustainable Business
At AvidXchange, we continue to evolve from the lessons we have learned throughout our IPO journey and are better prepared to embrace the opportunities strategic capital provides us in continuing to lead the industry in delivering innovative products to our middle-market customers.
Whether or not an IPO is the right move for your business, these best practices—along with being laser-focused with a dose of patience—will help you scale to your next summit of growth.
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