I'm in one of those unique spots where my start-up needs to raise $25-100 million to get off the ground. It's in a glamorous sector that Baidu, Google, Amazon, Tesla, and GM, for example, all have business units working on.
Venture capital/angel investment/seed investment is entirely insufficient. (A $500,000 seed investment barely keeps the proverbial lights on for a month. Even $10 million is light, though I wouldn't turn it down!) On the other hand, most IPO companies I assume have traction--revenue, pre-sales, etc. So tapping the public equity markets via traditional IPO is unlikely to succeed--I doubt an investment bank would take a 30-second call from us.
Do y'all think a direct listing might be a good approach to raising this money? Would a no-name start-up even be able to get on a stock exchange? Thoughts on OTC? I assume without some form of publicity shares would languish with minimal trading.
TLDR: There are a few ways, but would not recommend going public. Private markets are hot hot hot, there is a shit ton of dry powder, $25-50mm is frankly not a big round.
Have seen quite a few early stage companies go-public. We see this a lot in Canada as the TSX-V has a mechanism to encourage this. Interesting businesses in growing verticals, typically with decent revenue, about a year or less away from EBITDA. Most of these are absolutely languishing now. We call them "orphans" - no research coverage, no liquidity, no institutional shareholding, inadequate brand / market pull to bring in any of that. Effectively cut off from cost-effective public capital at the growth phase.
My hot take is a this is where a lot of the SPAC'd businesses will end up.
Stay private for now. There is a ton of private capital, you'll avoid the costs/requirements of being a public company, retain your focus on long-term strategy and growth (versus the quarterly view of a public company).
If I'm guessing right and you're in autotech, the private investor universe goes beyond VC. Depending on the vertical, everyone from OEMs to TSPs have private capital pools they're plugging into early / growth businesses. EVs/batteries take up the headlines but there is good interest in software and other verticals.
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