From start-up to IPO, and beyond

The journey to becoming a publicly listed company is often portrayed as a singular path, yet the reality is far more nuanced. For fintech firms, the decision to go public is shaped by unique business models, market conditions, and strategic goals.

A recent discussion held at Fintech Connect in London shed light on the diverse approaches companies can take toward an IPO, revealing both challenges and opportunities along the way.

The panel was chaired by Neil Shah, Director of Technology at the London Stock Exchange Group (LSEG); his panellists – Jon Prideaux, former CEO of BOKU, and Lisa Picardo, chief business officer at PensionBee.

BOKU navigated the traditional venture capital route, leveraging Silicon Valley expertise before opting for a London listing. PensionBee on the other hand, followed a less conventional path, bypassing institutional funding to maintain founder control and listing early on the UK premium market. Despite their differences, both businesses underscored the importance of balancing ambition, investor relations, and customer trust to achieve sustainable growth.

The road to IPO

The path to an initial public offering (IPO) often reflects a company’s broader philosophy on growth and control. For BOKU, the journey was built on the foundation of venture capital. Over several years, the company secured funding from prominent investors, who provided both capital and strategic guidance.

However, this approach also brought its own challenges, including managing multiple share classes and balancing the varied interests of investors. Ultimately, listing on the AIM market offered a way to streamline the company’s capital structure and unlock new funding opportunities while maintaining its vision for long-term growth.

In contrast, PensionBee took a markedly different approach. From the outset, the founders prioritised retaining control, relying on angel investors and smaller funding rounds rather than institutional backing. This strategy allowed them to preserve decision-making power and avoid the often restrictive terms associated with venture capital.

Despite having lower revenues at the time of its listing, the company pursued an early IPO on the UK premium market, a move that aligned with its ambitions to build trust and credibility in a highly regulated industry.

Benefits of going public

The decision to go public is not just about raising capital. One of the key takeaways from the panel discussion was about what being a public company enables. For BOKU, the IPO marked a turning point in its operational capabilities. Moving from a complex venture-backed structure to a single class of shares brought clarity to its governance, while the transparency required of public companies introduced greater financial discipline.

Public listing also provided easier access to capital markets, allowing the company to raise funds swiftly to support acquisitions and strategic growth initiatives. This newfound efficiency enabled the firm to scale globally while maintaining its focus on innovation.

For PensionBee, the benefits were more customer-facing. Operating in a sector where trust and credibility are paramount, going public offered a level of legitimacy that was otherwise hard to achieve. Being a listed company on the UK premium market signalled stability and transparency to potential customers, strengthening its brand and simplifying the often-challenging process of customer acquisition. For a direct-to-consumer business, this trust factor became a crucial differentiator in building long-term relationships with its clients.

The challenges of public markets

While the benefits of going public are significant, they come with their own set of challenges. One of the most prominent hurdles is the heightened scrutiny and demand for predictability that public markets impose. The panellists noted that form some fintech firms, the transition requires a cultural shift—adapting to the rigorous reporting schedules and the expectation of delivering consistent, incremental results.

BOKU’s former CEO noted investors in public markets often value stability over surprises, even positive ones, making it essential for companies to carefully manage expectations and avoid deviations from forecasted performance.

Another challenge lies in the psychological adjustment to daily fluctuations in share price. Navigating this aspect of public life often involves maintaining a long-term focus and resisting the temptation to overreact to short-term market movements. Both panellists emphasised the importance of prioritising operational goals and customer satisfaction, trusting that investor confidence would follow.

Additionally, public listing may not be suitable for all business models. One panellist noted that without a predictable revenue stream or those unable to articulate their growth trajectory effectively may struggle to gain investor confidence. For example, the panellist highlighted how its recurring revenue model and high customer retention rates provided the predictability needed to thrive in public markets. Without such characteristics, the challenges of going public could outweigh the benefits.

Strategic global expansion

For both fintech firms, the IPO was not just a financial milestone but a stepping stone to international growth. BOKU’s Prideau, who oversaw the company as it expanded to operate in over 70 countries, emphasised the importance of aligning global expansion with its customer base.

By partnering with large multinational clients, BOKU leveraged customer-led growth to establish a presence in new markets organically. This approach minimised the risks associated with entering unfamiliar territories and allowed the company to scale its operations efficiently across diverse geographies.

PensionBee, on the other hand, expanded in a more calculated and deliberate way, with the US market now its clear target. Operating in a highly regulated industry, Picardo noted the company saw its entry into the world’s largest market as a natural progression of its ambitions. The decision to expand westward was informed by the universal nature of the problems its services solve, such as simplifying complex financial arrangements for consumers.

Both firms highlighted the importance of timing and readiness in pursuing international opportunities. While one company’s strategy was grounded in global partnerships and operational adaptability, the other relied on a deep understanding of customer behaviour and regulatory requirements. These differing approaches illustrate that successful global expansion is not about following a single formula but about tailoring strategies to fit the unique strengths and goals of the business.

If you’d like to discover more information on similar topics, check out Fintech Connect’s full agenda.

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