Let me tell you about what I learned since iWeb went public, in September 2004. First of all, to be involved on the stock market, your company needs to be a certain size, financially speaking, for this to work – this is usually your market cap (Market Cap: the value of your company ). In Canada, specifically on the TSX Venture, you must have a market cap of at least $10-20 Million, all the way up to $100M. Bigger than $100 Million, you can migrate to the senior markets, like the TSX, the NASDAQ, etc. iWeb was actually worth around $5M when we did an IPO – it was really early in our development, but we were growing so fast that it made sense. We peaked at around $47M of market cap in mid-2007, before the financial crisis, not bad, huh?
The other thing you must be careful with are all the fees involved with going public; there are lawyers, accountants, brokers, TSX fees, and more. What I learned, and thank goodness I did, is that you make a commitment to respect the fee and put all this in contact. The other very important thing is to be well surrounded.Find a mentor who has been through this before, or who has experience in a publicly traded company, someone you can trust! iWeb used a capital Shell, a CPC, which is sort of like a reverse take-over. The small private company acquires the publicly traded entity. The people who were involved with the shell company stuck around and helped us for a while, mentoring us through some of the important first steps of being public – this really makes it easier for your company to succeed.
For iWeb, going public gave us the means to buy our first Data center and all the infrastructure. We raised $750 000, but the net was $500 000 (after paying all the fees I mentioned). back then, it was a lot of money – our annual revenue was $1.3M. With this money, we would quickly generate over $2.9M of revenue – we all knew that we were working on something very special…
Next post I will talk about the challenges associated with growing revenue!