Why Startups Shouldn’t Try to Time the IPO Market: Insights from Ibotta’s CEO

As we approach the latter part of 2024, the IPO market remains relatively quiet despite investors’ hopes for a revival. Factors like high interest rates (even with a recent 50 basis points cut) and uncertainties surrounding the U.S. elections have kept many companies on the sidelines, waiting for more favorable market conditions.

Yet, a few companies have taken the plunge and gone public this year. One notable example is Ibotta, an enterprise rewards platform that powers loyalty programs for big-name clients like Walmart and Exxon. The company made its debut on the NYSE on April 18, 2024, with shares priced at $88, eventually opening at $117. While the stock has since settled at around $63, with a market cap of $1.7 billion, Ibotta’s CEO Bryan Leach has no regrets about the decision to go public.

The Timing Dilemma

In an interview with TechCrunch, Leach emphasized that trying to time the IPO market is a “huge mistake.” Going public requires months, if not years, of preparation, and predicting market conditions in advance is nearly impossible. “Who knows what the [Federal Reserve] will do?” Leach noted. He explained that while many financial advisors suggest waiting for the perfect time, no one can truly predict the best moment to go public. “At the end of the day, it’s not a destination, it’s a phase,” he added.

Many companies that were once expected to go public in 2022 and 2023 are still holding off. These businesses are sitting on lofty valuations earned during the boom years of 2021 and would likely face significant reductions if they were to go public today. The IPO market, which saw 310 deals in 2021, has since slowed dramatically. There were only 80 IPOs in 2022, 85 in 2023, and just 37 so far in 2024.

Stock Performance: Short-Term Fluctuations vs. Long-Term Value

Critics might argue that Ibotta’s stock losing nearly 50% of its value since the IPO indicates the company should have waited. However, Leach believes it’s too early to draw such conclusions. He pointed to Instacart, whose stock initially struggled post-IPO but has now recovered, reaching a 52-week high just one year later. Leach is optimistic that Ibotta will follow a similar trajectory, noting that the company is already benefiting from being publicly traded.

“We’re the largest tech IPO in Colorado history,” Leach said. “The stock has gone up and down, but from a company perspective, we’ve been pleasantly surprised by how much value we’ve gained from going public.”

The Benefits of Going Public

Beyond stock performance, Leach sees significant advantages to being a public company. One of the most notable benefits is the increased legitimacy it provides, particularly when securing large enterprise clients. “They trust us,” Leach said, referencing a recent partnership with Instacart. He explained that public companies offer potential partners transparency and confidence, something private companies often struggle to provide.

Being public also makes Ibotta a more attractive option for top talent. Leach highlighted that the company now offers stock options tied to public market valuations rather than private ones, which can fluctuate wildly. This provides employees with a clearer picture of their compensation and makes Ibotta a more stable and appealing place to work.

The Right Time to Go Public

Leach’s advice to other companies considering an IPO is simple: don’t try to time the market, but do ensure you’re prepared for the public spotlight. For Ibotta, the decision to go public wasn’t made overnight. In fact, the company had prepared to go public as early as 2021 during the SPAC and IPO frenzy, but Leach and his team decided to wait. At the time, Ibotta had just landed a major deal with Walmart to run a white-label rewards program, and Leach wanted to ensure the partnership was fully operational before entering the public market.

That patience paid off. By the time Ibotta went public in 2024, the company had six consecutive profitable quarters under its belt and a solid financial foundation. Leach believes other late-stage companies should focus on internal readiness rather than waiting for the “perfect” market conditions.

Looking Ahead: What’s Next for the IPO Market?

While many companies continue to wait, the IPO market won’t stay dormant forever. Interest rates are starting to come down, and rumors are swirling about companies hiring bankers to start the IPO process. By 2025, we could see a significant uptick in companies going public.

Leach’s experience with Ibotta offers a valuable lesson: going public isn’t about timing the market perfectly—it’s about ensuring your company is ready for the demands and opportunities that come with being publicly traded. Whether the stock rises or falls in the short term, the long-term value of transparency, legitimacy, and access to capital makes the decision worthwhile for many businesses.

The IPO market may be unpredictable, but being prepared is always in a company's control.