For sure – if you get to tens of millions of revenues in your first year.

You could. It just makes more sense to wait these days.

It can happen. Lotus 1-2-3 IPO’d in a little more than a year — after doing $50m in ’83 dollars its first year: Lotus 1-2-3 turns 30: Mitch Kapor on the Google before Google

In general, a few generations of tech companies back, IPOs for fast growing startups often would happen in 3–4 years. Apple + + Amazon + Adobe IPO’d in 3.5 years: What startups exited in less than 2 years, or had an IPO in first 2 years of its launch?

That’s in fact most likely why employee stock options have a 4 year vesting period. In the old days, the hottest startups would IPO by then, so a 4 year vesting schedule incented folks to stay through IPO.

But times have changed and the best companies now … wait. They wait for much higher valuations, in the billions — instead of hundreds of millions — when they IPO. When Amazon IPO’d, its market cap was $438m. If it were today instead, Amazon would have raised money from late stage investors rather than IPO after 3 years … waited another 3–4 years, and IPO’d at $4.5b-$10b instead.

In the old days, you couldn’t wait even if you wanted to because there wasn’t enough late stage capital. The IPO was your Series D round, so to speak. Amazon and Apple needed the capital 3 years in. Amazon raised $54m in its IPO. Today, that’s a Series C or even a healthy Series B round.

Today, there is 1000x more late-stage capital than back in those days — literally. Softbank Vision fund alone has $100 billion to invest in late stage start-ups.

So it makes more sense to wait — if you are doing well. You can escape the scrutiny of the public markets, and most importantly, run losses for longer. Once you go public, it’s hard to maintain huge losses. But private investors are OK with huge losses — as long as the growth far exceeds the losses.

This has worked out well in SaaS in particular. It’s allowed SaaS companies to wait to IPO until $150m-$200m+ in ARR, IPO at a $2b+ valuation, and burn more capital on the way to an IPO that the public markets would likely tolerate.

After IPO, you generally have to be on a clear path to profitability. But before that, you can pick your path with a relatively small number of shareholders and board members.

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