Post-IPO, you need to manage more investors, and tweak growth plans
One strange effect is having competitors knocking on your door for partnerships
AS the startup ecosystem in South-East Asia matures, more companies will probably start looking at an initial public offering (IPO) as a viable growth strategy – and perhaps even as an exit for some founders.
But such a route brings about its own challenges, Flexiroam Ltd founder and managing director Jef Ong Kenn Tat told the Echelon Malaysia 2015 conference in Kuala Lumpur on Oct 1.
Being a listed company “means I need to manage the investor side as well – such as learning how to address investors, letting them know what’s going on in the company, and keeping them updated,” he said.
“Pressure from investors is always there, whether you are in an IPO or receiving funding from VCs (venture capitalists), because when people invest in your company, they expect returns,” he added.
Founded in 2011, Kuala Lumpur-based Flexiroam is a niche telecommunications player that offers budget international roaming services for outbound travellers from eight markets – Malaysia, Australia, Canada, Hong Kong, Indonesia, Singapore, the United Kingdom and the United States.
As part of its growth plan, it listed on the Australian Securities Exchange (ASX) on June 16, raising A$9.3 million (US$6.57 million) through its IPO, and is now valued at about A$36 million (US$25.44 million), according to Ong.
Ong was sharing his experience taking a startup to an IPO at Echelon Malaysia 2015, the local satellite edition of the main Echelon startup and investor conference organised annually by Singapore-headquartered regional startup blog e27.
“Being listed also meant that we had to change our growth strategy, and in Flexiroam’s case, I was meeting up with different investors [pre-IPO] to understand the various financial options available to raise capital,” he said.
“It was also to understand the grow path for us, and as we explored all these options, we also realised we needed local partners in order to expand in different countries.
“Finally, being a listed structure has offered us [an] incentive for us to grow,” he added.
The legalities of public listing
Ong pointed out the three key components of the IPO process – legalising, accounting, and fundraising – although he elaborated only on the first at Echelon Malaysia.
“The legal side of the IPO process is the prospectus that is drafted. Essentially, a prospectus is a term sheet that you draft for your investors, instead of investors drafting it for you.
“So we actually put in what we wanted them to know: Information about the company, how much we were trying to raise, and the company’s structure.
“If investors like it, they buy our shares,” he said.
Currently Flexiroam has about 40% of its listed shares. According to Ong, 80% of its group investors are Malaysian, while 75% of its individual investors are Australian.
“But the investors who are investing a lot are mostly Malaysians,” he said.
“The top 20 shareholders actually control 80% of the company. But the good thing about it is that my founder and I are still the major stakeholders of the company.
“So rest assured, we are always there to do well for the company,” he declared.
Now that its pockets are deeper, the company will be focused on execution and rolling out new products and services.
“A lot of time will be spent on execution as we constantly ask ourselves how we can roll this (new product) out faster, and if there is a company in the market that we can partner with,” said Ong.
“Or, whether we can acquire a startup which has that certain technology so we don’t have to build our product from scratch,” he added.
One strange effect of being a public-listed company is that Flexiroam can now connect with its competitors, according to Ong.
“It’s surprising, I know. Some competitors actually knock on our door, proposing potential collaborations to cross-sell our technologies and products with each other.
“This has opened up a new realm for us to grow – and it’s not about keeping it all to yourself, but about building wealth together with shareholders, potential investors, suppliers, customers, and competitors.
“It’s a win-win philosophy,” he added.
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