These days there are few opportunities to take a private company public. However, there is no time like the present to prepare yourself for the day – probably in a few years – when the IPO market will get started again.
If you are leading a startup, there is a good chance you have a long-term vision for building a company that scales enough to make the world a better place. Your odds of doing that are much better if you can remain as CEO after the company goes public.
Sadly, many CEOs can grow their company to the verge of an IPO but cannot run it well afterwards. Indeed, according to The Founder’s Dilemmas some 60 percent of founders do not remain CEOs following their company’s Series D investment round.
I recently spoke with an entrepreneur who has overcome that common hurdle. The CEO in question is Shlomi Ben Haim, who runs “liquid software” provider JFrog. Despite the slowing economy, JFrog – which went public in 2020 — has been growing surprisingly quickly – at 34 percent in the most recent quarter.
Here are the three strategies that have contributed to his success and that you should consider following if you aspire to lead your company to an IPO and beyond. In my book, Scaling Your Startup, I called this fourth stage of scaling Running the Marathon.
1. Partner with a strategist CFO.
When a startup begins raising capital from venture investors, it needs a chief financial officer (CFO) with experience taking a company public and communicating with investors after the IPO. While every CEO has different skills and areas where they need help, I think many of them are better off if they can collaborate with a CFO who can do that and be a business strategist.
Such a partnership is contributing to JFrog’s success. Ben Haim, a visionary CEO, and Jacob Shulman, a risk-managing CFO work effectively to strike the right balance between ambition and realism. Ben Haim told me that he is happy that Shulman — who joined JFrog as CFO in May 2018 after serving as CFO of Mellanox Technologies — is his “partner in crime.”
Ben Haim hired Shulman to collaborate on business strategy. “I was not looking for an accountant,” says Ben Haim. “I wanted someone who could read and understand the data and have credibility. I needed a partner to read the market waters, listen to analysts and peers, and help us take a controlled approach to risk.”
2. Maintain a long-term focus.
To scale a company to the point where it can go public, a leader must balance the short- and long-term. Public company CEOs must report to investors every quarter and that makes it hard to resist the temptation to focus too much on those reports.
What’s more, these days many CEOs are scrambling to deal with short-term pressures brought on by high inflation and rising interest rates. Current macroeconomic headwinds are not deterring Ben Haim. “I have experience with rapidly changing headwinds and tailwinds. I started two companies during such times — one in 2001 and JFrog in 2008 — three months before a global crisis in both cases,” he told me.
This experience focuses him on aiming at long-term goals while preserving cash. “I can identify [the beginning of an economic downturn] and did not wait for the analysts to tell the world. With $500 million in cash, we have built in resiliency. We know the market will recover,” he said.
3. Stay ahead of potential disruptors.
A founder who is running a public company must invest in the future. Ben Haim and Shulman have collaborated to keep JFrog stay ahead of potential disruptors. As Ben Haim said, “I could see the evolution years ahead of time. Every company was going to be a DevOps company. Security would be a task that developers would have to face. The next stage was IoT and connected devices.”
To realize his vision, JFrog made acquisitions. For example, in September 2021, it acquired Upswift, a connected-device management software provider, and in June 2021 JFrog acquired Vdoo, a product security firm, for about $300 million, according to Calcalist.
Ben Haim credits Shulman with helping with M&A strategies. As Shulman told me, “I am an agent of change and controlled risk. We discussed the IoT business model and set milestones we needed to achieve. [We addressed questions such as] ‘How much should we invest? How could we achieve a return on investment?'”
Follow these three strategies and you can boost your odds of taking your company public and continuing to lead it to higher ground.
By: Peter Cohan, Founder, Peter S. Cohan & Associates
When you first start your business, your own home may well be all the space you need. But every new business needs to grow. So sooner or later, you’ll find yourself needing a bit more room to work in. Renting or buying your own offices is not always possible at his point – it’s expensive and, for many small businesses, excessive. So what is the solution?
Well, startups can benefit from coworking spaces, so this is one option you may want to consider. And it’s not just because they’re budget-friendly either; there are other ways in which coworking spaces can be helpful to a business that’s just starting out.
What are coworking spaces?
Simply put, a coworking place is a temporary office space you share with other businesses. You can rent a simple desk for yourself, a whole office for all your employees, or a meeting room where you can get together with potential clients. Not only is the space fully furnished, but it also comes with various features such as high-speed Wi-Fi, access to printers, comfortable common spaces, secure lockers, complimentary snacks, and more – depending on the space you choose.
Ways in which startups can benefit from coworking spaces
Although any business can take advantage of coworking spaces, they are especially beneficial for startups because of their flexibility. When you choose coworking spaces over traditional offices, you can:
Save money on rent and utilities
When you’re just starting your business, every penny counts. It is, therefore, essential to find affordable and cost-effective solutions for everything, including office space. For this reason, most small businesses start in a garage or a kitchen. But a time will come when your business outgrows your home, and you need to start thinking about setting up an office.
However, traditional office space is costly to rent and often requires signing a contract for at least a few months, if not longer. So, if you’re looking to get all the advantages of an office without paying an exorbitant price, coworking spaces are the perfect solution. With flexible and affordable pricing plans, they can save you thousands of dollars in rent. Furthermore, you will not have to worry about utilities – electricity, Wi-Fi, water, and cleaning are all included in the price!
Get a great working space for as long as you need
It is an unfortunate truth that starting a business is always a risky endeavor. In the beginning, it is difficult to predict how much profit you’ll make and how much you’ll have to spend on office space. Your situation can change quite drastically quite quickly, so it’s best to have a flexible solution rather than a lengthy rental contract. That’s exactly what coworking spaces provide – you can rent them by the day, week, or month and cancel them on short notice.
Become more productive
If your startup practices work from home, you may find that your productivity is not where it should be. When this happens, it’s good to switch things up and start working from an actual office. Coworking spaces are a convenient and affordable way to do this. You can get your work-life balance back without committing to an office job.
Use the opportunity to network
Coworking spaces are shared among businesses. Even if you rent an entire office for yourself and your team, you’ll still be running into other people in common areas. This is an excellent opportunity to meet business owners like yourself, make connections in your industry, and expand your network.
Some coworking spaces even organize events specifically for this purpose. So don’t miss your chance – who knows whom you might meet through shared office spaces! You may find new business partners, talented employees, or specialists you didn’t even realize you needed.
Learn from other startups and small businesses
Startups and small businesses are the ones that most often rely on coworking spaces, so you’ll probably meet a lot of people just like you. The experts at WP Full Care, who started out just like this, say that that’s one of the best things about coworking spaces – they provide you with a support network. You can talk to others who are facing the same issues and working toward the same goals as you are. So don’t hesitate to initiate a conversation.
Both you and those around you stand to benefit from friendships made in coworking spaces. You can swap experiences and learn from each other about what does and doesn’t work in the world of startups.
What to look for in coworking spaces
Although startups can benefit from coworking spaces in many ways, you’ll only really get the most out of one if you choose well. Much like regular offices, coworking spaces come in many shapes and forms. It’s crucial to find one that fits your needs.
The first thing to look at is the location – there’s no point renting an office across town. Then, take a look at the space on offer – how much room are you getting, and what does it look like? Next, you’ll want to check out the amenities – what is included in the fee?
Finally, but no less importantly, you need to learn the price. It’s best to compare a few options (including the cost of renting traditional office space) because this will help you make the best possible decision. And remember: price on its own doesn’t mean much – take a good look at what you’re getting for the rate you’re paying. You should be aiming for the most cost-effective solution, which is not always the same as the cheapest option.
Kintsugi’s voice biomarker technology works to detect signs of clinical depression and anxiety from short clips of speech in any language. (Muqamba/GettyImages)
Startup Kintsugi is using artificial intelligence to build smarter mental health care by helping clinicians detect depression and anxiety in patients more quickly using just their voices.
The company banked $20 million in series A funding to build out its staff, including its marketing, business and operations teams, according to Grace Chang, founder and CEO of Kintsugi.The funding round was led by New York-based global venture capital and private equity firm Insight Partners. Acrew Capital, Darling Ventures, Citta Capital, Side Door Ventures, Primetime Partners, IT Farm, AngelList Fund and Alpha Edison also participated in the round. The company has raised $28 million since its inception in 2019.
Chang, a technologist, and machine learning scientist Rima Seiilova-Olson founded Kintsugi in 2019. The company uses AI technology to close mental health gaps. The company developed an advanced machine learning tool that can score people for signs of mental health conditions using short clips of their voices while anonymizing identifiable information.
It is already being adopted by healthcare organizations and is on track to be used on millions of patient phone calls by the end of 2022.
According to the Centers for Disease Control and Prevention, the percentage of adults with recent symptoms of an anxiety or depressive disorder increased to 41.5% from 36.4% between August 2020 and February 2021.
Mental health conditions are not only on the rise, they are only identified by doctors 47.3% of the time and noted 33.6% of the time, according to a global Lancet study. “That means a good 60% to 70% of people really just fall through the cracks,” Chang said.
Kintsugi developed KiVA, its voice biomarker API platform for enterprise, as a clinical decision support tool providing practitioners with real-time scoring on patients’ mental health by integrating seamlessly with clinical call centers, telehealth platforms and remote patient monitoring apps. The company says its technology detects voice biomarkers for signs of depression and anxiety based on how patients speak—not natural language processing—to provide machine learning models that are uniquely language-agnostic.
The company aims to work with payers, providers, health systems, pharmaceutical companies and small- and medium-sized enterprises. “What our technology does is, today, we’re integrated into Fortune 500 companies like through the largest care management call center.
What we do is we help augment general practitioners and nurses to be able to identify signs of clinical depression and anxiety so that we can get patients to the right level of care at the time of need during the pandemic,” Chang said. “We saw an explosion of all different types of mental health solutions from coaching to digital health apps to therapies to different types of treatments.”
She continued, “With the particular partners that we’ve been working with, they’re all integrated behavioral health solutions where they have access to all of these different resources, but they have a really hard time at the moment trying to understand who needs what, when. We have a technology that helps give that sort of visibility to a generalist who typically doesn’t pick that up.”
Chang says Kintsugi’s ultimate aim is to develop objective, quantifiable and accurate measurements to raise the parity of mental health to that of physical health. “Our Computational Care thesis looks for special teams with empathy and technical wizardry on use cases that matter. Kintsugi sits squarely at that intersection by helping partners optimize when and how patients receive the right care,” said Scott Barclay, managing director at Insight Partners, in a statement.
Kintsugi also is working with the scientific and healthcare communities to provide high-fidelity mental health population insights from its uniquely large global data set. The company says its data set is 110 times larger than the next largest and can better detect and understand signs of mental health conditions across demographics, geographies, social determinants of health and languages.
Current clinical partnerships include physicians from Children’s Hospital Colorado and the Pediatric Institute of Discovery and Innovation at Joe DiMaggio Children’s Hospital. Growth xPartners, based in Japan, has also become a Kintsugi collaboration partner.
Experts agree depression and anxiety have been difficult to track with traditional paper surveys, PHQ-9 and GAD-7, which measure the severity of depression and anxiety through a self-guided questionnaire. “I’m really excited to see if we can change the paradigm of mental health and give it some measurement to treat mental health with the same parity as physical health.
Many of the clinicians that we are now working with, they see that vision that if there is measurement there could be parity,” Chang said. “I think that’s exciting for this field that has been kind of the redheaded stepchild of the industry because there just hasn’t been any way to measure if somebody is improving or not.”
“The pandemic has helped bring to light the need for new tools and methods for identifying mental health concerns,” said Fredric Reyelts, M.D., medical director for innovation at Mercy Health, in a statement.
“Capturing this information only annually comes up far too short in evaluating true ongoing mental wellness. Tools that are fluid and can be utilized in various settings will allow for earlier detection and improved patient care,” Reyelts said.
Shares of Signify Health skyrocketed Monday after the Wall Street Journal reported e-commerce giant Amazon is reportedly looking into acquiring the at-home health services provider, joining a crop of other corporate giants—including CVS and UnitedHealth—in a potential bidding war that could value the firm at more than $8 billion.
Shares of Signify jumped as much as 40% early Monday to reach their highest level since July after WSJreported over the weekend that Amazon is among firms looking to strike a deal to buy Signify within the next few weeks; Signify’s market cap climbed to about $6.8 billion amid the stock surge.
Earlier this month, WSJreported CVS Health was also seeking to buy Signify, which provides its technology services to the government, insurers and private employers, after the firm started working with bankers to explore a potential sale.
In a note Monday morning, William Blair analyst Matt Larew said Signify gathers vast amounts of data on the health status and needs of the Medicare Advantage population, which would make it a valuable acquisition for any large retailer intent on diving into the demographic and broadening its reach in healthcare.
He notes an acquisition valued at more than $8 billion would imply a stock price of about $34—roughly 17% more than current levels; shares are now up 94% this year, compared to a 13% decline for the S&P 500.
A potential bid would mark only the latest healthcare play from Amazon, whose CEO Andy Jassy has made expanding into the industry a top priority: Last month, the company paid about $3.9 billion in cash to acquire healthcare technology startup One Medical.
A representative for Signify declined to comment on the potential bid; Amazon did not immediately respond to Forbes‘ request for comment. Signify stock struggled after the Dallas-based firm’s buzzy initial public offering in February 2021, when the firm raised some $564 million from investors and nabbed a market value of more than $7 billion.
Even with the Monday surge, the stock is down about 20% from its peak just days after the IPO. Earlier this month, the company laid off 489 employees across the nation as part of its plan to discontinue its episodes of care services in favor of the fast-growing and profitable home-services segment.
Signify is one of Ark Invest’s top holdings. The investment firm helmed by high-profile stock picker Cathie Wood owns a more than $200 million stake in Signify, but offloaded roughly $12 million worth of shares last week. It also holds a large position in Teladoc.
Signify Health, Inc. is a healthcare platform that leverages advanced analytics, technology, and nationwide healthcare provider networks to create and power value-based payment programs. Its solutions support value-based payment programs by aligning financial incentives around outcomes, providing tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, coordination and cost-savings.
The company operates through two business segments: Home and Community Services and Episodes of Care Services. The Home & Community Services segment focuses on reaching and engaging populations at home. The Episodes of Care Services segment manages episode-based payment programs. The company was founded in 2009 and is headquartered in Norwalk, CT.
Signify Health ’s market capitalization is nearly $5 billion. The Journal reported that Signify was for sale in an auction that could value it at more than $8 billion. Bids are due around Labor Day, the people told the Journal, but it’s always possible a deal could be reached before then.
Signify shares were soaring 36.9% to $29.02 on Monday. Representatives for Signify Health didn’t reply to requests for comment from Barron’s. Amazon said in an email to Barron’s that “we don’t comment on speculation.” UnitedHealth said it doesn’t “comment on rumors and speculation.”
UnitedHealth has submitted the highest bid in excess of $30 a share, Bloomberg reported, citing people with knowledge of the matter. Amazon’s offer was close behind.
BMW will test a long-range battery made by Michigan-based startup Our Next Energy in the car manufacturer’s iX electric SUV, the companies announced Tuesday. ONE’s Gemini battery will use two types of battery cells, including one featuring advanced chemistry that can store more energy and enable vehicle range of at least 600 miles between charges, the company said.
The prototype automobile is expected to be finished by the end of the fiscal year, ONE said. The Gemini battery looks to cut down on the use of traditional electric vehicle battery materials like cobalt, nickel, graphite and lithium, ONE founder and CEO Mujeeb Ijaz said. Ijaz said ONE is testing a range of different electrode chemistries in Gemini while also analyzing possible tradeoffs in cost, energy and sustainability.
ONE may offer a production version of the battery in three varying sizes and prices. This would include a low-end version costing the equivalent, or potentially lower, as nickel- and cobalt-based batteries, Ijaz said.A BMW iX Flow with color-shifting material is displayed during CES 2022 at the Las Vegas Convention Center in Las Vegas, Nevada, U.S. January 6, 2022.
The battery maker is talking to other companies about similar prototype testing of its Gemini battery. BMW’s corporate venture department in March led a $65 million funding round in the battery company. The round’s other investors included Coatue Management, Breakthrough Energy Ventures, Assembly Ventures, Flex and Volta Energy Technologies.
ONE said in December that an early prototype of the Gemini battery modified in a Tesla Model S offered more than 750 miles of range, significantly more than the best production electric vehicles on the market.The logo of German car manufacturer BMW is pictured on a BMW car prior to the earnings press conference in Munich, Germany, Wednesday, March 20, 2019.
After ONE was founded in 2020, the company has centered its attention on a long-range battery that uses safer and more sustainable materials while also putting more energy into a smaller, cheaper package. BMW executive Juergen Hildinger said in a statement that the automaker is looking for opportunities “to integrate ONE’s battery technologies into models of our future BEV (battery electric vehicle) product lineup.”
Carmakers grapple with conflicting goals in designing electric-car batteries. They want high energy density for long range, but they also want to reduce the costly metals that provide that capacity.
Michigan battery startup Our Next Energy (ONE) claims to have a better way to optimize across all these factors. Now, BMW will fit an early prototype of ONE’s Gemini “Dual-Chemistry” battery into a test version of its iX EV luxury SUV to see if the claims—a heady 600 miles of range, nearly double the stock iX xDrive50’s EPA range estimates—are borne out in a variety of real-world uses. The test iX will be on the road by the end of this year, both companies say.
BMW is the logical vehicle partner to test ONE’s technology, because its investment arm—BMW i Ventures—was one of several backers in a $25 million round of financing for the battery startup last October.
Traction + Long Range
The Dual-Chemistry label on ONE’s Gemini battery refers to the pairing of two different types of battery cells, each with a different purpose.
The “Traction” portion has cells that use a lithium iron-phosphate (LFP) cathode, known to have a lower energy density than chemistries based on cobalt, nickel, manganese, or aluminum. LFP batteries are rare in North America, but common in Chinese EVs. Their use of cheap and easily available iron in the cathode leads battery analysts to suggest LFP cells will surge in popularity as their energy density rises, even though it remains below that of advanced cobalt-nickel cells.
The “Long Range” portion of ONE’s Gemini battery, on the other hand, uses a higher energy-density chemistry based on a proprietary material rich in manganese, with only minimal cobalt and nickel. During the current R&D phase, ONE founder and CEO Mujeeb Ijaz told Car and Driver, the company is still experimenting with blends of the three metals to enhance performance. Unusually, it has only a bare copper current collector—rather than separate anode material—a design known in academic circles as “anode-free.”
The LFP “Traction” cells will provide close to 99 percent of the vehicle’s overall miles, Ijaz said, while the “Long Range” cells kick in for the 1 percent of usage that requires extreme power, reducing stress on and deterioration of the LFP cells.
ONE says it can thus provide a battery with energy density that’s claimed to be double that of those in today’s EVs, while focusing on “safer” and “sustainable” battery chemistries created via a “conflict-free supply chain” that includes appropriately sourced and inexpensive manganese.
Lab Tests, Meet Real World
Hundreds of battery chemistries show at least some promise in lab tests, but far fewer make it into production—or even extended testing. The Gemini-powered BMW iX prototype will hit the road by the end of this year. It will be used as a demonstrator first, to prove the Gemini battery concept can store and deliver energy.
After that, BMW and ONE will work together on further testing. As Ijaz notes, ONE needs to “work with BMW to understand their requirements” for his company to become a long-term supplier. That’s an arduous path, but one every battery startup needs to travel before its products find a market.
The ONE-powered BMW iX will mark a new milestone for the company: Powering an actual vehicle, rather than simply showing bench-test results. The actual cells that will go into this early prototype pack will be fabricated by one or more of four separate supplier partners, both in Asia and North America, that are working with ONE on prototyping and production scale-up of its new cells.
When the iX is shown to run, charge, and cover the promised distances, ONE will have moved a large step away from its press stunt last December. In that effort, which ONE called a proof of concept, it stuffed cells with twice the energy capacity as a standard Tesla Model S into that car’s pack and ran it for more than 750 miles—or twice the usual range.
But those weren’t Gemini cells, whereas the BMW iX coming by the end of the year is expected to use very early and experimental versions of ONE’s new cells. This will count as definite progress, presuming it happens on schedule. Stay tuned.
Photo: Getty Images
