The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why the IPO Market is not Closed | Why Revenue Multiples are BS and Founders Need to Change | Advice From Jack Ma, Jamie Dimon and Evan Spiegel | Lessons from Taking Snap & Alibaba Public with Imran Khan

Aug 26, 2024

Imran Khan, founder and Chief Investment Officer of Proem Asset Management, shares his expert insights on the IPO market, emphasizing its current stagnation and the inflated revenue expectations that hinder companies from going public. He discusses the unfortunate state of M&A and how founders must adapt their mindset towards acquisitions amidst regulatory challenges. Additionally, Imran explores the complex landscape of AI investments, reflecting on the lessons learned from taking Alibaba public, while offering valuable advice from entrepreneurs like Jack Ma and Jamie Dimon.

01:04:38

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Imran Khan

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Quick takeaways

The current IPO market presents opportunities for companies willing to realign their valuation expectations with public market realities.

A shift from public to private markets has created challenges in operational talent, hindering the growth of innovative ideas in startups.

Founders should prioritize building solid cash flow-generating businesses over worrying about initial valuations to ensure sustainable long-term value.

Deep dives

Challenges in the IPO Market

The current IPO market is not entirely closed; rather, companies hesitate to go public due to inflated valuation expectations. Many firms raised significant capital at unsustainable valuations during the low interest rates of 2020 and 2021, leading to a mismatch with public market realities. While public markets may offer valuations based on cash flow that are more aligned with realistic earnings multiples, many private companies are still clinging to overly optimistic expectations. This disconnect results in missed opportunities for public offerings as founders fail to reset their valuation outlook based on changing market conditions.

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00:50

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01:10

Predictability is Key to Investment

01:10

High Margins Drive Business Value

01:21

Intro

4min

Navigating the IPO Landscape

9min

Navigating the IPO Landscape

23min

Political Impacts on Market Sentiment and Policy Consequences

2min

Navigating AI Investment Complexities

21min

The Importance of Focus and Strategic Decision-Making in Business

2min

Insights from Influential Leaders and Essential Tools for Startups

3min

Imran Khan is the OG of IPOs having taken some of the biggest companies public including Alibaba, Snap, Box, Weibo and more. Today, Imran is the founder and Chief Investment Officer of Proem Asset Management. Prior to co-founding Proem, Imran served as Snap Inc.’s Chief Strategy Officer. Under his leadership, Snap’s annual revenue run rate increased to $1.6 billion from zero in less than four years. Previously, Imran was a Managing Director and Head of Global Internet Investment Banking at Credit Suisse where he advised on more than $45 billion-worth of Internet M&A and financing transactions.

In Today's Episode with Imran Khan We Discuss:

1. The IPO Market: When Does it Open:

How does Imran assess the state of the IPO market today?
Can companies really go out with $100-$200M in revenue?
Will we see revenue multiples reflate? Can venture continue as an asset class if they do not?
When does Imran expect the IPO market to really open?

2. Is M&A F******:

How does Imran assess the state of the M&A market today?
How do founders need to change how they think about M&A? Why are they to blame for the lack of M&A activity we have today?
To what extent can we blame Lina Khan for the lack of M&A?
Why would a company go do an M&A process today when it is unlikely to be approved by the SEC?
Why does Imran believe in the case of Wiz, it was a mistake for the company not to do the M&A?

3. AI's $600BN Question: Capex Spend:

How does Imran analyse the insane capex spend we are seeing from Meta, Google and Amazon?
How does Zuck not having his cash cow as the cloud business change how he can act?
How does this compare to Google's capex spend 20 years ago? What can we learn from that?

4. Going Public: The Process, The Players and Jack Ma & Jamie Dimon:

What is the literal process to take a company public?
Who sets the price? What do large institutions want in companies going public?
What are some of Imran's biggest lessons from taking Snap and Alibaba public?
What are some of Imran's biggest lessons from Jack Ma, Jamie Dimon and Evan Spiegel?

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