The new year has officially arrived.

Founders, I hope you all had a chance to get away and enjoy the festivities with family and friends this past week. If you’re wondering if I had major FOMO these past days (options are little limited when you have kids and your stuck in an apartment), then you’re right.

I’m not trying to be a party pooper–heck, I love a good party just as much as the next guy. However, as we step into 2025, here are some facts that need to be understood from the beginning if we’re going to get serious about taking our company to new heights.

Facts:

• 9 out of 10 startups fail (source: Startup Genome – the 2019 report claims 11 out of 12 fail).
• 7.5 out of 10 venture-backed startups fail (source: Shikhar Ghosh).
• 2 out of 10 new businesses fail in the first year of operations (source: Bureau of Labor).
• Only 1% of startups become unicorn firms like Uber, Airbnb, Slack, Stripe, and Docker (source: CB Insights).
• The success percentage for first-time founders is 18% (source: Exploding Topics).

As the new year unfolds, the pressure and risk to secure sustainable growth and position your company for success has never been greater. For those eyeing an Initial Public Offering (IPO), now is the time to focus on an often-overlooked competitive advantage: your workplace culture.

The common pushback I hear is that investing in workplace culture takes too much time. However, this argument doesn’t hold up when you consider that the median time between initial VC funding and an IPO exit for U.S.-based startups is 5.3 years.

That timeline has become even more critical as IPO activity has slowed significantly in recent years (see graph below), with the last three years seeing an especially pronounced decline.

Yet, companies with strong cultures not only survive but thrive in challenging times, standing out to investors, employees, and the public alike.

Building a thriving culture isn’t just a “nice-to-have”—it’s a necessity that impacts every aspect of IPO preparation. Below, we explore how workplace culture can help your startup succeed in key areas as you prepare to go public.

1. Attracting and Retaining Top Talent:

• Competitive Edge: Companies with a strong culture often find it easier to attract and retain top talent. Talented individuals are drawn to workplaces with positive environments, clear values, and a commitment to employee well-being. What you value, who you value and how you show that value will largely determine if the right talent stays or not.

• Stability: Consistent, motivated, and engaged teams are crucial during the IPO process, as they ensure continuity and stability in operations.

2. Enhancing Company Reputation:

• Investor Confidence: Investors are more likely to invest in companies with a positive culture, as it indicates a healthy working environment and a lower risk of internal conflicts. The key here is risk mitigation. A company known for its strong culture is seen as more reliable and trustworthy. The opposite? A company that isn’t reliable more likely to have higher turnover and decreased productivity.
• Public Perception: A well-established culture contributes to a positive public image, which is essential when a company goes public. It can influence market perception and attract potential shareholders who value ethical and sustainable business practices.

3. Ensuring Compliance and Ethical Behavior:

• Regulatory Adherence: A robust workplace culture fosters ethical behavior and a strong commitment to compliance with regulations. This not only minimizes the risk of legal complications but also strengthens the company’s reputation with regulatory bodies. Avoiding complaints and legal disputes allows your organization to stay focused on driving growth and achieving its goals.
• Transparency: It’s pretty simple: In today’s era of modern work, organizations that embrace openness in their operations, decision-making processes, and accountability practices tend to build stronger trust and loyalty among employees, customers, and stakeholders, positioning themselves for long-term success.

4. Driving Long-Term Success:

• Sustainable Growth: Startups that build a strong, values-driven culture are better positioned for sustainable growth. By promoting innovation, collaboration, and a shared vision, they establish a foundation for consistent performance and adaptability. This approach drives stronger financial outcomes, ensures readiness for scaling, and appeals to investors who prioritize stability and long-term potential over short-term profits that may undermine resilience. For startups aiming for an IPO, sustainable growth becomes a key differentiator in achieving lasting success.
• Resilience: A positive culture helps build a resilient organization that can adapt to changes and overcome challenges. This resilience is crucial during the volatile and demanding IPO process.

5. Strengthening Governance and Leadership:

• Effective Leadership: Strong workplace cultures are rooted in effective leadership. For startups preparing for an IPO, showcasing a leadership team that fosters a positive and resilient culture sends a powerful message to investors. It signals robust governance capabilities and builds confidence in the company’s ability to navigate the complexities of going public while maintaining its values and vision.
• Alignment of Goals: A cohesive culture ensures that all employees are aligned with the company’s goals and values, which is critical when transitioning to a public entity.

6. Showcasing Organizational Maturity:

• Professionalism: A well-established culture reflects organizational maturity and professionalism. I believe this point above all others doesn’t get mention enough. Morever, this commitment is reflected in how the organization engages its workforce, aligns its teams with strategic goals, and addresses challenges proactively. For investors, such professionalism reduces perceived risk and enhances confidence in the company’s ability to sustain growth and deliver consistent performance post-IPO.
• Strategic Vision: It demonstrates that the company is not just focused on short-term gains but is committed to long-term growth and stability.

Prepare for IPO Success by Prioritizing Culture

The stats don’t lie (see above): startup success is an uphill battle. But just as the best parties are remembered for their thoughtful details and shared joy, the most successful startups distinguish themselves by building a workplace culture that acts as the cornerstone for long-term success.

For startups aiming to go public, a well-established culture is more than just a “nice-to-have”; it is a strategic asset that can significantly enhance the IPO process. It builds investor confidence, attracts top talent, ensures compliance, drives sustainable growth, strengthens governance, and showcases organizational maturity.

As we dive into 2025, let’s take these insights and apply them with urgency. Prioritizing culture isn’t about adding another task to your plate—it’s about building a foundation that makes every other effort more effective, from attracting talent to preparing for an IPO.

So here’s to the new year—a blank slate filled with possibilities. Let’s make 2025 the year your startup stands out, not just for its vision or innovation, but for the strength of its people and values. When next year’s celebrations roll around, your success will be the kind everyone wants to toast to. Cheers!

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Questions to consider:

For Startup Founders:
What role does workplace culture play in your preparation for scaling or going public?

Are there specific cultural challenges you foresee as you navigate the IPO process?

For Venture Capitalists:
How important is workplace culture in your evaluation of a potential portfolio company?

How do you advise founders to balance cultural investments with other operational priorities?

Can you share a story of a company that excelled in IPO preparation because of its strong culture?

Article was written by John-Miguel Mitchell who is the Founder and Lead Consultant at Ekipo LLC. If you’d like to learn more about how to design and build out the ideal workplace culture for your business, email him at jmitchell@joinekipo.com.

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