Beyond the Bell: Every Path a Startup Can Take to Go Public

e’ll IPO one day.

It’s one of the most repeated lines in startup boardrooms, and one of the least interrogated. For many founders, the phrase becomes shorthand for success, like a movie ending with confetti on the trading floor. But in reality, an IPO is just one of many ways a startup can cross into a new phase. And it’s often the least realistic.

The truth is, exits aren’t binary. They’re not the end of the road or a ceremonial finish line. They’re inflection points; each with their own timelines, tradeoffs, and consequences for founders, teams, and investors. Some exits bring prestige and liquidity. Others bring regret, misalignment, or the slow fade of what could’ve been.

The most resilient founders don’t fixate on going public. They engineer optionality, the ability to pursue a public offering, strategic sale, or even a quiet wind-down without being cornered by investor pressure, market cycles, or incomplete narratives.

This article breaks down every meaningful exit path available to startups today; from underwritten IPOs to SPACs, M&A, direct listings, niche carve-outs, and soft landings. By the end, you’ll know how each one works, who it serves, and when it’s worth pursuing.

The Big Four IPO Pathways

When founders think of “going public,” they’re usually thinking of one of four actual routes, each with its own mechanics, stakeholders, and implications. The right path isn’t about what’s hot or prestigious. It’s about how your company makes money, what kind of capital you need, and how much control you want to keep.

Let’s break down the big four.

1. Traditional Underwritten IPO

How it works:
You hire a group of investment banks (the underwriters) who price and market your offering. After months of prep - audits, roadshows, SEC filings - they buy the shares at a negotiated price and sell them to institutional investors. The stock lists publicly the next day.

Pros (from a founder’s lens):

• Raises significant primary capital.
• Visibility and credibility with institutional investors.
• Potential to expand customer and partner confidence post-IPO.

Cons:

• High cost: underwriters typically take ~7% of funds raised.
• Prone to underpricing (“IPO pop”) that leaves money on the table.
• Lockup periods restrict insider liquidity for 6 months.
• Public market exposure creates short-term earnings pressure.

Example:
Airbnb’s 2020 IPO was hailed as a win, until you realize it priced at $68, popped to $144 on Day 1, and effectively gave up billions in potential proceeds. That’s the cost of a traditional book-building process when demand is underestimated.

Timeline: 6–12 months
Investor profile: Long-only funds, pensions, mutual funds, hedge funds
Cost: $20M+ typical all-in for a $300M raise

2. Direct Listing

How it works:
You go public without raising new capital. There’s no underwriter syndicate buying shares; existing shareholders (employees, early investors) sell directly into the market. The opening price is set by auction.

Pros:

• No dilution: no new shares issued.
• No lockup: insiders can sell Day 1.
• Lower fees (no underwriting cut).
• Market sets the price transparently.

Cons:

• Doesn’t raise primary capital.
• Requires strong brand and retail/institutional interest.
• Volatility risk with no price stabilization support.

Example:
Spotify pioneered the model in 2018, followed by Slack and Asana. Each had strong name recognition and cash reserves, making capital raise unnecessary.

Timeline: 6 months
Investor profile: Mostly institutional, strong retail on brand-name listings
Cost: Significantly lower ($5M–$10M total)

3. SPAC Merger

How it works:
A public shell company (the SPAC) merges with your private company, taking you public via a de-SPAC process. You negotiate terms privately, then disclose the deal and begin a short roadshow before listing under your brand.

Pros:

• Speed: faster than a traditional IPO.
• Negotiated valuation with fewer surprises.
• Can raise PIPE (private investment in public equity) alongside the merger.
• Greater flexibility in forward-looking projections.

Cons:

• Sponsor dilution can be steep (promote shares).
• Redemption risk: SPAC investors can pull funds pre-merger.
• Often seen as a second-tier option if public comps are weak.
• Post-deal volatility is common.

Example:
Opendoor merged with Chamath Palihapitiya’s SPAC in 2020, valuing the business at $4.8B. It got to market fast, but shares dropped 80% within a year as real estate tech faced macro headwinds.

Timeline: 3–6 months
Investor profile: Hedge funds, PIPE participants, crossover investors
Cost: Variable, but SPAC sponsor + legal fees can exceed 10–15%

4. Reverse Merger

How it works:
You merge into a dormant or lightly-traded public shell, effectively becoming public overnight. Commonly used by companies too small or niche for a traditional IPO.

Pros:

• Very fast and cheap path to public markets.
• Can sidestep institutional barriers or quiet IPO markets.
• Sometimes used in distressed or time-sensitive situations.

Cons:

• Thin trading volumes, limited analyst coverage.
• Brand stigma: reverse mergers are sometimes associated with pump-and-dump schemes.
• Difficult to raise follow-on capital without additional visibility work.

Example:
DraftKings went public via a reverse merger in 2020 by combining with a SPAC and SBTech. It was technically a de-SPAC, but the reverse merger mechanics were central.

Timeline: 1–3 months
Investor profile: Opportunistic public investors, retail-heavy
Cost: Low upfront, but expensive in reputation risk

Comparison Table

Selling the Company: The Strategic or Financial Acquisition Route

Not every exit requires public markets. For many startups, especially those outside headline-grabbing sectors, a sale is the most realistic, and sometimes most lucrative, path. But “M&A” is not a monolith. Who acquires you and why shapes everything from valuation to legacy.

There are two dominant flavors: strategic and financial.

Strategic Acquisition: The Vision Fold-In

A strategic acquirer is typically a larger operating company buying you to accelerate its own roadmap. Your product fills a feature gap, your team brings key talent, or your customer base unlocks a new market. They’re not buying your EBITDA. They’re buying leverage.

Common motives include speed to market (build vs buy), defensive moves (acquire to block competitors), talent acquisition in tight hiring markets, and technology absorption or integration.

Valuations are often based on revenue multiples, with a premium layered in for synergies; hat the buyer believes they can do with your platform that you couldn’t. These can be 5x, 10x, even 15x revenue in frothy categories, especially if the acquisition neutralizes a strategic threat.

Control terms vary: some deals are all-cash, others offer acquirer stock. Retention packages and earnouts (future payouts tied to performance) are common. And that’s where risk creeps in.

Cautionary tale:
Founders often overestimate post-acquisition autonomy. Teams get re-orged, product gets de-scoped, and vision gets diluted. In the worst cases, the acquired company becomes a line item that slowly fades. Cultural mismatch is the top reason these deals fail. Case in point: Yahoo’s string of acquisitions in the 2010s.

Strategic acquisition works when there is a high-multiple exit, clear role transitions, and a product that thrives within a larger platform. Think Instagram at Facebook.

Financial Acquisition: The PE Playbook

A financial acquisition is when a private equity firm, growth fund, or holding company buys you with the goal of maximizing financial return. They’re less interested in long-term vision, more focused on operational efficiency, cash flows, and strategic rollups.

Typical plays:

• Buy-and-build: bolt you onto a platform company.
• Cost optimization: cut burn, raise EBITDA.
• Recap and resale: stabilize, grow, exit in 3–5 years.

Valuation is based on EBITDA multiples or projected cash flows - 7x to 12x is common, though lower for distressed assets. These buyers care deeply about unit economics, margin expansion, and predictability.

Expect tight deal terms: earnouts are more rigid, and retention is usually baked in through multi-year management agreements. There’s also a greater likelihood of being reshuffled into a portfolio structure you didn’t sign up for.

Cautionary tale:
Many founders enter PE-driven exits assuming they’ll “stay on and keep building.” What they find instead is headcount cuts, quarterly EBITDA targets, and loss of strategic freedom. The upside: liquidity, and in some cases, a second bite at the apple if the company is sold again.

So, When Is It a Great Exit?

Strategic acquisition is ideal when your product slots neatly into a bigger vision, and the acquirer wants you, not just your users.

Financial acquisition makes sense when your company is cash-flow positive, founder fatigue is real, and you want to derisk personally while staying involved operationally.

In both cases, terms matter more than headline price. A $300M acquisition can feel like a win, or a quiet burial, depending on lockups, retention packages, and how your culture survives the handover.

You don’t just sell your company. You sell what happens to it next.

The Niche but Notable Routes

While the majority of exits follow familiar paths - IPO, M&A, or shutdown - there’s a smaller constellation of alternatives that founders rarely hear about, but should. These routes may not apply to most companies, but in specific scenarios, they offer speed, liquidity, or strategic clarity when mainstream doors aren’t open.

Regulation A+ Mini-IPO

The Regulation A+ exemption allows startups to raise up to $75 million from the public without filing a full S-1. It’s most often used by consumer-facing brands with loyal audiences; startups that can turn customers into shareholders. For companies that don’t want to sell or aren’t yet fit for a major listing, Reg A+ offers a bridge: liquidity, visibility, and capital without institutional gatekeeping. But the “mini” label is misleading. Legal and audit costs are still significant, and execution depends on sustained marketing, financial discipline, and retail investor appetite. Without those, the offering can fall flat.

Auction IPO

Most IPOs use book-building to set a price; banks gauge investor interest behind closed doors. An auction IPO flips that model. Investors submit bids in a Dutch auction, and the offering price is set based on market demand. It’s more transparent and theoretically more democratic. Google famously used this approach in 2004. While the deal succeeded, it left many institutions cold and showed that price discovery alone doesn’t guarantee stability. Few companies repeat the model today. But for founders obsessed with fairness, or allergic to banker politics, it remains a viable, if risky, tool.

Acqui-Hire

An acqui-hire isn’t an exit for your company, it’s an exit for your team. In these deals, a larger company absorbs your staff, often shutting down your product in the process. It’s most common when the startup’s core business hasn’t scaled, but the team is strong, and the acquiring company wants to skip the recruiting grind. Facebook’s acquisition of Lightbox is a textbook example: the team was folded in, the app was shut down, and the mission ended quietly. Acqui-hires rarely deliver investor returns, but for founders, they can preserve career momentum and provide a soft landing.

Spin-Off or Carve-Out

As startups grow more complex, they sometimes outgrow themselves. A product that started as a side bet becomes valuable in its own right. In these cases, founders may spin out that asset into a new company, with separate funding, leadership, and a focused cap table. Spin-offs can also be used to simplify an acquisition: clean separation of assets reduces integration risk. Alphabet has built a habit of this approach, turning moonshot projects into independent entities. But carve-outs are operationally intense. They demand legal clarity, management alignment, and a reason for the new company to stand on its own.

These paths aren’t for everyone. They’re not high-profile, and they don’t come with confetti. But in edge cases, they offer a kind of precision, and sometimes dignity, that the headline routes can’t.

When the Exit Is a Shutdown - And How to Make It a Soft Landing

Not every startup ends in a headline. Some end in an email. And sometimes, that’s the cleanest, most honorable move a founder can make.

Shutting down doesn’t mean you failed. It means the business, as constructed, ran out of leverage; on capital, on time, on growth, on narrative. It’s a hard call to make, but when made deliberately, it’s also one of the few decisions entirely in your control.

A “soft landing” isn’t an acquisition, but it’s not a collapse either. It’s the act of closing shop while doing right by your people, your investors, and your product. That might mean placing team members at trusted companies, open-sourcing parts of your codebase, or selling IP to a buyer who can give it a second life. It might mean negotiating a quiet acqui-hire to preserve continuity for your engineers. The shape varies, but the intent is the same: exit with clarity, not wreckage.

The founders who handle shutdowns well tend to over-communicate. They brief their investors early. They walk employees through the timeline, the severance plan, the references they’ll write. They terminate contracts properly and protect customer data. They leave a paper trail of integrity. That’s what earns them trust in their next chapter; not bravado, but responsibility.

Compare that to the alternative: ghosting your cap table, vanishing from Slack, leaving unpaid vendors in the dark. That doesn’t just burn bridges, it tags you. Investors talk; so do employees, and acquirers. Reputation isn’t something you recover in the next round.

There are respectful precedents. Everpix shut down in 2013 with a public letter, a refund to subscribers, and a clear explanation of what happened. LayerVault followed with a transparent postmortem and job offers for its team. Neither story ended in IPO glory, but both founders earned more goodwill in closing than most do in selling.

The truth is, most startups don’t exit through ringing a bell. But even in silence, you get to choose how the story ends. Write the last line well.

What IPO Bankers & VCs Don’t Tell You

Going public is pitched as a milestone. But what most founders don’t hear until it’s too late is that the day you ring the bell isn’t the finish line, it’s a negotiation midpoint. And many of the terms that define your actual outcome are buried beneath the headlines.

Let’s start with underpricing. When Rivian went public in 2021, its IPO priced at $78. On the first day of trading, the stock surged more than 30%, briefly valuing the company above $100 billion. For a pre-revenue EV startup, that “pop” wasn’t validation, it was value left on the table. The banks argued it ensured a strong aftermarket. For founders, the math is harsher: billions that could have funded growth instead became a windfall for hedge funds flipping shares.

Then there’s the lockup period. For six months post-IPO, insiders can’t sell. The rationale is market stability. But in practice, it’s a cliff. When the lockup on Robinhood expired, the stock slid sharply as employees and early backers sold into a weakened market. Founders often assume they’ll get liquidity “right after the IPO.” Most don’t.

SPACs come with their own fine print. While they promise speed and price certainty, they often carry heavy dilution. Sponsor promote shares and PIPE investors can erode ownership fast, especially if redemptions spike before the merger closes. What looks like a $2 billion deal on paper might deliver half that in real cash and control once the dust settles.

Other mechanisms hide in the details. Greenshoe options allow underwriters to sell extra shares post-IPO to stabilize price, but they can dilute further. PIPE negotiations, used in SPACs, often favor new institutional entrants over early backers. Even the headline IPO valuation can be misleading. If you price at $2B but sell only a fraction of the float, that’s not your true market cap. It’s a snapshot of interest under artificially constrained supply.

A founder once described their IPO experience like “selling the car, but only being allowed to price the rearview mirror.” That’s what happens when you focus on optics over terms.

The takeaway: if you’re going public, you need more than a banker and a bell. You need to understand the post-IPO mechanics, read every footnote, and assume that anything you don’t control will be optimized for someone else’s return.

How to Choose: A Strategic Exit Framework

By this point, you’ve seen that exits are rarely black-and-white. The right path isn’t just about valuation. It’s about control, timing, values, and what kind of founder you want to be when it’s over.

The decision starts by asking a few questions:

• Do you need capital to keep scaling, or liquidity for investors and team?
• Are you in a high-growth phase, or stabilizing into maturity?
• Is the market window open, turbulent, or frozen shut?
• Do you still want to build this business, or are you ready to move on?

There’s no universal playbook. But there is a pattern map. Here's how founders often match goals to pathways:

If more than one row feels right, that’s the point. The best founders build toward optionality; preserving the ability to go multiple directions without getting boxed in by cap table complexity, premature commitments, or rigid investor timelines.

Exit planning shouldn’t be a panic move or a passive drift toward whatever the market allows. It’s part of company-building. Same as your GTM, hiring, or roadmap. You design for it. You position for it. You run scenarios months, even years, before you're “ready.”

The most successful founders don’t just pick a path. They shape the conditions around it. Timing is luck. But when and how you exit is leverage, and it’s earned.

The Exit Whisperers: Who You Need Around the Table

No founder exits alone. And the difference between a clean win and a cautionary tale often comes down to who’s advising you when the term sheets arrive.

You need a CFO or finance lead who’s seen transactions before, someone who understands how dilution plays out five steps ahead. You need legal counsel who’s not just startup-friendly but deal-savvy, especially when negotiating lockups, earnouts, or IP carve-outs. You need a banker or capital markets advisor who’s aligned with your incentives, not just their league tables. And you need someone - VC, board member, operator - who’s not afraid to say no when the valuation looks pretty but the structure’s broken.

In the fog of late-stage fundraising, dual-track preparation, or inbound M&A, founders can lose clarity. These people help you keep it. They’ll catch the soft red flags in a buyer’s LOI. They’ll model what happens to common stockholders in a down-round exit. They’ll remind you that prestige is a lousy reason to sell.

The best exits aren’t just well-priced. They’re well-defended.

Beyond the Bell, On Your Terms

Exits aren’t rewards. They’re leverage points - some earned, some engineered, some imposed. The founders who win aren’t the ones chasing an IPO or waiting for a buyer. They’re the ones designing for optionality, reading the fine print, and choosing when to walk, sell, or stay.

You now know the full map: every major route, every trap door, every soft landing.

Whether you go public, get acquired, or call it, make sure it’s your call. Because the real victory isn’t ringing the bell. It’s knowing you never needed it to prove you built something that mattered.