Inside the IPO: Semrush CFO advises flexibility and pitch-practice
Semrush, the Boston-headquartered marketing software company, listed on the New York Stock Exchange last month during a tricky time for the IPO market. CFO Evgeny Fetisov talks to GlobalCapital about the IPO and the challenges in taking the firm public.
Semrush is an all-in-one tool suite for improving online visibility and discovering marketing insights. The company says its tools are able to help marketers with SEO, PPC, SMM, keyword research, competitive research, PR, content marketing, marketing insights and campaign management.
Like many other IPO candidates listing on US or European exchanges, Semrush is a firm centred on developing new and innovative tech solutions for its customers.
Often not discussed in the story of tech companies going public is how management at tech firms can adapt to presenting highly-technical information to equity investors in the pressured situation of trying to get them to commit funds.
Fetisov said one of the first big challenges he encountered with taking the firm public was just learning how to present to investors.
“I joined the company in early 2019 and did a few meetings with private equity funds and I would say a lot changed between then and the IPO,” said Fetisov. “Looking back now, I would say we may have been somewhat naive in the way we were presenting information. Over time, we learnt how to pitch better, to be more structured, how to more effectively communicate and present our story to investors. We worked together to make our message crisp and clear and digestible for investors.
“We were a team of engineers, not salesmen, but we learnt how to be good communicators. I think that is an important thing. By the time of the IPO, we had done that preparation and were able to meet investors to deliver the messages we wanted.”
But issuers must be ready to adapt quickly to a changing market and Semrush’s pitching experience on its actual roadshow was very different from what the company had envisaged when it first dreamt of an IPO.
The Covid-19 pandemic has taken IPO roadshows virtual, ending punishing travel schedules but also the chance to meet investors face-to-face.
A number of bankers and investors have told GlobalCapital that the lack of physical investor meetings has been a negative but Fetisov said a virtual IPO process did have some advantages that offset the lack of in-person meetings.
“The roadshow was very efficient, because we were able to meet people from all cities, without having to travel between Boston, New York or elsewhere as we weren't able to meet people face to face,” he added. “Whether we like it or not, there is a difference to being a person in real life and doing a roadshow by video, but it was very efficient.
“It meant we were able to do the deal in a relatively short period of time, meet lots of investors in around seven working days, and got the same result as in a traditional IPO roadshow.”
Semrush priced its IPO on Wednesday March 24 at $14 a share, the bottom of its original IPO range. The final deal size was $140m, smaller than the $252m deal size that was speculated at beginning of the IPO process.
Fetisov said the decision to be flexible on price and deal size was important in a difficult market in order to get the IPO across the line.
“The market had been very supportive up until late February and then interestingly enough, it started to become softer,” he said. “All things being equal, we felt that investors were growing more cautious and more risk-averse. This resulted in us downsizing the deal, because we didn't want to do it at any cost.
“However, at the end of the day, I think the result was great: we are now a public company, with a great investor base, now we go in into the next stage where we have to deliver the results.”