Run the Numbers: What It Takes to Go Public Today | Inside the IPO Process with RBC’s Federico Acabbi

Host: CJ Gustafson
Guest: Federico Acabbi, Investment Banker at RBC
Date: March 23, 2026

Episode Overview

In this episode, CJ Gustafson welcomes Federico Acabbi, an investment banker at RBC specializing in cybersecurity and infrastructure software. Together, they unpack the current climate for tech companies considering going public, delving into the evolving IPO landscape, investor priorities in a world dominated by AI and cybersecurity, changing market cap expectations, and the nitty-gritty of preparing, structuring, and executing a modern IPO.

Key Discussion Points & Insights

1. State of the Software Market & Investment Landscape

Timestamps: 02:42 – 06:45

• Risk-Off Environment:
  • The market is “in the red”—investors are becoming more discerning, evaluating companies based on their AI moats, exposure to AI risks/opportunities, and ability to manage change.
  • Companies need to demonstrate execution on the shift to AI; “change management is actually pretty difficult to do.”
• System of Record Moats:
  • Legacy enterprise software (system of records) still holds negotiation leverage due to its embedded nature—“not a chance they’re going to rip and replace those.”
• Shifting Purchasing Power:
  • The era of 10% price increases at renewal is gone; now, “the negotiating power is actually shifting to the customer.”
  • Growth will look different: organizations are content to utilize a fraction of features and supplement with proprietary solutions.

“The more I’m spending time on this, you have to go through this matrix. I think of AI risk, AI opportunity and tailwinds, and just plot software companies there.”
— Federico, 03:19

2. AI and Cybersecurity as Investment Priorities

Timestamps: 06:46 – 09:22

• Cyber Budgets Climb:
  • Despite budget constraints elsewhere, “cyber keeps coming up as the CFO's number two investment priority behind AI.”
  • Regulatory, compliance, and security risks (especially in FinServ, healthcare) fuel cyber spend.
• AI Boosts Both Sides:
  • Attackers leverage AI for industrial-scale phishing and malware (e.g., “Xantorox AI”); defenders race to secure internal AI use and defend the perimeter.
• DevOps Disruption:
  • AI and “vibe coding” are rapidly subsuming traditional DevOps/security tasks, automating work previously done by specialized tools.

“The number and the severity of attacks is only growing...the attacker is continuing to innovate, and we have to catch up.”
— Federico, 07:56

3. IPO Landscape: Scale, Timing, and Market Selectivity

Timestamps: 14:22 – 21:16

• The New Scale Expectations:
  • Median revenue at IPO is now ~$800M (2025), up from $400–500M in 2020; market caps for IPOs have similarly shifted up.
  • The days of 100–200M revenue IPOs “as standard” are over.
• Why Bigger is Better (and Safer):
  • Larger companies have more predictable/less volatile financials for quarterly, public expectations—“If you're smaller, you miss a deal at the end of the quarter and...it doesn't take a lot in this market to disappoint investors.”
• Opportunity for Smaller IPOs:
  • Still room for sub–$5B IPOs, but the selection is “very selective”—you must show enduring business fundamentals, great management, and durable economics.
• Mega IPOs:
  • 2026 features “jumbo” IPOs (SpaceX, OpenAI, Anthropic), further skewing all averages and sucking up available investor attention.

“Private companies have been staying private for longer. They mature, have a different scale, a different level of maturity and systems in place when they go public.”
— Federico, 15:20

“There are investors out there that can invest against these names, but...companies are waiting to be larger to be in a better position to predict their business.”
— Federico, 17:10

4. Secondaries vs. Public Listing: Liquidity Trends

Timestamps: 19:33 – 22:42

• Founders Selling at IPO:
  • Common for founders to sell 2–3% at IPO (for personal liquidity), not seen as a negative by investors.
• Staying Private is Easier:
  • Secondaries and new private capital structures offer founders, employees, and early investors liquidity, removing much of the capital-raising pressure to IPO.
  • “$230 billion in secondary dollars of liquidity” vs. “$40 billion public markets liquidity” in 2025.

5. The IPO Process – Behind the Curtain

Timestamps: 29:57 – 36:41

• Role of Investment Banks:
  • Services begin well before formal engagement; help with S-1 drafting, structuring, valuation narrative, investor relationships, running the roadshow, and ongoing aftermarket support.
  • Lead (“lead left”) banks do most heavy lifting; multiple ‘active bookrunners’ share responsibilities.
  • Diligence: Extremely thorough—legal, financial, customer, product, and export compliance. Involves management, issuer and underwriter counsel.
• Roadshow Evolution:
  • Pre-pandemic: ~9 days, multiple cities, bankers foot the private jet bill (“more of a necessity than a discretionary choice”).
  • Pandemic: All-remote, six days, more efficient but exhausting.
  • Now: Hybrid—core cities and Zoom.
  • “Cornerstone investors” (e.g., Berkshire with Snowflake) often pre-commit pre-list, de-risking the IPO.

“We used to say as bankers, you as a CFO or CEO, you date with the bankers, but then you get married with the research analyst.”
— Federico, 32:24

“There’s a lot of work that you put into an IPO process, it starts well actually way before you appoint your underwriters.”
— Federico, 30:09

6. Direct Listings vs. IPOs

Timestamps: 40:41 – 43:57

• Direct Listings:
  • Banks act as advisors, not underwriters; no aftermarket support, less scrutiny in diligence.
  • Best for companies seeking liquidity for existing shareholders (e.g., Spotify, Asana, Palantir).
  • Changes in regulation allow for primary capital raises via direct listing, but this is untested at scale.

7. How Banks Make Money on IPOs and M&A

Timestamps: 44:07 – 47:25

• IPOs:
  • Gross spread is 4–5% of capital raised (Figma’s $1.2B raise = $54M to banks), split among lead and active banks.
  • Jumbo IPOs may drive fees closer to 1%.
• M&A:
  • Fewer banks, smaller percentage (often ~1%), but the ‘cake’ is split among fewer teams; “very lucrative.”

8. Personal Stories & Memorable Moments

Timestamps: 50:46 – 56:06

• Junior Banker Hustle:
  • Federico recounts speeding on his Vespa at midnight to deliver a last-minute analysis for a Nokia deal, only to find it wasn’t critical—leading to the realization:

    “We’re not saving human lives... Is the stuff I’m doing really important and for whom?” (52:33)

• Creative Expense Fraud:
  • An associate created a fake taxi account to pocket cab fare allowances, reminding all that finance processes should remain vigilant.

Notable Quotes & Moments

• On the changing IPO bar:

  “We’ve gone from an era where you could IPO around $100M in revenue... now you’re seeing closer to $800M.”
  — CJ, 18:09

• On modern cyber risk:

  “AI is helping industrialize a lot of these attacks.”
  — Federico, 08:22

• On the future for bankers:

  “We see the IPO as just the starting point of this relationship where we have many avenues to sell our services.”
  — Federico, 49:29

• On roadshow war stories:

  “It was midnight... I was chased by the police. The police pulled me over and I freaked out...”
  — Federico, 51:00

Timestamps for Key Segments

• Current state of software & AI / cyber priorities: 03:16–09:22
• Shift in IPO scale expectations: 14:22–19:04
• Liquidity & secondaries: 19:33–22:42
• Bank services and the full IPO process: 29:57–36:41
• Direct listings: 40:41–43:57
• Bank fee structures on IPO/M&A: 44:07–47:25
• War stories & human moments: 50:46–56:06

Conclusion

This episode serves as a hands-on playbook for operators, founders, and finance leaders contemplating the IPO journey in 2026. CJ and Federico demystify the new metrics for going public, the ongoing impact of AI and cyber, and the roles of investment banks, while also providing colorful personal stories from the trenches.

Memorable Closing Advice:

“You’re not saving human lives. It’s actually not rocket science what we do... Take a step back... is the stuff that I’m doing really important and for whom?”
— Federico, 53:20