The technology-driven IPO system (Tech-based IPO) is a framework where revenue requirements are more relaxed than those for regular IPOs, but the assessment of technological capabilities and growth potential becomes more crucial. Especially for bio, medical device, and software companies that are in the red but possess strong technology, this system provides an opportunity to enter the KOSDAQ market.
This article introduces key considerations that bio and IT (software) companies must address when preparing for a technology-driven IPO. We will outline the items actually evaluated during the listing review process, and based on success and failure cases, we will discuss the necessary strategies.
What Are the Core Evaluation Criteria for Technology-Driven IPOs?
Unlike regular IPOs, the technology-driven IPO places emphasis on qualitative evaluation of ‘technology and growth potential.’ Since the evaluation perspective differs based on industry and technology categories, a tailored strategy is required based on the business type.
Industry Classification: Bio pharmaceuticals, medical devices, IT, materials, parts & equipment (so-called “소부장”), services, etc.
Technology Classification: Artificial intelligence (AI), big data, immersive content, secondary batteries/ESS, clean energy, etc.
A technology-driven IPO is not granted simply because “technology exists.” The characteristics of the industry, market potential, and the company’s execution capabilities are all comprehensively evaluated. In particular, bio and software companies have different evaluation points.
Bio Companies: How to Be Evaluated as a Tech-Growth Company
The bio field is generally characterized by long-term R&D investments and delayed monetization. Therefore, the Korea Exchange evaluates bio companies for IPO eligibility based on the following criteria:
- If the company meets the tech-growth company requirements, it can list even with insufficient profits.
- The company must be recognized for its technology and growth potential by specialized evaluation institutions.
- Listening to expert opinions is essential during the preliminary listing review process.
- Core evaluation items: Originality of the technology, clinical stage and success probability, technology transfer achievements, etc.
Bio companies must prove future revenue generation potential, focusing on their R&D capabilities, plans for future commercialization, and technologies that give them an edge over competitors.
Real Evaluation Case Summaries:
- ✅ Technology transfer achievements and securing specialized talent → Recognized growth potential → IPO success
- ✅ Secured revenue base from genomic analysis business → Positive growth potential → IPO success
- ❌ Narrow market size for pipeline → Revenue uncertainty → IPO failure
- ❌ Claims of efficacy after clinical failure → Lack of objective evidence → IPO postponed
IT & Software Companies: Growth and Talent Management Are Key, Not Profitability
Software companies, with no manufacturing facilities and a business model focused on human resources, are evaluated by the exchange on the following factors:
- Marketability and growth potential: Product or service scalability, strategies for entering new markets
- Talent and technology management: Preventing key developer attrition, dependence on outsourcing, ownership of proprietary technology
- Intellectual property protection: Patent registration or securing IP rights for core technologies
Moreover, the revenue structure is critical. Revenue from development services, SaaS, and licenses is more highly evaluated than simple distribution revenue. Demonstrating a structure with recurring revenue is key.
Real Evaluation Case Summaries:
- ✅ Proven royalty-based revenue structure and marketability → IPO approval
- ❌ Excessive hardware-based revenue share → Difficult to classify as an IT company → Request for further review
- ❌ Decline in license revenue and lack of proof of recurring revenue → Uncertainty in revenue sustainability → Negative opinion
How to Prepare for a Technology-Driven IPO?
📌 Prepare Thorough Technology Evaluation
- Emphasize differentiation of core technologies, patent acquisition, and quantitative explanations of technological elements.
📌 Prove Growth and Marketability
- Provide concrete strategies for revenue growth, competitiveness compared to similar companies, and global expansion potential.
📌 Strengthen R&D Talent and IP Portfolio
- Secure key personnel, strategies to prevent attrition, IP management systems, and patent registration status.
A technology-driven IPO is not something that can be achieved in a short period of time. If you’re seriously considering listing, it is advisable to start preparations at least 2-3 years in advance. Especially, building a patent portfolio and formulating a technology strategy are crucial evaluation factors during the listing review, so it is safe to seek expert help.
Need a More In-Depth Strategy for a Technology-Driven IPO?
This article is a summary of the technology-driven IPO guide series being published by Patent Attorney Shin Sun on her blog. To explore more industry-specific case studies, evaluation perspectives, and strategic preparation points, visit the link below to read the full guide.
