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Alternative Disclosure in IPOs: How Business Model Targets Bridge the Forecasting Gap.
- Directors' Institute
- 13 hours ago
- 8 min read
If you’ve ever sat through an IPO presentation, you know the drill: past performance charts, future revenue forecasts, a sprinkle of industry jargon, and a whole lot of optimism. Sounds great—until you realise half those forecasts age faster than milk in the summer heat.
That’s not because companies are lying (well, most aren’t). It’s because modern businesses—especially in tech, SaaS, and digital-first spaces—don’t grow in straight lines anymore. They pivot, they test, they scrap features, they reinvent pricing models… sometimes all in the same quarter. So, telling investors “Here’s exactly what we’ll make in 2027” can feel like a polite fiction.
This is where alternative disclosure comes in. Instead of promising crystal-ball accuracy, companies are starting to share business model targets—things like customer acquisition cost, churn rates, active user growth, or market penetration goals. These are the dials and levers that really run the business, and they can paint a far more honest picture than a single number on a forecast slide.
Why does this matter? Because investors are tired of guesswork, regulators are rethinking what “disclosure” really means, and founders are looking for ways to tell their growth story without painting themselves into a corner. In this piece, we’re going to dig into how this shift works, who’s doing it well, and what it could mean for the future of IPOs.
Section 2: Why the Usual IPO Forecasts Just Don’t Work Anymore
Here’s the thing about IPO forecasts—they’ve always been a bit of a guess. But these days? They’re more like throwing darts blindfolded.
Think about it. Markets move faster than ever. One viral trend, one sudden policy change, one competitor’s surprise launch—and your beautiful revenue chart is toast. By the time your “next 3 years” forecast is printed in the prospectus, half of it is already stale.
And here’s the kicker: the companies going public now aren’t the slow-and-steady giants of the past. They’re SaaS startups, app-based platforms, and D2C brands—businesses where the real signals of health aren’t old-school metrics like “units sold,” but things like active users, customer churn, and engagement per session. IPO paperwork forces them to cram all that complexity into a single projected earnings figure. It’s like judging a whole restaurant by one photo of its menu.
Plus, there’s the human side—going public is high-stakes theatre. Founders want the stock to pop, bankers want their deal to shine, and suddenly those forecasts start looking suspiciously optimistic. Sometimes it’s overconfidence. Sometimes it’s the quiet hope that the future will magically cooperate.
Investors see those big numbers, buy into the dream, and six months later? The first earnings call hits, the dream meets reality, and the stock price does the awkward slide.
This is why alternative disclosure—showing your business model targets instead of pretending you can see the future—isn’t just “innovative.” It’s survival.
Section 3: What “Business Model Targets” Actually Look Like in Real Life
When you first hear “business model targets,” it sounds like corporate jargon you’d need a decoder ring for. But really, it’s just companies saying: “Here’s how we plan to win, and here’s how we’ll measure if it’s working.”
Instead of pretending they can tell you exactly how much revenue they’ll make in 2028 (spoiler: they can’t), they break it down into key building blocks. Think of it like telling someone your workout plan instead of promising them you’ll have six-pack abs by next summer.
Here’s how it shows up in IPO documents:
Unit Economics – Not just “we’ll grow revenue,” but “we’ll keep our customer acquisition cost under $30 while increasing lifetime value above $200.” That’s a health check for the business engine.
Growth Levers – Clear statements like “launching in three new geographies per year” or “expanding product range from 10 SKUs to 25 SKUs in 18 months.” Investors can actually track these.
Operational Metrics – For a SaaS firm, that might mean “maintaining churn under 5%” or “doubling active users annually.” For an e-commerce player, it might be “improving average basket size by 15%.”
Milestone Timelines – Instead of forecasting dollar amounts, companies map out events: new product launches, market entries, or key partnerships.
The beauty of this approach? It shifts the conversation from “Will you hit this revenue number?” to “Are you executing your plan?” Investors can follow along quarter by quarter without feeling misled, and companies get to share their growth story without setting themselves up for an embarrassing miss.
And it’s not just theory—plenty of IPOs are already doing this. Take Wise (the fintech formerly known as TransferWise). In its London listing, it didn’t offer a traditional profit forecast. Instead, it laid out a clear target: maintain a net take rate while growing customers at double-digit rates. Or look at Snowflake—its IPO prospectus leaned heavily on data warehouse usage growth and customer expansion, not just big headline numbers.
By focusing on the drivers instead of the destination, these companies gave investors something far more valuable than a crystal ball—they gave them a dashboard.
Section 4: Old Guard vs. New Wave — The Tug of War Over IPO Disclosures
If IPO disclosures were a family dinner, the “old guard” would be the traditionalists who insist on doing things the way it’s always been done: clear revenue forecasts, profit estimates, and a thick stack of assumptions no one actually reads.
On the other side of the table? The “new wave” founders and CFOs saying, “Look, we’re not fortune tellers. Here’s our playbook instead—watch how we execute.”
The Old Guard’s Argument
Traditional investors (and a fair chunk of regulators) worry that without hard numbers, they’re left in the dark. “Targets are nice,” they say, “but I want to know the score before I bet on the team.” For decades, IPO prospectuses have been built around that mindset: you pay your money, you get a projection, you measure against it.
The New Wave’s Pushback
Startups—especially in tech, biotech, and other high-growth sectors—argue that giving a 5-year forecast is like promising the weather on your wedding day two years from now. The markets move fast, customer behavior changes overnight, and one new regulation can flip a business model. Why set yourself up to miss a number you never had control over?
Instead, they pitch business model targets as a truth-in-advertising upgrade:
No smoke-and-mirrors revenue guesses.
Transparent execution milestones.
Investors get to track real progress, not outdated predictions.
The Middle Ground Emerging
Interestingly, some regulators and stock exchanges are starting to warm up to this hybrid approach. In Australia and Hong Kong, guidance has been issued encouraging companies to focus more on operational metrics and less on speculative numbers. Even in the U.S., you’ll see certain high-profile IPOs sidestepping traditional forecasts entirely, opting for a “metrics dashboard” approach.
The underlying message? Investors still want accountability—but they’re open to new scoreboards, as long as they can trust the game.
Section 5: What This Means for Indian IPOs — A Cricket Match Without the Guesswork
Picture this: you’re watching India play Pakistan in the World Cup. Before the match even starts, someone tells you exactly how many runs India will score, who will hit the winning shot, and in which over the game will end. Sounds exciting… until the first ball is bowled, the pitch turns out trickier than expected, and rain interrupts play.
That’s what a lot of traditional IPO forecasts feel like—overconfident predictions that can unravel in real life.
Why This Matters in the Indian Context
India’s IPO market is buzzing. In the last couple of years, we’ve seen everything from tech unicorns to decades-old manufacturing giants hitting Dalal Street. But here’s the twist—investors today aren’t just chasing numbers; they’re chasing stories.
When companies swap “We’ll make ₹500 crore in 2026” with “We aim to capture 15% of the EV market by building 200 fast-charging stations across Tier 1 cities,” it shifts the focus. It’s not about guessing the final score—it’s about seeing the game plan.
Why Investors Might Welcome It
Clarity without the crystal ball – They get to track whether a company is doing what it promised, instead of waiting for year-end financials.
Less room for manipulation – Business model targets are harder to fudge than over-optimistic revenue projections.
Alignment with India’s growth sectors – In fast-evolving spaces like renewable energy, fintech, or e-commerce, operational milestones tell you more than static forecasts.
The Flip Side
Of course, Indian regulators like SEBI will still want safeguards. Targets can’t just be vague slogans like “be the best in the industry.” They need to be measurable—just like in cricket, you need to know how many overs are left and how many runs to chase.
A Potential Game-Changer
If Indian IPOs adopt this approach, it could open the door for a new breed of investor—people who value execution discipline as much as (or more than) early profit numbers. Think of it as investing in a cricket team not because they promise 300 runs every match, but because you trust their batting order, fielding strategy, and captaincy.
Section 6: Global Trends India Can Learn From — No Need to Reinvent the Wheel
If IPO rules were a buffet, the U.S., Australia, and Hong Kong have already tried some dishes we can taste-test before cooking our own recipe.
Australia — The Pragmatist’s Playbook
Australia was one of the early movers in relaxing strict earnings forecast rules. Instead of forcing companies to give a crystal-ball profit number, they allowed “operational targets” — the business model equivalent of saying, “We’ll sail north for three days, not ‘We’ll reach exactly this island by 4 PM Friday’.”
What’s interesting is how Australian regulators made it work. They insisted that these targets be:
Measurable (e.g., “open 20 new stores” vs. “grow presence”)
Time-bound (so no endless “in the future” promises)
Linked to strategy (so you’re not talking about selling more ice cream when your main business is solar panels)
Result? Investors didn’t lose faith, and companies had more breathing room to explain their vision without the fear of missing a forecast.
Hong Kong — A Balancing Act
Hong Kong took a slightly different route — they still allow earnings forecasts, but companies can choose to give alternative disclosures if they think traditional forecasts are too speculative. It’s a bit like being allowed to submit either a full recipe or just your cooking method, as long as you’re clear about which one you’re offering.
The benefit here is flexibility. It recognises that a biotech firm launching a new drug is in a totally different position from a 40-year-old logistics company.
United States — Storytelling Meets Regulation
The U.S. doesn’t have a formal “alternative disclosure” rule the way Australia does, but it’s the land of the investor pitch deck. American IPOs often weave their S-1 filings with vision-led milestones — “We plan to expand to 50 cities in 2 years” — layered alongside financial numbers. It’s less about ticking boxes and more about building investor conviction.
One lesson India can steal from here? The art of blending narrative and numbers. A dry target sheet won’t excite anyone, but a strong narrative with concrete checkpoints will.
The Common Thread
Across all these markets, one thing stands out: trust is the currency. Whether you’re giving revenue forecasts or business model targets, the market will only believe you if your disclosures are clear, consistent, and followed up with proof of execution.
For India, borrowing from these playbooks means we don’t have to learn the hard way. We can take what works abroad, tweak it for our own fast-growing and regulation-sensitive market, and maybe—just maybe—set a gold standard others look to copy.
Conclusion — Bridging the Gap Without Burning the Bridge
At the heart of this whole debate, “alternative disclosures” in IPOs aren’t about avoiding hard truths — they’re about telling the right truths in the right way.
For decades, Indian IPOs have been like arranged marriages with very little courtship — investors often had to decide based on rigid, short-term forecasts that might not reflect the real journey ahead. Business model targets change that. They let companies share their map without pretending to know the exact weather or the minute of arrival.
But — and this is a big one — they only work if backed by transparency, measurable milestones, and follow-through. Otherwise, they risk becoming just another shiny buzzword in the capital markets glossary.
If India takes cues from Australia’s pragmatism, Hong Kong’s flexibility, and America’s storytelling, we could strike the perfect balance — a system where founders feel free to dream big, and investors feel confident those dreams are grounded in reality.
In the end, IPOs aren’t just about numbers; they’re about trust, vision, and partnership. Alternative disclosures might just be the bridge that gets us there — if we build it well.
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