When Darrell Heaps started Q4 Inc. in 2006, he wasn’t thinking about liquidity.
Like many early-stage founders, his focus was survival, and conversations about ownership, valuation, and exit strategy felt like distant issues.
“Where you are today and where you think you’re going to go, that’s going to change over time.”
Theresa Marx, CIBC
“When you start something, you’re really focused very much on the problem, the customer, how you’re going to make money,” he said. “It really does take 100 percent of your brain power to figure out how to create something out of nothing.”
Q4 is an investor relations platform used by public companies to manage everything from earnings calls to investor targeting.
By the time it went public in 2021, Heaps had changed his approach to managing his company’s liquidity, and with strategic thinking he spared himself the challenges often faced by busy startup founders.
“If you’ve raised venture capital you’ve raised growth equity, you’ve signed up for a liquidity event at some point in the future,” Paul McKinlay, Co-Head of CIBC Innovation Banking, said in a recent fireside conversation on pre- and post-liquidity planning.
“Oftentimes we hear from founders and executives that either it’s too early in their business for them to start thinking about it, or they just kind of neglect to think that it’s the right time, but that often becomes too late very quickly.”
Strategizing early
Being public was always part of the long term plan, but long before Q4’s IPO, Heaps started to recognize how liquidity events could function as checkpoints for himself as a founder.
After bootstrapping the company for five years, and completing their Series A in 2015, the mental shift came during the company’s Series B raise in 2017, when liquidity moved from a vague concept to a practical consideration. Many founders have their entire financial life tied up in one asset, and Heaps realized that he needed to approach liquidity as a gradual mechanism to ensure not just his company’s ability to cover its costs, but his own financial security as well.
“We had opportunities to sell and to exit along the way,” Heaps said. “In each instance, what I chose to do was to raise more, take a little bit of money off the table, de-risk, and keep building.”
Heaps’ approach is based on one principle: liquidity planning isn’t a single moment. It’s something to approach as part of the founder journey.
“I do believe that entrepreneurs should be taking some dollars out of the business as they go, and the reason for that is to really just de-risk,” he added. “You’ve got a lot of your chips in one thing, so to be able to save dollars out of that, to diversify, to provide some security for yourself, for your family, those are just really smart things to do.”
In his case, that meant selling a portion of his shares through secondary transactions, which are private sales of equity that allow shareholders to cash out a portion of their holdings during a large financing, like a Series B or C event. This approach allowed Heaps to achieve the financial flexibility to support his family while continuing to finance and grow the business.
Pre-liquidity planning is about protecting yourself while you build. That can mean selling a portion of one’s shares through a secondary transaction, but it always involves assembling the right advisory team to get ahead of key decisions.
Founders often delay estate and tax planning, assuming it’s only necessary post-exit. But as Theresa Marx, Director of Wealth Planning at CIBC Private Wealth Management in the US, pointed out, early preparation is what allows founders to be ready when liquidity hits. Everyone else is forced into last-minute “fixing mode,” she said.
“Plan early and plan often,” said Marx. “It’s getting those lawyers in place. It’s getting the bankers in place, your investment managers in place and starting to say, ‘This is where we are today’ and start thinking about where you want to go in the future.”
Marx noted it’s also key to build flexibility into that plan. “Where you are today and where you think you’re going to go, that’s going to change over time,” she said.
Going deep
By the time Q4 was preparing to go public, those lessons became even more relevant. Ringing the bell at an IPO does not ensure a founder’s financial milestone, Heaps said, and sometimes makes it more difficult to extract personal wealth.
“Going public is a very large financing that doesn’t necessarily represent a huge amount of actual liquidity for the founder,” Heaps said, noting that many founders are locked up from selling shares for at least a year after an IPO. “Even when the lockup expires, if you start to sell any shares, this is typically a negative signal to the market, that can trigger more selling, so it can take a long time before the founder will do this.”
Instead, Heaps says founders can get creative.
“There are opportunities to complete a secondary sale as part of the IPO, however this has to be planned well in advance,” Heaps said. “As well, once publicly traded, and if you have large public holdings, there are things you can do in terms of how to borrow against that, or use that as leverage in various ways to be able to improve your financial position without actually selling. Having the right advisors ahead of this is key to setting things up right.”
Throughout Q4’s IPO process, CIBC Innovation Banking played a dual role in supporting both the company and Heaps personally. Kenneth Shogren, Managing Director, Private Banking at CIBC Private Wealth, reflects on the bank’s long-view approach.
“Founders and executives of tech companies have very complex situations,” Shogren said. “It really pays off to have financial advisors that know both their business as well as their personal situation. Finding an institution that is able to understand your needs in both areas is extremely valuable.”
Destination vs decision points
In 2024, Q4 was acquired by Sumeru Equity Parters in a take-private transaction worth $257-million CAD. Rather than selling fully at this point, Heaps continued his approach to take some cash off the table, but roll the majority of his equity into the new private company, signaling his commitment to continuing to grow Q4 and achieve the next milestone down the road.
It’s a pattern he’s come to understand well: what looks like an exit, especially in the case of IPOs or private equity acquisition, is often another turning point and opportunity for wealth creation, especially for those building lasting companies.
“An IPO is an exit for shareholders, and for employees, but not as much for the founder, it is a major—and in most cases the largest—financing event,” he said. “In fact, I would say that the IPO is when it gets materially harder, not easier. It’s like you just entered the Super Bowl.”
That’s why liquidity planning matters as an ongoing strategy. For Heaps, liquidity represents a series of decision points rather than a destination. The earlier founders prepare for what’s ahead, by surrounding themselves with the right long-term advisors, the more options they’ll have when it matters.
“As a founder, you’re interested in providing and creating long-term value,” said Shogren. “You want to find advisors that are interested in being long-term partners with you, not somebody that’s interested in pushing a product, but developing long-term solutions, and understanding that it’s not always going to go as you plan.”
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Feature image provided by Darrell Heaps.