Editor's note: Fuhu made it back on the Inc. 500 list this year. Stay tuned to Inc.com next week to find out where it ranks when our Inc. 500 package goes live on Wednesday, August 20.

Fuhu, maker of the Nabi and other Android-based tablets for children, is officially trying to grow up.

Several sources familiar with the company's plans say the eight-year-old startup--Inc.'s fastest growing company of 2013--is readying an initial public offering.

The exact timing of the IPO is unclear, and Fuhu executives declined to comment. Its valuation could easily surpass $1 billion, potentially approaching twice that figure, according to estimates from industry experts. Bo Brustkern, a private company valuation expert and founder of Denver-based Arcstone Partners, says fast-growing tech companies seeking to go public currently achieve valuations ranging from four to 10 times revenue. Fuhu took in nearly $118 million in revenue in 2012, and almost $196 million in 2013.

Last year, Fuhu's 42,148 percent three-year growth rate landed it in the top spot of the Inc. 500, a detailed ranking of the fastest growing private companies in the U.S. The company went from just $279,000 in revenue in 2009 to nearly $118 million in 2012. The El Segundo, California-based company sells colorful, rubber-protected tablets for children, including a Nabi DreamTab it produced with Dreamworks, which was unveiled in June.

In the past several months, the company significantly bulked up its finance department, and in March Fuhu hired veteran investment banker Peter Coleman as its first chief financial officer. Coleman, who came from the online investing startup Loyal3, is a former CEO of investment banking firm Merriman Capital. Fuhu also made at least four additional new hires in its finance department withinthe last eight months, according to publicly available information on LinkedIn.

Fuhu was founded in 2007 by Robb Fujioka and brothers Steve and John Hui with $1.5 million in seed funding. Its current day-to-day operations are overseen by Fujioka, the president, and Chief Executive Officer Jim Mitchell. The executives declined to comment on their current ownership stakes or Fuhu's potential valutation.

Fuhu is currently in the midst of raising a fourth round of funding from investors that include DreamWorks and Intel, according to the company.

Fuhu is preparing to go public at a difficult time for tablets. In July, Best Buy CEO Hubert Joly told Recode that tablets "boomed and are now crashing. The volume has really gone down in the last few months."

Among the reasons tablet sales have slowed is consumers replace and upgrade them less frequently than smartphones, which most consumers buy on two-year contracts, says Morningstar equity analyst Brian Colello. Instead of buying a new tablet every two years, consumers hold onto their tablets longer, and often pass them down to other family members. Tablets also face new competition from the rise of the large-screen smartphone, especially overseas.

"Customers buying 5-inch smartphones don't see a need to own a 7-inch tablet," Colello says. 

Even so, Fuhu has gone to great lengths to differentiate the Nabi in a market where few other companies develop tablets specifically intended for kids. It has a soft rubber bumper, which makes it harder to break, and strict parental controls to keep kids limited to safe apps and games. The company has licensed music, movies, e-books, and other content from nearly every major entertainment company, including Nickelodeon, Disney, and DreamWorks.

Colello says Fuhu's approach may very well carve out a niche that will insulate it from the slowdown in the rest of the tablet market.

"The real question is, can they build out a meaningful app store and maintain their content relationships?" he asks, adding that doing so will be the key to fighting off its biggest competition--likely a "hand-me-down iPad" from its users' parents.

In the last few years, Fuhu produced tablets for almost every age bracket in its target demographic. Its tablets are sold in nearly 15,000 stores nationwide, including Target, Walmart, and Best Buy.

The company also derives significant revenue growth from an ever-expanding line of accessories, ranging from tablet sleeves and car-charging kits to decals and headphones.