It used to be that startups raised venture capital, grew fast, and went public. These days founders sell some of their shares in so-called secondary markets, raise more private capital, and avoid the IPO market.

So I was really scratching my head when I talked to a CEO who could not raise venture capital so he sold shares to the public last month.

The CEO in question is Philip Marcella who was born in Northern England and founded Boston-based appScatter -- a company that helps application developers to distribute their applications -- particularly outside the U.S.. where the Apple App Store and Google App Store lack much market share. appScatter charges its customers a regular subscription fee to use the platform. The charge is based on both the number of users ($10 per user per month) and the number of managed apps ($50 per app per month).

Marcella's first company was founded in 1994, raised $100 million in a 2000 IPO and employed 400 people -- 200 in the U.K.. and 200 in the U.S..

Since last December, when I first spoke with Marcella, appScatter has made progress. In an August 22 interview he said, "We are headquartered in London with an office in Boston, and we plan to open one in Berlin. We have workers in Porto, Portugal and Chennai, India. We expect to breakeven in the first half of 2018 as we fulfill the requests of 10,000 companies to join appScatter. We have 19 current employees and 28 outsourced contractors and over 8,000 registered users."

While appScatter was able to raise some private funding, it struck out when it came to winning growth capital from Boston-based venture capitalists. "We raised money from friends and family and wealthy individuals -- £12.6 million over three years -- 50% in services and 50% in cash. The wealthy individuals included Roland Koch (Vodafone), Kai Tshoake (Rothschild & Co), Dr Giuseppe Vita (Axel Springer), Andreas Berger (Allianz),
Marcus Schenck (Deutsche bank), and Florian Budde (McKinsey & Company)," said Marcella.

Problems came when appScatter tried to raise venture capital. "When we tried to raise capital in Boston -- where our developers did the core design -- from General Catalyst and Flybridge, we encountered problems. They said 'Come back after you have proof of concept, alpha testing, beta testing.' They kept changing the goal posts. And they wanted a high percentage of the company and exit control. We weren't getting anywhere," explained Marcella.

Marcella took the Boston VC lemons and turned them into lemonade by launching an IPO -- which seeks to raise £5 million on the London Stock Exchange's "junior" Aim market (only UK citizens can invest) in September. Marcella said, "We did our road show for appScatter Group plc -- 50 meetings in nine days. The offering was over-subscribed so we were able to select investors who said they would hold onto the shares for at least three years before they sell."

appScatter worked with a London-based firm, Edison Investment Research Limited, which prepared "pre-IPO research." Edison's July 31 research report concludes that appScatter will go from no revenue in 2016 while posting a pretax loss of £3.6 million to £17.3 million in revenue and £5.5 million in profit by 2019. Edison's report notes that by June 2017, appScatter's so-called soft launch was yielding £2.1 million in annualized recurring revenues. If it meets projections, Edison concluded that appScatter will be worth about 50 million in today's dollars after a successful IPO.

People who provide what looks to me like publicly-funded growth capital are taking a risk on a company which is losing money and is subject to many risks -- not the least of which are competition from mobile app rivals who could make a grab for market share by offering the same service at a lower price, its reliance on customer data from app stores -- which I available now but could change in the future, and appScatter's reliance on Amazon's AWS -- which could suffer performance and security problems according to Edison.

I admire Marcella's moxie and look forward to seeing how well appScatter's IPO goes and whether it achieves the targets Edison used to value the company.