London needs to do more to nurture growth in technology firms. This is the view of Michael Acton Smith, the head of one of the UK’s most successful internet firm.
With much tech market attention being on Facebook and its problematic initial public offering in New York, little has been written and said about tech IPOs on the London Stock Exchange (LSE). There is a very good reason for that.
There haven’t been any.
According to Acton Smith, not only does the LSE need to get their act together to nurture growth, but he believes it needs to become more of an attractive destination for SMBs to go public. He warns that the US is a significantly better option for blooming British companies.
These comments have come in direct response following government proposals announced last week to loosen listing requirements for fast-growing businesses on the LSE. Too many British tech firms have abandon the LSE for the Nasdaq index in recent years, and many look to be acquired instead of floating.
“The government getting their weight behind this definitely helps, but they can only do so much,” Acton Smith told City A.M.. “I’m very proud of being a British business and would love to float in London but it will be many months, probably many years before [it] looks attractive,” he added, saying UK investors don’t understand tech firms like the US does.
According to Neil Rimer, a partner at Index Ventures in London, “If you look at the number of tech deals floated over the last five years [in London], it is embarrassing.”
Innovation minister David Willetts put forward plans to relax free float – the proportion of a company that needs to go public – and reporting requirements last Thursday, in a move designed to encourage European as well as British firms to launch an initial public offering (IPO) in the UK. It is certainly a step forward.
The last UK technology company to consider floating domestically was Edwards, the vacuum pump group, which ended up floating in New York after pulling flotation plans in the UK last year.
Can London improve? Is floating on the LSE something you would consider in the current climate?
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