Insig Ai Share Discussion Threads

[banshee] 25/12/2021 17:51

Tech sector looks Stateside after 'stuffy' City struggles to win listings

Despite efforts to attract more technology firms, the London Stock Exchange is still not as attractive as US bourses
By James Titcomb 24 December 2021 • 3:00pm
Cazoo
Online used car seller Cazoo opted for a New York listing over London

Nadine Dorries was in an ebullient mood. Six weeks after a Cabinet reshuffle made her Culture Secretary, a post that includes responsibility for the UK’s digital sector, she laid out her priorities in a speech to the annual dinner of lobby group techUK.

Playing to the audience, Dorries promised to tackle the “stuffy culture” of the City, which she said made investors reluctant to back tech start-ups.

She also promised to make London “the best place in the world” for entrepreneurs to float their companies, saying: “we don't want to see British companies have to go do that in New York”.

The timing was unfortunate. Later that week, Matt Moulding, the embattled boss of ecommerce company THG, said listing in London had been a disastrous choice that had “sucked from start to finish”.

“The obvious lesson is: don't IPO in the UK,” a despondent Moulding told GQ. “I should have IPO'd in America. That's obvious.”

Moulding was a special case. His business was in the middle of a downward spiral - desperate attempts to win over shareholders were backfiring and its shares were in freefall.

But he is far from the only executive running a UK-listed tech company that has looked to greener pastures on Wall Street. The likes of cloud computing company WANdisco, music service Napster and - before it was put up for sale - software company Blue Prism have this year considered or confirmed plans to move their listings to New York.

Billion-dollar startups like online car seller Cazoo, digital health app Babylon and electric van maker Arrival have also chosen to list in the US instead of the UK.

London has had its own successes, attracting the likes of Wise, Oxford Nanopore and Darktrace, pushing the number of tech companies in the FTSE 350 to a post-dotcom crash high this year. But still, the number of companies looking stateside suggest the Government has work to do.

“The UK has difficulty in valuing companies that are building tremendous value,” says David Richards, the founder of Sheffield-based WANdisco, which this year said it is considering a New York listing.

“The US uses a completely different set of metrics to value companies. And until that changes, it is going to be very hard for UK companies to reliably list in London; until the investment community understands how to invest in tech. UK investors on the whole, are very focused on short termism,” says Richards.

“Would Amazon have been able to survive in London? Would Salesforce? I doubt it.”

Richards repeats a common concern among tech founders: that the London Stock Exchange is dominated by investors seeking profits and reliable dividends, rather than growth and investment. This phenomenon recently led Paul Marshall of investment manager Marshall Wace to call the City of London a “Jurassic Park” where investors “dedicate themselves to clipping coupons rather than encouraging growth and innovation”.

This year Napster, the music streaming company formerly known as MelodyVR, announced plans to delist from Aim, London’s junior market, ahead of a Nasdaq flotation in 2023.

The company argues this would give it a valuation close to its competitors with chief executive Anthony Matchett saying this could be anywhere between seven and 15 times the £35m valuation it had in the UK before announcing plans to switch.

“Nasdaq is a much more appropriate market, because of the investor sentiment because of it being more sophisticated,” Matchett says.

“I don't think that's anything against the UK, but it's just that Silicon Valley culture has bred a lot of amazing high growth tech companies, and people are used to seeing those list in the US. It’s tried and tested.”

Lewis Liu, an American who founded his software company Eigen in the UK, recently announced plans to move its headquarters to New York. While a flotation is at least two years away, the company’s move Stateside was partly inspired by a desire to list in the US - and he predicts more will follow.

“There is no trillion dollar company outside of America. We have an opportunity to be a massive company, and the US capital markets can support that.”

Meanwhile, the rise of blank cheque companies known as “Spacs” in the US have also made Wall Street more attractive to British startups, particularly those without the reliable income treasured by City investors. Spacs typically target early-stage firms that have little in the way of revenues, let alone profits.

Cazoo founder Alex Chesterman, who floated his previous company Zoopla in Britain, says New York was a much better destination this time, because Cazoo was lossmaking and planned to invest its money back into the business.

“Some people [in the UK] struggle to get their head around the idea that your plan is to lose money. That's a plan that US investors understand more readily and are more comfortable with.”

This year, ministers and the Financial Conduct Authority have made highly-publicised efforts to make London more appealing to technology companies, with reforms that make Spacs easier and allow for features popular in the US, such as dual-class share structures. But changing the rules can only do so much: one investor says that the City simply suffers from a lack of growth funds and analysts who understand tech.

“When people say the London Stock Exchange doesn't support tech companies, they don’t mean London Stock Exchange the capital market, or the company. What they mean is the entire financial ecosystem of the city.”

The UK has not been devoid of successful tech floats in the last year. Many of those considering crossing the Atlantic had previously been feted by investors, only experiencing a change of heart when things started to go south. Their problems could be their own, rather than London’s.

But even those who are staying put often grumble about short-termism in private. Many would say that Dorries’ diagnosis of a stuffy culture is correct. Identifying the problem is one thing, but fixing it is another matter entirely.

[ltinvestor] 23/12/2021 08:51

Good to see directors purchase…

[noujay] 22/12/2021 14:00

Certainly upbeat in the forward statements and looks like it could be a fast start to 2022. Pleased to see a little buying today as well

[pj 1] 22/12/2021 13:44

Only time for a quick scan of the RNS and my initial thoughts are it read well.

An immediate concern, as it does not make any sense to my simple brain, is why on earth do they have trade debtors (Trade and other receivables) of £1.6m against Revenue of £0.9m? Surely that isn't correct, is there some aged debt in there?

We then have Trade and other payables of £500k.

What on earth is the Accountant playing at?

How much cash have they burnt since the RTO?

[banshee] 22/12/2021 12:59

Nothing to complain about in the results, all very upbeat and also very much inline with what they have said before, together with a bit more insight on the recent acquistion. Still looking like an under appreciated gem in the making.

[noujay] 18/12/2021 09:20

Yes indeed half year was end of September so due anytime now. Wouldn't say reporting them towards the latter part of the window is indicative of anything, plenty do.

[pj 1] 17/12/2021 15:06

yump- I think its fair to say we are all also (shell) shocked by the price action here

Where do I recall you from?

[pj 1] 17/12/2021 15:04

Noujay15 Dec '21 - 14:59 - 546 of 547
There must be some results due in the next few days as well - will certainly read the forward statement with interest.

With the changed year end I assume half year was end September?

If so, they are not giving the perception that they are in control of their finances by taking, what is it, nearly 3 months to produce H1 Results.

If they have given a date for HY then I have missed it.

Meanwhile, the share price gets further down the cliff with no buyers in site. Does the Market know something that we do not is an immediate question. It appears that as soon as anyone presses the sell button then the MM's drop the bid as they have to go searching for any buyers. The MM's themselves clearly do not want the stock.

[yump] 15/12/2021 18:43

Thought I'd have a quick look - quite shocked.

Buying a business that's not proved its viable yet and paying 300K upfront and a shed load more for relatively small increases in revenue. Nice for the recipient.

I guess that's how the deals are done in the City. The idea of viability seems to escape a lot of people a lot of the time.

Just pay a multiple of revenue and everyone is happy.

[noujay] 15/12/2021 14:59

Good to see the contract win in a new vertical earlier in the week - if customising the tech for new customers like this is low cost then they could presumably start to scale this pretty quickly.There must be some results due in the next few days as well - will certainly read the forward statement with interest.

[judijudi] 14/12/2021 19:37

😂🤣
It looks a stunning place mate 👌

[parsnip1] 14/12/2021 17:40

All good thanks Judi. Slumming it on Burgh Island taking one for the team sir!!

[judijudi] 14/12/2021 17:28

parsnip
Hope you’re well
It’s just shown up

[busterdog2] 13/12/2021 15:50

I guess they'll have gone through on Plus

[parsnip1] 13/12/2021 15:44

Funny old world, there's at least 1 x 67k of shares bought this morning and not showing up. Wonder why?

[hiddendepths] 13/12/2021 09:21

"This contract win is important."

Agreed - demonstrates that the target market is much bigger than I, for one, had believed. Many, many more opportunities!

[ltinvestor] 13/12/2021 09:15

…interesting to note that this is a 5 year contract with recurring revenue

[parsnip1] 13/12/2021 07:23

A natural horizontal market. High volume of data with the need to be interpreted quickly into information for current and future analysis. Has to be the security sector next......a good portfolio building below the waterline. Colm's target prices in his agreement were not plucked out of the air

[ltinvestor] 10/12/2021 16:19

Seller cleared this afternoon…directors cannot buy as the company is in a close period.

[pj 1] 10/12/2021 15:36

Someone seems interested this PM. Too much to hope that our new Director is buying?

[pj 1] 02/12/2021 16:44

Its probably best to agree to disagree rather then bore everyone to death over this. However, its seems obvious to me OPTI and many other Companies have been found out issuing RNS's that investors have seen through as producing negligible Revenues.

[banshee] 02/12/2021 16:37

Except that Opti went from 8p to £1+ rather rapidly without including any of those details, and stayed in that region quite a long time, in their case of course they could not, and they went up just because investors liked the idea of the microbiome. And that is chicken feed compared to a lot of other stocks e.g on ther Nasdaq with similar lack of visibilty.

There are many factors involved, that is not to say that in their particular current situation INSG would not benefit from some more financial details, but likewise a significant nuumber of initial contracts would also be very positive..

[pj 1] 02/12/2021 16:27

Banshee, i doesn't matter which company or sector, if they do not include the detail investors need then the RNS's are useless.