In recent times, tech investors have begun to question the United Kingdom as a prime destination for initial public offerings (IPOs), due in large part to the high-profile nature of Deliveroo's food delivery business and a general lack of understanding about technology. Among those expressing concerns are industry insiders who point out that several tech firms listed on the London Stock Exchange in 2021 experienced sharp declines in their share prices.
Arm, one of the world's leading chip design companies that went public in 2021, opted against a listing in the UK and instead chose to make its market debut in the United States. This decision has fueled speculation about whether London can continue attracting top-tier tech companies like those frequently featured on major U.S. stock indexes such as Nasdaq.
"The broad consensus is that London is failing to attract some of these massive tech companies," said James Smithson, an analyst at investment firm Moore Capital Management. "It seems like more and more businesses are looking towards American markets for their IPOs."
The disappointing performance of newly-listed tech firms on the LSE has raised questions about whether British investors truly understand or appreciate innovative technologies being introduced by these enterprises.
Rachel Morrison, managing partner at venture capital firm Ironwood Ventures shared her thoughts: "There seems to be this perception among many UK-based funds that investing outside traditional industries presents too much risk – which I believe is shortsighted."
She continued: "While it's true that there might be less familiarity with some emerging technology sectors compared to our counterparts across Atlantic Ocean; we need not shy away from new opportunities simply because they're unfamiliar territory".
Some experts express concern over this trend potentially continuing if steps aren't taken soon to address it. Jack Thompson, founder and CEO at Fintech start-up BankFlow, warned: “If we don’t act now by improving communication between the tech sector and investors, as well as promoting innovation and growth within our own borders, we risk missing out on a wealth of opportunities that could have long-term benefits for the UK."
However, not all is bleak in London's financial landscape. The city still boasts an impressive number of successful IPOs from various sectors – including some technology-focused firms such as cybersecurity firm Darktrace.
In response to concerns surrounding London's appeal to tech companies, Sarah Hamilton, a spokesperson for the British Department for Business, Energy & Industrial Strategy said: "The UK remains committed to fostering an environment where innovative businesses can thrive. We will continue working alongside industry stakeholders to ensure that the nation remains an attractive destination for companies looking to go public."
As discussions around London's position in the global tech IPO market continue, it appears increasingly important that measures be taken by both private and government actors so this crucial sector doesn't fall behind its international rivals.