A couple of months ago Index Ventures mastermind Neil Rimer launched a broadside on the flaccid European market for IPOs, decrying a system that was failing hot European startups and encouraging them to sell out early or go public on the New York stock exchanges.
It was the venture capitalists’ equivalent of the St Crispen’s Day speech from Henry V, intended to galvanize the troops and ready them for action (though perhaps a little less poetic). Now it looks like Index — which has backed the likes of Skype (s MSFT), MySQL and Dropbox — is putting the next piece of its strategy into place.
Robin Klein, a venture partner at the firm and chairman of high profile British startups including Wonga and Moo, has outlined exactly what he thinks it might take to increase the number of technology IPOs happening in London.
In a post on the Index blog that was published over the weekend, Klein said that the City of London — the financial heart of Europe — needed to recognize that the “new economy” was taking over.
Those of us working in the tech world or, more accurately, the tech-enabled sectors, have known for some time that the Old Economy is being slowly replaced by the New Economy. Retail is being replaced by eCommerce, Old Media by New Media, enterprise software by SaaS.
It just does not seem right to me that the City of London, with all its smart investors, would allow the largest seismic shift in the economy to take place without their active participation. Particularly when evidence of this shift can now be found in the buildings outside their back door.
Our sense at Index is that a collective effort needs to be made to kick-start the IPO season for tech companies. And so, in an attempt to invigorate companies, policymakers and the City alike, we’ve put together some recommendations. All it will take is a three-pronged attack from policy-makers, entrepreneurs, and the City alike to make this happen, but it will only work if all the pieces come together.
You can read the recommendations yourself, but the crucial points are probably threefold:
– Government should slacken its requirements for companies going public (including the fact that a company must list at least 25 percent of its shares)
– Existing investors should be better prepared to IPO
– Institutional investors should work harder to specialist units that understand the needs and wants of venture-backed companies
It will be interesting to see if this turns into more public offerings, or just offers Index companies an excuse when they don’t list in London. There have been reports that Wonga, for example, has been rumored to be looking at New York for a listing.