Index Ventures is building an IPO market in London

Innovation

I don’t want to take too much credit about this recent story, but I’ve been spending a lot of time thinking about the IPO market in Europe, most of which was spurred by Index Ventures talking about it at their Summer Party in Paris a few months back. While people are looking for the next $1Billion startup in Europe, my thought is always “what would that startup do if it came from Europe?” The answer has always been “Sell it the US, Move to the US, or fold,” because there is no feasible IPO market in Europe.
As much as I love France, I know enough to know that France is not going to be the center of any huge tech IPO market anytime soon, it’s not in their culture. But the London Stock Exchange has great potential, and today Index Ventures announced some pretty cool stuff. They’ve been working with the UK government and the LSE to create a better environment for European startups to IPO in – lower thresholds for entering (which bring investors higher growth potential in new companies) seemed to be the main proposition:

“A lower minimum float requirement will encourage issuers to price their IPOs at levels that make them irresistible to growth-deprived investors.”

Index said that this is just the beginning of the battle, but that companies like Criteo (w00t!), Wonga and some 20-30 other European startups are ready to IPO, and I’ve heard that Criteo is considering IPO-ing outside of the US. Index warned that investors, banks, and entrepreneurs need to shape up as well, if these proposed changes are going to work. But the way I see it: this is one less excuse for European wa-ntrepreneurs to use about their startup not succeeding. For more info, check out the Index blog post.

6 Responses

  1. Avatar
    Louis Dorard

    I found that the Index article used very vague terms and was quite abstract… It’s hard to understand for someone who has little background in finance. I’m still not sure what it is exactly that changed, why it’s good news, and what still needs be done?

    • Avatar
      Liam Boogar

      Great comment! I, too, found it a bit vague, but the gist of it, that i took away, was: They are going to make it more attractive for tech companies to IPO in London, by lowering the barrier to entry (minimum capital/valuation required), but that this is only the beginning of creating an IPO market.
      Private Investment Banks need to learn how to valuate internet companies based off their potential and not off their current revenue (basically, value them higher).
      In addition, European entrepreneurs need to stop TALKING about buiding “global” and actually start creating things that are valuable enough to go public.
      Lastly, VC needs to get its act together and complete the gap between bootstrapping and public market, so that startups can suceed within Europe alone.
      This is what I took away from it, but perhaps there’s more – or perhaps I’m compeltely wrong

    • Avatar
      Louis Dorard

      Ok now this is making more sense to me, thanks!

    • Avatar
      Louis Dorard

      Ok now this is making more sense to me, thanks!

    • Avatar
      Liam Boogar

      Great comment! I, too, found it a bit vague, but the gist of it, that i took away, was: They are going to make it more attractive for tech companies to IPO in London, by lowering the barrier to entry (minimum capital/valuation required), but that this is only the beginning of creating an IPO market.
      Private Investment Banks need to learn how to valuate internet companies based off their potential and not off their current revenue (basically, value them higher).
      In addition, European entrepreneurs need to stop TALKING about buiding “global” and actually start creating things that are valuable enough to go public.
      Lastly, VC needs to get its act together and complete the gap between bootstrapping and public market, so that startups can suceed within Europe alone.
      This is what I took away from it, but perhaps there’s more – or perhaps I’m compeltely wrong

  2. Avatar
    Louis Dorard

    I found that the Index article used very vague terms and was quite abstract… It’s hard to understand for someone who has little background in finance. I’m still not sure what it is exactly that changed, why it’s good news, and what still needs be done?

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