In a season of IPOs, Deliveroo’s market debut made the headlines (for the wrong reasons of course). Following this, the director of AO Appliances offered an appraisal of the broader circumstances around the flotation, noting his view that capital markets are not supportive of entrepreneurship – hence the stock price cliff edge once shares were in public hands.
We see the public markets in a brighter light, noting the number of growth companies that have had much more positive experiences through the public listing process.
On the other side of the transaction is the money that supports growth companies to the point that they are ready for the public markets. Often this is private equity and VC money. This capital is the life-blood of early stage and scale-up companies. To keep that money working in the private markets we see the progression of these growth companies into the public markets as a natural and effective mechanism for recycling capital back into the VC/PE ecosystem.
There is a general view that individual investors are ring-fenced out of the VC space (plenty of crowdfunding platforms are attempting to rectify this – though whether they can provide access to genuinely high quality businesses is another matter of course). There has also been commentary that retail investors don’t get enough access to IPO subscriptions, though this too is being addressed on increasing numbers of public listings. Keeping this dovetail active between private and public markets maintains liquidity in the VC/PE funding pool, and enhances opportunities in the public markets.
We’re fortunate to operate in that dovetail, engaging with private equity markets in funding promising scale-ups, and then taking those companies to an IPO once their market relevance is proven. The equities market remains buoyant this year, and we look forward to seeing the virtuous (re)cycle of capital continue, to support the next wave of entrepreneurs!