Investors Get A Handle On London Tech Firms As They Head Towards Becoming Unicorns

London has always been an ideal location to base a business, even back in the old days, for it is not only ideally located, i.e. close to important transport routes etc. but it provides a central hub of activity and a ready and waiting customer base. These days the same is true, especially for tech startups who find that it is the perfect place for business growth and to seek and attract investment.

London’s public markets have really warmed to tech stocks over recent years and over the past two years we have really seen a huge number of venture capitalists start pouring money into innovative, exciting London-based tech firms. Investors are becoming ever more wise to the intricacies of tech startups, which is only a positive thing and leads to a deeper understanding of just how valuable tech firms can be, which in turn leads to more investment!

The UK, and London in particular, is becoming a global leader in a number of tech marketplaces, including the health and education sectors, as well as the finance sector, with 344 tech companies being listed on Aim (the London Stock Exchanges market for small/ growing companies) and the main market.

The Aim market gives the UK a huge advantage, for it means that growing businesses can benefit from a slightly lighter regulatory environment when compared with the London Stock Exchange’s main market.

Where most startups fall down is in their choice of adviser and or investor when they want to go to market. It is crucial to choose the right partnership in order to ensure the success of a company’s initial public offering (IPO). Making sure a business’ growth forecast is viable is incredibly important, as shown by the number of IPOs which have delivered on their growth expectations upon coming to market, although some have also greatly underperformed!

Of course many businesses go to market for the first time with unrealistic valuations, however, the second wave often results in more realistic valuations, which helps both investors and companies, enables the IPO market to evolve, and also creates a positive trade environment.

UK investors are seemingly falling over themselves to invest in growing tech firms so it appears that there is no better time than now to attract the attention of fund managers and the like. Provided a company can show that it has grown, is growing, has recurring revenues and a high level of management, it should be on track to receive investment and edge ever closer to joining the unicorn club.

Despite the UK failing to stack up to the US’ offering of unicorns and decacorns ($10 billion startups), it is at least clear that we are well on our way to securing more and more unicorns. With UK tech firms now finding that they can secure investment at each stage of their growth cycle, the pressure to be snapped up early on (at initial idea stage) by an American corporation or a private equity firm has lessened. This is hugely positive for it means that our UK tech firms can stay independent, see their ideas through to fruition and more importantly stay based in the UK!