Several tech companies are turning their backs on the London Stock Exchange in favor of listings in the United States. Among them, British fintech Wise recently announced its decision to shift its primary listing from London to New York, following in the footsteps of other firms like UK chip designer Arm and food delivery giant Just Eat Takeaway.
In 2023, Arm opted for a New York IPO, while Just Eat Takeaway chose Amsterdam over the LSE in November. Sweden’s Klarna is also set to go public in New York, mirroring the path taken by Stockholm-based Spotify in 2018. The allure of bigger valuations, deeper capital, and a greater appetite for risk in the US market is evident.
Victor Basta, managing partner at Artis Partners, highlighted the superior performance of the US economy and the higher valuations available for companies listing there. The New York Stock Exchange boasts a market cap of approximately $27 trillion, dwarfing the LSE’s $3.5 trillion market cap.
This significant difference in scale, along with the presence of deep-pocketed investors, motivated companies like Arm and Wise to opt for listings in the US. Wise’s CEO, Kristo Käärmann, emphasized the move’s potential to tap into the largest market opportunity globally and access the most liquid capital market.
US investors are known for their willingness to take substantial risks on growth-stage tech companies, unlike their European counterparts who often prioritize immediate revenue. This contrast, according to UK-based serial entrepreneur Andrey Korchak, can hinder the growth of startups in Europe.
Korchak pointed out that Europe lacks the density of tech unicorns seen in the US, and even when European startups reach a billion-dollar valuation, many still prefer listing in the US. Sean Reddington, co-founder of UK tech firm Thrive, expressed concern over Wise’s move to the US, fearing it could exacerbate existing challenges.
He highlighted the potential brain drain of capital and talent, making it harder for UK scaleups to attract investment without a clear US exit plan. Reddington called for urgent government intervention, proposing meaningful incentives to encourage tech firms to list in the UK and retain their presence in the country.
European startup struggles and the trend of companies favoring US listings over domestic ones will be key topics at the upcoming TNW Conference in Amsterdam. The event aims to address these challenges and provide insights into navigating the evolving tech landscape.
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