"We’re not just repeating what’s been done in the industry,” the president of British EV company Arrival said ahead of its £10 billion float via a SPAC on the Nasdaq in 2021.
“We’ve rethought how the industry should work.”
The ailing UK car dealership industry was “ripe for disruption,” Cazoo founder Alex Chesterman said ahead of the firm’s own Nasdaq SPAC float a few months later, as he listed off a host of problems with decades-old rivals.
Arrival entered administration in February, and it looks like Cazoo will follow suit today.
The lesson? If someone thinks they get the market better than anyone else, they probably don’t.
At the time, both these firms choosing not to list in London was seen as a blow to our public markets. Now, it looks like London dodged a bullet, or two.
Chesterman said he picked New York because putting cash into in a high-growth business that was not aiming for short-term profitability was “just better understood by investors in the US.”
It would be tempting to stop listening to anything Chesterman says at this point. But he’s still right.
Tech firms I speak to still have their eyes on the Nasdaq when they think about the future. Many have talked about a London float – but things never get much further than talking.
Medium-sized tech companies in the UK still struggle to find the cash they need to grow: they face the choice of scaling back their ambitions or picking up the phone to the Americans for more support. They complain that there is neither a deep enough pool, nor a big enough risk appetite, for the capital being deployed here.
Several have quit the LSE over the past two months. They cite growing frustration that whenever they made progress, the shares barely budged.
A sluggish domestic IPO market means we avoid all the corporate failures – but at the expense of a much larger number of successes. That is the bigger risk.
