London Tech Week opened under a cloud, with two major developments casting doubt on the strength of the UK’s public markets. Just days after fintech giant Wise announced plans to shift its primary listing to New York, semiconductor firm Alphawave is now set to be acquired by a US buyer. These back-to-back blows have reignited debate over the UK’s ability to retain and scale its most innovative tech companies.
FundCalibre’s Darius McDermott and Gresham House’s Ken Wotton say the UK must do more to retain its most promising businesses. If the government is serious about fostering homegrown innovation, they say, it must take urgent steps to strengthen the domestic capital markets – particularly AIM.
Darius McDermott, managing director at FundCalibre:
“It’s a telling contrast: the Prime Minister courts Nvidia’s Jensen Huang just as another UK tech success story, Alphawave, is set to be acquired by an American buyer. This comes just days following Wise’s decision to shift its primary listing to New York last week, in another sign of UK public markets’ fragility.
“Selling to larger US rivals has long been a common exit path for UK tech, but this need not be the status quo. If the government wants innovation to flourish at home, it must recognise the vital role a healthy public market ecosystem plays in retaining and scaling these businesses.
“Stripping away incentives for AIM risks permanently damaging one of the UK’s most effective growth engines of the market and economy – particularly when the revenue raised would be inconsequential.
“Our view is the government must prioritise policies that support domestic UK capital markets – not kill them. They are critical for a well-functioning economy and society. For too long, the government has neglected, overregulated and taxed them, driving liquidity and investment out of the UK.”
Ken Wotton, portfolio manager of Strategic Equity Capital (SEC):
“The perpetual flight of promising homegrown tech leaders from our public markets is a stark reminder of the deep discounts UK equities trade on relative to US and private market peers. Overseas buyers are capitalising while domestic investors overlook the value on our doorstep.
“If the Prime Minister takes one message from London Tech Week, it should be this: in a global economy increasingly driven by innovation and entrepreneurship, the UK cannot afford to neglect one of its most effective tools for scaling high-potential businesses. AIM deserves not just protection, but proactive promotion. That starts with a firm commitment to maintain the tax incentives that have long attracted patient capital and supported sustainable growth.
“While the halving of IHT exemptions has had a material adverse impact on liquidity and sentiment, AIM remains home to a diverse array of growth companies trading at historically attractive valuations. This presents a compelling entry point for long-term investors seeking exposure to innovation-driven businesses across multiple sectors – but policy support is needed to rebuild confidence.
“One step would be to allow VCTs to invest in the secondary market for eligible AIM companies, boosting liquidity without any added fiscal cost. Meanwhile, revising limits on company size, age and capital would allow the most promising SMEs to raise more money, for longer, and scale more effectively.
“AIM-listed companies have delivered robust post-IPO earnings growth and include some of the most exciting technology businesses we hold in our portfolios. With the potential for meaningful investment returns, coupled with the positive economic impact of these firms, AIM remains highly investable. Its importance to the UK’s ambition to reclaim its position as a global technology leader must be recognised.
