Learning from Twitter’s call to IPO on the NYSE

The decision by Twitter to list on the New York Stock Exchange, rather than the techie favourite NASDAQ, raises the question of what an exchange really means.

For the last decade, all of the major technology IPOs have happened on NASDAQ. From A&T Wireless back at the turn of the millennium to Facebook last year, the exchange has members including Google, Apple, Amazon, Microsoft, Yahoo…..you can see where I’m going with this.

However, the ill-fated listing of social media behemoth Facebook on NASDAQ in 2012 proved to be an embarrassment through a combination of technical glitches and lack of preparation for the demand that occurred.

In a signal of the turning tide, figures from Forbes point towards an interesting development that has panned out during the last 18 months – the NYSE is now the home of choice for high-flying technology concerns.

Of the 20 highest-valued ventured capital-backed technology offerings during 2012, the NYSE was responsible for 16 of them. Facebook was by far and away the runaway leader when it came to value, but its rival exchange filled up the remaining top five.

The decision to IPO is one of the biggest that any business will make in its evolution – at that stage it’s either float or sell out to a bigger player. It’s kind of like deciding where you want to live for the next 50 years, you need to be comfortable that it’s going to have the right investors, platform and fellow companies.

For the first time in a long time London’s Alternative Investment Market is back on the radar of ambitious growth companies as a suitable home and fuel for future development.

Rather unsurprisingly the most interesting and anticipated flotations in the UK, apart from Royal Mail, have involved technology companies.

There was, however, a stark warning from Powa chief executive Dan Wagner over the summer which deserves some attention. The e-commerce concern head said that unless banks and investors learn more about British technology businesses then London will lose potential IPOs. He revealed that there is a distinct lack of specialised analysts and committed investors, following a process which saw Powa turn to US investors as part of a £48.5 million investment.

If the heavyweights of the UK technology market are saying that there are some big issues to address, they’re probably right. For a high-flying company to be happy with an exchange then they must be shown clear anecdotal evidence that making the move will result in exponential growth.

Platforms like NASDAQ and the NYSE must realise they can’t simply assume that companies will ultimately end up with them. More must be done to prove that IPOs are the game-changing decisions they once were.

NASDAQ has long described itself as the stock market for the next 100 years – it remains to be seen whether they and their rivals can live up to this declaration.

Hunter Ruthven

Bernard Williamson

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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