Learning about Funding Options for Scale Ups at AIM 20
How can growing Scottish companies raise the capital they need to expand? What are the advantages and drawbacks of accessing equity capital through the Alternative Investment Market? AIM 20: Scaling to New Heights helped leaders of over 50 Scottish businesses answer these questions.
TalentSpark (powered by Eden Scott) partnered with Informatics Ventures and the London Stock Exchange to host this summit at the Balmoral Hotel. Companies from the ICT, Life Sciences, and Food & Drink sectors heard about Taragenyx and Money Dashboard’s successful journeys to IPO. Smart Metering Systems and iomart spoke about life as an AIM company. Below are some of the key lessons they shared.
What is AIM 20?
2015 is 20th anniversary of the Alternative Investment Market. It’s the London Stock Exchanges’s lower-cost alternative for smaller growing companies seeking investment. It’s home to over 1,000 small and midsized companies, but only 23 are Scottish.
This summit was a great day for growing Scottish companies to connect with and learn from AIM veterans.
Prepare for AIM with ELITE: Education, Advice and Connections to Grow
LSE’s ELITE programme helps CEOs of growing companies develop their business and readiness for investment. It prepares them for an IPO or to be acquired in a trade sale.
It offers business support tools and education on scaling up, as well as access to advisors and investors. Scale Ups are guided on shaping their business to grow further and increase their visibility and attractiveness to potential investors.
ELITE welcomes a new cohort of companies every 6 months. To participate, the company must generate at least £5m in revenue. The CEO, CFO, or Chairman must represent the company at sessions. These take place once a quarter (over 1 to 1.5 days) for 18 months.
What are the Benefits?
Networking and connections: ELITE is a unique opportunity to develop strong relationships with other CEOs, CFOs and Chairman in your cohort, as well as leaders who recently listed their company. You also get access to investors and can meet them early – before the pitching process begins, develop a rapport, and lay the groundwork.
Knowledge: It’s key for leaders to be knowledgeable about their options for obtaining capital. ELITE demystifies the IPO process and the language around it. You learn what questions to ask. You need to understand and speak language of the investment process to retain your role.
Options: An IPO may not be the best fit. The programme helps you work with finance providers across the market, learning which option is the best route for your business.
Advantages of AIM
Being listed on AIM, not only brings capital, but more credibility. It further legitimizes your business. It increases clients’ confidence, particularly in B2B transactions. They know you have more funds and resources behind you.
Moving towards a public listing requires due diligence. Even if you decide not to list on AIM, the diligence pack is valuable. It can have other uses, such as gaining bank and VC funds. AIM also gives a basis for the valuation of your company.
Drawbacks of AIM
Being listed on AIM means more accountability to investors. Some investors may look for quick returns and not be thinking long term. You may have to alter your decisions to satisfy them and consider how decisions will impact your stock price.
Motivating Employees with Stock
Awarding employees shares in your company may bring out their best performance. It can help them feel ownership in the company, a huge motivator, increasing staff retention and motivation. If you educate staff on how stock options work, you may “get it back in spades.” Share schemes can also be key to bringing in the most talented senior staff.
TalentSpark can help you find the right motivated people to scale your business. This is crucial because, along with capital investment, investing in the right people is critical for growth.
Janeen Matacchiera was recently awarded her MBA with Distinction from the University of Edinburgh. Check out her LinkedIn profile for more information.