MICHAEL HAYMAN MBE: AIM PROVES THE BENCHMARK THAT OTHERS FOLLOW
This article first appeared in The Yorkshire Post on 7 July 2015.
These are testing times for the public markets. Uncertainty stretching from Greece to China has put investor confidence on a hair trigger, evidenced by the £34bn that was wiped off the value of FTSE 100 stocks in just one day last week.
But there is also a more optimistic, hopeful story to be told. At the recent AIM 20th Anniversary Dinner, I was struck by the message from the new Business Secretary, Sajid Javid.
He described AIM, the UK’s junior market, as “the envy of the world”, highlighting that the more than 3,000 companies who have been part of the index since 1995 have raised funding in excess of £90bn.
The birthday reviews for AIM were undoubtedly mixed: for some, it will always be a chancer’s market, a tide too choppy to try and tame. But that cannot take away from the vital role it plays in supporting the growth of some of Britain’s most innovative and high-potential emerging companies.
The AIM Market has a vital role to play in accelerating the potential and performance of UK companies, and, as it hits 20, its best years lie ahead. Not least because of the revolution that has taken place at the early-stage end of the market, with the flourishing of young start-ups who can mature into AIM-ready companies, quicker now than ever before.
Over the last five years, we have witnessed a revolution in the UK’s business community, a sustained surge of start-up creation and growth that can be a gamechanger for the junior market.
Over 760,000 new businesses have been founded since 2010, something I have had the chance to witness first hand as one of the founders of the government-backed StartUp Britain campaign.
Surely, you might think, the gap between business births and listings is a yawning one. But this is not just a story about early-stage entrepreneurship.
The UK has also seen what was a relatively stagnant pool of venture capital turn into a flood in the last two to three years, private funding that is the powering the growth of a generation of scalable success stories, especially in the technology sector.
When I interviewed the then Business Secretary, Vince Cable, at the London Stock Exchange last year he claimed that in his early years in the job the Government was the single biggest backer of private sector venture capital.
Now the picture is much more balanced. According to one survey, the volume of venture capital into London tech increased twentyfold between 2010 and 2014. In Yorkshire and across the North, bespoke venture capital providers are likewise springing up to support an increasingly vibrant tech ecosystem.
Fuel in the tank at the early stage means the path from start-up to scale-up is becoming increasingly well trodden and the companies who are banging on the door of the public market are better equipped to survive the often bumpy ride it entails.
The future for these companies, and indeed for AIM as a whole, is neither simple nor easy. But this is a market made for challengers, and defined by growth.
By one estimate, two thirds of the companies that will make up the S&P 500 index in a decade’s time have not yet been created.
That could equally stand for the UK; if the last five years in business might be defined as a Start-Up Parliament, marked by a flurry of business creation, the next must become the Scale-Up Parliament, where young companies mature into growth engines.
A STORY OF SUCCESS
That you can take a company from nowhere to global success was the story of many entrepreneurs I interviewed for Mission: How The Best in Business Break Through.
Take Edwina Dunn and Clive Humby, founders of dunnhumby, the business behind the Tesco Clubcard.
They were faced with the quandary of how to grow internationally with a shortage of requisite skills. Their answer was ‘The Power of Two’, a methodology which sent carefully-selected teams of two to conquer new markets.
Today, dunnhumby is being valued for sale at £2bn; 25 years ago it was a kitchen table start-up.