Top tech boss: London still no Silicon Valley

LONDON needs to do more to nurture growth in technology firms and become an attractive destination for them to go public, the head of one of the UK’s most successful internet firms said yesterday, warning that the US is a significantly better option for blooming British companies.

Michael Acton Smith, chief executive of Mind Candy, told City A.M. yesterday that he would prefer to float the firm in the UK, but that “US markets are much more attractive” and “a lot needs to happen” for London to compete.

Mind Candy, which created the popular children’s online franchise Moshi Monsters, saw sales reach £29m and its profits increase six-fold to £7.4m last year, but Acton Smith said he was not looking to float “in the short term” and called for the City to have “more awareness of what’s happening”. He said there needs to be “a few successful listings, so that the next generation doesn’t think the US is the only place to go”.

Acton Smith’s comments follow government proposals announced last week to loosen listing requirements for fast-growing companies on the London Stock Exchange (LSE). London has seen a number of British tech firms abandon the LSE for the Nasdaq index or look to be acquired instead of floating in recent years.

“The government getting their weight behind this definitely helps, but they can only do so much,” Acton Smith said. “I’m very proud of being a British business and would love to float in London but it will be many months, probably many years before [it] looks attractive,” he added, saying UK investors don’t understand tech firms like the US does.

Innovation minister David Willetts put forward plans to relax free float – the proportion of a company that needs to go public – and reporting requirements last Thursday, in a move designed to encourage European as well as British firms to launch an initial public offering (IPO) in the UK.

The last UK technology company to consider floating domestically was Edwards, the vacuum pump group, that ended up floating in New York after pulling flotation plans in the UK last year.