Listed companies shouldn’t be excluded from Burnham’s Scale-Up Fund
Backing Britain’s future through initiatives like the Scale-Up Fund means backing its public growth companies too, writes Danny Lopez
In one of his first acts as Prime Minister over the summer, Andy Burnham announced a £1bn Scale-Up Fund for UK science and technology companies. It was undoubtedly a positive move for Britain’s most innovative companies, but it also acknowledged a problem: talent and world class companies are in plentiful supply in this country, but scale-up capital is not.
The challenge we are facing is ensuring great companies, tech and beyond, have access to the investment they need. Without it, British champions struggle to remain in the UK and scale to become global success stories. If our government is serious about driving productivity, creating skilled jobs, strengthening our long-term competitiveness and ultimately growing our economy, it is right that facilitating such investment is at the top of the agenda.
Therefore, plans to establish a British Business Bank-backed investment vehicle supported by some of the country’s largest pension providers are hugely encouraging. Directing long-term capital towards fast-growing science and technology businesses in this way is an intervention that could materially strengthen Britain’s scale-up ecosystem.
Listed companies deserve help too
I have personally spent a large part of my career promoting and championing British business overseas. During that time, I saw first-hand how highly UK innovation is regarded across the globe. Today, as CEO of British cybersecurity company Glasswall, I see the challenge from the other side. Building a promising technology business is difficult but scaling it into a global company is harder still. That requires patient capital, committed long-term investors and a funding ecosystem that grows alongside the business. The government’s initiative is an essential step in the right direction if we are serious about turning British innovation into international success. I write as one of the fortunate few, the CEO of a company that has the benefit of a long-term investor who backs it through its growth journey. Most founders I meet are not so lucky. That gap is precisely what a well-designed scale-up fund exists to close.
However, as the detail becomes clearer, I urge policymakers to consider our public markets and not allow listed growth companies to be left behind. This is because, at the moment, it is uncertain whether the government’s initiative will extend to companies on the public markets, as well as their private counterparts. If the ambition is to back the next generation of high-growth British companies, then every company that meets this criteria should be eligible, regardless of ownership structure. Many of tomorrow’s unicorns are already on UK public growth markets, with some of Britain’s biggest tech success stories coming up this way, and they deserve the same opportunities.
As chair of Aquis Stock Exchange, I meet the founders of ambitious, fast-growing companies who choose public markets for the visibility, liquidity and permanence they offer. There is a perverse signal in a design that risks excluding these companies – that they would be penalised for the very transparency and governance discipline that a public listing demands. Founders who opened themselves to public scrutiny and accepted the obligations of continuous disclosure should not, as a result, be shut out of the capital their private peers can reach.
Public and private markets aren’t rivals
Our fifth annual Aquis Showcase takes place over the coming weeks, providing an opportunity for Aquis-listed businesses to pitch their investment case to investors and peers. Each year, this event reminds us just how much energy and creativity exists within the small-cap ecosystem. From digital asset pioneers to new-technology innovators, we’re witnessing a new generation of businesses sparking real excitement among retail investors and redefining what the growth economy looks like. These are companies that embody innovation and ambition, and are exactly the types of businesses who should benefit from the government’s plans.
Public and private markets are not competing alternatives, they are complementary parts of the same growth ecosystem. The Mansion House Compact recognised this by committing to greater investment in unlisted assets – a definition that included companies quoted on registered UK growth exchanges alongside private businesses. The Scale-Up Fund must undertake this same mandate.
The Prime Minister has taken an important first step by recognising that scale-up finance is one of the UK’s biggest economic challenges. It must now ensure that it builds a funding environment that backs Britain’s future technology champions at every stage of growth. Britain’s tech future depends on public and private capital working together.
Danny Lopez is the chair of the Aquis Stock Exchange and CEO of Glasswall. He served as the British Consul-General to New York from 2011 to 2016