After a slow year in initial public offerings by European startups in 2020, many are predicting that 2021 will see a lot more European tech companies list on the stock markets.
Companies from Klarna to Allegro and Huuuge Games have said publicly that they are planning an initial public offering (IPO), pointing to a healthy pipeline. It's been reported that London-born Deliveroo is weighing a listing in the new year too.
And it’s not just them. Sifted put together its own list of prospective IPO candidates recently, with names including TransferWise and Darktrace.
The end of 2020 already showed signs of the IPO market picking up. The Hut Group scored the biggest tech listing in London since 2015 in September. In October, Link Mobility started trading in Oslo, in what was the biggest listing of the year there and the largest in Norway since March 2018.
“The IPO is a must in every maturing company’s life — there’s a point when you just can’t get around it,” says Guillaume Van Gaver, Link Mobility’s CEO. “It’s a kind of litmus test for a company’s strategy, growth prospects, and underlying industry trends.”
Demand for Link Mobility’s mobile messaging technology soared amid Covid-19, especially as consumers in lockdown turned to e-commerce for purchases. Clients like parcel delivery service DHL use Link Mobility’s platform to interact with customers through a text-message chatbot, to do things like reschedule deliveries.
Rivals include Sweden’s Sinch and Twilio in the US.
Link Mobility raised 6bn Norwegian Kroner (€571m) by selling shares on October 21, including existing shares owned by US private equity firm and majority holder Abry Partners.
Here’s some advice from Van Gaver for future IPO candidates.
Get help from the board
“We worked for six months on our 2025 strategy, and when we presented the plan to our board members, they were the ones who suggested we IPO,” says Van Gaver.
It helped that the company’s founder and chairman, Jens Rugseth, is a serial entrepreneur whose IPO experience also includes software maker Crayon Group, says Van Gaver.
Tell a simple story
“An IPO starts with a story that will make people’s eyes shine — starting with investors and board members,” says Van Gaver.
Growth potential and Link Mobility’s ambitions to invest massively in technology upgrades were key to its ability to raise money on the stock market, he says. So were the company’s plans for mergers and acquisitions.
“Link Mobility is surfing on one of the strongest market trends right now: digitalisation, we resisted better than we had even expected during Covid, and we need capital to grow,” the CEO says. “We also want to accelerate on doing deals and acquiring rivals.”
“Once we said all that, things went really really fast.”
The decision to IPO was made in July, a month after Van Gaver’s strategy presentation to the board. The company worked with banks in August to prepare the IPO, and listed in October.
Executives at Link Mobility conducted some 100 presentations during the process. Amid Covid-19 restrictions, everything was done through videoconferencing instead of the usual roadshow, which helped save some time, he says.
“I would definitely advise executives to keep the IPO process short,” says Van Gaver. “The longer executives are busy selling their strategy, the longer they are away from executing on it.”