The City is 'toxic' for tech companies, says Deliveroo investor

·2-min read
City of London
City of London

London's markets have been accused of being “toxic to tech companies” by an investor in Darktrace and Deliveroo, two of last year's biggest digital floats.

Hussein Kanji, a partner at London-based venture capital fund Hoxton Ventures, said that the City was dominated by an “old world mentality” that prevented listed technology companies from being valued at the same levels as those in the US.

London enjoyed a bumper year for tech floats in 2021, with Rishi Sunak, the Chancellor, hailing the listings as a sign that Britain was luring more high-growth tech start-ups, but companies including Deliveroo, Darktrace and money transfer service Wise have slumped in recent months.

Executives and venture capital investors have repeatedly complained that technology companies traded in London are undervalued compared to those in New York, where shareholders are said to appreciate growth more than profits and dividends.

Mr Kanji wrote on Twitter: “I think the exchange is toxic to tech companies and being honest about why is the only way to solve it. If the exchange continues to believe it's great and markets only that, it stays a problem.”

He told The Telegraph: “I think it's an old world mentality. Given that these are flagship tech companies that decided to list in the UK, the UK market has not been very kind towards them.”

He said recent history suggested that start-ups currently looking at floating should “maybe be looking in another place”.

Neil Shah, the LSE's tech sector specialist, said there were “lots of good companies achieving robust valuations in London”. He said many of the technology companies that had listed in Britain last year had seen shares soar since going public.

British companies including used car marketplace Cazoo and medical app Babylon went public in the US last year, and several UK-listed companies have said they are considering switching to New York.

Nadine Dorries, the Culture Secretary, has promised to change the “stuffy” culture of the City when it comes to technology companies.

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