Ed Molyneux story about his company FreeAgent (FREE), now public on London Stock Exchange, might be of interest for a number of founders and CEOs of SaaS companies, B2B SaaS in particular. In his yesterday’s interview, Lessons from a young Scottish company that listed on the stock exchange, Ed shares his experience of listing his company. Most importantly Ed explains FreeAgent’s reasons to raise £10.7m at the IPO instead of going the common route of access to growth capital via Venture Capital or Private Equity firms.
A few key points summarized below:
- With 8m Euro funding since inception, FreeAgent could establish itself as a leading provider of financial management software for SMBs/SMEs.
- To not only be impactful, but also aim to be at the front of the field, in 2015 management needed to plan another, significant funding event.
- While FreeAgent grew very well and gained more and more momentum and market share in the UK, the company didn’t want to tell Venture Capital and Private Equity firms the expected hyper-growth story.
- Alternatively Ed could have gone the route of selling up to a bigger player, but he decided to build his company further with gradual and responsible growth in mind.
- The next option was a public listing to raise 10m+ in fresh money, which shall allow the company to further strengthen its leading position in the UK market.
- The final decision to aim for an IPO was a series of examination and consideration exercises over the last couple of years.
- In the first half of 2016 the company was putting the groundwork in place.
- By August 2016 management made the final decision to go ahead.
- With £10.7m from the IPO, Ed sees FreeAgent in a great place to embrace the next decade.
In my opinion, this is a very interesting and encouraging story about access to growth capital. In FreeAgent’s home region the UK, the Alternative Investment Market (AIM), London Stock Exchange’s international market for smaller growing companies, offers a wide range of businesses including early stage, venture capital backed as well as more established companies access to growth capital. Just recently Deutsche Boerse AG has announced to launch its new exchange segment designed to enhance access to investors and growth capital for smaller and medium-sized enterprises (SMEs) on 1 March 2017 (New SME-segment to facilitate access to growth capital for enterprises).