Public markets: The ultimate platform for scaling tech-companies

See if you can guess which company IPO’d with c.$300m market cap, $79m revenue, $26m gross profit and $39m net losses in 2002 as the NASDAQ was still bottoming out? I’ll give you a hint - it defined its TAM as “in-home filmed entertainment, representing $23 billion […] in 2001”. In FY23 the same company delivered $34bn revenue and over $6bn net income, and is currently worth $300bn.

The biggest companies were built on the public markets (Apple, Autodesk, Adobe, Lam Research, Micron Tech, Microsoft, Oracle, etc all IPO’d in the 80s). But today, in the US, a sub $500m market cap company is considered micro-cap and hardly gets any institutional attention.

This is not the case in the UK; Take Peel Hunt client Alpha Group. Having listed with just £8.5m revenue and £60m market cap, it recently hit £1bn market cap having delivered £110m revenue in FY23.

As we exit the “free money” era, now is the time for entrepreneurs to start thinking of Public Markets as THE place to build a company that will stand the test of time… Are you closing in on double-digit net revenue, great unit economics and clarity around your go-to-market, r&d and capital allocation strategies? Can you tell a compelling story around the below prompts? Then you have to talk to someone from team Peel Hunt;

1. What problem does the main (never attempt to explain all—remember the 80/20 rule) product or service solve?
2. Is your particular product or service going to change an existing market or create a new market—in effect, what is the differentiation?
3. Where will people find the money to pay for it? Can existing budgets be repurposed or reallocated from something less important?
4. Why now? Why can’t customers wait another year, two, or even a decade? What is the ‘call to action’?
5. Who else has the same idea, and who might end up having the same idea—existing and potential competition?

Damindu Jayaweera, Research Analyst - Technology

www.peelhunt.com