Monday 02 May 2016 12:14 pm

Tech entrepreneurs aim higher than alternative investment market despite increasing investor demand

Technology companies are aiming away from the London Stock Exchange's alternative investment market (Aim) despite strong demand from investors, new research suggests.

Less than a quarter of UK technology entrepreneurs are planning to use Aim as an exit strategy, according to research from law firm Nabarro out today.

Although 82 per cent of tech entrepreneurs surveyed agreed that Aim is the “natural home for fast-growing UK technology companies”, listing on other markets is a more popular option, with 48 per cent choosing this strategy.

Meanwhile, 21 per cent favour a trade sale to a bigger technology company, compared with 23 per cent who are chasing an Aim listing.

The law firm suggested this shows tech founders are “holding out for a bigger, more ambitious exit further down the line”.

Nabarro found strong demand from Aim investors for tech companies, though. Tech stocks made up an average 31 per cent of portfolios of investors surveyed, with 88 per cent planning to increase or maintain this level in the next five years.

Alasdair Steele, corporate partner at Nabarro, said: “Our research shows there is an appetite for investment across the tech industry, but lack of awareness of the benefits of an IPO on Aim could be stunting growth in the sector.

“Businesses need to consider floating on Aim as a stepping stone to raise capital and profile, rather than focusing solely on the London Stock Exchange’s main market, or pinning their hopes on a trade sale to one of the ‘Big Five’ technology brands.”

Guy Heath, partner and head of technology at Nabarro, added: “Investor demand for Aim technology stocks is high, and set to increase over the next five years. If the ambitions of founders meet the increasing appetite of investors for tech stocks, then Aim could become a breeding ground for a new generation of UK and European unicorns.”