With investment in European fintech companies reaching $1.66b in Q3 2017 and 6 of the 10 largest European fintech deals taking place in London*, the UK continues to remain at the heart of fintech growth. As more and more players enter the market place, deals in early stage or seed companies have decreased, with investors preferring later stage or more mature companies with a proven track record.
One such company is Boku, founded in 2009, who underwent multiple rounds of venture capital (VC) fundraising before taking the step of listing on London’s AIM market. As their chosen registrar, we were delighted to work closely with Boku’s senior management throughout the listing process and support their successful IPO on 20 November 2017. Jon Prideaux, CEO, shares with us his experience of the listing process and what it has meant for his company.
Q: Can you give us a brief overview of Boku?
JP: Boku is a platform which allows individuals to buy things and charge them to their mobile phone bill or pre-paid balance. It’s simple to buy things on your phone using your phone number, and with the 5bn phones around the world far exceeding the number of bank accounts, it’s easy to see why companies like Apple, Microsoft, Google, Spotify, Facebook, and Sony use our service to help them acquire new paying users. We’re the biggest company of our type and that scale is a big advantage for us. It allows us to be at one and the same time a low cost provider, a high function player with a broad array of products, and deliver a high quality product.
Q: Why did you choose an IPO to raise capital, rather than other methods such as private equity or VC funding?
JP: We have been through several rounds of venture-backed funding - up to series D-2 and a convertible note; that’s a pretty complex capitalisation structure. Floating gave us the chance to simplify things and gain access to a new tranche of investors, right at the time when the company was becoming profitable – we’re now EBITDA positive – and its growth more predictable.
Q: Why did you choose London?
JP: We were persuaded by LSE’s pitch that it’s better for a company of our size to be in London rather than being a smaller fish on NASDAQ. Investors here understand Fintech in general and our sector in particular. I think that the decision was the right one, given the very positive response that we’ve had to the offering.
Q: Based on your experience, what should tech or fintech businesses consider when planning an IPO?
JP: One thing that made our lives difficult was having so many shareholders - more than 350. This meant that there was more administration than we would’ve liked. Link really helped us in migrating our shareholders’ details over onto their systems and we are grateful for that. More generally, timing is important. Companies shouldn’t list too early; they should list at a point when their finances are healthy and growing. Investors are concerned that tech businesses might run up big costs; being profitable - or at least close to it - is important to public market investors.
I would also say to other companies: don’t underestimate the effort. You will have to update your finance procedures and sharpen up your processes. There’s a lot of work to do with due diligence and getting the accounting ready. Choose the right advisers; get that right and your journey will be a lot simpler. Make sure that you pick the right people as well as the right firm.
Q: Now you have successfully listed, what’s next?
JP: We look forward to delivering good results to our new investors and, more than anything, to putting some of the funds raised to work in developing great products that allow us to help make mobile commerce more efficient and effective. We think that the mobile network operators of the world have fabulous assets and that, by working together in partnership with Boku, we will help them play a much more significant role going forward.
Q: What do you think will be the next big development in the fintech world?
JP: The next big change to hit us will be Second Payment Services Directive (PSD2) , which will increase the focus on open banking. It could lead to a new explosion of innovation, and we’re thrilled to be part of it.
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The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of Link Asset Services or any other company in Link Group.