How to choose the right European trade show to debut in the IT sector?

Co-founder and CEO of the TenderHut Technological Capital Group. Entrepreneur and investor. More than 20 years of experience in the IT sector.

If your business is scaling up enough and you’re still hungry for growth, the next step is to figure out how to get additional financing. One way is to list the company on a stock exchange. According to EY, the most effective candidates for listing often devote themselves to often two or more years building business processes and infrastructure, recruiting management personnel and reorganizing information flows. One of our first decisions, immediately after my company decided to debut in the market, was to choose the exchange market where we would make our public offering.

When we started the listing process, we considered making our debut in several markets: outside of Poland, we also analyzed the exchanges in Sweden (Nasdaq Nordic Stockholm), Switzerland (SIX Swiss) and the United Kingdom (AIM) .

Below I will share our observations regarding these stock markets and present the conclusions that led us to make the final decision.

Nasdaq Nordic Stockholm

Sweden was a logical choice for TenderHut, as we have many Scandinavian customers. This is an interesting trading floor when it comes to acquiring financing for technology companies. This is especially true for companies in the phase of initial, dynamic growth.

According to a PwC analysis prepared for TenderHut, many companies are listed there that are balancing on the profitability threshold with high revenue growth dynamics. These companies tend to invest in increasing their customer base, skills and the market at the cost of a temporary deterioration in results. This characteristic of the market indicates that those who invest in it have a good understanding of early stage projects and are able to evaluate both the potential of a particular project and the risk associated with it. A very important point is that we don’t have to teach investors about the nature of our business, how we achieve our goals, or explain our choice of course of action.

SIX Swiss

Within our group, the industry dealing with solutions for laboratory systems plays an important role. The PwC analysis highlighted that the Swiss market is very strong in terms of industrial labs from all sectors. Our presence in this market was critical to us and while we have already achieved that presence, a stock market debut would be the icing on the cake. According to our internal research, the long and complicated process of customer acquisition is offset by the Swiss’ emphasis on long-term business relationships.

Naturally, a debut on the Zurich stock exchange also brings prestige and a substantial increase in the recognition of the organization among investors. However, it is precisely because of the maturity and stability of this market and the size of the companies listed there that we recognized that our company was too small an entity to generate any real interest from the investors there.

AIM London

Another option we considered was the London alternative trading floor (AIM). Companies from the technology sector together form 12% of all companies listed there. Importantly, from the perspective of a software house organization, this marketplace has a lot of experience with such organizations, as it already has about 60 companies from the tech sector listed on it. We also looked at the investment opportunities of investors operating in London and the number of peers, ie comparable companies. Players on the AIM exchange have experience and understand companies that make growth rate their top priority, both in terms of the size of the customer base and in terms of technologies supported, which translates into very high revenue dynamics.

From the perspective of a Polish organization, we could not find a company from our country with comparable experience that debuted on the London stock exchange. Until now, operations by Polish companies have been rare and have involved double listing or debt listing, rather than substantial capital gains for growth and acquisitions.

NewConnect Poland

After five years of work, we are currently listed on the NewConnect market in Poland since April 2021. This choice was not so obvious, but the argument to take small steps and take the time to understand the reality of operating as a listed company to learn, won out. Our collaboration with PwC in this area, who has done analytics for us, has helped us significantly.

The cost of entry and advisory services in the listing process favored NewConnect. The fact that this market is familiar with IT/technology publishers with a representative customer base was also a plus. PwC emphasized that this trading floor also differentiates in terms of the number of entrants with a scale of operations similar to ours. It was not without significance that Poland is the natural home base for TenderHut, both from a regulatory and business environment perspective.

Resume

Based on my experience, these are the three crucial questions to ask yourself before deciding which scholarship to debut with:

1. Are there other companies like yours on this fair?

See how many companies like yours are listed in this market in terms of industry, investment strategy, technology, etc. If you are going to debut in a foreign market, check if other companies from your country are listed there.

2. Does your organization have experience in the given legal environment and can it meet its requirements?

Remember the Roman rule: ‘Ignorantia iuris nocet’ or ‘not knowing the law is harmful’. Come prepared and if you don’t know what you’re doing, ask for help by consulting other companies. Try to choose an exchange where the regulations and information requirements are similar to those of markets you already know.

3. What costs do you consider acceptable when it comes to making your debut?

It is important to remember that making your stock market debut costs money. There are two types of costs: 1. Advice and promotion. 2. Administration costs. What amount is acceptable? That depends on the financial goals you want to achieve.

But the cost of raising amounts of equity should always be sufficient for the volume of capital you want to accumulate through the debut process.

Forbes Technology Council is an invite-only community for world-class CIOs, CTOs, and technology executives. Am I eligible?