Individual investors are investing in the IPO boom using digital platforms

Coinbase employees will spray champagne during the initial public offering (IPO) of the company on Wednesday, April 14, 2021, outside the Nasdaq MarketSite in New York, USA.

Michael Nagle | Bloomberg | Getty Images

London — Equity listings have spawned founders, venture capitalists and large institutional investors Good luck.. Retailers are now trying to take part in action using a number of new digital investment platforms.

David Middleton, an M & A advisor based in Warrington, England, has purchased shares in a recently listed company. Palantir, Snowflake And Coinbase, With the stock trading app Freetrade.

Mr Middleton told CNBC over the phone.

Middleton, a member of London-based financial education website Finimize, said it was a “bumpy road” when it came to investing, but it’s there in the long run. So far, he has made a profit on his investment.

“I’m not a big fan of financial details. There are many other things that affect stock prices,” he added. “I really don’t care what happens in the short term. It may go up or down. I just want to be there for the ride.”

Over the years, several platforms have emerged that allow amateur investors to own a small number of businesses in both the public and private markets. At venture capital, equity crowdfunding services like Crowdcube and Seedrs have long allowed startups to raise money from users. The idea is to strengthen the relationship between the customer and the brand.

On Thursday, Crowd cube will launch a secondary market called Cubex. This allows existing shareholders to offload some of the shares of a private company to individual investors. The platform retrieves data from Crunchbase, a site that provides insights into startups, and provides users with information about the companies listed.

“What we’ve done well over the last decade has been to allow the public to invest in exciting companies,” Darren Westlake, CEO and co-founder of Crowdcube, told CNBC.

“Our market lists thousands of European companies. Individual investors enter the platform and use powerful search and discovery tools and customizations on the platform to find companies of interest. The idea is that you can do it. “

This is a particularly timely product launch, especially as European tech start-ups will be available in the coming months.I’ve already seen something like this year Deliveroo And Darktrace Entering the public market, several other companies such as Wise, WeTransfer and Klarna will soon be listed.

Investing in an IPO

Novice investors are increasingly buying into corporate debuts. Deliveroo Allows Customers and The Public to Invest In IPOs Through a platform called PrimaryBid.. However, due to conditional trading restrictions, these investors were locked in position from the first day of Deliveroo’s trading until a week later.Stocks of food delivery companies Plunged With its debut, it has become one of the worst London IPOs in history.

“It is essential for the market to give individual investors access to IPOs at the same stage as institutional investors,” said Westlake, who invested £ 1,000 ($ 1,390) in Deliveroo through PrimaryBid.

In the UK, some investment platforms are urging governments to allow retail investors to participate in IPOs in order to level the competition between retail and institutional investors.

“Currently, retail shareholder rights are almost completely ignored for most IPOs. Most IPOs take place between city agencies in closed rooms.” Hargreaves Slan’s Down, AJ Bell and Interactive Investor Open letter Became Minister of City John Glenn in February.

HM Treasury — Currently Reform the listing system in London — When I was contacted by CNBC, I didn’t get any comments right away.

Stateside and Robinhood are reportedly developing a platform that allows users to participate in IPOs. Including original ones, by Reuters.. The company played an important role when retailers piled up very scarce stocks like GameStop and AMC.Robin Hood faced criticism from users Restrict transactions With such stocks due to volatility and regulatory requirements.

Robin Hood declined to comment on Reuters’ report.

Avishek Das | LightRocket | Getty Images

Meanwhile, a US company called Forge offers a market similar to Crowdcube, where users can invest in pre-IPO companies.the company Recently raised $ 150 million From investors such as Wells Fargo and Temasek.

Make an early bet

Some investors want to help the company early in their journey, hoping to secure significant profits before the company emerges or is acquired.

Equity crowdfunding sites allow consumers to buy stock in early-stage businesses. But now, some venture capitalists are looking at ways to expose startup bets to retail investors.

In the UK, Passion Capital, an early investor in digital bank Monzo, has launched a third fund through Seedrs. This move means that anyone can become an investor in a new fund of Passion Capital (usually a role limited to pension funds and family offices), thus profiting as the value of the fund’s portfolio increases. You will get it.

Eileen Barbridge, founding partner of Passion Capital, said: I told CNBC.

Burbidge said he believed there was a link between Reddit-fueled stock market enthusiasm and her initiative.

“Clearly, one of the guiding themes was to mitigate some of the impact of” faceless “hedge funds and give some of their” market power “to retail investors.” She said. “The market impact, exposure, access to assets that have historically been preserved for institutional investors, or access to” wealthy “assets for more individuals is good. “

However, she added that individual investors should be properly informed about the risks involved before making such investment decisions. Individual investors are investing in the IPO boom using digital platforms

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