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May 24, 2007

Dotcom IPOs are back - on the AIM that is

PEHub and VentureBeat have reported how loss-making video search web site Blinkx has raised $50 million via an IPO on the London AIM exchange.

PEHub also points to an article on AIM listing by Jeffrey R. Houle a senior partner with law firm Greenberg Traurig LLP. (Related link: See earlier post linking to a downloadable primer on AIM listing by Indian law firm King Stubb & Kasiva.)
Depending on the amount of due diligence required, the admission process to join AIM lasts typically only three to four months. Costs associated with joining include AIM’s admission fees, currently £4,340 ($8,500), as well as commissions and fees for the various required advisors. Generally, fees total less than 10% of the amount raised.

...The AIM model appears to be working. According to Thomson Financial (publisher of VCJ), there were more public offerings on AIM in 2006 than there were at the exchanges of New York and Hong Kong—including a number of IPOs by companies in the environmental technology and software and computer networking sectors. Contributing to this trend is the perception of many high-tech entrepreneurs that European investors are less skeptical about high-tech startups than are North American investors because they were not as negatively impacted by the bursting of the dot-com bubble.

Post-listing, AIM’s less burdensome reporting requirements are also considered an advantage to potential listers. Beyond the cost and time considerations associated with reporting requirements under U.S. law, the ability to report financial results every six months can be an advantage. The additional time gives a startup that may have an erratic revenue stream considerably more breathing room that it would have under other reporting regimes. From the perspective of a fledgling company, the emphasis on growth rather than reporting and governance may make AIM a good market in which to mature.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.