How London won round Raspberry Pi
When Raspberry Pi chief Eben Upton boarded a plane to the US late last year, he was 70/30 set on floating his feted computer maker in New York.
Upton had pulled plans to float in London two years prior as the public markets were shaken by the pandemic and his own supply chains were snarled by the global computer chip shortage. Since then, the City had been plunged into the doldrums by a dearth of IPOs and a flood of cash out of the market.
On the other side of the Atlantic, however, green shoots were already beginning to emerge and Cambridge stablemate Arm had just pulled off a bumper $43bn (£34bn) listing on the Nasdaq.
When he touched down back in the UK a few days later, though, Upton said his mind had swung in the other direction.
The about-turn runs counter to scores of founders who find themselves wooed by the bright lights and red-carpet charm offensives of the of the Big Apple’s two bourses.
It marks a coup for Canada at a time when fresh IPOs have plunged to near 15-year lows and gloomy warnings have gripped the minds of those in the City. It’s also something of a feather in the cap for the likes of Neil Shah, who leads the at-times thankless task of tempting tech firms on the London Stock Exchange.
But why did Upton’s mind change after his trip to New York?
“There’s good, smart money in London,” Upton, a former Cambridge computer science lecturer, told the Sunday Times last year. “I think this narrative that you have to run off to the US feels a little overblown.”
The numbers underscore Upton’s perspective. Of the 20 UK companies raising over $100m (£80m) that have floated in the US over the past 10 years, excluding SPACs, eight have already delisted, and only three are trading above their IPO price, according to data from the London Stock Exchange, shared with Morning Wire
The remainder of the firms that have had their heads turned are trading down by an average of 71 per cent.
Among the few to have risen is Arm, which has rocketed on the Nasdaq after brutally snubbing London last year. The success of Arm, however, is in part testament to its size and ability to make a splash in the deep US market with a price tag of $43bn. At an expected valuation of around £500m, Raspberry Pi was at risk of getting lost as a small fish in a huge pond.
“For a smaller company such as Raspberry Pi, the depth of the liquidity pool isn’t such an important factor,” Upton told the BBC’s Wake up to Money in January.
“What is important is access to quality investors – we want people with domain knowledge who will be with you for the long haul.”
The move to float is the product of an unexpected decade of growth under Upton, who founded the company in 2008 with the ambition of reviving interest in computer science among the younger generation. The circuit maker has since become something of a darling in the world of tech, selling over 60m units in 70 countries at prices from about £4 up to £60.
According to its IPO announcement today, Raspberry Pi made profits of £38.2m last year on revenue of £265.8m and is now looking to raise cash to target an addressable market of £17bn.
“When we released our first product in 2012, our goal was to provide a computer that was affordable enough for young people to own and explore with confidence, giving them the chance to discover computing and get excited about it,” Upton said in today’s announcement.
“But from the very beginning we saw customers using our products in a staggering variety of applications across a broad swathe of markets, and as we recognised the potential for affordable technology to make a meaningful difference not just in education but in countless other contexts, the scale of our ambition grew.”
While its growth has rocketed, the computer maker has kept an educational ethos and the charitable foundation of the same name remains its biggest investor. That may change on a shift onto the London Stock Exchange, but Upton said the foundation would now have an opportunity to cash in and “double down on their outstanding work to enable young people to realise their potential through the power of computing”.
Plans for a London float have been cheered across the world of UK tech today held as a sign that there’s life in London yet for tech companies.
“This float is also a strong signal about the attractions of London as a place both to headquarter a growing tech company and the interest from investors in emerging technologies as this forms a large of our future economy,” Gerard Grech, managing director of the Founders programme at the University of Cambridge, told Morning Wire today.
“By listing here many UK pension funds and institutions will be able to benefit from Raspberry Pi’s future success, which will in turn help encourage more founders to start companies here to tap into the talent and investment knowledge.”
The founder of Tech London Advocates, Russ Shaw, describes it as a “major vote of confidence in the London Stock Exchange”.
Unfortunately for Raspberry Pi, its float will now take on the totemic role of bellwether for London’s public markets and signal of whether things are opening up. Executives at the London Stock Exchange will be hoping this DIY computer-maker can help put its broken circuits back together.