PrimaryBid: why we’re backing the team on a mission to democratise capital markets access.
I’m hugely excited to announce that OMERS Ventures has led an investment in PrimaryBid’s Series B. We couldn’t be more thrilled to support co-founders Anand, Kieran, James and Eric in their mission to democratise access to public market primary issuance.
Public market primary issuance, you say?
Every year, companies go public, typically via an IPO. Public companies can also issue additional shares later on, in what’s known as a follow-on placement or accelerated book builds. We don’t hear much about follow-on placements, but they typically dwarf IPOs in terms of equity issuance.
With very rare exceptions, the man or woman on the street doesn’t get to participate in these transactions, despite forming a significant minority of share ownership throughout Europe (rising to c. 40% in the States).
PrimaryBid is on a mission to change that.
For the most part, primary stock issuance has not changed since the 90s. It’s expensive for companies because:
1) Primary issuance is virtually untouched by tech, and fees to list are high, and
2) Pricing an IPO or a follow-on placement is a function of an exclusive process, managed by the banks, where there are other incentives at play beyond getting the best price for the company. This, among other market factors, has resulted in the phenomenon of the IPO “pop,” which has come under fire from lots of private market investors in recent years.
The result is that the system penalises:
1) successful individual companies — because the pop is meaningless to the company’s overall raise.
2) smaller investors — who simply don’t have privileged access to the same opportunities to generate investment returns. Worse, if they are existing shareholders of a business, they get diluted without having the chance to have their pre-emption rights (i.e. rights to maintain ownership) respected.
It’s not fair.
And it’s increasingly bad business.
Boards and banks have typically shied away from retail investors in primary placements, however much they may have wanted to include them, because it’s such a hassle to deal with multiple small checks. PrimaryBid has made access to retail investors simple, thereby opening up a large pool of untapped capital. PB acts as speedily and simply as an institutional buyer of stock, and participates on the same terms. For the issuer and the bank, it’s as easy as dealing with any other counter-party.
This means that boards don’t have to choose between expediency, or diversifying their shareholder registry and respecting pre-emption rights. It’s a win-win for small investors and for the companies, especially as retail investors overwhelmingly tend to buy and hold, which reduces volatility.
As a team, we’ve known PrimaryBid since 2019, and watched them execute their plan during these unprecedented times. It’s a testament to their vision and deep relationships that they have continued to gain the confidence of the market over the past year, participating in both the UK’s largest follow-on placement (Compass Group) and its largest IPO (The Hut Group) by equity issuance, all in the last 6 months. They have built a strong, API-first, tech moat to manage the digital order books and proven to be a trusted partner to stock exchanges, banks, issuers and investors
Unsurprisingly, they’ve built a strong syndicate for this round. We’re delighted to be investing alongside our friends at Draper Esprit, Fidelity Strategic Ventures, the London Stock Exchange Group , ABN AMRO, and existing investors Pentech, Outward VC and HambroPerks.
We’ve rarely met such a mission driven team who feel so passionately about fair access to the capital markets. We can’t wait to watch them grow — this is just the beginning!