AIM-ing high: the FinTech that went from equity crowdfunding to IPO

Equity crowdfund to IPO
By Hannah Downie, CA Today

24 July 2017

Katherine Tenner CA and Chief Financial Officer at FreeAgent, the first Scottish FinTech company to join London’s Alternative Investment Market since 2012, on why the startup decided to list and the challenges in doing so.

As CFO of FinTech startup FreeAgent, no two days are the same for Katherine Tenner. In addition to being responsible for all aspects of the group’s financial operations and management, she is a member of the Board, and plays a key role in determining and delivering the overall business strategy and performance and leading on investor relations.

Why a Scottish FinTech decided to list on AIM

FreeAgent is a cloud accounting system designed for freelancers, contractors and micro-businesses and the accountants they work with.  It was established in 2007, and by November 2016 it had listed on AIM.

“We chose AIM because it satisfied our need for accessing growth financing but within a more flexible regulatory environment than the Main Market,” Katherine explained.

After looking at a number of funding options, they felt that the public markets were the right place for the company, helping increase visibility and providing validation that reassures customers and investors.

“Admission also provided a regulated dealing facility in the Company’s Ordinary Shares to the benefit of all shareholders and provided us with greater flexibility of financing options, including access to the capital markets, to support our growth strategy,” said Katherine.

But listing is not a decision to take lightly.  

FreeAgent is the first Scottish company to join AIM since 2012 and numbers among a handful of new stock market listings by Scottish companies in recent years. It’s also believed to be the first UK FinTech company to successfully IPO having previously raised growth capital through equity crowdfunding.

“It’s important to properly examine your business, your position in the market and your future aspirations to make sure that going public really is the best move,” explains Katherine.

“That includes reviewing economic conditions and projections, taking major geopolitical issues into account (in our case, examining what effect Brexit could have on the markets) and analysing any future legislative changes that could make your business more favourable to going public.”

FreeAgent raised £10.7 million as part of the IPO, working with their nominated advisor (‘nomad’) and broker to raise the funds which came from a range of institutional investors.  

Overcoming the difficulties of listing

An IPO is a complex process which requires to be project managed in fine detail.  There will always be unforeseen complications which arise, and in FreeAgents’ case this was a very complex corporate restructuring process.  

“We were very fortunate to have a great team of lawyers at Maclay Murray & Spens who were able to guide us through these difficulties,” said Katherine.

After deciding to list, the first step for FreeAgent was to hire an advisory firm to help them explore all the options and to start getting the company in order.

“We went through our own selection process for brokers, accountants and lawyers, and ended up with a great team.  

“It’s so important to ensure that you select people you can get along with – after all, the process can be lengthy and you will spend a lot of time working very closely with them.”

Katherine’s advice for start-ups considering listing

Before listing, businesses should consider very carefully whether the capital markets are the right place for them.  The listing process itself is very demanding on the business and the post-listing environment is very different, Katherine explained.  

Katherine Tenner, CFO of FreeAgentThere are many more requirements placed on the business such as the need to have a nomad, a suitable Board of Directors, audit committee and registrar.  All of these things are both costly and time consuming to manage.

“If you have the systems and processes in place to cope with the demands of both the listing process itself and life as a listed company, then the impact of these demands can be mitigated.  

“One of the biggest challenges we have found is maintaining the company culture.  We have always been transparent with our team but we have had to limit the information flow a bit in the post-IPO world.  

“However, all of our employees had some share options at the time of the IPO.  Our team is by far our most important asset we have and it is great that they now have a tangible share in the success of the business and can realise some value from these options.”

From qualification to c-suite

After graduating from Edinburgh University with a Masters in Chemistry in 2006, Katherine started her ICAS training with Deloitte.  Qualifying as a CA in 2009, she then joined FreeAgent as Financial Controller in 2012. Two years later she was promoted to CFO.

At 33, Katherine has made it to the top quickly, so what is her advice to those aspiring to the C-Suite?

“As a CFO you need to be dynamic – you constantly have to adapt to changing circumstances and external influences.

“It’s as important to be a good financial professional as it is to be a capable project manager and people person.

“It’s also really important to gain as wide financial experience as you can and to expand both your business and operational exposure as broadly as you can.”

Topics

  • Financial Services
  • Technology
  • Business

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