Twitter’s successful initial public offering (IPO) yesterday has highlighted the importance of major listings in creating investor confidence.
The micro-blogging site’s share price rose to a high of US$50 on the first day’s trading and some observers expect the share price to double by the time Twitter’s executives and directors – including venture capital firm Benchmark’s Peter Fenton – are allowed to sell their stocks in 180 days. Facebook, after an initial setback, is also now firmly back on track.
Such success stories are a boon to the global tech scene, demonstrating a concrete example of the venture capital (VC) business model growing a start-up into a truly international brand.
Capital is scarce and investors are more risk averse since the financial crisis but, put simply, yesterday’s IPO, the second largest US internet IPO on record behind Facebook, shows the business model works and can deliver fantastic results. That should encourage more investment and help fundraising.
The challenge is now to convince more investors, in Europe and abroad, to back European VC. That mission is an important part of Invest Europe’s work, which is why we work on publications such as the Smart Choice report.
Investor confidence is key and hopefully the optimism created by yesterday’s IPO will help convince more investors to back the venture capital asset class.