Huddle boss not yet ready to follow Box's IPO footsteps
The British company still plans to list in US, despite Tech City UK's efforts
Huddle co-founder Alastair Mitchell has revealed that the he will not be seeking a public listing for another “few” years.
When the time does come to list, the British entrepreneur, who recently moved out to the US to raise more capital for his company and expand the business, said that it would be in the US because there’s a “better market for technology”.
The London Stock Exchange and Tech City UK have introduced several initiatives to make London a more desirable place to float a technology company, including the new High Growth Segment and the Future Fifty programme.
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“They’ve made some efforts but until they change some of the rules it’s not going to happen,” Mitchell told Techworld in San Francisco, pointing specifically to the amount of equity that fast-growing technology are forced to list in London.
He said companies like Huddle typically only want to list around five percent of their business when they make an initial public offering (IPO), but London's markets don’t allow for this in the same way that New York’s do.
Mitchell confessed that Huddle is a couple of years behind rivals Box, which announced on Monday that it is hoping to raise $250 million (£151.5 million) on the New York Stock Exchange through an upcoming floatation. At the time of the announcement, Box also revealed it has been losing money over the last few years, with losses of $168.6 million (£102.2 million) in the year leading up to January 31 2014.
“I think everyone in the market is fairly surprised at how much they’re spending. They’re essentially spending three dollars to make a dollar. We’re dramatically different in that we run a much tighter ship,” said Mitchell, adding that Box needs to cash in on the latest IPO wave in order to keep going.
While Box has spent a lot on sales and marketing in its quest to attract a vast market of potential customers who need relatively simple file storage, Huddle has spent comparatively less in pursuing a smaller number of large deals with government and professional service organisations like KPMG who need collaboration capabilities in addition to high levels of security, according to Mitchell.
“We overlap [with Box] in a small chunk of business. They’re going for all of the market but there are bits of it that they just can’t get,” said Mitchell, claiming that Box chooses cheap storage that can’t deliver the same security offered by Huddle's platform.
The cloud storage and collaboration market that the likes of Huddle, Box and Dropbox are competing in, is thought to be worth $25-$26 billion.
"We want our bit, they want their bit and Dropbox want their bit," said Mitchell. "There’s grey areas and so on but generally it’s a big enough market for the three of us."