Thanks to the growth of fintech, financial services like investing are getting ever more accessible to the wider population of consumers. Now, one of the bigger players pushing the boundaries of that concept is announcing a big round of funding on the heels of strong demand and what it believes are even bigger opportunities ahead. PrimaryBid — which helps companies that are going public, or public companies that are raising more money, offer their shares to retail investors (that is, ordinary people, not professionals) alongside more traditional share sales — has raised $190 million.
Anand Sambasivan, the CEO and co-founder of PrimaryBid, said the London-based startup plans to use the funding both to continue building out the products that it offers to companies, such as the ability to invest in SPAC-based public listings and investments in retail bonds; and to expand to new geographies, specifically with an eye on building out an office in the U.S., where it is going through the process of getting regulatory approvals to work with companies listing in that market and is likely to launch in late 2022 or 2023.
PrimaryBid today interoperates with some 60 channels to enable investments, which include brokerages and apps that people use to make investments today, and that list also is likely to continue growing.
The company’s mission is to bring the “public” back into the concept of a public offering, giving ordinary people a chance to invest directly in IPOs alongside banks and other large, professional investors, Sambasivan said.
If public markets were invented today, would they look like they did 100 years ago? No, services would interoperate with APIs, with mobile apps, and more accessible investing,” he said. “It’s a system in need of an upgrade.”
SoftBank, via its Vision Fund 2, is leading this round, a Series C, along with participation from previous, unnamed investors (previous backers in its $50 million Series B in October 2020 included the London Stock Exchange Group, Draper Esprit, OMERS Ventures, Fidelity International Strategic Ventures, ABN AMRO Ventures, Pentech and Outward Ventures).
Sambasivan said that PrimaryBid is not disclosing a valuation, although a note on the round in PitchBook, from January when it noted $150 million had been secured, pegged the valuation at $650 million. That may have followed from a report on Sky News at the time that first floated rumors of the round and put the pre-money valuation at $500 million. If those figures are accurate, PrimaryBid’s valuation now is around $690 million.
Between that Series B and now, PrimaryBid has been on a growth tear, fueled by an increasing appetite among everyday people to get more involved in the world of investment. The company says that in the past 18 months it has helped facilitate share offerings for retail investors for some 150 IPOs and follow-on share issues. These have been primarily in the U.K., although the company is now also starting to work with companies in France, and — with the help of its investor ABN AMRO, it is also looking to open for business in The Netherlands. Some of the bigger share sales that it has powered include sales for Deliveroo, PensionBee and the US IPO of MCG Group (Soho House) in 2021, which was done via a share sale in the U.K.
“We’ve found a foothold in the capital markets in a big way,” he said in an interview. “The notion that [we are battling is that] the public is no longer included in the public markets, and some of the best companies going public have a strong ethos of their stakeholders, and they were unable to include that in an IPO. They all see the value of including them in a thoughtful and robust way and we are giving them the ability to do that through our platform. Now we are seeing sustained growth and [we believe] what we are doing is too big to fail.”
PrimaryBid is riding on a wave of interest that has been a long time in the forming, helped by a series of other developments. Financial apps like Robinhood and Revolut, and the growth of a new approach to investing popular in Europe, the ETF, have made it much easier for ordinary consumers to invest in public companies and currencies (including cryptocurrencies) that interest them or that they think might bring them good returns — something that previously would have been only possible for high net-worth individuals working with brokers, or professional investors.
And events like the Gamestop stock frenzy of 2021 may have also highlighted the pitfalls of that democratization, but nevertheless underscored just how powerful general public investing had become. It was only a matter of time before that democratization moved to IPO and follow-on share issues.
There is a strong argument for B2C companies offering shares to their users as part of a public offering or fundraise, not least because those customers want to back the companies they believe in and already use. That’s something that will only grow. (Case in point: Reddit’s CEO has stated that the company wants to offer shares to individual investors when it goes public.)
But Sambasivan points out that consumer-focused businesses are not the only ones that are benefitting from that market demand, either on the part of companies or investors themselves. In fact B2C forms only about 10% of the trades that PrimaryBid has worked with, he said.
“PrimaryBid is powering inclusivity in the capital markets by making it simple and easy for anyone to access stock issuances previously reserved for institutional or professional investors,” said Anthony Doeh, a partner at SoftBank Investment Advisers, in a statement. “We believe the team has created a platform that combines technology, data and an ‘ecosystem friendly’ approach to the challenge of widening participation, including developing a unique Community IPO platform for corporate issuers. We’re excited to partner with them and believe we can add significant value to the business through our global network and expertise.”