One of the forerunners to Equity Crowdfunding launched in the United Kingdom in 1995. The AIM (formerly the Alternative Investment Market) offers a more flexible regulatory environment for smaller companies. The average market capitalization of AIM companies at time of listing is 80 Million Pounds. Small cap stocks in the U.S., that don’t benefit from a more flexible regulatory environment, have an average market capitalization of $300 Million to $2 Billion USD.
As of November 2018, there are 785 companies listed on the AIM with over 100 Billion Pounds in market value. In 2018, the AIM saw 53 new companies to date who raised over 5 Billion Pounds (Source). Out of the 53 companies, 10 companies were located outside of the UK.
A small cap IPO might be a potential source of liquidity for equity crowdfunders, and startups who would prefer to keep their company out of the hands of private equity firms.
One of the most significant exits from an equity crowdfunding backed firm came at the hands of private equity. In 2017, Brewdog, a Scotland-based company sold to 22% of their shares to a PE firm. In the deal, equity crowdfunders could sell 15% of their shares at 2,765% of their original value (source).
Small cap IPO’s on the AIM market could offer an alternative source of liquidity for Equity Crowdfund Investors that want to exit to institutional investors. The relationship between markets like AIM and Equity Crowdfunding might better define how institutional investors can participate in local markets.