British fintech firm Wise recently announced its intention to shift its primary listing from London to New York, joining a growing trend of companies turning away from the London Stock Exchange (LSE). This follows similar moves by other European tech businesses.

in 2023, UK chip designer Arm chose New York for its IPO, while food delivery giant Just Eat Takeaway left the LSE for Amsterdam in November. Sweden’s Klarna has also confirmed plans to go public in New york, following in the footsteps of Stockholm-based Spotify, which listed on the NYSE in 2018.

The primary attraction for these companies is the prospect of larger valuations, access to deeper capital reserves, and a greater appetite for risk among investors.

The Allure of US Markets

“The US economy continues to perform far better than the EU, and valuations are simply higher for companies that can list there,” Victor Basta, managing partner at Artis partners, told reporters.

The New York stock Exchange (NYSE) boasts a market capitalization of approximately $27 trillion, significantly higher than the LSE’s $3.5 trillion. This substantial difference, along with the concentration of deep-pocketed investors, influenced Arm’s decision to list in the US. Wise CEO Kristo Käärmann echoed this sentiment.

Käärmann stated that the move would tap “the biggest market opportunity in the world for our products today, and enable better access to the world’s deepest and most liquid capital market.”

“The US economy continues to perform far better than the EU, and valuations are simply higher for companies that can list there.”

Beyond the potential for rapid growth, US investors are known for being more willing to invest in growth-stage tech companies, even if they are not yet profitable.

Risk Appetite and Growth Strategies

“US investors understand the whole ‘revenue-before-profit’ strategy,” Andrey Korchak, a British serial entrepreneur, explained. “Meanwhile, in Europe, they often want to see revenue from day one.”

Korchak believes that this risk aversion in Europe can hinder the growth of startups.

“Europe just doesn’t have the same density of tech unicorns,” he said. “And when startups here do hit that billion-dollar mark, most still prefer to list in the US.”

Concerns About a “Brain drain”

Sean Reddington, co-founder of UK tech firm Thrive, expressed concerns that Wise’s New York listing could exacerbate existing problems.

“wise’s move to the US signals a worrying trend,” he said. “It threatens a ‘brain drain’ of capital and talent, making it harder for growth-stage VCs to invest in UK scaleups without a clear US exit plan.”

Reddington called for government intervention, including providing “meaningful incentives” for tech firms to list in the UK.

“If the ultimate reward of a domestic IPO is diminished, it pushes more companies to consider relocating or listing overseas,” he stated.