Synthesia Cites Lack of Appeal, High Fees for Avoiding London Stock Exchange Listing

Synthesia, a London-based AI company, has expressed its reluctance to list on the London Stock Exchange, citing a lack of appeal for companies seeking to go public. The company's chief executive officer, who is also a co-founder, stated that the London Stock Exchange lacks the necessary allure to attract tech companies, which has led to a significant number of enterprises opting to list in the United States instead. This sentiment underscores the challenges faced by the London financial hub in drawing in tech companies, as it struggles to compete with other global markets. The company's valuation stands at 150 million pounds, and its decision to avoid listing in London highlights the broader trend of tech companies seeking more favorable conditions elsewhere.

Synthesia's chief executive officer and co-founder highlighted the structural issues that make listing in London less attractive. The company's chief executive officer pointed out that the London Stock Exchange has high transaction fees and low liquidity, making it an unappealing option for businesses. This perspective is shared by other companies that have chosen to list in the United States, where the market conditions are more favorable. The company's chief executive officer also noted that while listing in the United Kingdom might be beneficial for companies focused on domestic clients, those with global operations are more likely to consider listing in the United States.

Synthesia was founded in 2017 by a group of entrepreneurs and computer scientists, including the company's chief executive officer, Steffen Tjerrild, Lourdes Agapito, and Matthias Niessner. The company has achieved rapid growth by developing highly realistic AI virtual avatars, which are used to create AI videos for training, marketing, and customer communication. These avatars can deliver training videos, product demonstrations, and other content, making them a valuable tool for businesses. The company's success has attracted significant investment, with a recent funding round raising 180 million dollars from investors such as NEA, Google Ventures, and Nvidia, bringing its valuation to 2.1 billion dollars.

Despite the company's rapid growth and success, the company's chief executive officer acknowledged that Synthesia is still some distance away from going public. However, the company is now at the stage where it is considering the possibility of an initial public offering. The company is also planning to expand its operations in London, having recently moved into a new headquarters and potentially doubling its workforce to 400 employees. While the company's chief executive officer expressed reservations about listing in London, they emphasized their commitment to keeping the company's headquarters in the city.

The reluctance of companies like Synthesia to list on the London Stock Exchange reflects a broader trend of enterprises opting to go public in the United States. This trend has put pressure on the London Stock Exchange, which has seen several high-profile companies, including Wise, one of the most valuable tech companies in the United Kingdom, announce plans to move their primary listing to New York. The London Stock Exchange has acknowledged the need for reforms to make the market more attractive to tech companies, including proposals to abolish certain stamp duties that impact the liquidity of the capital market.

In addition to the challenges posed by the London Stock Exchange, Synthesia and other AI startups have expressed concerns about proposed EU regulations on AI. The company has joined forces with dozens of other AI startups to call for a freeze on the implementation of new AI regulations, warning that they could hinder the growth of rapidly developing companies. The company's chief executive officer cautioned that overly strict AI regulations in the EU could put the region at a disadvantage compared to the United Kingdom, which has taken a more balanced approach to AI governance. This sentiment underscores the broader debate about the role of regulation in fostering innovation and growth in the tech sector.