20VC: Will Revolut and Monzo List in the UK | How Does London Compete Against the US To Win The Best UK IPOs | Are UK Public Companies Punished on Price for Listing in London | The Myths and the Reality of The London Stock Exchange with CEO, Julia Hoggett

23:03I don't think, can't prove a negative, but I think it's a false idea to say a London market wouldn't have valued that the same way. In the first period of time after they listed, only 1 % of the investor base in arm, which is a great bridge company based in Cambridge coming out of our ecosystem was owned by UK investors. Not one of our major pension funds had them as one of their major investments and retail couldn't buy it because of the structure of the way it was done. Okay, so if we say we're indifferent to where a company lists, we're basically indifferent to the UK investor being exposed to the upside of the value that UK based companies can generate.

23:36That can't be right. We tend to think of these things as an asset on one side and as liability on the other side or something like that. When actually it's a risk capital flywheel. It's how do we have the right form of risk capital going to great companies that produce R &D, produce investment, produce jobs, produce growth, produce revenues, produce dividends that create great asset people can invest in that give them more returns and more safety in their pension and that ultimately pay tax revenue as well. And we've lost sight of thinking of it as a flywheel. I think here of the flywheel, I'm at the beginning of the flywheel and what concerns me most is 10 years or 15 years, whatever it was, but when transfer wires and mom's own, Ravolude all started, it was a great place to start a FinTech business.

24:17The best developers don't want to build in London anymore. And that worries me. They think it's incredibly regulatory. They think there's a high cost of living. Crime is pretty bad. Well, they want to live in San Francisco on that basis. No, but they'll live in other parts of Europe. They'll live in Dubai. They'll live in much more friendly attacks. I guess my question to you is, do you see that that London's faucets competitiveness for the best of other persons or not. I think it was a broader point. The FCA made a very, very overt decision in the teensies or whatever we call it to create a sandboxing environment for Fentex to be able to start out.

24:50The likes of the revolutes, the monsoes, etc. started because the UK created the best possible regulatory environment for them to do so. Now other people have followed it and copied that absolutely, but that is something we should be really proud of and that was a conscious choice on the part of our country to do so. If you then say, okay, the country is now making a really conscious choice to make sure that we've got the best possible funding continuum for people to get access to capital, to be able to start, grow scale and stay here, and make sure that we're incentivising our institutional money to invest in that part of the ecosystem as well.

25:21And the conversation that is going on at the moment about regulation is about outcomes based regulation that is less checkboxy and gets the balance right in terms of the right kind of protections, but the right kind of enabling of innovation and growth. then we've got a pretty good track record of doing it already. And if we want to create UK -based companies, then that's the right ecosystem to shift to. And I think that's the conversation that's happening right now. In terms of like risk on mindset within pension funds, what is the thing that actually really enables us? It's just saying, hey, you have to have 5 % in private companies in the UK and around the world.

25:54That is the rule that will enable that. I think it's going to be a combination of things. I think the fundamental thing is returns. So if you look at say the performance of Canadian and Australian pension funds They tend to pay higher fees than the fees that are being paid by UK pension funds But they make higher real returns, you know, their net return is higher and the compounding value of higher real returns to the individual pensioner It's huge, you know, 1 % in real return increased every year. Just think about it It's only watering that we weren't having much conversation as a country and some of the things that we had done were perverse We basically created a world where cheap was good for financial services.

26:33It's a bad way of thinking about it. But if I was ever challenged with the crime I didn't commit, I wouldn't want cheap lawyer defining me. It sort of, we created this idea that for retail consumers of financial services, you wanted a cheap product. And that's not the right way to think about it. In a value -righted industry, you want to incentivize people to continue to add value that produces best possible products. And that's the model that's used around the world. Canadian pension funds or the Australian pension funds employ very good fund managers. Do so on a big, aggregated basis. Pay fees for originate complex alternative assets and private companies.

27:08And so 5 % plus movement away from cost to incentive -based profit? And consolidation so that you can do it. Because you don't invest in one private company you've seen how it's done. You invest in a portfolio of companies. Some of them will pay off. Some of them won't. It's got a different failure rate to what would happen in the public markets and therefore you need a bigger consolidated way of looking at that. Is scale important? Scale is important. Yeah. That's why the UK is doing what it's doing right now. It's consolidating its funds together, changing the evaluation of cost benefit in terms of net return and looking at how we also think about incentivising investment in the UK.

27:43So we used to have tax boats from invest in the UK. We took them all the way and then wondered why people didn't invest as much in the UK. You said about a movement away from cost and being overly worried to pay bluntly for quality. despite the fact that it does much better. You said before that UK CEO is a paid too little by international standards. I completely agree. I think it's a joke that we chastise CEO as being paid or they paid actually when they run multi -hundred -minute dollar companies. Talk to me about your thinking around that. Do you think the UK gets it yet? It's changing quite radically.

28:12It is. Yeah, it really is. And I think it's... I was talking about these things. You go around the other side of the problem and just look at it from a different angle, you know? Sometimes. So we had for various cultural reasons as much as anything else. A lot of this was market practice. It wasn't actually the rules. It had this perception that we needed to constrain and really zero in on focusing on what, to be honest, usually two people get paid, which is the two executive directors on the board. So you can have 40 pages disclosure about what two people get paid. But essentially, the way we've reframed it as the capital market synergy task forces is let's just have a big time conversation about what we mean here.

28:47If we're trying to constrain what the leaders and senior executives in our largest listed companies get paid, but actually what the UK has been doing for years is creating globally consignential companies from the UK. If in order to break into say that market in Asia or that market in the US for your product, the going rate for that person is more than the asset managers allowing you to pay your CEO, but a definition arguably of the buy side saying, I don't want you to be globally consignential. Now, actually, I don't think that's what they're saying. I don't think that was what they ever intended to say.

29:18It is a little bit of saying, okay, we don't want to go down this sort of Elon Musk pay -pack it kind of route, but we do want to make sure we are creating a competitive environment for the best possible people to be leading our institutions. There's the right balance between incentivising people to deliver that value and recognising that things are very aligned and that actually so many things in life, more things are aligned than oppositional than people realise. But if you're along any investor in the company, you want it's long term value creation the same way that if you're the executive of the company You do if you think about a private company You've got VCs and P's sitting on your board coaching CEOs as to how to succeed Everybody's got the same liquidity risk profile.

29:59Everybody's got the same they're the same way around They want the same thing, you know The idea that you suddenly you get to the public markets and those interests on to line just is a bit of a pervacity Do you think why they've done better being in the UK than they would have done if they're in the US? Look, the risk of a company of that size given the profile of their businesses that have been lost. They've got pretty healthy following here and are well understood and well recognised as a brand. And they're logic of saying, OK, we're incredibly proud of what we've done. We're going to stand on our own, because in terms of being able to market ourselves too, our investors are going to get the market, identify the price.

30:33They've got an incredibly good price. Do you think it's a good marketing message to say this year is, hey, be a big fish in a small pond? I think it's a big fish in a big pond. Look, I mean, we are the second largest equity capital market in the world in a free market economy. And I think that's the thing that gets lost. If you want to essentially be able to only guarantee your indexation and therefore your support from 60 % of the investor base, if you decide to read domicile or relocate to the US and sufficiently all your operations are there, then the US market may be right for you. The UK allows you to have all the indexation or the access to the investors, a higher liquidity actually turnover rate for your shares available.

31:14And you can stay in the UK if that's where you come from. Or if you're an international company, you can get access to those things without having to readomersile. The US market basically has some pretty strict demands on companies and increasingly incentivizes them to move into the US company. If they want to get the true benefit being in the US market. Do you think that should be a unified EU market? Look, whether you came market, So, and it's not for us to judge who'll tell the EU what it should do. I think what we're seeking to be is the largest and we are, and we have been every year for the last decade, the largest equity capital market in Europe and we are.

31:51And there may have been a certain amount of flow back to Europe on Brexit in terms of activity. Increasingly, what we're seeing, particularly now that our rules have changed, is people, even European companies are looking at London, saying actually we're going to use London as our list. didn't Brexit didn't era probably damage London in time? No, it had natural consequences, which I think you can't deny. If London had built to be the hub, it was because it was the largest financial centre in the single market, and we're not in the single market anymore, then stuff's going to happen. Do you think Brexit hurt or helped the UK markets in the long term?

32:23I think making sure that when you have to rely on your own record distances at work, because the city got bigger every year, because the single market got bigger. You know, that's actually going, okay, what is our job? Both to drive our places, a global financial center and to drive the UK economy. And are we properly structured to do that? I think it forced us to have that conversation in a way that we might not have had as thoroughly otherwise. And we have always had a globally significant capital market. This is the thing that is sort of forgotten in, for most of the first few weeks of January, we were the largest equity capital market in the world by capital raised ahead of NASA.

32:58We are the, as of today, if you take the 2024 -25 numbers by total capital raised, the only capital market countries in the world that are bigger than us are the US and India. Everywhere else is behind us. We're the only European market in the top 10 and we raised more equity capital last year than the next three European venues combined. We forget that as a nation. We fixate constantly on the US. Yes, the US is a huge capital market. But if you want great companies to be able to start here, grow here, scale here and stay here, if you want UK investors to have access to the best possible fast growing assets that give them the right returns, I mean that they have good pension returns, but also invest in their economy so that their kids have got good jobs and their kids have got futures, then you need to have a vibrant capital market.

33:45How do we get rid of STEM, GT? I'm working on it. I think you start tapering it. One of the things that we've been looking at is if the UK can encourage and provide incentives, and that's a lot of discussion at the moment, to make sure that our pension funds are incentivised to invest in the UK, which is what we used to do when we had dividend tax credits. We give people tax breaks to keep their money in cash in the UK in from of 100 % cash I says. Now cash I says are very, very important for people who need a safety net and to be encouraged to save. It doesn't need to be 100 % of everybody's total lifetime allowance.

34:18If you did those two things, you'd see a potentially pretty significant increase in the amount of flows already into UK opportunities, which would increase the government's revenue on stamp. That would then mean that you could start tapering it around, for example, retail tickets and under a certain size, to just re -incentrify retail participation in our market and get rid of the friction associated with it, and then start tapering it from there. You're not going to be able to go, please can I just take four billion out of the exchequer. You know, in a world where the chancellor has got the disciplines that she's got around the OBR, you can't do that.

34:52So you can't just say get rid of it. You've got to come up with a mechanism whereby net net it works over time. But I think there's a pretty compelling reason for how to do it. And I think everybody understands the panicious nature of it now. It's not about the city saying just get rid of it, not thinking about the consequences for the politicians who who got to make those choices, is about finding the best possible way for them to be able to do it in a way that operates within the constraints that they're operating to. You said before I can't remember where exactly it was, but we need to be young, scrappy, and hungry.

35:23Yeah, it was a quote from Halton. If you could do anything without fear of repercussion or decision making from teams or anyone else, what would you do to enable progress growth innovation? Well, the only sense of that question is, If I had a magic one, I always describe this as sort of the delurian package without the bankrupt nor the Norwich car company. In other words, it's back to the future. We used to back ourselves as a nation. We used to have structures and tax incentives to invest in the UK. At that point, we had some of the highest investment rates, highest growth rates, largest capital market in the world.

35:57We gradually took those incentives away and then assumed everybody else would invest in us if we weren't investing in ourselves. To me, it's about a proper conversation as a country, about how we take these enormous pools of capital that we actually have and we are re -incentrified to invest in ourselves. Now I think that becomes a virtuous circle very quickly and once you start getting into the habit of it, it will be maintained. So I think that's one thing. It's basically making sure that we incentivise domestic flows of capital. But the other thing is the culture. How we celebrate entrepreneurship, how we recognise people like you and what you've done and what you've built and that actually there is something remarkable about a founder's journey that we should be really proud of how many of them we have in this country.

36:37I was jokingly say, the North -Ellab and the Fandas I meet put their money, their mortgage and often their marriage on the line to create great companies. And we should be celebrating that. The people who are prepared to create work as hard as they do to create that value and be as driven and visionary for a version of the world that doesn't exist yet which is what they're creating is what we should celebrate. I mean great scientific breakthroughs come because people sit in a lab and envisage a world that doesn't exist yet. companies like Revolute exist because next sat there and envisaged a way of providing financial services that at the time didn't exist.

37:08That is the thing that changes society, creates efficiencies, improves people's lives, solves problems, creates value, pays taxes, pays for the NHS, pays for our defence. We just need to get better at celebrating it. We have this habit of talking ourselves down as a nation. This is great life sciences investor who I quoted recently in a speech I gave, who came to do something at the exchange and he was American. and moved over to the UK because of the fundamental science that was being done here that he wanted to back. And he basically said, I've realised, the Americans are perceived to be incredibly naive on the surface, but we're incredibly cynical underneath.

37:43You've got incredibly cynical on the surface, and you can finish it with me, but actually I've realised you're quite naive underneath. And what I was saying in my speech was, I think we can be cynically naive. We forget the damage of talking ourselves down and not celebrating what we're good at as a nation. It wouldn't occur to an American founder not to be singing from balcony that they... We need to find our inner kind of channeling of that growth mindset and that optimism. And it isn't that we don't have it. It's that we have a sort of culture that doesn't allow us to recognise it. If I had a magic wand to say, yeah, we could all as a nation just face the day with optimism and the belief that if we rub the right brain cells together we're going to come to the right answer.

38:27So that's probably the magic wand I want to wave. There's two elements for audio equipment fire. The first is you mentioned that if you can say the neck, like you should list in London because of this sentence or would it be? The honest answer is I think when you look at the side by side of what London offers versus the US, it's at least as compelling as you. Do you not think they're at the scale where they do get into the top ashlands of US markets? There was no guarantee they get indexation that walks straight into the FTSE 100 here. You can still access US investors afterwards. Do you think you'll get them?

38:57Look, every company has to make a sovereign decision. The only thing I can do, and that's where the young scrapping in Hungary comes from, is we will fight for every listing where we think we've got a compelling argument. That's where the young scrapping in Hungary, Stamen came from. Final one, you said about the sexiness of the US. Is there anything we can learn from the US in terms of how they present themselves and the product that they sell to be more sexy? Yeah, it's an interesting question. And it's a really interesting tension. Some of the things that are special about the city are that we have been doing the same thing for hundreds and hundreds of years, actually.

39:30And it's part of our strength. And some of our longevity at doing these great things as a nation, as a city, are things that we should celebrate. You can, that's why I describe what I run as a 300 year off fintech. Both statements are true. We've existed for 300 years. What we do in terms of purpose is the same today it was 300 years ago and I described our job as a convener to bring together those who have capital with those who need capital and service and objective. The way we do it technologically is transformed even from how we did it 10 years ago, let alone how we did it 30 years ago or did it 40 years ago.

40:03And so the technology that we use is some of the most cutting edge technology in the world and I run a tech company. People don't think of me that way. And so some of it is just about how we kind of explain ourselves, talk about ourselves, and then add more celebration to the success of the companies that list on our market. And make sure that they're more visible and make sure that people go, yeah, that's where I want to be. And that's the thing that we're seeking to do. And we've done a lot over the course of last few years to change that, but there's more that we can do. I want to do a quick fire on, otherwise I'll talk to you all day.

40:33Okay. What do you believe the most around you disbelieve? I mean, I always believe that any problem is fixable. The right way to think about it is my basic philosophy is if you don't like the system change the system. And an awful lot of people in this city don't think they can change the system. What do you know now that you wish you'd known when you accepted the role? It isn't possible to operate on for a sleep for very long. I wish I had a magic machine that would give me 48 hours on a day and still enough time to sleep. What do you not do now that you would do if you had more time? It's been more time in my family.

41:08What if you changed your mind on the last 12 months? I always have this phrase, I don't need to be right, I need us to get to the right answer. The question is how do you create that group of people around you where you know the objects of your trying to achieve and then you all co -curate how to get there but you've got people in the room who are going to poke you and project and go, ah, have you thought about that and have you thought about that and actually Julia, no, I know you've been hooked on this but here's a problem with it, how about we think about that way. I'll have my mind changed every day, that's what it should be.

41:37The most important thing is to understand how it's to make the best possible decision you can in the moment with the information that you've got, recognizing that as you get more information you need to evolve what you think. So the things that I thought probably in the reform agenda were the most important things to focus on, actually have either become less important or they've been fixed and other things have become more important. Have you ever sit down with Rachel or you've sent a biser on one thing? What would you say? Pension for the reform. Turn the taps on. Do you think she's listening?

42:03I think the government have very clearly prioritised looking at pensions and looking at domestic loads of capital. And they're right. Is ESG bought sticking? And BNPR? Here's the thing. A focus on the climate impact of companies is not wrong. You think about an existential threat to multiple generations of what is happening to a planet, then actually these are wholly legitimate things to take into account in the consideration of value. However, how you do that so that you actually take it into account for the right reasons and drive investment into the things that you need as an economy, both continue to grow to create the right living sense for people and to finance the transition is a different exercise.

42:45And there have been places where over regulating these things has actually produced perverse outcomes where investors are incentivised to invest in big extractive industries, for example rather than medium -sized scaling green economy companies because one can produce the data from the other can't. And so I don't think the fundamental regard for the impact of a company on climate change and how it is going to mitigate its pathway through the changing climate for the benefit of its long -term stakeholders is wrong at all. Having a prescriptive view as to how that should be done, doesn't allow for innovation, doesn't allow for learning.

43:27And the way I would frame it is, if getting to NetZero was easy, would have done it already. We're going to have to learn and fail and learn again and fail and hopefully do so as fast as we can in order to manage climate change. And therefore we need to create space for that innovation to happen and incentives for that to happen. Sometimes the regulating it can run a foul of the need to create that space to innovate. What concerns you most in the world there? This conversation alone illustrates that things aren't binary, things are complicated, there's lots of shades of grey. We don't create much space to have those truly fundamental conversations about those shades of grey.

44:05We create a lot of space to say, well I'm on this side of the argument and you're on that side of the argument and I'm going to shoot my metaphorical arrows at you. How we find the space to actually have the nuanced understanding about how you balance, for example, the cost of transition to net zero and the consequences of doing so and the demands are going to place on people, recognizing that actually it's not all binary but it's been constructed such and there are trade -offs and societies to agree those. We need to find spaces to have those conversations. Algorithms that... Algorithms drive content today.

44:37They do. They take people to the places they already are and they take places to the people. But also new ones doesn't drive hits. No one cares about it. It depends. Bad headlines drive clicks. Totally. Well, not even bad headlines by opinions drive clicks. And so it depends and it's really nuanced. But it take it out, boring. Yeah, I know. Cut to the first bit. Unfortunately, the world is not as binary as everybody can trust. And the real value is in mapping your way through the nuance. I do worry that we don't cross the space. Was black and white when you were younger, that now with wisdom and the experience, you're like, no, no, no.

45:14Probably most things. It's very easy to, I don't know, I think the older I've got, the more I've realised things on binary. I was jokingly so I see very few things in life as binary, including football matches, which as a fan of Manchester United has been quite convenient recently. I can see the benefits of most things on both sides. I also think that we treat things as oppositional when they're not too much at the time. We decide it so I'm well, there's one side or the other side. And when I'm in meetings where my team will go, well, there's this option and there's and I go, how about one in the middle?

45:46And usually there's one in between the two, because they've been constructed as either one. And in fact, there's actually something that can make most people happy and solve most of the problems. And you might at the margin have a small number of things that you've not resolved. Final one, LSE in 2035. Where's the LSE then? Well, I hope we've proven our point as the leading international exchange that is genuinely the default choice for great UK companies that have built to a really significant scale because they have had domestic capital driving their financing as they've started, as they've grown and as they've scaled.

46:22That's the vision. Juliet, thank you so much for having us in the office. Thank you so much for being so open and I've really enjoyed it. I don't know, me too. Thank you for having me. Now I want to say huge thank you to London Stock Exchange for letting us come to their headquarters to record the show today. If you want to watch the full episode, you can see that on YouTube by searching for 20VC, that's 2 .0VC on YouTube. But before we leave you today, Secure Frame empowers businesses to build trust with customers by simplifying information security and compliance through AI and automation. Thousands of fast -grown businesses including Nasdaq, Angel List, Doodle and Coda trust Secure Frame to expedite their compliance journey for global security and privacy standards such as SOC2 and ISO 27001.

47:06CMMC, NIST standards and more. Battened by top tier investors and corporations like Google and Cliner Perkins, the company is among Forbes' list of the top 100 startup employers for 2024. Cheat -tooth's best software awards for higher satisfaction products and a recipient of the 2024 Cybersecurity Excellence Awards. Something I definitely never got in school myself. Learn more today at SecureFrame .com. And speaking of speed, let's talk about something every founder, product leader and CEO is thinking about. Innovation. We all know that innovation is the lifeblood of any company, yet more than 80 % of innovation projects stool before they even make it to execution.

47:43Why is that? Because one's teams move from discovery to development, outdated processes, endless contact switching, and misalignment. Slow everything down. Don't you hate it when that happens. Well, that's exactly why Miro built the Innovation workspace. God, that's a cool name. A faster, smarter way to take ideas to execution. Now at 20VC we work with countless startup founders who know that speed is everything. And that's where AI powered tools like Miro's come in. From AI sidekicks that act as a designer, analyst or engineer on demand to instant AI summaries that condense meeting those, product briefs and retrospectives in seconds, Miro is built for teams that want to move fast.

48:23And one feature I love, the two way sync with Jira and Azura. So when something is updated in Miro, it's automatically reflected in your development tools and vice versa. No more duplication, no more miscommunication, just seamless execution. So whether you're in product, UX, engineering, agile or IT, Miro's innovation workspace helps teams go from idea to outcome faster. Try it today at Miro .com. That's M -I -R -O .com. Now that your team is up and running worldwide, make sure your finances work just as hard with Brex. the ultimate financial stack for startups. So when Brackse was founded, it wasn't just about creating another financial product, it was about solving the really gritty challenges that founders face daily.

49:03Let's be honest, building something from the ground up is hard enough. Without dealing with clunky outdated banks, the pile on fees and leave your cash idle. Brackse is different, it's the financial stack that scales with you, no matter where you are in your journey. From corporate cards to maximising your runway, to earning yield on your cash. Bracks was designed with founders in mind to make every dollar go further, so you can focus on building. And here's what really stands out to me. Bracks combines the best of checking, treasury and FDIC insurance in one powerhouse account. You can send and receive money globally at lightning speed, earn yield from day one and still access your funds whenever you need.

49:41Plus, with 20X the standard protection through program banks, your cash is not just working harder, it's working safer too. It's no surprise that one in three venture -backed startups in the US, with companies like Anthropic, Coinbase and Robinhood, I mean my god these companies are incredible, trust Brax to help them grow. If you want to join the smarter startups on the planet, head over to Brax .com forward slash startups and see what they can do for you. As always we so appreciate all your support and stay tuned for an episode on Monday with the CTO Microsoft Kevin Scott.