The online reviews platform
Trustpilot was created in 2007 by Peter Holten Mühlmann and is headquartered in Denmark. It is a digital platform that collects and publishes reviews of businesses. Its goal is to develop trust between companies and consumers by making the latter shop with confidence and by giving useful insights to businesses. The site provides statistics on business’ customer satisfaction rates and it is an important feedback resource for products, services, or brands.
Each month are posted 1 million reviews by customers and the company generates income from subscribing businesses that use its software to be reviewed by buyers. Trustpilot has offices in several cities including New York, London, Copenhagen, and Melbourne. Companies that create an account on Trustpilot have the aim to ameliorate their online presence and improve their credibility. They are not allowed to pick which reviews are published on, or deleted from the platform for transparency reasons.
London for IPO
Every month nearly 20,000 businesses pay fees to Trustpilot to put on view the ratings on their websites. Because of a sudden upward movement in e-commerce, last year the company’s revenues reached $ 102 million. The biggest markets of Trustpilot are the UK and the US.
A few days ago, the company said that it will sell shares in London in a stock offering. It will hold an initial public offering (IPO) on the LSE (London Stock Exchange) to sell 25% of its shares to raise $50 million. Existing shareholders will also be able to share sales. Parts of the IPO proceeds will help the company to upgrade algorithms to identify the presence of fake reviews and to expand in the US and Europe.
What is more, the founder of Trustpilot mentioned that they chose London for IPO because of its ‘growing tech scene’ and the ‘ great liquidity’ on the LSE. This will help shore up the city’s status as a financial hub and destination for tech companies after Brexit. The business wants to take advantage of a boom in online retailing and investor demand.
It hopes to be eligible for FTSE (Financial Times Stock Exchange Group) UK indices. With an IPO the company can invest the money for its growth and this will help to ensure that reviews are trustworthy. In 2020, it took down 2.2 million reviews considered to be fake or fraudulent, and the majority of them were deleted.
The advantages of an IPO
In general, IPO allows a business to raise capital from public investors. It is the procedure of offering shares of a private corporation to the public in a new stock issuance. When a company has reached a private valuation of almost $ 1 billion can begin to express its will to go public. The previously owned private share ownership becomes public and private shareholders can decide if they will hold onto their shares in the public market. The IPO consists of two parts, the pre-marketing phase of the offering and the initial public offering while the underwriters lead the IPO process.
An IPO can bring lots of advantages with the most important one being the rise of company capital. Also, the business gets access to investment from the public and this leads to an increase in transparency. Companies can attract and retain better management and skilled employees and have a lower cost of capital for equity and debt. Last but not least, IPO strengthens the prestige and public image of a business, and this benefits the sales and profits.
To summarize, London got its first Europe IPO this year with Trustpilot. This significant landmark at the company’s development will make the platform able to distribute new goods to more geographies. The COVID-19 crisis caused a huge shift to buy online and Trustpilot can prove essential to consumers at this crucial point, in which they need to know where to place their trust.
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