There is still a certain grandeur to the London Stock Exchange on a calm weekday afternoon, with its marble floors, ticker screens, and the buzz of a structure that has witnessed the rise and fall of financial empires. However, the tone quickly changes if you spend a few minutes speaking with fund managers who follow small-cap British businesses. The exchange’s once-celebrated growth market, AIM, is the most obvious indication that something has quietly broken.
AIM was founded in 1995 with the straightforward goal of providing young, aspirational British businesses with an easier way to raise capital and go public without having to deal with the onerous compliance requirements of the main market. It worked for a while. On their path to greater success, Asos, Plus500, and Entain all went through AIM. It evolved into a sort of launching pad where a tenacious local company could see if the general public believed in it.
This belief appears to be waning. In 2025, businesses moved off AIM to the main market at the quickest rate in fourteen years, and the market has shrunk to less than half the number of listed companies it once had. Last year alone, seven businesses made that leap, and at least five more are reportedly in the works. It’s a peculiar kind of crisis—a gradual, steady depletion rather than a crash.
There is a structural component to what is occurring. While the overall FTSE All-Share increased by 46% during the same period, the FTSE AIM All Share index fell by about 34% over a five-year period ending in 2025. After more than ten years on AIM, the nearly 200-year-old pub chain Young’s is returning to the main market in April. Interestingly, its shares are still trading where they were in 2013, even though profits have more than doubled since then. Boardrooms are often uneasy about such numbers, and for good reason.
However, attention might be the root of the issue. On average, only a small percentage of analysts cover AIM-listed companies compared to similar-sized US firms. Founders are forced to look elsewhere because fewer analysts mean fewer investors are paying attention, which results in lower valuations. It’s a self-sustaining cycle that Nasdaq has been covertly taking advantage of.
The math has become uncomfortably easy for a British startup founder deciding where to list. Whether justly or not, London has found it difficult to match Nasdaq’s deeper institutional capital pools, analyst coverage that genuinely influences share prices, and a cultural appetite for growth stories. In the City, Wise’s choice to float in New York instead of London became somewhat of a cautionary tale because, from the company’s perspective, it made perfect sense rather than being scandalous.
The irony in this situation is difficult to ignore. For years, London courted unicorns, built tech-friendly IPO infrastructure, and celebrated companies like Oxford Nanopore and Darktrace as evidence that the city could compete. A portion of that optimism was genuine, and some of it was successful. However, optimism doesn’t solve liquidity issues or take the place of analysts who have switched to covering American businesses.
This is not being disregarded by regulators. The Financial Conduct Authority has relaxed regulations pertaining to major transactions and dual-class share structures, in part to improve the main market’s attractiveness and halt the bleeding toward the United States. It’s still unclear if that’s treating the illness or the symptom. AIM was never meant to compete with Nasdaq directly — it was meant to be a stepping stone. The problem is that more businesses appear to be ignoring it.
