Some called it the “least successful stock market float in [the City’s] history”. Still others dubbed it “

” or “Deliver-oops”. In an internal memo CFO Adam Miller listed a series of mitigating factors for the company’s under-performance, while others blamed “

controversial share structures, employment conditions and ambitious valuations

Whatever the reason for Deliveroo’s disastrous IPO last month, one thing is for certain: with

 on its first day as a public company, its listing could well have served as a cautionary tale for those wishing to go public in the City.

But, perhaps fittingly for an AI company with an edge in cyber security, DarkTrace seems to know something Deliveroo didn’t. It has just announced the London Stock Exchange as the home of its IPO after unveiling a £3 billion evaluation, making it the second largest cyber security IPO on the London market after Avast.

Controversial investor Mike Lynch could yet dent Darktrace&#8217;s reception


With the flotation is predicted to take place sometime in May, the company will reportedly offer around a fifth of its shares, with an option to release a further 15%. It is aiming to rise around £250 million. The cash influx will be used to fast-track product development and should earn its chief executive Poppy Gustaffson around £20 million.

“Our intention to list on the London Stock Exchange marks a major milestone in Darktrace’s history of rapid growth, and a historic day for the UK’s thriving technology sector,” Gustafsson said in a statement.

“For us London feels like the natural choice, it is absolutely the right place for us,” Gustafsson continued. “We have amazing talent in this country, and fantastic heritage in cyber security. This is an exciting landmark for us, a great British tech company.”

Of course, nothing is yet set in stone. Especially so considering worrisome reports in February that Swiss bankers UBS had dropped out of plans to sponsor the float due to Darktrace’s links to one of its earliest financial backers, Mike Lynch.

Lynch’s Invoke Capital backed Darktrace in its early days. Lynch’s share of the company is rumoured at a 40% stake which may be worth £1.2 billion when Darktrace goes public.

"Lynch is currently fighting extradition to the US where he is accused of fraudulently inflating the value of his previous firm, Autonomy"

Lynch sits on Darktrace’s board, but has been embroiled in a long-running legal battle. Lynch is currently fighting extradition to the US where he is accused of fraudulently inflating the value of his previous firm, Autonomy, before its sale to Hewlett-Packard in 2011. Lynch denies any wrongdoing but could face up to 25 years in prison if found guilty.

It’s understandable, then, that Lynch’s involvement might be giving some potential investors pause for thought. But, Lynch aside, do the company’s track record and projected revenues justify the £3 billion valuation?

Darktrace hopes to lift the spirits of the London Stock Exchange following the lacklustre Deliveroo IPO


Founded in 2013, Darktrace certainly boasts a world-class pedigree. As a collaborative effort between British intelligence agencies and Cambridge University mathematicians, it claims to be the first company to use AI to detect cybersecurity threats on a large scale.

At the core of its operations is its Enterprise Immune System technology which uses machine learning to autonomously detect cyber-threats and take action against them automatically. One of its early successes came when the

In addition to Lynch, its backers boast some equally impressive names: Alan Wade is former CIO of the CIA and now sits on the advisory board. As does Lord Evans of Weardale KCB, former Director-General of MI5.

From a numbers perspective the company – which employs more than 1500 staff and has headquarters in Cambridge and San Francisco – seems to be going from strength to strength. As of

, its technology had been used over 9,000 times on five continents. Today it serves 4,600 customers including Rolls-Royce and Micron.

"The biggest surprise for us was the fact that the company is now profitable..."

Figures for the 2017-2018 financial year show the company earned $78 million in revenue, with a September 2018 valuation putting its worth at

 – officially unicorn status. The company has since claimed it is tapping into a market worth around £29 billion, with its revenues growing to $199 million in 2020 as the coronavirus pandemic drove more companies to want to protect themselves from scammers.

“Growth was supported by a 41% increase in customers to around 3,900 and a 101% retention rate,” Megabuyte analyst Indraneel Arampatta told

. “The biggest surprise for us was the fact that the company is now profitable, generating $20.8 million of adjusted earnings before interest, tax, depreciation and amortisation.”

However, Arampatta went on to raise doubt over the company’s forthcoming offering: “We wonder how pricing discussions will progress, especially given the soggy reception to Deliveroo’s recent IPO,” he said.

, Russ Mould, investment director at AJ Bell, also raised concerns about the IPO but said, should it be successful, it could restore London’s reputation.

“There is a lot riding on Darktrace’s forthcoming IPO after Deliveroo’s stock market flop,” he said. “The food delivery company’s IPO disaster has put a cloud over the UK tech sector and whether other tech entrepreneurs would really want to risk floating their company in London… If Darktrace manages to float its shares successfully and see them rise in value once trading begins then sentiment may improve towards London as a listing venue.”

Lynch’s involvement aside, the continued involvement of Darktrace’s chief executive Poppy Gustaffson – who has been called the “brains behind Darktrace” – should be more than enough to reassure investors that this is a safe bet.

As someone with vast industry experience across sectors socialising in venture capital and tech companies including HP and Invoke Capital, Gustaffson is uniquely placed to take the company public.

As recently as 2017, her team was named ‘Team of the Year’ at the Enterprise Awards, which acknowledges the very best of the entrepreneurial talent in the UK each year. Judges praised Gustaffson and her team’s vision, strategy and disruptive innovation.

Gustaffson, who also accompanied then prime minister Theresa May to India on a trade mission, was later awarded an OBE for services to cyber security in 2019, as well as being named the winner of the Veuve Clicquot Business Woman Awards 2019., “Darktrace’s success has been built on the shoulders of giants: our world-leading position is testament to the strength of the UK’s world-leading science base and long history of mathematical discovery and computing inventions, from Charles Babbage and Ada Lovelace to Alan Turing,” Gustaffson said. “We are proud to be part of that tradition of British innovation, as the UK becomes a leading global centre for the development of AI.”

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