‘While November to March were very bleak,’ admits Clive Carver, head of corporate finance at specialist small-cap broker FinnCap, ‘from April on, it’s just got stronger and stronger. We’re working on three IPOs that are underway at the moment and all of them are looking for cash.’

While institutional investors are unwilling to back new companies, many are supporting companies they have already backed – a case of better the devil you know. In 2008, more than three times the money was raised for existing AIM plcs as for new IPOs. Up until the end of July 2009, the £300 million raised by the lonely three AIM newcomers has been dwarfed by £2.3 billion of secondary fundraisings, the fourth-highest in AIM’s history.

‘This is the way recoveries in the past have worked,’ recalls Paul Tetlow, capital markets partner at law firm Hunton & Williams. ‘In the post-dotcom era, people started to do secondary fundings to keep businesses alive, even if they were only small. I think that will continue.

‘The money is still there and there is still an appetite. I think that as the economy improves, activity rates will start to improve in secondary and eventually IPO fundraisings – but I believe there will be a retrenchment away from speculative companies.’

James Noble, a senior director at small-cap broker Astaire and AIM-listed investment group Evolve Capital, agrees: ‘There’s not a lot of money for really interesting projects that will take five years; that’s very difficult now. There is money if it isn’t being used for pure research and development, but to take products to market.’

However, Noble still argues that a listing can be a preferable option for companies to seeking private venture capital. ‘VC firms are running very short of cash and they are imposing stronger demands on their investments. It’s difficult to market a company that’s only just starting up if you want to raise money. One problem is that venture capital firms are insisting on fancier and fancier types of shares to protect themselves. You avoid all that by floating, as you generally have just one type of share.’

While that may be true, nothing is likely to go ahead without the say-so of the people with the money. Stephen Roberts, corporate finance head at Daniel Stewart, says, ‘Everything we’re doing now will have a pre-marketing element [where] we get the view of institutions first.’

Likewise, Richard Thornhill, capital markets director at Big Four firm Deloitte, adds that ‘new companies will face a lot more scrutiny. Inexperienced companies, of which there are many on AIM, have disappointed their investors in the past and people need good reputations.’

Among AIM’s 1,336 companies, 86 per cent now have a market cap of less than £50 million, while half are valued at under £10 million. For these companies, there is the long-standing issue of liquidity as they often fail to appear on the radars of brokers and institutional investors.

‘New companies will face a lot more scrutiny’

‘[AIM] has matured to an extent where there’s not really any longer a market for £5 million and £10 million companies,’ says Bill Staple, chief executive of AIM-listed advisory firm Hanson Westhouse. ‘A lot of [investment] funds have been hit very hard by having situations in small companies, and at that size they are not going to be able to easily trade out of their positions.’

Clearly, valuations will rise as economic conditions improve, but the feeling among many advisers is that the smaller companies will look to go elsewhere. This is borne out by 273 companies leaving the exchange during the past 12 months – this includes companies moving to the Official List, being acquired, delisting or becoming insolvent.

Says Staple: ‘AIM is not for everyone. I do still think we will see some “micro-cap” companies listing, but many smaller companies are looking to raise pre-IPO money privately and then list at a later stage.’

The hope of many CEOs and advisers is that 2010 cannot possibly be as austere as 2009, especially the situation at the start of this year. Throughout this time, funds have been raised, companies have endured and a number are now intending to go on the offensive and use the exchanges to grow through fundraisings and acquisitions.

Tetlow says: ‘AIM is supposed to be a growth market. People forget that you will always have failures and, of course, not every growing company survives. The thing is that they had promise and, though they may not have brought their product to market or produced profits, they were given an opportunity.

‘AIM is an arena where investors are aware that there is a high degree of risk. I believe there will continue to be people who want opportunities to take risk as that is where there is the potential for the greatest capital growth.’