What Is AIM and How Can You Trade or Invest in It?

The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange (LSE), designed to give small and growing companies easier access to public capital. It was introduced to replace the Unlisted Securities Market and support early-stage businesses that couldn't meet the full listing requirements of the Main Market.

Established in 1995, AIM provides a more flexible regulatory environment than the Main Market, allowing younger companies to float shares publicly with reduced listing costs and lighter reporting obligations.

Though it launched with just 10 companies and a market capitalisation of £82 million, AIM has helped over 4,000 companies raise more than £135 billion since inception, contributing significantly to UK GDP and employment — and built an ecosystem of advisers including nominated advisers, brokers and market makers, who have built their own businesses around the index.

What sets AIM apart is its principles-based regulatory system based on flexibility and access over red tape. While this approach attracts entrepreneurs and investors with higher risk tolerance, it also introduces unique challenges, particularly surrounding transparency, oversight and liquidity.

For context, AIM’s performance has varied over the years. In the mid-2000s, it saw rapid growth and global popularity, but more recently the number of listings has declined sharply. Regulatory reforms, macroeconomic uncertainty, and reduced investor appetite for small-cap risk have contributed to this slowdown, and as of mid-2025, AIM has fewer than 700 actively listed companies, compared to a peak of over 1,600 in 2007.

But despite recent declines in IPO volumes and increased investor uncertainty, AIM remains a unique platform for dynamic, high-potential businesses. And arguably, its listings could recover sharply in the event that the current market demand for larger companies falls.

Why do companies choose to list on AIM?

Companies list on AIM when they require capital to scale up operations but lack the size, financial maturity, or track record for the Main Market. Inevitably, these businesses tend to be in high-growth sectors like biotech, mining, fintech and digital services, many of which are pre-revenue or cashflow negative at the time of admission.

For these companies, AIM offers access to institutional and retail investors, in addition to increased visibility and credibility. Further, it’s also significantly cheaper to launch an IPO on AIM compared to the Main Market. And companies, are not required to have a trading record, minimum market capitalisation, or shareholder threshold.

Of course, while AIM companies benefit from increased capital access, they must also be prepared to operate under public scrutiny, but within the bounds of ‘light touch’ regulation.

How do companies list on AIM?

Listing on AIM is relatively straightforward — it includes preparing an AIM Admission Document, conducting due diligence, organising investor roadshows, hiring a Nominated Adviser (NOMAD) and setting a float price. Reverse takeovers, share placings, and corporate restructures are also governed by AIM Rules for Companies.

One of AIM’s defining features is its use of NOMADs, who replace the role of the UK Listing Authority seen in the Main Market. Nomads are financial firms (usually investment banks or brokers) that are responsible for guiding companies through the IPO process and ensuring their regulatory compliance afterward. Every AIM-listed company must have a Nomad at all times and losing yours for more than a month results in suspension.

Critics argue that this model is a significant conflict of interest, since NOMADs are paid by the very companies they are supposed to supervise. However, defenders of the model argue that it’s much more cost-effective and therefore worth the trade-off for growth companies.

Is investing in AIM shares risky?

As a general rule, AIM is regarded as higher risk than the LSE Main Market though there are several established names at the top end of the index. The reduced regulatory requirements, early-stage nature of many businesses and lower trading volumes all contribute to this reality.

Shares can be more volatile, and it’s much harder to exit large positions than with blue chip companies, without affecting the market price. Additionally, the quality and frequency of corporate disclosure varies significantly between companies, depending on their NOMAD and corporate governance.

However, the potential upside can be very significant. Success stories like Fevertree Drinks or Wynnstay Properties have delivered massive returns to early investors — and while many AIM stocks fail, the ones that do well can generate an outsized return.

Because of this high-risk, high-reward dynamic, AIM tends to attract venture capitalists, hedge funds and sophisticated retail investors. It does also attract some investors who enjoy the partial inheritance tax relief on some of these stocks if held in a portfolio for more than two years.

It’s therefore generally not suitable for defensive portfolios or those seeking steady dividends, but allocating a small percentage of your portfolio to some of the index’s risk assets is a common strategy.

Five Simple Steps to Invest in AIM Shares with us

If you’re considering investing directly in AIM-listed stocks, here’s a step-by-step guide to get started:

1. Choose a brokerage account that offers access to AIM shares. We offer many AIM shares on the IG Invest App or our online platform.
2. Research AIM companies and sectors thoroughly and check recent corporate presentations and news releases. You might also want to review any company accounts, NOMAD history and admission documents. Research is even more important on AIM than with blue chips.
3. Assess your risk tolerance and diversify your exposure. AIM investing is not about betting everything on one stock. You might consider spreading your capital across multiple companies and not investing more than a small percentage of your portfolio, or what you can afford to lose.
4. Place your order and monitor your position. You can use limit orders to control your entry point, instead of placing a simple market order. Track your performance regularly and watch for trading updates, regulatory news, or any changes that might impact your investment.

Consider tax-efficient wrappers like ISAs or SIPPs. Some AIM shares can be held within an ISA or SIPP for tax-free growth. You may also benefit from inheritance tax exemptions if the shares qualify for BPR.

If you are concerned about the higher risk of individual AIM shares, there are many AIM-focused ETFs that offer diversified exposure to UK small cap companies, including the iShares MSCI UK Small Cap UCITS ETF   among others.

Given the heightened risk, you might also want to try AIM shares with our demo account first without risking your own capital or conduct further research through our free online IG Academy.