Aus startup exits now 7th globally
Dean McEvoy: The TechSydney CEO says liquidity in the market has been key to current Aussie success
A new report places Australia seventh in the number of tech industry exits in 2016. Exits are a good thing, based on the terminology used in the startup industry. An ‘exit’ is not a company going broke – it is a successful float or acquisition of a startup.
The report from research group CB Insights (CBI), counted 3,260 tech exits globally in calendar 2016. Around half of these were in the US, which was followed by the UK, India, Canada, Germany, France – and Australia. Startup powerhouse Israel was in tenth spot.
Unfortunately the publicly available version of the report does not list the actual number of exits in countries other than the US. But Australia in seventh spot globally is a healthy sign.
The data shows that Australia has a vibrant startup scene, with many successful exits. By far the majority – more than 95 percent – of exits globally were through acquisition, but in Australia stock market floats are also popular.
Why Australia’s high ranking? Alex McCauley, CEO of StartupAUS, told InnovationAus.com that it is a combination of factors.
“As noted in StartupAUS’s 2016 Crossroads Report, it’s been a big 18 months for startups in Australia. A combination of increased bipartisan government support, a VC boom, buy-outs, and a surge in startup activity has accelerated growth in the national startup ecosystem.
“It's heartening to see Australia’s commitment to innovation reflected in these latest metrics.”
Successful Australian entrepreneur and investor Dean McEvoy, CEO and co-founder of TechSydney, says that liquidity in the market is a critical factor.
“It's great to see Australia ranked so high globally for the number of tech exits last year. It’s a testament to the hard work of a large number of people,” he told InnovationAus.com from San Francisco.
“Sydney's ecosystem is taking off and it's important that we keep this momentum going. TechSydney is working to make Sydney one of the most desirable places overall to start and grow a tech company.”
Floats, otherwise known as IPOs (Initial Public Offerings) tend to be higher value exits than those through acquisition – the report gives the example of high profile IPOs in 2016 such as UCar Group (A Chinese chauffeured car service company), which raised an incredible US$5.5. billion. and US ‘hyperconverged’ server make Nutanix (US$ 2.2 billion).
The biggest acquisition exit globally was Walmart’s purchase of US Internet retailer Jet.com for US$3.3 billion. But most exits are much smaller. The CBI reports says that 58 percent of them in 2016 were for less than US$10 million.
Financial research company OnMarket BookBuilds iists the ten most successful technology IPOs on the ASX in 2016 as:
- Afterpay Holdings (fintech – short-term credit)
- ApplyDirect (e-recruitment)
- Aurora Labs (3D metal printing)
- Bravura Solutions (fintech – superannuation and insurance software)
- Droneshield (identification of unauthorised drones
- Gooroo Ventures (e-recruitment)
- HotCopper Holdings (investor chat forum)
- LiveHire (e-recruitment)
- WiseTech Global (logistics management)
WiseTech was the largest tech IPO on the ASX in 2016. With annual revenues of $100 million, its April float of 16 per cent of the company gave it a market valuation of more than $1 billion. Only financial software vendors MYOB’s 2015 float was larger.
There was also substantial activity in acquisitions of tech startups in Australia in 2016. These included:
- Daintree Networks (building automation, acquired by GE for $100 million)
- Dealer solutions (Car dealer software, acquired by Manheim Automative Financial Services)
- Distribution Central (distribution software, $65 million acquisition by US components manufacturer Arrow Electronic)
- ePAT (demantia management, reverse takeover by Minquest)
- Medical Director (Practice management, $155 million acquisition by Hong Kong private equity firm Affinity Equity Partners)
- Plenary Networks and Sixtree (two systems integrators acquired by Deloitte)
- RxWorks (veterinary software, acquired by IS medical products distributor Henry Schein)
It’s an impressive list, and there were many more. There is also likely to be continued activity this year. Research company Frost & Sullivan expects strong growth in the number of (IPOs) on the Australian Stock Exchange ASX in 2017.
"Currently the number of proposed listings on the ASX for 2017 looks strong with close to 45 already in the pipeline," said Industry Director Ivan Fernandez.
"IPO listings in 2016 on the ASX continued unabated and finished the year on par with 2015 with IT and fintech listings representing almost 25 per cent of the total IPO market.”
The CBI report is available here.