‘Opaque’ FIRB delays Aussie GovTech deal

Joseph Brookes
Senior Reporter

Two Australian founded government technology companies have been acquired for an undisclosed amount by US firm Granicus, which plans to roll the software into a unified platform, as American investment in local tech ramps up.

The deal with one of the local govtechs, Bang the Table, was agreed in January, but approval from the Foreign Investment Review Board took four months, a process the founder says has become common and may be hampering deals between US buyers and small Australian companies.

“It was a process that felt quite opaque,” Bang the Table co-founder Matt Crozier told InnovationAus.

“We got through it and I’m very happy with the result, but I’m still a little bit in the dark as to what was done for 16 weeks.”

Bang the Table co-founder Matt Crozier

Bang the Table was co-founded in 2007 by Mr Croizer, a former government worker, and Dr Crispin Butteriss. The company’s software collects and measures citizen engagement with local, state and federal governments. It counts Service NSW, Sydney Water, and Gold Coast City Council as local customers.

In a bid to scale up in 2016, the company moved to Colorado to tap the huge US government market and a fast growing startup and govtech scene in the Denver and Boulder area.

Mr Crozier said the company quickly expanded in America and attracted attention from private investors and large US govtechs looking to build out their platforms.

But COVID-19 “iced” acquisition plans amid market uncertainty in early 2020, and Mr Crozier returned home but continued talking to investors. By late 2020 he was in serious talks with US govtech Granicus.

It was a “relatively easy decision” to go with the established Granicus, Mr Crozier told InnovationAus, but the deal still needed sign off from the Foreign Investment Review Board (FIRB), a process that legislation says should take only 30 calendar days after fees being paid in most cases.

But the Granicus application blew out to four months, adding to “stress and uncertainty within the teams” and financial strain, Mr Crozier said.

“The deal costs suddenly blow out when you’ve got to keep accountants, lawyers, various other people redoing the numbers and arguing over different points for four months. That’s not as nice as closing within two weeks.”

Because the acquiring company is the applicant to FIRB, Bang the Table was largely uninvolved in the process, according to Mr Crozier. He said he accepts there are valid reasons for thorough evaluations, but delays can be a deterrent and impact smaller businesses in particular, which often need to expand beyond the limited Australian market.

“As an owner, it’s quite confronting to be told that you can’t sell your asset without government having a look at it for 16 weeks…It’s a very opaque process when you’re on the receiving end.

“I just take it as a reminder [to keep pushing] and it redoubles my determination to keep on with the mission.”

Last week FIRB released its 2019/20 annual report, showing 1,155 business applications worth $178.4 billion were approved.

It revealed business applications for communication services have ballooned from just eight deals worth 900 million three years ago to 48 deals worth more than $21 billion in the last financial year, with the US far and away the biggest source of investment for service businesses.

The data predates last year’s reforms to FIRB framework, which technology companies and investment groups warned would dampen enthusiasm for investment in Australian technology companies.

Bang the Table and Granicus’s other new acquisition, Melbourne headquartered OpenCities, will now be rolled into a new end to end Granicus platform, which existing Australian customers will now gain access to.

Mr Crozier will move into a new role of ANZ managing director for Granicus while OpenCities chief executive Alex Gelbak will become general manager of global platform strategy.

Do you know more? Contact James Riley via Email.

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