By Jason Wyatt, Managing Director Marketplacer
There’s a sense of excitement and glamour involved with big sharemarket floats. We’ve seen some stupendously big tech company listings over the past few years, especially in the USA, and it’s always fascinating to watch the numbers thrown around for these IPOs and how these companies fare down the road.
This subject was touched upon in a recent interview I gave to the Australian Financial Review.
The article focused on a recent piece of milestone news in the Marketplacer story: an $11 million funding round led by one of our major investors, Gerry Ryan, which is set to help us grow the company even more. It’s yet another confirmation that we’re on the right road in regards to building a successful tech company that has incredible potential for further expansion and growth.
This round of funding comes in addition to the $10 million round that was raised last year. We have, we think, well-founded confidence in what we’re doing as a world-leading online marketplace platform provider, and it’s satisfying to know astute investors such as Gerry Ryan and David Paradice are recognising that as well.
We’re using the latest round of funding to further our international expansion plans and for strategic acquisitions. We started all this close to a decade ago with Bike Exchange and we’ve grown steadily ever since, all the while keeping an eye on the underlying fundamentals of what we do. Our systems have got better; our processes more refined; our knowledge even deeper.
As I told the AFR when asked about the idea of Marketplacer floating on the ASX:
“My feeling is a lot of tech businesses are listing quite early in an immature state before they have really reliable forecasts and before they have scalable systems and processes.”
“We’re more mature than that, but the most important thing for us is to create a great business first. IF you have a great business, you’ll have opportunities.”
Of course every company is different and each is entitled to follow what they feel to be the best course of action for them.
However, there’s certainly been a significant amount of disquiet in the Australian tech, investor, and startup communities about the haste with which some companies are seeking to list. A lot of these companies are startups that have yet to really prove their business models or their potential to scale.
They see listing on the sharemarket as a quick solution to their funding issues — the pot of gold that’s going to help them grow their company. This belief is fuelled by the fact there is a lot of hype and excitement around tech companies at the moment.
With concepts like Internet of Things and Artificial Intelligence being thrown about, plenty of investors are at the very least willing to look at a pitch deck if there are some high concept terms being touted. No one wants to miss out on the next big thing, after all.
The ASX recently released a consultation paper dealing with this issue, which looks at making the listing requirements for companies more stringent. This would be done in order to ensure the ASX “continues to be a market of quality and integrity, and remains internationally competitive.”
The ASX obviously has to strike the right balance between protecting its integrity while also remaining liberal enough in its regulation to not exclude companies that are credibly looking at an IPO as a fundraising option. The other issue here is that access to funding is still tight in the small to medium cap category.
There’s a lot of competition out there for investor dollars, especially in the tech sector, which is why we feel privileged that smart investors have once more shown their confidence in what we’re doing at Marketplacer.