The decision of Australia’s biggest tech company, Atlassian, to file for an IPO in the US – at an estimated valuation of more than $US3 billion – is a long-awaited development in the story of the jewel in the crown of Australia’s startup sector.
But the offshore listing of the company founded in Sydney 13 years ago is also to the dismay of many Australian entrepreneurs, investors and startup industry observers.
Some question why the darling of Australia’s tech scene shunned the ASX, saying a local listing would have been the best thing Atlassian could have done for the local sector.
But Sam Chandler, CEO of Australian-founded tech company Nitro, who has also taken his company to the US, says the local stock exchange is just not mature enough to handle the listing.
“If Atlassian listed on the ASX, it would be the only pure software company listed on the market, while in the US it would be one of many such companies,” Chandler told The Australian.
“There’s a level of maturity there that’s very important.
“One of the problems with the ASX is that all technology businesses get bundled into one. We have had some successes but they are either online marketplaces or IT-managed services.”
Chandler says Wall Street’s analyst community will provide the level of evaluation and market guidance Atlassian needs for a successful IPO.
While other Australian tech giant’s like Freelancer’s Matt Barrie, who has been lobbying the co-founders to stay in Australia for years, disagrees with Atlassian’s decision, the need to boost the local market in order to lure such listings has also been discussed by Australian politicians.
Recently Wyatt Roy, the assistant minister for innovation, told Lateline that Australia hasn’t managed to embrace the entrepreneurial culture and attract the capital needed to help companies like Atlassian but as soon as the country better positions itself the big players will come return to Australia.
“To give you an example: Sam Chandler, who runs a company called Nitro in Silicon Valley, which is a competitor to Adobe, a very large company. When you walk into his office in San Francisco he’s got Astroturf laid out, he’s got the MCG on the wall. He wants to come back here. I know they want to come back here and I think now is a great opportunity for them to be part of what is a very exciting time for our country,” he said.
“If we grow that talent pool through the things we were talk about and attracting some of the brightest people from across the globe to come to Australia, this will be an amazing place to start a new start-up business. And this is a global race around innovation and we want to be at the front of that pack.”
However, Atlassian’s choice to debut on the US stock exchange isn’t surprising, given co-founders Scott Farquhar and Mike Cannon-Brookes, who started the business in 2002 using a $10,000 credit card, have long indicated a preference for a US IPO.
Last year, Business Insider spoke to the founders, who said Australian investors don’t understand the software business as well as US investors might because there are fewer ASX-listed technology companies to compare Atlassian against. You can read more about that here.
Just last month Cannon-Brookes told Business Insider the federal government seems “determined not to do anything” in response to a global business and consumer revolution in technology, commenting that Australia will pay the price for decades to come.
“I think the federal government has its head so deep in the sand that it couldn’t see the opportunity,” he said.
“I don’t think they’re missing (it), I think they’ve completely missed it and they’re determined to avoid it.
“I don’t pretend to understand why. But they are determined to avoid it in any shape or form for, I think, the huge detriment of the country in 10 or 20 years’ time.”
Read more on what he had to say here.
After appointing former General Electric and eBay executive Erik Bardman as chief financial officer in February, many saw an IPO on either the NASDAQ or the New York Stock Exchange as the next step for the business.
Stockmarket investors will be watching Atlassian’s offering to see whether the IPO market still has life in it after only a handful of US tech firms valued at more than $US1 billion privately have gone public this year.
The Australian has more.
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