Four Australian brokerages were knocked back by taxi app goCatch, after interest from investors such as James Packer saw a round of fundraising oversubscribed.
RBS Morgans, D J Carmichael, Wilson HTM and Ord Minnett were unable to, on behalf of clients, take a stake in the business, sources with knowledge of the negotiations said.
High levels of interest in the application, which lets users book and pay for taxis with their smartphones, recently saw a fundraising drive close early.
After attempting to raise up to $2.5 million, goCatch co-founder Andrew Campbell said that “within one week” the start-up had received $3 million in capital.
James Packer and SEEK co-founder Paul Bassat have invested through their fund Square Peg Capital, Campbell said. They are joined by Markus Kahlbetzer, who has bought into goCatch through his fund Tankstream Ventures.
High-profile deals have put the spotlight on Australian start-ups in recent months. Freelancer.com recently fielded a $400 million buy-out offer from a Japanese company.
Square Peg Capital is reportedly buying into several new businesses, seeing off overseas venture capitalists in the process.
It is understood at least one of the brokerages was interested in goCatch on behalf of clients looking for an alternative to investments in the resources sector. One source said the risk-return metrics were similar, and the time from investment to positive cash flow was potentially shorter.
“The reason they [the brokerage firms] got cut out is there was just no room,” one of the people, who requested anonymity as the information is private, told Business Insider.
A Wilson HTM source with direct knowledge of the deal said: “We definitely met with them [goCatch] a few times.”
Sources also said all four firms were interested in working with the app for a potential public offering. “They would use their high-net-worth rank to provide seed capital and then would partner with the company to go through the IPO phase,” one of the people said.
Campbell said the business was aiming towards an IPO, but that “the plan has not been developed to a great extent”. Another option which will also be considered is further fundraising, or a trade sale.
“We are setting the business up so any of those outcomes can be achieved,” he said. “It won’t be in the next six months, that’s for sure.”
Applications such as goCatch are putting pressure on Cabcharge by undermining its 10% surcharge fee. It joins a number of start-ups disrupting the sector, such as Ingogo and Uber.
Cabcharge, which has its system in nearly every Australian taxi, has come under fire for its 10% surcharge rate. goCatch charges 7.5% for its credit card payments.
The Victorian Government in May accepted the finding of an inquiry which recommended cutting taxi credit card surcharges to 5%. The company’s shares fell more than 15%, from around $5 to $4.
Now read: Australian Entrepreneur Matt Barrie Poised To Make A Fortune With $US400 Million Offer For His Start-Up Freelancer.com
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