Dealer fatigue is something Andy Taylor, the boss of mobile tech company Yatango, has noticed after finishing an investor roadshow this late in the calendar year.
He said the hype around the $5.7 billion Medibank IPO and the significant number of small cap tech companies listing this year has taken a lot of capital off the table.
“There’s a lot of dealer fatigue,” he said.
“It’s just feedback from our roadshow…What I’ve heard from funds in general is it was such a big deal getting allocations to that [Medibank] IPO.
“Absolutely – it’s definitely affected our roadshow. Without a doubt there’s a lot of people that are a bit over it now and are just looking forward to the end of the year.”
Yatango has raised about $7 million to date and is looking to secure another $5 million in capital as it looks to build out its place in the telecommunications sector.
The company is currently running two raising processes, one in Australia and one in the UK. Discussions with a number of investors are ongoing.
Taylor said while it’s good to see tech companies listing, via reverse takeovers and the like, he’s concerned some are listing too early.
“It’s a smart thing for tech startups to raise the capital that they need to scale,” he said. “Private series A is non-existent over here it’s very hard to raise.”
“My concern is public markets are pretty tough and to be able to stand up in that market they want to see business plans, revenue models and they want to take a short term approach.
“Too many companies are doing that at an immature state, it is a concern.
“I’m seeing a lot of businesses that are quite immature getting funded with no revenue model, or in a very early stage of proving that out and it just worries me.
“What we’ve tried to do is show that we can link our customer acquisition to revenue.”
With only a few companies succeeding, Taylor said a couple of duds can give the whole industry a bad name.
“I don’t want to see all the tech companies get tainted with that brush,” he said.
“There’s only a few that obviously break out.
“If you look back in 2000, with the businesses like Amazon which were able to scale and navigate, there were only a few of them.”
However, Taylor said as money moves out of mining and into other areas there is capital available for tech companies to secure.
“Investors want to put their money in other areas and tech is on the rise,” he said.
Yatango hasn’t made a decision on where to IPO yet but Taylor said it will most likely be outside Australia because “the valuations and the investor appetite is much more mature.”
Pointing to Atlassian and Xero as exceptions, Taylor said: “What worries me, and some people are quite candid, a lot of the big companies come out of the US, not only from a capital point of view but also a culture point of view.”
“There isn’t a huge amount of international success stories coming out of Australia,” he said.
“We want to stand the best chance of rolling out internationally [and] top digital models, and they typically come out of the US.”