The 25 hottest tech companies that could be acquired next (August 2016)

Jiri KramCloud Architect | Student@MIT Fintech Course

NetSuite, one of the companies in my previous list, was acquired last week by Oracle for 9.3 billion USD. It’s time now to review our list and add a few name

Reflection 

When I published first version of this article on 10 June 2016, I didn’t expect it to be my most successful article on LinkedIn. It received 77,358 views, 3,549 likes, 98 comments and 1,118 shares. Thank you for that! Another interesting effect was that my follower base rose from 4,000 to 7,000. The article also led to numerous discussions and suggestions about companies that should make it to the list. So I made a promise to update my TOP 25 every time a company is marked off the list.

NetSuite and Oracle

Let’s revisit what I said about NetSuite on 10 June 2016. NetSuite was included in my category, Watch list [I can’t decide on a theme yet], as number 3. Here is what I wrote:

“NetSuite – a similar story to Workday. Why would anyone buy them? Maybe because of the cheap market cap of 6,9 billion USD, but revenue is less than 1 billion USD. So the question is why would IBM, Oracle, Microsoft, or SAP buy them? I don’t think they can challenge Salesforce dominance or pose enough of a challenge such that incumbents SAP or Oracle would pay a premium. (I may be wrong. I don’t know enough to justify the theme. Feel free to suggest.)”

What happened next? After publishing, I received, exactly as I had asked, tips from people on why someone would buy NetSuite. It was a clear battle between Microsoft, Oracle and SAP.  Winner: ORACLE
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Now, ladies and gentlemen, may I present you:

List of top 25 tech companies to watch 

For better readability there are four categories:

1. Public companies (themes) – companies already traded on the stock exchange.
2. Public companies (watch list) – interesting companies with potential.
3. Pre-IPO companies (list) – fast growing tech companies not yet IPO.
4. Pre-IPO companies (Watch list) – Non-IPO companies worth watching.

Any company missing? Please feel free to suggest it in the discussion under the article or contact me via LinkedIn message or Inmail.

Public companies [themes]

1. [Big cyber security consolidation] – I am reiterating my suggestion that the next big consolidation must happen in the Cyber Security space. The “Three Horsemen of the Cyber Apocalypse,” FireEye, Palo Alto Networks, and CyberArk are ripe for the picking: CISCO (sitting on piles of cash and doing stock buybacks), INTEL (that again must grow), SYMANTEC (losing market share and just to sit and wait while MICROSOFT (slowly starts to acquire one cyber security startup after another). Something must happen here!
   
   Potential buyers: Defensive (Cisco, Intel, Symantec), Offensive (Microsoft, IBM, HP) Estimated price (range): 5 - 25 billion USD. 
   
   LAST RATING: 1 on public company list / CURRENT: 1 on public company list
2. PEGA SYSTEMS – I am issuing a new rating for Pegasystems. After NetSuite acquisition this is the hottest enterprise takeover target out there. Oracle, Microsoft, Salesforce and SAP need to either acquire or stop PEGA. This will be a bidding war, where if PEGA goes to Oracle, can result in a new cloud empire. Oracle Cloud + NetSuite + PEGA is a dangerous combination. As will combining PEGA with Microsoft Dynamics PG (former PEGA) especially now that Microsoft launched Dynamics 365. SAP PEGA with SAP HANA also makes a lot sense. To Salesforce.com PEGA is a defensive strategy. I don’t think IBM and HP will join the race so I dropped them from the list. 
   
   Potential buyers: Offensive (Microsoft, Oracle, SAP), Defensive (Salesforce) Estimated price: previous 8 billion USD. UPDATED: 10-15 billion USD. 
   
   LAST RATING: 3 on public company list / CURRENT: 2 on public company list
3. TWILIO (NEW) – this company is new to our hotlist, the reason being it was not at IPO when the previous article was published. However TWILIO has something which makes it, with its very favourable 3.6 billion USD market cap, a very good acquisition target. They have a unique enterprise product that bridges the gap between telco (voice) and cloud (technology). Twilio does what none of the big enterprise cloud players can do – voice. This makes them an immediate target for various strategies. 
   
   Potential buyers: Offensive (Salesforce, Microsoft, IBM), Defensive (Cisco, Nokia, Ericsson, Huawei, ZTE) Estimated price: 5 billion USD 
   
   LAST RATING: N/A / CURRENT: 3 on public company list
4. Service Now – still the hottest service cloud out there but compared to the direction it’s taking in the market I am decreasing my previous rating by 2 points. 
   
   Potential buyers: Defensive (Salesforce), Offensive (Microsoft, Oracle, SAP, IBM, HP, Fujitsu) Estimated price: 15 billion USD. 
   
   LAST RATING: 2 on public company list / CURRENT: 4 on public company list.
5. Tableau – I still believe this is an acquisition target. I’m keeping it high on my list but reducing its rating by 1 point. 
   
   Potential buyers: Defensive (Microsoft, SAP, Oracle, IBM), Offensive (Salesforce) Estimated price: 6 billion USD. 
   
   LAST RATING: 4 on public company list / CURRENT: 5 on public company list

Watch list [Follow closely, do more homework]

1. Box (LAST RATING: 1 on watch list / CURRENT RATING: 1 on watch list)
2. Workday (LAST RATING: 2 on watch list / CURRENT RATING: 2 on watch list)
3. Veeva Systems (LAST RATING: 5 on public company list / CURRENT RATING: 3 on watch list)
4. Hortonworks (LAST RATING: 6 on public company list / CURRENT RATING: 4 on watch list)
5. [IT Ops Play] New Relic or Splunk(LAST RATING: 4 on watch list / CURRENT RATING: 5 on watch list)

 

Pre-IPO companies

1. Slack – this company is the biggest surprise from the last round. It was number 1 on my watch list of pre-IPO companies but now is the absolute number one. Slack is a clear game changer and disruptor of various highly profitable franchises. Who should buy Slack and do it quick? 1) Microsoft – if Slack goes to Google, Microsoft Office 365 will have a massive competitor, 2) IBM – Slack is a Lotus Notes killer. Anyone who lived through the hell of using the worst enterprise application in the universe knows how far behind, somewhere in 19th century, Lotus Notes is from Slack and Office 365. If IBM buys Slack it can stop the massive churn and hate of Lotus Notes users (I am one of them) 3) Google – if Google for Work wants to finally create traction Slack is the way to go: integrate with Gmail, Hangouts, Google Docs and you aim directly at both IBM and Microsoft, 4) Salesforce – will likely join the bidding war too because the potential ability to attack both IBM (Lotus Notes) and Microsoft (Office 365) will be too great a temptation to resist for Marc Benioff, 5) Facebook – Marc Zuckerberg has long dreamt of getting Facebook to enterprises and companies. If he gets Slack it will be a direct blow to all competitors in this space: Google, Microsoft, IBM and Salesforce. 
   
   Potential buyers: Defensive (Microsoft, IBM), Offensive (Google, Salesforce, Facebook) Estimated price: 5 - 25 billion USD. 
   
   LAST RATING: 1 on pre IPO watch list /CURRENT: 1 on pre IPO list
2. Docker – this company is still my favourite and I believe in the potential of Docker. The only change from the last list is the massive growth of Kubernetes market share, another container technology to watch. Therefore I am decreasing my estimate to 15 billion USD. 
   
   Potential buyers: Defensive (Amazon, Microsoft, Salesforce), Offensive (Google, HP, IBM, Red Hat, VMWare) Estimated price: (NEW) 10 billion USD / (PREVIOUS) 20 billion USD 
   
   LAST RATING: 2 on pre IPO list / CURRENT: 2 on pre IPO list
3. InsideSales – Oracle’s willingness to spend 9.3 billion USD for NetSuite and LinkedIn’s 26 billion USD acquisition by Microsoft indicate that the giants are willing to use the cash to reduce the impact of disruption caused by the likes of Salesforce.com. InsideSales is an ideal target for Oracle, Microsoft, SAP and Salesforce.com. It will very likely be a new bidding war. I am dropping IBM from the list of buyers as this will be a SaaS-only war. 
   
   Potential buyers: Microsoft, Salesforce, Oracle, SAP Estimated price: (NEW) 5 billion USD / (PREVIOUS) 3,5 billion USD 
   
   LAST RATING: 5 on re IPO list / CURRENT: 3 on pre IPO list
4. MuleSoft – based on many conversations I had after including MuleSoft in my TOP 25 list, I am more and more convinced they are a target. A big one. Especially by the likes of Salesforce, Oracle, Microsoft, IBM, and HP. I can even imagine Informatica having an interest in putting a stop to MuleSoft. Of course there is also an “Informatica LBO-like” scenario in play where some P/E would acquire MuleSoft. The value of the company could be quite high and that’s why my estimate increased because of the likely bidding war between Salesforce, Oracle, Microsoft, IBM, HP, and Informatica. 
   
   Potential buyers: Salesforce, Microsoft, Oracle, IBM, HP, informatica Estimate price: (NEW) 3,5 billion USD / (PREVIOUS) 2 billion USD 
   
   LAST RATING: 7 on re IPO list / CURRENT: 4 on pre IPO list
5. Betterment (NEW) – this is a new name on our list and a controversial one. Because Betterment, unlike any of the previous companies, is not a pure technology company but a so called “robo-advisor”: An automated investment system that replaces standard passive investments where you need a certain level of capital (e.g. 200k USD and more) to be allowed to invest. Betterment allows you to start with almost nothing (there is no minimal capital requirement) and, unlike passive investment vehicles, charges very low fees. It’s hard to decide if Betterment is a technology company or purely financial. I argue Betterment should be part of our list because Fintech is a combination of technology and finance. Betterment wouldn’t exist without the technology behind it. And given that it’s estimated that the Robo-Advisor market in the US will reach 2 trillion USD in AUM (Assets Under Management) by 2020, there will be many who will be interested in owning the most successful robo-advisor on the market. 
   
   Potential buyers: Large banks such as: Citibank, Wells-Fargo, JP Morgan Chase…etc., Large funds such as: Fidelity, Vanguard, Charles Schwab….etc. Estimated price: 10 billion USD (depends whether Fintech acquisitions will be measured by profit or disruptive potential of stealing AUM from incumbents) 
   
   LAST RATING: N/A / CURRENT: 5 on pre IPO list
   
   

PRE – IPO Watch list [Follow closely, do more homework]

1. Digital Asset Holdings – I still love the company, which was my 1 in Pre-IPO list, just given the list of investors. See crunchbase (https://www.crunchbase.com/organization/digital-asset-2#/entity) that includes the likes of: JP Morgan, CME Venture, Goldman Sachs, Citigroup, Santander, ANB AMRO, Accenture, IBM… and others. I believe it will become an extremely strong company that will be one of the first Fintech IPOs, which will set the benchmark for future Fintech valuations.  LAST RATING: 1 on pre IPO list / CURRENT RATING: 1 on pre IPO watch list
2.  Cloudera – I still believe in Cloudera and Hadoop. We’ll see what happens here. LAST RATING: 3 on pre IPO list / CURRENT RATING: 2 on pre IPO watch list
3. Magento – yes someone will buy them but when? Let’s wait and see. LAST RATING: 4 on pre IPO list / CURRENT RATING: 3 on pre IPO watch list
4. CipherCloud – yes someone will buy them but when? Let’s wait and see. LAST RATING: 6 on pre IPO list / CURRENT RATING: 4 on pre IPO watch list
5. DocuSign – yes someone will buy them but when? Let’s wait and see. LAST RATING: 8 on pre IPO list / CURRENT RATING: 5 on pre IPO watch list
6. Apttus – yes someone will buy them but when? Let’s wait and see. LAST RATING: 9 on pre IPO list / CURRENT RATING: 6 on pre IPO watch list
7. Appirio – yes someone will buy them but when? Let’s wait and see. LAST RATING: 9 on pre IPO list / CURRENT RATING: 6 on pre IPO watch list
8. Dropbox – yes someone will buy them but when? Let’s wait and see. LAST RATING: 2 on pre IPO list / CURRENT RATING: 6 on pre IPO watch list
9. Ping Identity – received an investment of 600 million USD from PE. Surely a company to watch. LAST RATING: 4 on pre IPO list / CURRENT RATING: 9 on pre IPO watch list
10. Gygya / Sprinklr – I wasn't sure which one to include so I put both as the last entry. LAST RATING: 3 on pre IPO list / CURRENT RATING: 10 on pre IPO watch list
    
    

And now....

 

Your Suggestions 

Here are your suggestion from the last time....

1. KRUX – Theme: “last independent DMP play”
2. Zendesk – Theme: “could be bought by anyone”
3. RPA – Robotic Process Automation (multiple companies: BluePrism, UI Path) – Theme: “robots are the next big thing”
4. Gooddata – Theme “Analytics is still a hot thing”
5. Walkbase – Theme “Personalized in-store shopping”
6. Domo – Theme ”Analytics is still a hot thing”
7. Kenshoo – Theme “Predictive marketing”
8. Nice Systems – Theme “Big data for surveillance”
9. InvenSense – Theme “IoT”
10. Verifone – Theme “owns majority of US payment terminals”
11. Marketo – Theme “Marketing automation is still a big theme”
12. Device Authority – Theme “IoT Security”
13. Marine CFO – Theme “Maritime optimization” Here is what we have so far. Please continue to send me your ideas.

BONUS
Special recognition in this round goes to Osvaldo Coelho for his suggestion. 
Cisco Will buy Ericsson (https://www.linkedin.com/pulse/cisco-buy-ericsson-osvaldo-coelho)

Next update?

When any company (public / pre-IPO) on our list or watch list is acquired or, in the case of pre-IPO companies, makes it to IPO.

 

DISCLOSURE: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.

Written by

Jiri KramCloud Architect | Student@MIT Fintech Course

Start-up investor tax breaks: ESIC Hub's Stephen Crowe on how yours can qualify

Tom WestCo-Founder & CEO at Hyper Apps | Partner at LOKE | Investor | Mentor | Passionate Growth Hackerby Stephen Crowe.

Concessional tax treatments become available for investors in "early-stage innovation companies", or ESICs.

The concessions include a 20 per cent tax offset on investment, capped at $200,000 per investor, per year, and a 10-year capital gains tax exemption for profits on equity investments held for at least 12 months.

So, an investor making a $500,000 investment in an ESIC can save $100,000 income tax in that year. If the investor sells their investment five years later for $2 million, the full capital gain of $1,500,000 is exempt from capital gains tax.

The $200,000 maximum tax saving is only available to sophisticated investors under the Corporations Law.

Other investors can also benefit, though their maximum annual investment amount is $50,000 to attract a tax saving. This is to ensure less-sophisticated investors are not over-exposed to this asset class.

Investments made through self-managed super funds, trusts, partnerships and companies can qualify. However, companies that are publicly listed or have more than 50 shareholders do not.

Investors cannot own more than 30 per cent of an ESIC and shares issued under employee-share schemes are also precluded. Investors can be non-resident.

Why's the government targeting early-stage companies?

The government estimates 4500 early-stage companies are missing out on equity finance each year and is targeting $1 billion to be raised in the early years of the scheme, which continues indefinitely. The government wants to incentivise investors to direct their funds towards innovative, high-growth Australian companies.

What's in this for early-stage companies?

From July 1, the smart money will head towards ESICs, which will provide the best tax incentives for investors. It's more important than ever that early-stage companies wanting capital tick the right boxes for their structure and that investors handing over funding have their eyes wide open.

An early-stage company unsure of its ESIC status will quickly become a questionable proposition for an investor. So, early-stage companies should take steps to be ESIC- ready so they can accelerate capital raisings.

What do early-stage companies need to do to show they are ESIC ready?

First, they need to show they are early stage. They must:

• Be incorporated in Australia or registered in the Australian Business Register within the past three years

• Have expenditure and income of $1 million and $200,000 or less respectively in the previous income year

• If incorporated in Australia between three and six years ago, they (and any 100 per cent subsidiaries) must have total expenses of $1 million or less over the last three years

• Not be listed on any stock exchange.

Second, the ESIC needs to show it is involved in innovation. This can be done through meeting a points system, meeting what the government is calling a principles-based system, or receiving an ATO determination.

The points system will require an ESIC to receive 100 points to qualify based on its:

• R&D tax expenditure history

• Intellectual property rights

• History of raising equity capital from non-associates

• Involvement in selected industry programs, and

• Formal associations with higher education institutes or registered research providers.

Under the principles-based system, companies will be asked questions such as:

• Does the business have high growth potential?

• Is the company focused on commercialising?

• Can the company demonstrate that it has the potential to be able to successfully scale?

• Does the company have the potential to address global markets?

What about investors? To qualify for the tax savings, investors must ensure their equity investment is a qualifying ESIC. They need to obtain a qualifying ESIC certificate.

The ticking of boxes may seem like another complex task in the day of an entrepreneur, innovator or researcher but the incentives will be worth it. In the competition for funding, getting ESIC-ready will be one step an early-stage company cannot afford to neglect.

Stephen Crowe is the founder of ESIC Hub, an Australian-owned independent service connecting start-ups and investors.

Australian-founded IoT startup Proxy raises US$1.6 million seed round led by Blackbird Ventures

Startup daily -  Gina Baldassarre. 

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 Internet of things (IoT) startup Proxy has announced it has raised US$1.6 million in a seed funding round led by Blackbird Ventures, who kicked in US$1 million, with funding also coming from the y combinator accelerator.

Founded by Australians Simon Ratner and Denis Mars as Martians in 2015, Proxylooks to remove the hassle of downloading an app and creating logins for every new electronic device we add to our homes and offices by making them all work through Proxy instead.

Proxy’s software turns the user’s smartphone into a beacon of sorts through its Bluetooth signal, which interacts with sensors connected to IoT devices. If the user has been given access to the device they will be allowed to use it, all of this happening through a hands-free process.

“We wanted to reconcile the problem of having a personalized experience without having to give up control over your virtual identity. The amount of information you’re creating is growing exponentially and you’re leaving a digital footprint everywhere and there’s not much control over that process,” Ratner told YC.

“We wanted to create something that broadcasts over a limited range in a more controlled environment. That way you’re not sending your information out for everyone to see, and you retain control over your own identity.”

The cofounders have started with “the most mundane interaction”, that is, unlocking office doors. According to TechCrunch there are 20 companies around the Bay Area signed on to use the system.

Proxy is one of the select few IoT startups in Blackbird’s portfolio, with the firm having also invested in Lifx and the now defunct Ninja Blocks.

Blackbird cofounder Rick Baker said the decision to invest came from, as with its other investments, the firm’s belief in the founders.

“We had known Denis and Simon for a few years, both serial entrepreneurs and both part of the cohort of Aussies in Silicon Valley we’ve gotten to know over the years. When they both came together to start Proxy, they were both well and truly on our radar and we were interested to hear about it,” Baker said.

Of course, the product is also key, with Baker saying Blackbird is interested in the ability of companies to “create new, delightful experiences for people.”

“IoT of course promises this in many different ways, but in most cases today it becomes slightly annoying. With IoT you’ve always got to pull your phone out of your pocket and press a button. What we love about Proxy is its mission to create delightful experiences without having to take the phone out of your pocket or open an app. To us, it’s the next step in IoT that makes IoT really delightful rather than slightly annoying.”

The funding will be used to help Proxy further develop and test the office door use case in the market before looking to others.

Image: Simon Ratner and Denis Mars. Source:

http://www.startupdaily.net/2016/08/australian-founded-iot-startup-proxy-raises-us1-6-million-seed-round-led-blackbird-ventures/

Tech23 calls for applications to eighth annual pitching event

Applications are open for the eighth Tech23 event, which looks to bring together entrepreneurs, investors, and business leaders from across Australia to help facilitate collaboration by helping startups connect with investors and businesses that can help take their ideas further.

To be held in Sydney on October 11, the annual event organised by SlatteryIT with support from the CSIRO sees 23 startups pitch their ideas to an audience of over 400 people and a panel of industry leaders.

Among the experts on this year’s panel will be Bill Bartee of Blackbird Ventures; partner at NAB Ventures, Melissa Widner; Angela Clark, director of digital at the ABC; and Petra Andren, CEO of ATP Innovations.

Startups will be awarded prizes from cash, trips to international startup hubs, mentoring and advice, and coworking space, though it’s the connections made through the event that will be of most value.

Rachel Slattery, director of SlatteryIT, said, “Tech23 is all about encouraging our informal networks, so collaboration can increase between industry, research and development organisations, and startups.”

Tech23 is calling for applications from companies that have technology at their core, can provide evidence of the potential of their company’s business model and information about clients and partners, and can explain why they are unique.

Hundreds of startups have now passed through Tech23, with last year’s event seeing pitches from companies including Aipoly, Locomote, and Parent Paperwork.

Over the years the likes of Rebekah Campbell of Posse (now Hey You), Scriptrock (now UpGuard), goCatch, Rome2rio, SmartSparrow, 2Mar Robotics, and GoFar have also pitched at Tech23.

Top 100 Tech Billionnaires approaching a Trillion!!!!

The world’s 100 Richest In Tech are worth a combined $892 billion, 6% more than a year ago. 

The minimum net worth is now $2.2 billion, up from $2 billion a year ago. 

53 of the top 100 added to their fortunes, while 27 got poorer. 

12 newcomers joined the ranks;

the top 5 billionaires collectively added $36.9 billion to their fortunes 

over the past year -  accounting for two-thirds of all gains.

51 of the top 100 are USA based and are worth $600b - 2/3 of total wealth

- Bill Gates - richest $100b - only 15pc of his wealth in Microsoft

- Jeff Bezos - Amazon $60b

- Larry Ellison - Oracle

- Mark Zuckerberg - Facebook

- many joined the list from Facebook acquisitions - eg Whatsapp  

Next is China - 19 billionaires worth 128b - Jack Ma of Ali Baba worth $26b

5 women have made it in the top 100

Richest $6b - the others $2b

See the full list here.

Richest In Tech list was edited by Kerry A. Dolan and Luisa Kroll  

Craig Rispin to facilitate the BBG Open Chambers Innovation Forum

Craig Rispin, - Business Futurist and Innovation Expert, will be facilitating the BBG Open Chambers Forum of 30 Entrepreneurs, Innovators and Business Leaders.

If you'd like to understand the landscape of your future, and generate a steady flow of warm referrals for your business, this could be the answer you've been looking for
Hurry! Seating is Limited
We look forward to seeing you there!

WHEN
Thursday, 8 September 2016 from 7:30 AM to 9:00 AM (AEST) - Add to Calendar
WHERE
The theatre room, NAB - 700 Bourke St, Docklands, Melbourne, VIC - View Map

Forget about your previous experience of networking and referral groups ... BBG has been designed from the ground up to overcome the challenges that business owners and leaders face in generating new business.

Our unique structure, best-of-breed tools and professional mentoring program will help you to build an army of informed advocates for your business.

Join us as a guest at our BBG Open Chambers Breakfast Briefing and we'll show you how we can help you achieve your growth objectives.

click here to register today

This meeting is strictly limited to 30 people.

Startup Victoria appoints Georgia Beattie as its new CEO after a “highly competitive” four-month search

From Denham Sandler - startup smart 

Startup Victoria has appointed its new CEO, Lupe and Beattie Wines co-founder Georgia Beattie taking the reins with an aim to make Melbourne the leading tech destination in the Asia-Pacific.

Startup Victoria is the leading startup body in the state and now has over 11,000 community members. 

Beattie, who co-founded her startup straight out of university, says she’s been involved with Startup Victoria for many years now and is excited to pay it forward to the local ecosystem.

“They made a really, really big impact on my business and this is sending the lift down and contributing back into that community,” Beattie tells StartupSmart.

“It’s an absolute honour to have the reins of Startup Victoria, it’s going to be fun.”

Beattie studied entrepreneurship at RMIT University and Babson College in Boston. After attending a music festival and being unable to buy a glass of wine outside, she went on to create Australia’s first single serve glass of wine, and soon expanded the startup into six countries in five years.

“It’s about being the face of Startup Victoria and having the conversations that are important and that the community needs to hear." 

“Our focus is on founders and we want to make it about creating more value for founders.”

“Startup Victoria is now perfectly positioned for growth as we play our part in helping Melbourne develop into the number one tech destination in the Asia-Pacific region.”

Beattie says there’s nothing standing in the way of making Melbourne the startup hub of the Asia-Pacific region.

“It’s growing at an incredible rate,” she says.

“In the past year alone we’ve seen global tech leaders like Slack, Square, and Zendesk set up their headquarters in Melbourne. That’s a really good sign of what’s to come in being the tech destination in the region.

“We’ve got a really progressive government that has a focus on creating opportunities for entrepreneurs in the area, and we’ve got large companies coming over and up-skilling our students. There isn’t anything in our way.”

Startup Victoria runs seven big events and projects, including the Above All Human conference. Beattie says her role now is to “refine” and improve these offerings.

“There are a lot of projects that have been running so it’s about prioritising them and making them as best executed as possible,” she says.

“I’m super excited about rolling up my sleeves and getting into it.”

USA VC firm comes to Oz

Right Click Capital partners Garry Visontay, Ben Chong and Ari Klinger believe being part of the Draper Venture Network will assist their portfolio of companies' US expansion plans. Edwina Pickles

by Yolanda Redrup 

Silicon Valley billionaire and one of the US's leading venture capitalists, Tim Draper, has his sights set on Australian start-ups, having signed up Right Click Capital to be the first local VC firm in its Draper Venture Network.

In April Mr Draper raised $190 million for a new Draper Associates seed fund, and some of that capital could be headed to early-stage Australian companies. His reputation as a tech investor comes from various successes, including stakes in Skype, Baidu, Tesla and Hotmail.

"Draper Associates will often co-invest with Draper Venture Network (DVN) partners. Other network partners may also co-invest. We are very interested in Australian start-ups. There have been some great companies started down under," Mr Draper told The Australian Financial Review.

"We've seen some great success stories from the region, like Atlassian and Xero ... through the DVN and the DVN Beta program, we're looking to back entrepreneurs who are building globally scalable companies regardless of where they are based and I see Australian founders as having great potential."  

Tim Draper believes his fund can find good value in investing in Australian-founded start-ups. Bloomberg

Being the first Australian firm to join the DVN is a feather in the cap of Right Click Capital.

It will now have co-investment opportunities in global deals secured by other partner firms in the network, as well as the ability to connect its stable of companies with firms in the DVN for future investment and business opportunities.

"I like that they [Right Click Capital] are founder led, have a strong track record with Australian tech companies and have a global perspective," Mr Draper said.

Right Click Capital joins DVN

Mr Klinger pitched to Mr Draper that the network should have a presence in Australia following a meeting in Texas earlier this year. Edwina Pickles

Right Click Capital partner Ari Klinger met Mr Draper at the DVN summit in Austin, Texas, this year and was introduced by the managing partner at one of its partner funds, Paul Santos from Wavemaker.

Mr Klinger pitched to Mr Draper that the network should have a presence in Australia and in April the due diligence process began.

Mr Klinger said the primary reason for Right Click Capital joining the DVN was to let its portfolio companies access funding and opportunities in other markets and that the ability to co-invest was a bonus.

Australian venture funds that don't have a presence on the ground in Silicon Valley often have difficulty accessing the best deals, but Mr Klinger was hopeful being part of the DVN would open up opportunities.

"There is a bit of a network, or a club, that goes on, especially in Silicon Valley and you do see it locally as well. It's not a great thing, but it's the reality of how it works," he said.

"It really is about actually connecting in person, not via a conference call. There are all the serendipitous moments when you're in a room and you get the chance to connect in person."

Mr Draper, who is often credited with creating viral email marketing which was key in the success of Hotmail, Yahoo and Gmail, agreed with this sentiment, but posited that deals were becoming more global.

"We're seeing more deals being syndicated between firms and across different countries," he said.

"[But] having a local connection and perspective is important because one of the most important challenges is having a connection with the company's founders and making sure the fit is mutual."

As well as founding Draper Associates and the Draper Venture Network, Mr Draper was also behind Draper University, a school for young entrepreneurs, and VC firm Draper Fisher Jurvetson, which he stepped back from in terms of managerial duties in November 2013.

Missed opportunities

Despite his investment successes, Mr Draper said there are still some companies he regrets not having invested in when he had the chance.

"Google was competitive with one of the six search engines in our portfolio, so we didn't back them. Now we will back teams who compete with each other," he said. 

"We were outbid in our efforts to back Facebook and Yahoo. And I met Jack Ma, and I saw his passion, I just didn't understand Chinese." 

The Draper Associates new seed fund is particularly focused on finding start-up successes in the fintech, medical and education sectors, as well as tech companies making governments more efficient. 

Earlier this year Mr Draper said he would deter a tech company from listing in the US with less than $US10 billion in revenue, but he believes the ASX could be a viable alternative for firms with a local connection.

"Listing in the US is an expensive and often distracting process for management. We would rather they keep building their business," he said.

"My perspective is generally companies should IPO once they've reached a level of maturity of their business model and their is some certainty to future earnings ... if you are a founder and you go public in the US, you're laid wide open to critics and competitors which is often a rude awakening to founders. But, if set up well and without the Sarbox [Sarbanes-Oxley] rules killing the US markets, the ASX could be a welcome alternative for companies."

Read more: http://www.afr.com/technology/billionaire-us-vc-tim-draper-has-his-sights-set-on-australian-startups-20160727-gqewre#ixzz4GsEUH8J7
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