Ignition Lane's Weekly Wrap: E-I-E-IPO, Pause Fest goes on permanent pause, New...

It’s raining IPOs

All-remote DevOps firm GitLab completed its IPO on Thursday. It closed the week up 49%, giving GitLab a market cap of nearly US$16.5bn. In true remote work fashion, the company was the first-ever Nasdaq listed company to livestream its entire IPO day, with about 18,000 people stopping by over the course of the broadcast.

2021 has seen a mega-surge in listings. In the US alone, over 100 tech companies have IPO’d—the highest figure since the 2000 internet bubble—raising more money than any year since 1995. And that’s before accounting for any direct listings or SPACs.

Australia’s IPO outlook is trending the same way. This quarter alone will see at least seven A$1bn+ floats on the ASX (across all industries) – the biggest quarter since Q4 2013.

On the tech side, listing whispers are abound (all $ in AUD):

• Hotel booking software company, Siteminder, closed a $100m pre-IPO round last month and is currently drumming up interest to raise $600m in an IPO, which will imply a market cap of $1.31bn to $1.36bn.
• Online healthcare booking service, HealthEngine, and influencer marketing platform, Tribe, are expected to undertake management roadshows and bookbuilds in the next few weeks.
• After a unicorn-creating USD$100m raise in July, Culture Amp is said to be working towards a listing on the ASX or Nasdaq.
• Online casino and poker game developer, Virtual Gaming Worlds, is looking to list in the US, leveraging an eye-watering pre-tax profit of $358m (a 361% increase from FY20).
• Digital gift-card provider Prezzee is mulling a float. It generated $20.2m in FY21 and, while declaring itself a unicorn, says it is on track to achieve more than $1bn in gift card transactions in FY22.
• Packform, an online packaging marketplace, secured $25m in a pre-IPO raise this week (reportedly oversubscribed by 2.5x) and thinks it could potentially fetch a $300m valuation at IPO.
• RedEarth, a renewable energy tech company supplying solar batteries and systems to households, plans to list on the ASX after raising $12m in pre-IPO funding this week.

This may just be the beginning, too. Venture capital fundraising is at a record high, turbocharging private market value and unicorn proliferation (860 and counting). Most of these unicorns eventually need an exit plan, with IPO and listing presenting a magic trap door.

Magic for investors, perhaps. But being listed isn’t always a silver bullet for everyone – particularly early stage startups.

Firstly, going public is expensive, typically costing $250,000 to $1m+. Then, once you’re public, complying with listed company obligations can be a heavy burden and distraction for small teams. Being subject to constant public scrutiny and disclosure is tough, particularly if revenue growth isn’t heading in the right direction. Plus, your share price is at the mercy of small trades by ‘mum and dad’ investors, who don’t always understand the nuances of high-risk startup investing.

We’ll have to wait and see whether these IPOs will be as successful as GitLab. In the US, share price performance after the first day of trading for IPOs was negative for most of this year, i.e. on average, investors who put money into an IPO after the first day of trading lost money.

If you’re looking to invest, consider whether you’re getting a killer share price in a customer-centric company with solid defensibility in a growing market, or if you’re just buying into yet another company capitalising on the public market bullrush.

Births, deaths and marriages 

 Births

Drones = storks for drugs. Swoop Aero made its first malaria vaccine delivery by drone in Malawi. The ground-breaking vaccine for children—called RTS,S—was proven effective six years ago! This week Swoop also delivered its 400,000th item, keeping it on track to providing 100m people with access to sustainable drone networks by 2025.

Canva hits play. Canva is launching a video editing offering. The growth of video content makes this an obvious (and clever) move by the design juggernaut, which is already on track to do US$1bn in annualised revenue in 2021.

The second ANZ EdTech 50 is out – a relatively mature cohort with 2/3 of the group 6+ years old.

Crypto sneaks onto the ASX. Betashares and ETF Securities announced two new crypto-related exchange traded funds (ETFs). The ETFs will give local investors easier exposure to crypto and cyrpto-enabled assets. At the moment, crypto isn’t directly available via Australian share markets, meaning that local investors have to use crypto exchanges such as Coinjar to buy and sell Bitcoin, Ethereum etc.

 Deaths

Pausing Pause Fest permanently, perhaps. Pause Fest is cancelled for 2022 and beyond unless it can find a new owner and hometown. Founder, George Hedon, waved the white flag via an emotive post on Wednesday. Hedon calculates its contribution to the Victorian economy at roughly $170m, with Canva, Netflix, Amazon, Afterpay, Airbnb, Atlassian and Ignition Lane (shameless plug) amongst the companies to have shared wisdom over the festival’s 11 years of operation.

All over, Clover. Financial planner SuperEd will be gradually closing Clover, the robo-advice business it acquired in 2020. Clover offered (mostly millennial) users pre-mixed investment portfolios made up of passive ETFs. SuperEd is abandoning Clover’s low margin customer base, instead integrating Clover’s tech into its own offering for retirees and pre-retirees.

 Marriages

(De)risky business. Data room and governance software company Ansarada will acquire TriLine GRC, a governance, risk and compliance (GRC) SaaS company operating across the UK and APAC. With its sights set on accelerating growth in the $52.5bn GRC market, this $5.2m union should significantly expand Ansarada’s customer base.

Wine time. WineDepot will acquire digital B2B alcohol beverage business Kaddy for around $35m in cash and stock. The two companies will merge into Australia’s largest alcohol-focused cloud-based logistics and marketplace platform.

Bigger BNPL. Openpay signed on the dotted line with Goldman Sachs and investment advisory firm Atalaya Capital Management to secure a US$271m debt facility. Openpay says the facility will enable it to provide BNPL loans to consumers for “crucial life purchases, such as important medical procedures or paramount servicing to their commuter cars. [It will] grow our US business at an entirely new scale.”

Local raising news

Trend: The need for Seed (sub-$4m round). Strong representation from NZ too, with 6 deals.

NZ VC Icehouse Ventures has secured NZ$110m for its growth fund.

FrankieOne raised $20m to provide fintechs with ID and fraud management as a service.

Reejig raised $6m led by investment firm Skip Capital. Reejig’s platform helps companies to map the skills they have in their workforce to target retraining and help them retain key people.

Partly raised NZ$3.7m from Blackbird and others, including Rocketlab CEO and Founder, Peter Beck; Figma’s CEO and Cofounder, Dylan Field; and Notion’s COO and Cofounder, Akshay Kothari. Partly is building the core infrastructure for anyone, anywhere wanting to manage, sell or purchase automotive parts.

Hectre raised NZ$3.5m for its orchard management and fruit sizing software that supports fruit growers and packers to optimise performance and profit.

Releaseit raised $3m for its marketplace for rented goods.

Perx Health raised $3m led by AirTree for its software that helps people with chronic health conditions (eg diabetes) adhere to daily treatment plans.

Farmbot raised $2.7m, including $1m from Telstra. The agritech startup is installing thousands of IoT water-monitors in rural Australia, giving farmers real-time insights into their water storage and usage.

SafeStack Academy raised NZ$2.3m led by Jelix Ventures for its online security training platform.

BuildAI raised $1.9m. BuildAI uses cameras to monitor cranes and the movement of materials and workers on a construction site, and then relays that data to a system that automatically reports construction progress, helping project managers better understand site resourcing and timeframes.

CrowdProperty Australia raised $1.5m for its peer-to-peer lending platform focused on property.

Enosi raised $1.48m for its tech allowing businesses and individuals to see where their energy is coming from, and how much they’re paying.

GoGenerosity raised NZ$1.3m for its giving software that allows customers to “pay it forward” by donating to charity through a small business.

Pushas raised $1.2m for its sneaker marketplace.

GovConnex raised $1m for its research and relationship management software for government relations teams.

JunoFem raised NZ$1m for its tech-enabled medical device that has been clinically proven to help women improve their pelvic floor health.

Aspiring Materials raised NZ$1m. Aspiring Materials extracts mineral products from silicate rocks to produce a material that removes CO2 at the source of emission.

That’s a wrap! We hope you enjoyed it.

Bex, Gavin and the team at Ignition Lane