Is the ASX the future of financing Australian startups?
Wednesday, June 11, 2014/
The Australian Securities Exchange (ASX) is the future of financing for Australian tech startups, according to Freelancer chief executive Matt Barrie.
And that’s exactly what the ASX wants, according to its general manager listings, Max Cunningham.
He says a decline in the mining sector that was longer and deeper than most expected has the ASX paying more attention than ever before to the tech industry.
Cunningham says the ASX is starting a push to become Asia’s tech hub and Barrie thinks that’s very possible.
One of the first moves in this push was to partner with startup conference SydStart.
Barrie’s Freelancer listed on the ASX last year.
“I think it absolutely could become the hub for Asia and I think the companies ultimately have a strong chance of getting a premium being on the market because of the nature of investors on the market,’’ Barrie tells StartupSmart.
Recently, Australian entrepreneur and angel investor Guy King said Singapore was “kicking our arse” in that regard, but Barrie believes the ASX already has just about all it needs to compete.
“I think outside of taxation reform and all those (policy) things, all of the mechanisms are already there,’’ Barrie says.
“It’s a very well-operated market.
“Singapore’s great, but the Australian tech industry is much bigger than the Singapore tech industry.”
But in order for that to occur, Barrie says there needs to be a change in the mindset of Australian tech entrepreneurs.
He says unlike tech startups, mining startups don’t go and knock on the doors of venture capitalists seeking investment.
“My view is in the future pretty much every Australian startup is going to end up financing through the ASX,” he says.
“Mining companies go and do this, it’s been tried and tested for decades, and a lot of it is just a change of behaviour and thinking.
“If you’re a young guy that’s fresh out of uni it’s been drummed into you that you go to a seed company and then venture capital funding.
“It’s just how people have been taught.”
But Barrie says there’s no reason tech startups can’t raise money in the same way most mining startups do, through listing on the ASX.
“A typical early stage mining company is speculative and risky, with a potentially high return,” Barrie says.
“In some ways it looks like an early stage tech company.
“A tech startup is generally better run and secondly the capital requirements are significantly less for industries like software and so on.”
Barrie says the general public love to invest in startup mining companies and he doesn’t see why that wouldn’t be the case with tech companies.
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