Hopes of an investment boom in Australian tech start-ups have been fuelled after the Nine Entertainment Company invested around $4 million into online shoe retailer StyleTread, which is just six months old.
StyleTread, despite only launching in November, is valued at around $20 million through the deal, according to a report in the Australian Financial Review.
The company says it has attempted to set itself apart from its competitors with a user-friendly website, large and detailed photographs, exceptional customer service, and various delivery options.
While StyleTread managing director Mark Rowland would not confirm the investment price, he says the company has received the money at a critical time for the fast-growing company.
“We’ve had to move out of the warehouse we leased out six months ago because we’ve already outgrown it. The growth has been extraordinary,” Rowland told SmartCompany.
“We offer everything you expect in a bricks-and-mortar store, including delivery. So we offer next-day delivery, and we have a 100-day return policy as well. We want to give a full retail service to our customers online.”
Nine Entertainment’s stake in StyleTread follows on from its investments in group-buying site Cudo and financial management group Yellow Brick Road.
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“We’re continuing to expand our presence in eCommerce, following on from our earlier investment in Cudo and our upcoming launch of Getaway Lounge,” director of strategy and digital David Coleman says.
Getaway Lounge is an online extension of the Getaway travel television series.
Coleman, who will join the StyleTread board, reportedly said the company will increase its stake in StyleTread in the future with more capital raisings.
Phaedon Stough, co-founder of investment network Innovation Bay, says the valuations occurring within the tech sector “aren’t so much high as they are interesting” due to changes within the investment cycle.
“There are platforms where you can distribute products really quickly, resulting in fast-tracked growth,” Stough says.
Foad Fadaghi, research manager at market analyst firm Telsyte, agrees there are more technologies and platforms available to companies, suggesting the sector could be headed for another dotcom boom.
“We’re going through a period that many see as an opportunity to raise capital. The market is hot with liquidity – there’s a lot of money in the market right now and the cost of borrowing is quite low,” Fadaghi says.
Michael Fox, managing director of online shoe retailer Shoes of Prey, says the StyleTread valuation provides a validation to the local online and digital shoe retailing sectors.
“It definitely shows there is confidence in people buying online,” he says.
“We wouldn’t necessarily view them as a competitor… because I think their offer is quite different. But this is a fantastic validation about the marketplace at the moment, and is certainly a welcome development.”