Fast-growing Australian software company Atlassian this morning revealed it had taken a US$60 million minority investment from US-based venture capital firm Accel Partners, with a long-term view to a public listing in the US.
Mike Cannon-Brookes and Scott Farquhar (Credit: Atlassian)
"We've been fans of Atlassian for years, and the vast majority of our portfolio companies innovate using Atlassian products," Accel Partners partner Rich Wong said in a statement issued by Atlassian. "We're fans of Atlassian's unique culture, their incredible execution and the continued opportunity in front of them."
Atlassian was founded in 2002 by Sydney entrepreneurs Scott Farquhar and Mike Cannon-Brookes to create better software tools for software developers to work and collaborate. It has since grown to 225 employees worldwide — with $58 million in revenue in the 2010 financial year, according to its website.
In an interview yesterday, Cannon-Brookes said that over his company's life, its management had chatted at various stages to about 50 venture capitalists. The process intensified over the past six months as Atlassian worked out how it wanted to develop in future. It approached four or five key VCs that Cannon-Brookes said the company would have really liked to work with on a personal level.
"We went over there [to Silicon Valley] and interviewed a whole host and had a little process between us," he said. "We're hiring these guys, effectively, for the next five years."
Accel Partners stood out "head and shoulders above the rest", the executive said. The company has invested in dozens of technology firms over the years, with some highlights being Facebook, Foundry Networks, Glam Media, Interwoven, JBoss and Zimbra.
One of the reasons Atlassian picked Accel Partners, Cannon-Brookes said, was the firm's experience in taking companies to public listing in the US.
"We'd certainly like to think that it's possible for us to go public in the US — it would be a true watershed moment for an Australian technology business to do that," he said, noting it was currently Atlassian's five-year goal to achieve US listing.
In order to achieve that listing, Cannon-Brookes said Atlassian would need to be "a couple of multiples from where we are today".
He said there were a number of advantages to listing in the US — namely the access to capital and the valuation the company would get there. "The Australian market for technology companies is pretty anaemic," he said.
The Accel money will be used by Atlassian for a few different purposes, the first one being founder liquidity. "We've been a profitable company for the past eight years," said Cannon-Brookes. "From a cash perspective it's really just additive."
The company has made seven acquisitions over its history and plans more. "As we grow, the size of the acquisitions and the complexity goes up," he said. And international expansion is also on the cards, with a growing office of 60 staff now in San Francisco and a European office opened in Amsterdam some 12 months ago.
The Australian experience
In general, Cannon-Brookes said he believes Australia has a good reputation in Silicon Valley for churning out good businesses and being good entrepreneurs. However, he noted that in terms of the general business climate it was another matter — Australia was seen as "a bit sketchy".
Issues like the Federal Government's recent mining tax, he said, "scare people". And the nation's high taxation rate could also frighten off investors. "We had to work through some of those issues," he said.
Atlassian didn't look at taking investment from any Australian VCs or firms. "We know all of them, and there are some guys doing some good work here," said Cannon-Brookes. "But the size that we are ... it would be very difficult down here."
One of the benefits of the Accel investment, he said, was that the firm gave Atlassian access to its portfolio companies to ask questions. That level of expertise "is something that we just can't match down here", the executive said.
Some of the benefits will flow on to Atlassian's staff. The company is now introducing a stock plan for employees, and although Cannon-Brookes said he didn't personally celebrate the investment, the company is having a worldwide celebration at the moment — a function was held in Sydney this week at the ritzy Ivy bar in Sydney's CBD, with all employees and partners invited.
And similar events will be held for the staff in San Francisco and Amsterdam.
In general, Cannon-Brookes hopes that the Atlassian example will spur other Australian technology entrepreneurs to follow the same path. One of the first things that he and Farquhar will be doing when they return from their overseas jaunts will be to speak to university students in Sydney about their experience.
"We hope that there can be many more," he said.