Alex Waislitz’s Thorney Investments, an early investor, stayed on the register and was vocal about the company’s glowing future. And just ahead of the delisting, investors including the Lowy family, Peter Constable’s Ryder Capital and Navitas founder Rod Jones’ family office Hoperidge Capital also bought more shares. Many of those were also long-term backers of the company, some even before the listing in 2015, when the company sold shares at 20¢ each. Directors, including former Domain boss Anthony Catalano, also committed not to sell any shares, as did co-founder and chief executive David Greenberg.
Almost three months on, and in a very different capital-raising environment, Updater’s next big test is looming.
Talk among investors is that Updater is expected to finalise its capital raising as early as February, though others more conservatively expect a deal to be done by the end of the first quarter.
Although speculation centred on Moelis, which floated the company, being the lead adviser, The Australian Financial Review understands this is not the case.
Updater has been intentionally vague about which funds have shown interest – ahead of the delisting it talked broadly about interest from “numerous international financial investors and strategic parties” – though one name persistently rumoured to be still looking is Softbank. It has been equally tight-lipped about its adviser after assessing a range of options.
Softbank is a giant in the venture capital sector, and it’s a safe name to throw around. The reality is it would be unusual if Softbank hadn’t turned up in the mix.
In November, Updater sent a three-page update to investors, in which management was described as “optimistic” about private investors funding “an acceleration plan on favourable terms for investors”.
The shareholder update also said Updater was “in position to achieve” its 2018 revenue forecast of $US19 million ($26.4 million) to $US23 million, which many in the market had thought was an aggressive goal.
Unlike an ASX-listed company, Updater doesn’t have continuous disclosure obligations, so since November there has been no formal correspondence with investors.
But reports are that the operational side of the business continues to track well, and some emphasise this business could reach profitability without an additional capital raising. Though, equally, it’s always better to raise when you don’t need to.
Like many tech companies, Updater wants more capital to get a bigger share of the market, faster. In its case, that means signing up US real estate agents to refer people to the website, which in turn will refer the movers to ways to switch over their insurance (where more emphasis has been placed in recent months, with the company wanting to sell insurance), phone, electricity, gas and pay-TV accounts. Some 17 million households move each year in the US, though that may slow as the property market does.
Clearly, valuations for technology companies are under pressure. There’s been a steep drop in the value of the FAANGs since October, a rethink of tech company valuations despite the large pools of venture capital money still needing to be put to work. The technology sell-off at least would suggest the hoped-for $US1 billion valuation may be a stretch.
But, as always, the interesting part will be on what terms – whether the existing shareholders cede control – or what sort of rights the preference shareholders may be granted over existing shareholders. Although a $US1 billion headline valuation would be a neat rebuttal of any of Updater’s lingering Australian critics.
from Just News Viral http://bit.ly/2Tqp2Jm
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