Kim Heras is a Sydney-based technology writer and entrepreneur. His passions include the Australian startup industry, innovation and the Kim Heras is a Sydney-based technology writer and entrepreneur. His passions include the Australian startup industry, innovation and the web as an enabler of change. You can follow Kim on twitter - @kimheras
Atlassian, the Australian-based provider of Collaboration and Software Development Tools to some of the world’s largest organisations, has closed a US$60 Million investment from Accel Partners for “a minority equity position”.
Rich Wong, Partner at Accel Partners, will join Atlassian’s board of directors and work with the team as they use the capital injection to fund growth through global expansion and additional acquisitions (they have already acquired 7 companies over the past few years).
The deal is huge for a couple of reasons.
First of all, this is Accel Partner’s biggest deal in 10 years.
It’s also their largest software deal. Ever.
When you consider that Accel is one of the giants of the Silicon Valley VC industry, with investments in a who’s who of tech startups, it’s clear that Atlassian is a very special company.
For those unfamiliar with the company, Atlassian was co-founded in 2002 by Mike Cannon-Brookes and Scott Farquhar in Sydney, Australia with the goal of changing the way the world manages product development. The self-funded company has been profitable since its inception, and until this round has received no outside financing. It also won two “The Next Web Australia Awards” last year.
Cannon-Brookes and Farquhar will continue as co-CEOs of Atlassian and will continue to split their time between Sydney and their other offices around the world
I spoke to Cannon-Brookes to discuss the deal and he said Atlassian is thrilled to have Accel Partners and Rich Wong onboard.
He also said that one of the reasons Atlassian decided to do this deal was because the valuation was right.
While he wasn’t giving out any more information on the valuation we can try to estimate what it was.
Atlassian did $45M in revenues in FY08/09 and while last year’s figures aren’t available yet (the Australian financial year ends June 30) if we assume it grew at the same rate as the year before, it will have done around $60M.
Considering the Atlassian business, it wouldn’t be unusual for a 6x revenue valuation, which would put their post-money value at approximately $400-$420M.
This would mean that Accel took a 15% stake, something that passes the sniff test for the stage Atlassian is at, the strength of their business and their general reluctance to take investment in the past despite, as Cannon-Brookes explained, the fact that they’ve had meetings with “more than 50 VC’s over the years”.
It could be less (4x revenue has been quite a common number lately) or it could be a whole lot more (if you use a 20x P/E rato and assume Atlassian is a very high margin business), but $400-$420M sounds about right.
A BIG DEAL FOR AUSTRALIA
Another thing to note about the deal is that while it’s big in general it’s massive for the Australian tech startup industry. Estimates have the $60M investment equal to ALL other investments made in other Australian tech startups last financial year.
That’s not to say that Atlassian is the only success story that has come out of Australia recently.
PC Tools was acquired by Symantec in late 2008 for $280M; Tapulous, which was co-founded by Australian Andrew Lacy, was recently sold to Disney for a rumoured $30-$50M; and coupon site Tjoos was acquired by NASDAQ listed Internet Brands for a rumoured $10M earlier this year.
There are others, but the important thing to note is that there is a lot happening Down Under and the Atlassian deal may finally shine some long-overdue light on the growing Australian tech startup industry and its ever-growing number of quality technology entrepreneurs.
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