From The MAC to Mobecom.
Mobecom, a business intelligence and customer engagement technology provider that is well down the path of an exponential global growth curve, is slated to hit the ASX boards in early 2017.
This is not about providing an exit strategy for what has been a successful investment by his family’s Tulla Group, says Mr Maloney, but rather, a strategy driven by the need to access the capital markets in order to help Mobecom achieve its ambitions.
“We don’t look at the ASX listing as a liquidity event, we look at the ASX as giving the company access to the capital required to continue to expand globally,’ Mr Maloney says.
“Mobecom has so many deals that they have won internationally this year, they need a minimum of $9 million just to fulfil existing contracts and to execute their business plan. This is truly a company that is seeking expansion capital, not just product development and marketing capital.”
Mr. Maloney, best known as a resources sector entrepreneur who struck it super rich when he sold The MAC Services Group to US rival Oil States International for $689 million in 2010, has been investing in technology for almost a decade.
A regularly changing portfolio of seven to eight tech investments is dwarfed in dollar terms by the rest of the $350 million invested across Tulla Group’s portfolio, which covers the resources sector, the Segenhoe thoroughbred stud in the Hunter Valley, the company behind the Australian Hunger Games Exhibition, Property, Entertainment, Sumo Salad, and New Zealand accommodation business Urbanz to name a few.
$350 million invested across Tulla Group’s portfolio
But there is passion in Mr. Maloney’s tech and industry knowledge to successfully marry new technologies, as well as devise new applications for existing products, Mobecom marks a Tulla Group shift on two fronts – hitherto its main focus had been on business-to-business technology, particularly in the asset management space, and the traditional focus being on growing and sustaining profitable private companies as opposed to listed Public companies.
It we choose to invest, we like to work with the founders to help them to develop the business and to scale their offering
Having already invested $1 million into Mobecom over the past eight months, Mr Maloney believes this direct-to-consumer technology play now needs to hit the bourse for access to an ever bigger pot of funds. (see www.mobecom.co)
It is a well-considered move by Tulla Group, whose technology venture capital business is run by Kevin O’Hara.
Tulla Group has spent the past two years watching the ASX tech listing boom (and bust) in an attempt to assess what it takes to be successful.
“What we believe is required is they need to have locked in contracts, they need to be carrying their own weight financially, they need to have enough revenue to sustain being listed and they need to have the ability to prove that they are well on the way to earnings,’ Mr O’Hara said.
The stock exchange push is not the latest get-rich scheme for Mr. Maloney, whose family’s wealth has been estimated at $485 million by BRW, but the evolution of an understanding of the importance technology plays in boosting business.
The MAC proved the trigger.
A mining services company that focused on providing mine site accommodation in Queensland and Western Australia, The MAC grew to owning and operating more than 6,000 rooms across about eight community villages and had plans, and approvals, to expand to 15,000 rooms.
“It got to a point that we realised we needed serious technology to manage all these assets, you couldn’t just do it off the back of a spreadsheet,” Mr. Maloney recalled.
“When I set The MAC up, I got burnt in a technology deal and learned a hard lesson. Initially, we could not find a technology package to automate our booking systems for our rooms, owing to the uniqueness of it. It wasn’t an in-and-out (for the mine site workers, the room occupants) every day, it was in for months, you went home for a week end or you put them on hold. As such, we couldn’t manage this with existing technologies that were in the market.
Mr. Maloney tried various approaches but they failed to come up with the goods.
The solution for The MAC came from Mr. Maloney’s relationship with John O’Brien’s Whitesmiths Group, then a reseller of the TRIRIGA workplace management software (now owned by IBM).
“John said to me ‘Kevin, the only way to do it is to write a spec of what you precisely need, and then work from there’,” Mr. Maloney said.
“So we did all that and we finished up coming up with a system that we predominantly developed ourselves. The problem was that we paid a software company to build the platform, and later, found out that at the end of the day, we spent all the money but owned nothing. The software company owned all of the Intellectual Property (IP). It turns out that it was all in the fine print” said Mr. Maloney.
But it worked – Tulla Group has since invested in the expanding Whitesmiths Group – which cemented Mr. Maloney’s interest in technology.
In a sector that is abundant with ideas, too few technologies achieve commercial success because they are either not applicable, or fail to connect successfully with the end user.
“Most entrepreneurs who come through the door (with their tech idea) tend to be too focused on their product,” Mr. Maloney said.
“We are in the business of helping entrepreneurs take their technology to market, because at the end of the day, no matter how good the technology is, if you haven’t got clients for your technology, you haven’t got a business at all.
“It we choose to invest, we like to work with the founders to help them to develop the business and to scale their offering” said Mr. Maloney.
“Tulla are proving to be a great strategic partner for Mobecom; providing us with advice, guidance and introductions to their global network. We look forward to growing our successful partnership in the future” said Mr Joseph, the CEO of Mobecom.
Tech investments by Tulla Group are offered access to its legal, financial, corporate and digital marketing resources, and access to a vast network of financiers, advisors, investors and potential customers.
Mr. O’Hara says there is a “excessive quantum” of Australian startups though concedes “the good deals tend to be quite tightly held in the investment space”. Tulla Group’s size and expertise, does however help to attract some of those good deals.
So what are the criteria for a Tulla Group investment?
“We really like to see good business and financial management as well as a great technology,” Mr.Maloney said.
“They have to manage growth in a sustainable fashion and manage cash flow, and they need to make sure that as well as having a great idea and great technology, that running a business remains their top priority.
Mr. Maloney says there is no rush to exit or have mandated investment periods that are typical in the venture capital industry.
“It all depends,” he said. “I like to stay with a business and see them through, and do a lot of business building. We don’t want to be running the business; we want to help them build the business. We are working on the business, not in the business. “(But) one thing I learnt very early in my corporate career is you never go broke taking a profit”.