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TDM invests $70m in ROKT
31 Oct 2019
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Article care of The Australian:

Rokt, the digital marketing company backed by Lachlan Murdoch and the James Packer-backed Square Peg Capital, has closed a $70m capital raising backed by Australian growth capital firm TDM Growth Partners, valuing the New York-based firm at around $400m.

Only days after Japan’s SoftBank injected almost $1bn into another Australian owned and run tech firm, the Lex Greensill-run fintech Greensill Capital, TDM has bankrolled the biggest ever capital raising by Rokt of $US48m ($70m).

Rokt is run by former Jetstar chief executive Bruce Buchanan and is backed by former Carsales boss Greg Roebuck, Hong Kong-based fund manager and Bellamy’s Australia chairman, John Ho, international media group Time and Moelis Australia Asset Management.

Following the raising, Rokt has appointed TDM partner Tom Cowan to its board as well as a second external director, Groupon chief operating officer Steve Krenzer.

Mr Cowan said TDM, which is an investor in soon-to-list fintech Tyro Payments and was also a pre-IPO investor in retailer Baby Bunting, was not concerned about the high valuations currently being put on private tech companies.

“While we are seeing some high valuations in the private markets it’s certainly not across the board. In our experience, sensible boards and founders understand that any pre-IPO capital raising is not a price maximisation event but rather about finding the right partner for the future,’’ he said.

“When you invest in the private markets you’re entering a relationship for the long term and it is imperative founders and CEOs are focused on what value, not just capital, any equity partner can bring to help the business achieve its objectives.”

Mr Buchanan said, while the Rokt raising was not designed to generate a high valuation but rather to provide some liquidity for long-term investors and provide firepower for acquisitions, he said valuations on tech companies were “all about fundamentals”.

 

Rokt chief executive Bruce Buchanan in New York
 Rokt chief executive Bruce Buchanan in New York

 

“Where companies are building good, viable business and are scaling with capital efficiency, you understand why valuations get that way,’’ he said, noting his company chose to partner with TDM after receiving approaches from several venture capital firms late last year.

Rokt has patented technology that connects advertisers through partners’ websites to new digital online and mobile consumers.

It has more than 200 staff worldwide. It recently expanded into Japan, France and The Netherlands and is eyeing further ­opportunities in Europe.

Mr Buchanan said the series C raising would give the company “runway” so it didn’t need to go public in the next six to 12 months to give investors liquidity.

“We think this gives us two to three years when we can focus on growth. Then we can consider a public listing as the next step. We want to be ready to IPO for our next funding round,’’ he said.

“We then want to be at least at a $US200m run rate revenue. That is a level where the maturity and predictability of revenue will be there.” The number recently passed $US100m.

He said there was a strong case for the company to list in Australia, given its shareholder base.

“These things change a lot as we move forward so it is just important for us to keep an open mind. But I would say Australia is definitely in contention. I would say it is more likely than the US at this point,’’ he said.

TDM is also an investor in Mexican fast food company Guzman y Gomez, of which Mr Buchanan is a director.

“Having seen Bruce at close quarters during our time together on the GYG board it is clear that we share the same core values and beliefs, which in my mind is perhaps the most important characteristic of any well-functioning business relationship,’’ Mr Cowan said.

“Bruce is a very unique executive — perhaps one of the best I have seen. He has a proven record of scaling businesses from start-up to billions of revenue. This is a very rare capability to possess.”

Rokt has now raised more than $100m from its investors since it was launched in 2010 by ex-Google senior executive Justin Viles and ex-Adconion sales director Ben Voltz.

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