Former All Black David Kirk says his company has found a sweet spot in the market – successful start-ups wanting to move to the next level. He talks to Brenda Ward.

When David Kirk was younger, his passion was getting a rugby ball over the line as captain of the All Blacks. Now the Kiwi’s a captain of industry, and his new challenge is pushing successful tech start-ups into the big league.

The former Fairfax chief executive started Bailador Technology Investments in Sydney with colleague Paul Wilson six years ago. It’s now listed on the Australian Stock Exchange.

Bailador invests in expansion- or growth-stage information technology companies from New Zealand and Australia.

“These are companies that have got past the start-up phase, and typically have between NZ$5 million and NZ$15 million revenue,” he says.

Well established

“They’re typically well established and leaders in Australia and New Zealand, and looking for extra equity capital to grow, to invest in product development, but mostly to invest in going global.”

He says the start-up sector is well-catered for, with government tax breaks, incubators, and ‘angel investors’ who invest small amounts in lots of companies.

“We invest in the start-up companies which fight their way through the pack to become globally successful, and are looking for larger cheques.

“These are companies wanting to grow their businesses from the NZ$5-10 million revenue bracket, to NZ$20-50 million in revenue.”

Starting with just three companies and A$20 million from a group of 33 investors, Bailador now has an investment team of six and works with ten companies.

Kirk says these growth-stage companies are much further along the development pathway than start-ups are. “They’ve proven their technology, they’ve proven they can win customers, and proven they’ve got a scalable economic model, and are able to grow.”

Kirk says Kiwi companies are just as active in the start-up market as Australian firms.

“There are lots and lots of start-ups. It’s great,” he says. “Being an entrepreneur is much more of an established career pathway these days, in both Australia and New Zealand, for young people out of university.”

He says redundancies are common in financial services companies and the big banks, so graduates are starting their own companies.

“It’s a great thing, because instead of people being a small cog in a big machine, they’re finding it’s more satisfying to be a big cog in a small machine, and setting out to grow.”

Bailador typically owns 15–25 per cent of each business, and a member of its team is on the board of all but one of the companies, to help them with growth strategies.

Success stories of companies in the Bailador portfolio include:

• Siteminder, which supplies technology to hotels to allow them to connect with all the sources of bookings.
• Kiwi company Straker, which supplies ‘hybrid’ foreign-language translations, a mix of machine learning and crowdsourced human translation.
• Lendi, an online mortgage broking and fulfilment business which matches borrowers with one of 30 lenders and hundreds of loans.

Start-ups are notoriously risky. “The advantage of the growth stage is that failures should be much, much less common. You can’t rule them out completely, but we’re funding and accelerating the growth of already established businesses.

“If they’re going to fail, they’re going to fail in the stage before we invest in them.”
The key to minimising risk in any investment is to have a portfolio, says Kirk.

“Especially in the start-up phase, it makes sense to invest small amounts of money in quite a wide variety of companies. That gives the benefit of having some successes as well as some which may do less well, or fail.”

First published Autumn 2018

Story by Brenda Ward

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