Our team has been doing business in Australia and New Zealand for over a decade as both investors and operators. We’ve completed dozens of investments in quality, vertical-specific SaaS software (“VSaaS”) businesses, led companies with significant teams, and engaged with and supported customers and industry stakeholders in the region.
Our direct, first-hand experience led to a deep appreciation for each country’s respective cultures (similar in some ways; very different in others, as any Aussie or Kiwi will tell you!), their approach to business, and the entrepreneurial, no-nonsense style to deal making that makes investing and operating in the region a pleasure.
So when Arcadea was founded, we knew the region would be a key area of focus. Our first two investments were in Australia and New Zealand. Our first senior investing hire, Nelson Ball, is based in Brisbane and exclusively focused on the region.
VSaaS companies based in Australia and New Zealand can compete with the best in the world, building great products with efficient execution and a desire to grow both at home and internationally. These are precisely the type of companies and founders with whom we want to partner at Arcadea.
Existing investment approaches don’t work for high-quality VSaaS companies
A common theme from our engagement with the VSaaS founder community in the region has been a frustration with the existing options for companies at a transition point in their ownership cycle.
The traditional options in ANZ have been:
- Sell up to 100% of the business to a local Private Equity firm focused that will flip the “asset” to another owner in 18 – 36 months. These firms lack operating expertise and long-term ambitions for the businesses, utilizing leverage and aggressive customer tactics to realize fast returns in support of raising bigger, subsequent funds (“pots” of money that generate fees for them).
- Sell the business to an industry “strategic” player who will absorb the business into a larger parent organization.
- Sell the business to a high-volume, low-valuation software aggregator focused on maximizing short-term cashflows at the expense of organic growth and individuality of each company. These buyers are numerous and are a good fit for low-growth companies that have limited upside potential. These buyers can be efficient liquidators of the annuity stream that is recurring revenue, providing fair value for the quality at hand, yet are not built to take a bespoke approach to any given company, nor their teams.
While each of those models may be a fit for certain types of businesses, most of the founders we talk with are tired of their options, feeling that they speak to the same roster of interested parties endlessly, with little to no differentiation amongst them.
Arcadea’s place in the market
Arcadea is focused on parting in majority VSaaS investments in companies with $1M to $20M in recurring revenue, 10%-50%+ annual growth, and a fierce desire for both operational excellence and long-term success.
The companies we partner with typically have unique cultures and a deep connection to their stakeholders. They are focused on multi-decade success. And, typically, they have achieved top quartile operating performance.
The fundamentally long-term nature of our company allows us to consider a wide variety of strategic, tactical and financial options for each business we choose to partner with. We can steer away from the common strategies employed by other types of buyers, like maximum debt, growth-stifling cost reductions or inefficient spending all while maintaining independence and autonomy.
How Arcadea uniquely helps ANZ companies
With all of our Managing Directors having direct, successful operating experience as C-level leaders of VSaaS businesses, we put the emphasis on strategy, tactics, and execution rather than capital structure, debt, or selling our businesses to the next buyer.
Our in-house value creation team is solely focused on helping our businesses improve their products, execution, and growth over time, and, importantly, is deeply experienced in cross-borders expansion, international team scaling, and how to translate success in ANZ to other business cultures around the world. Importantly, the entire team has real, successful operating experience spanning decades and multiple end markets.
As a thematic investor, we look for those companies that have globally relevant products, especially those that can address the North American and EU economies, where we have key staff and locations ready to support expansion to those regions.
You can read more about our approach here: Welcome to Arcadea
Our ANZ journey so far….
We are currently partnered with two archetypal Arcadea businesses in the region: Air Maestro (Adelaide) and Spidertracks (Auckland). Both businesses were performing well prior to our investment and showed tremendous growth potential outside of their local markets with the opportunity to grow further via rapid product expansion.
Both chose Arcadea over a large number of strategic and private equity suitors to help navigate their expansion journeys, while ensuring the brands would live on via achieving enduring operational excellence. In one instance we were happy to welcome the original founder as a minority equity partner, a structure we are happy to accommodate in the right set of circumstances.
In the months following the investments, we worked closely with the management teams to implement the key tactical and strategic best practices from our proprietary Arcadea Business System, laying the groundwork for long-term operational excellence. We have also made significant investments in the respective teams, in particular adding sales & marketing roles in international markets as we look to extend the presently strong growth trajectories.
…. With more to come
We expect to accelerate our investment activities in the region during 2023, and our goal is to find a handful of extremely-high-quality businesses who can help form the foundation for our multi-decade strategy in the region.
If our long-term philosophy resonates and you own or run the sort of business that can meet our quality thresholds we would like to speak with you. For those businesses with the inherent quality, long-range potential, customer centricity and desire to see something that lasts, we think there’s no better partner or home in the world than Arcadea.