Brad Couper, the chief executive of Brisbane-based SAAS company (maker of tools for tradies) simPRO, founded by Stephen Bradshaw and Vaughan McKillop, has just completed a $40 million capital raising from New York venture capital firm Level Equity,valuing the business north of $100 million.
In February the local bank it has used for 14 years had refused its application for a $2 million business expansion loan.
Its estimating and scheduling platform for tradespeople turned over $20 million in 2015/16 and claims nearly 100,000 users worldwide.
Mr Couper said that, despite the entrepreneur-friendly rhetoric all the banks have dialled up since the government’s 2015 “ideas boom”, they had no framework for valuing his business or assessing its likely speed of growth.
He said the bank was nervous about simPRO’s intention to use the loan to expand its Boulder and London offices, and did not understand its software-as-a-service (SaaS) model.
“The only way we were going to get the $2 million was if every one of our 12 shareholders signed a personal guarantee and put their house on the line. It’s not that the banks wouldn’t like to back us but their systems just don’t allow it.”
Mr Couper’s next stop was Australian venture capitalists, where he was also out of luck.
While he said local VCs could value SaaS companies, they could not a write a cheque of the size required by simPRO after 14 years of bootstrapping.
“And the handful that are big enough just want to value you at two or three times last year’s earnings, and that doesn’t fly in a fast growth SaaS company.”
Mr Couper and three other simPRO executives paid $12k and joined a few other Aussie Tech companies with Elevate61. We found the east coast VCs understood established SaaS businesses like ours, and were prepared to pay a multiple of forward earnings for them, anywhere from three to eight times,” he said.
Simpro has just signed off on hiring 41 more people, which will take simPRO’s total head count to 210. Thirty of those will be for product development in Brisbane, with the balance additional support staff in the Boulder and London offices.
This article was originally published on the Australian Financial Review. Read the original here, or follow the AFR on Facebook.