Kinetica’s Paul Appleby warns of tech sector hubris


Visiting Australia to open Kinetica’s first offices in Sydney and Melbourne, Mr Appleby revealed Kinetica will look to finalise a $50 million capital raising next year.  The company could also consider a trade sale to a major technology company which did not have data analytics capabilities of its own.

“In fact that’s one of the conversations I’m having with my board … some companies have stayed private for too long because the access to capital was so great, because the valuations were so great and eventually they’ve had to pay the price.

“I think we’ll see a cycle where companies will go public sooner, won’t hang on for those massive valuations and … have a far more considered approach for building scale for their businesses.”

In September, workspace sharing outfit WeWork pulled plans to list and raise up to $US5.9 billion after questions were raised about its path to profitability. Since then, the company has lost its chief executive Adam Neumann and slashed its valuation by $US37 billion.

WiseTech, the Australian logistics company, had a market valuation of more than $12 billion until last month, when short-selling hedge funds questioned the business model and pushed shares from almost $40 to $29.17, where they closed on Friday.

Part of the criticism levelled at WiseTech was that its share price made it comparatively more expensive than many of the largest and most successful technology companies including Microsoft.

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Mr Appleby said hubris and those enormous valuations were becoming “a challenge” in the industry.

Visiting Australia to open Kinetica’s first offices in Sydney and Melbourne, he said the local technology start-up industry had been let down by a lack of venture capital.

“We have very strong educational institutions and we’re producing highly talented individuals who could be thought leaders in technology,” he said.

“The challenge is of course is that we don’t have that thriving venture capital community which exists in Silicon Valley, the culture of mentorship, the government incentives, [particularly] around equity ownership and how that’s treated.

“So there are a whole variety of things that come together in the valley that we don’t have here and as a consequence, and it’s fair to say, we’re really missing an opportunity.”



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