Echoes of Aconoex

The Australian - Echoes of Aconex as tech firm prepares IPO

Damon Kitney (page 19)

It was the first unicorn exit in construction technology out of Australia.
When software giant Oracle made a $1.56 billion offer in December 2017 to buy a Melbourne construction management software business known as Aconex, it was dubbed by Atlassian cofounder Mike Cannon-Brookes as a “big win for Aussie tech”.

Now the company’s former chairman, Simon Yencken, is seeking to take Australian construction technology to the world again, joining the board of local workforce management systems company Damstra Technology ahead of its mooted float on the Australian Securities Exchange later this year.

Damstra provides cloud-based software solutions for clients dealing with complex regulatory and compliance issues relating to their staff and list of contractors. Some of its biggest customers include global mining giant Newmont Goldcorp, telco NBN Co, energy firm AGL and construction groups CPB and John Holland. Its current shareholders include Regal Funds Management, Ellerston Capital and Alium Capital, as well as the private investment vehicle of the Flannery family. The group raised $9 million in a private funding round 18 months ago to accelerate growth and bring on some institutional investors. An IPO, if it proceeds, will give it the capital to supercharge its expansion.

In a non-deal roadshow conducted by Morgan Stanley in June, Damstra executives told fund managers the company was profitable and generating 30 per cent-plus revenue growth. “Historically, construction and mining and infrastructure have been very low tech. There is a big opportunity to innovate, to look at ways tech can help projects complete more quickly, have less risk and provide a great return on investment to that sector,’’ Mr Yencken tells The Australian.

“The other big opportunity is adding workflow and adding a lot of value on top of those core technical requirements that exist in infrastructure, mining, oil and gas. If you are in there with the latest technology — hardware and software as a service — it can significant decrease time to market and shorten construction time limits.”

Damstra was founded by Christian Damstra, who is now based in Denver, Colorado. Mr Yencken is based in San Francisco.
“The US market is an enormous opportunity for Damstra. You can see that in the CEO’s commitment to growing that business with his presence in Denver. Given the relationship with Newmont and the contracts in the pipeline, the opportunity is endless,’’ Mr Yencken says. Damstra’s executive chairman, Johannes Risseeuw, says the recruitment of Mr Yencken as a director reflects the company’s pivot to North America but also his experience as someone who has “been through the trenches” in construction sector tech. “We wanted someone with an IT background and someone who has been through the journey.” Aconex went through some hard times. We wanted a director who had been through the good times and the bad,’’ he says. “We wanted to tap into someone in not only the investment community, but the operational part of the business. “We are small little Australian company that wants to be another Australian global success story in this space. We pride ourselves on being profitable and cashflow generative.”

Mr Yencken was one of the first investors in Aconex, which was founded by Leigh Jasper and Rob Phillpot from an idea they cooked up while playing squash together each week in suburban Melbourne. It built up a customer base of 70,000 user organisations in more than 70 countries and was listed on the ASX in 2014. “Going through that IPO process, I had to deal with existing shareholders, everyone involved from a regulatory and compliance standpoint and then there is the journey beyond that. You are in the view of the ASX, ASIC, the market participants,’’ Mr Yencken says.

Mr Yencken is also a venture capitalist, being an early stage investor in technology companies including Revere, Redbubble, Inkiru, Dokio, Canva and Moda Operandi. He led a seed funding round of almost $1m into Matrak Industries, which tracks building materials for construction projects, and has been the company’s chairman since March this year.
He is also the co-founder and chief executive of Fanplayr, which helps online merchants increase conversions by using big data. “Personally my philosophy as an investor is to concentrate on fields that you know. That has always been my focus: to play to your strengths personally and look for opportunities where you can add value,’’ he says. “Construction technology is pretty exciting.”