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The Australian – Business Review: Audio golden-child Audinate mulls IPO

Australian audio tech outfit Audinate has appointed Blackpeak Capital and Shaw and Partners to advise them as part of the decision to look at expansion options, which may include an IPO this year.

The firm, whose audio networking technology is used by the likes of Barbra Streisand, Bruce Springsteen and Foo Fighters, is looking at capital expansion options which could be a funding round or a public listing on the ASX in coming months.

“Over the last several years we’ve gone from 20 manufacturers using us back in 2010 to now 350 brands and manufacturers,” Audinate CEO Lee Ellison told The Australian in an interview. “We’re now in over 1000 products. In order to win this game it’s really important to invest in this business and keep transforming it. Our current VC partners have invested three times each, and now we’re starting to introduce new products that we’ll be launching in he latter half of this calendar year.

“That changes the landscape, its’ a software-based platform that helps improve the scalability and manageability of audio networks. Now’s the time for us to raise additional capital.”
Mr Williams said Audinate started life at Motorola’s Australian research centre, before that closed and about 50 R&D staff were laid off.

“We were back to ground zero, so we pitched a project to NICTA on high-performance AV networking technology,” he said. “It was at NICTA we did the fundamental research, basic R&D and tech development that became Dante. We spent three years on the tech and getting the first Australian companies interested in the technology, before landing our first deal with Dolby.”

After spinning off from NICTA, the Audinate team met the late Australian sound engineer called Bruce Jackson, who began his career mixing for Elvis Presley before touring for a decade with Bruce Springsteen and moving on to work with Barbra Streisand. Mr Jackson went on to be a major supporter of Audinate, and Dante and helped to facilitate their relationship with Dolby and also help them prove their chops with live concerts.

“Bruce Jackson was a colourful character, he was a legend of the Australian audio industry and passed away in a very rock and roll fashion, during a plane crash in Death Valley a couple of years ago,” Mr Ellison said. “He was huge for us.”

The company has raised about $16m, from Starfish Ventures and Innovation Capital. According to Mr Ellison, most VC firms invest in a promising start-up for five to seven years, and then sell their stake. Most go through a recurring life cycle pattern where they raise money for a fund, then manage it, then turn a profit and start again.

Instead of doing that with Audinate, Starfish Ventures and Innovation Capital realised the big-picture potential on offer and took a long-term bet that’s continuing today, with both funds still major stakeholders in the company.

He said the two VC firms realised that it was going to take 10 years, not five, for Audinate to achieve its goals.

“In terms of the initial capital raising we talked to a lot of VC firms, and that is not the easiest process in terms of getting initial investment and getting people interested with audio tech. We’ve done a lot with the reasonably small amount of investment, and with a good team. And think we’ve had good investors in Starfish and Innovation Capital.

“Certainly with Starfish they saw where the tech could go in its ability to change the way the industry works, and they’ve ben suprirsingly patient. They’ve been investors for ten years, and we’ve benefited from their longer term view of where the technology could go and the longer term upside of where it may be.”

The pair said it was fulfilling to be achieving their global ambitions, given they’ve cemented deals with the world’s biggest companies including Yamaha, Bose, Harman, Sennheiser, Shure, Crestron, Sony, Extron and Bosch.

“One important thing from day one was that we start this as an international company, with a desire to access global markets,” Mr Ellison said.

“We’ve done that.”