Curtis Bailey - the West Auckland electrician who founded Tradify after finding he was spending too much time on admin. He owns 9% of the firm ahead of the $100m-plus deal. Photo: Supplied / New Zealand Herald
Curtis Bailey, who left school for an apprenticeship at a small electrical engineering company in South Auckland, is in line for a $9 million-plus payday.
UK firm The Access Group has entered an agreement to buy Tradify, the firm Bailey created in 2010 after becoming frustrated there was no app for tradies to manage and book jobs.
The price is confidential, but the deal is subject to Overseas Investment Office approval, implying it sits above the regulator's $100 million threshold.
The Access Group, based in the Midlands and backed by a complex private equity setup, has been buying dozens of what it calls "mid-market" and "back office" business software firms globally.
In 2021, Tradify raised $10m at a $55m valuation in a Series A round led by local venture capital outfit Movac, with support from existing investors Sir Stephen Tindall (through his K1W1 vehicle) and Icehouse Ventures.
Icehouse Ventures chief executive Robbie Paul said today the deal was set to deliver the largest cash return in his firm's history. "The returns will pay off the majority of the 2016 Seed Fund [an $11m fund]."
Paul earlier told the Herald Tradify was one of firm's top-performing investments in its Growth Fund 1, a more recent investment fund that includes a $2.9m stake in Tradify.
DIY
Bailey - who stepped down as chief executive in 2020 but still serves as a director - founded Tradify in 2010. The software was born out of his frustration that too much of his time was taken up by the admin side of his sparkie business. His advertising pitch was that it was software made by tradies, for tradies.
Ahead of The Access Group deal, Movac is the largest shareholder with a 36 percent stake, followed by Icehouse (10 percent), Bailey (9 percent) and Tindall (6 percent).
A raft of smaller investors include Joyous and Sonar6 founder Mike Carden and Vend alumnus and Prosaic founder Nick Houldsworth (also a Tradify director during the startup's early days).
While Tradify appeared to prosper under its venture capital backing, rival GeoOp (later re-named Geo) went the public listing route - but it stumbled, delisting from the NZX earlier this year and going into receivership on September 26. (Co-founder Brendan Cervin, who left Geo in 2016, landed on his feet. He's one of the trio behind new hit firm Ideally.)
Tradify chief executive Michael Steckler - who took the reins from founder Curtis Bailey in mid-2020. Photo: Supplied
At the time of the Series A raise, Tradify chief executive Michael Steckler would not put a figure on revenue, but said the average tradie paid $39 a month for Tradify, and it had 18,000 tradies on its books - implying annual revenue of about $8.5m. More than 90 percent of customers were offshore.
The raise was used for a push into the UK, and expanding staff from 50 to 75.
Tradify now has 20,000 customers, spread across New Zealand, Australia and the UK.
Steckler said his firm has grown to 107 employees, "The majority of whom are based in Aotearoa", with most of the rest in the firm's London office.
Asked if Tradify's centre of operations would remain in NZ, he said he was committed to growing the firm post-deal. "The management team at Tradify in Auckland are incredibly excited about the next phase of this journey with the support of Access Group."
Buying spree
In mid-2022, the Financial Times said The Access Group had grown to a £9.2 billion ($19.5b) valuation, with barely any public profile, after snapping up 40 companies over a five-year buying spree.
Acquisitions have continued apace. Last week, The Access Group bought Scottish hospitality software QikServe. Recent months have also seen it scoop up ChangeGPS, an Australian maker of practice management software for accountants; US firm SHR, which specialises in hotel and casino management software; and automated purchasing software maker Lightyear, founded by Irish brothers Chris & Roger Gregg, among other deals.
The price is never disclosed. The Access Group says the various business management software brands in its portfolio cater to "mid-market organisations in the UK, Ireland, US and Asia Pacific".
'More to come'
"This deal is a sign of the great results to come for the NZ venture ecosystem," Icehouse Venture's Paul said.
"At 10-years-old, Tradify is generating a very worthwhile return for early investors including our Seed Fund. PowerbyProxi [the Auckland wireless charging startup sold to Apple for $100m-plus] was the same age. So was Kami. (More on Kami below).
"All we need to do now is look at the 5+year old companies like Auror, Halter, Sharesies, Mint, Dawn, Partly, Re-Leased, Fuel50, LawVu, Shuttlerock, ArchiPro, Spalk, AskNicely, and Crimson to appreciate how much potential value is to come."
OIO offers more details of Kami sale
Meanwhile, the Overseas Investment Office - which has yet to publish any details on Tradify's sale - has published its decision on education software maker Kami's sale to an American private equity firm, Boston Ventures.
It was announced as a rounded $300m on 22 August. The OIO lists it as $289m, saying "This figure represents the approximate value in NZD of the purchase price of US$175m as at 19 August 2024. This figure represents the total asset value, ie, including both New Zealand and non-New Zealand assets."
Kami's four founders earlier said they would maintain a minority stake in the business.
The OIO decision indicates they took a 29 percent stake in the US-based vehicle that Boston Ventures created for the deal.
The regulator offered no detail on its rationale for approval beyond the oneliner that: "Consent was granted as the applicants have met the investor test criterion".
The Kami buyout was the second biggest deal of its type. The largest edutech transaction was when US private equity giant KKR took majority control of Dunedin's Education Perfect in a mid-2021 transaction that valued the Kiwi firm at $455m.
The pandemic stimulus-diven low interest rate fuelled a venture capital frenzy with a clutch of NZ tech techs sold offshore, including retail software firm Vend's $455m sale to Canada's Lightspeed, geo-modelling software firm Seequent's $1.45b sale to Nasdaq-listed Bentley Systems, Grinding Gear Games' $100m plus sale to China's Tencent, veterinary practice management software maker ezyVet's $216msale to Nasdaq-listed IDEXX Laboratories, salon appoint software maker Timely's $100m-plus sale to the Silver Lake-backed EverCommerce, mobile game developer Ninja Kiwi's $203m sale to a Scandinavian buyer, e-commers player Cin7′s $133m sale to US private equity firm Rubicon, breast cancer screening software firm Volpara's $322m sale to a Korean rival, and the sale of $2.2b of Wētā Digital's technology division to US-based Unity Software (a deal that would later unravel as Unity hit financial strife).
The VC industry and founders say it has made the local scene stronger as profits from the sales have been fed back into the local ecosystem to fund a new wave of startups. Buyers have often expanded NZ workforces, and helped the companies expand globally.
- This story was originally published by the New Zealand Herald.