Technology companies are in the news more than ever these days, with Elon Musk’s bid for Twitter the latest to send investors into a frenzy.
Even before the COVID pandemic drove ever more business online, the big five US tech companies made up 18 per cent of the US stock market, and here in Australia firms like Atlassian, Afterpay and Menulog have produced impressive returns for local investors.
So, who are the new kids on the technology block for investors to get excited about? And how can we get on board before their businesses explode?
Deloitte Australia’s Tech Fast 50 has been tracking the fastest growing technology companies in the country for over 20 years, and their latest list was released recently.
Yahoo Finance Australia spoke to Deloitte’s Joshua Tanchel, lead partner for the Tech Fast 50 list, to find out more about the latest crop of tech companies bidding to become the next big thing.
ASX listings up for growth tech firms
One of the first observations we discussed was how 32 per cent of this year’s cohort are already listed companies, up from 22 per cent last year.
“In recent years the ASX has become a great place for Australian tech companies to list, which might explain why the percentage of listed companies is up on last year,” Tanchel said.
He goes on to explain that listing on the Australian exchange is a cheaper and quicker route to market for many tech firms, with US rival Nasdaq requiring higher revenues and incurring higher costs before institutions are interested in investing.
“There is lots of capital available in Australia for growth stocks at present, particularly with the stock market having risen so strongly in the last 18 months,” Tanchel said.
That’s positive news for Australian technology entrepreneurs, who have been able to take advantage of 13.2 per cent rise in the ASX during 2021, and the private equity availability this has resulted in.
Direct to consumer businesses flying
There is also a significant trend in the type of technology company that is growing exponentially over the last 12 months, with this year’s top 50 seeing business to consumer (B2C) focused companies making up 30 per cent of the list.
“As has been well documented through the pandemic, the rise of tech companies in the B2C space has been significant. This has meant significantly more direct to consumer businesses have made the list compared to previous years,” Tanchel said.
There is little doubt that COVID has accelerated the business opportunities for B2C businesses in the last few years. Companies such as online education provider Cluey Learning (ASX:CLU) have capitalised on this, experiencing revenue growth of 1,662 per cent in 2021 to take out number five in this year’s report.
Brisbane based internet marketing company Citrus Ad (not listed) is another to have benefitted from the accelerated move online, achieving an incredible 3,095 per cent increase in revenue over 12 months, to come in at number two on this year’s list.
Female leader takes the honours
However, the company sitting at the top of this year’s Tech Fast 50 is bucking the trend in a number of ways.
Aviation software vendor Monarc Global – who haven’t relied on the B2C boom as they focus on the business to business (B2B) market - took out top spot with an eye watering 6,331 per cent growth in revenue in 2021.
The company (again not listed) also achieved top spot in the female leadership award section, which Tanchel was keen to expand on.
“For the first time, the fastest growing tech company in Australia – Monarc Global - is also the home to the winner of the Best Female Leadership award, which is great to see," he said.
The lady in question is Monica Zagrodny, who co-founded Monarc Global in 2017 whilst also holding down a full-time job with travel giant Flight Centre.
Zagrodny was unavailable for comment on this unique achievement, but her success will hopefully inspire other female entrepreneurs to launch tech businesses in what has traditionally been a male dominated industry.
With nominations for this year’s Deloitte Tech Fast 50 at record levels, these numbers seem set to grow even further, although beating this year’s average growth rate of 936 per cent for our top 50 tech companies may take some beating.
Following in the footsteps of the aforementioned Atlassian, Afterpay and Menulog (all previous entrants in the Tech Fast 50 list) is no doubt the dream.
Although the majority may not get there, it appears that many aspirational Australians are ditching the security of a nine-to-five job to launch exciting new businesses in the technology sector.
The result for investors in the sector may be a wealth of opportunity to capitalise on the rise of this booming sector.