This Silicon Valley techexec flew 7,000 miles to take his...

This Silicon Valley techexec flew 7,000 miles to take his internet company public in Australia

PUBLISHEDSUN, MAY 12 2019 11:04 AM EDT

Salvador Rodriguez@SAL19

KEYPOINTS

·Life360, a San Francisco socialcompany backed by Silicon Valley venture capitalists, went public on Friday onthe Australian Securities Exchange.

·CEO Chris Hulls said he wanted toavoid taking late-stage money in the U.S. because often they’re “really notclean terms.”

·The company is valued atabout $764 million Australian ($535 million).

Life360 Co-founders Alex Haro, left, and ChrisHulls ring the bell at the Australian Securities Exchange.

Life360

Social media company Life360 went public on Friday, the same day that fellow San Franciscan Uber debuted and amid a wave of Bay Area IPOs from names like Lyft, Pinterest and Zoom. But unlike its neighbors, which trade on the Nasdaq or New York Stock Exchange, Life360 rang an opening bell on the other side of the world — in Australia.

Life360, an app that lets familymembers stay connected, joined the Australian Securities Exchange, whoselargest members include Commonwealth Bank of Australia and BHP Group, the world’s biggest miner. It’s the latest tech company to opt for an IPO down under, in lieu of raising another private round or testing the waters on Wall Street. Credible, a consumer finance marketplace, took the same route in 2017.

“People think of Australia as a smalllittle country, but in terms of investable capital, it’s massivelydisproportionate to their population,” Life360 CEO Chris Hulls said in a recentinterview with CNBC.

Life360 raised about $145 millionAustralian dollars (close to $102 million) on Friday. The stock rose a littleover 5%, giving the company a market value of $764 million Australian ($535million.).

With revenue of $32.1 million last year and a forecast to reach $58.6 million in 2019, Life360 isn’t big enough to attract public market capital in the U.S., where companies these days are typically well past $100 million by the time they debut. Uber, the largest tech company to go public this year, generated over $11 billion in sales last year. Beyond Meat, which is less of a tech company than a food company but with Silicon Valley investors, is the smallest at $87.9 million.

“We could go public here, but we don’twant to be in this swirl of noise,” said Hulls, who rang the bell of the ASX inSydney on Friday. Instead, Life360 is the biggest tech IPO on the ASX in threeyears, he said.

Life360′s “Find My Family, Friends,Phone” app is currently the sixth most popular social networking app on iOS. Itincludes free features such as location sharing and has a $7.99 per monthDriver Protect plan that includes crash detection and roadside assistance. Themajority of its 20 million monthly active users are in the U.S., concentratedin southern states like Georgia and Mississippi.

Life360 was previously backed bySilicon Valley venture firms including DCM, Bessemer Venture Partners andBullpen Capital and strategic investor ADT.

The company’s first investor was anAustralian named James Synge, who put $40,000 in 2008 and took a board seat.

When Hulls and his family were inAustralia on vacation in 2017, Synge suggested that he sit down withrepresentatives of the ASX. Synge knew the company was preparing to raiseanother round of capital and he wanted Hulls to explore the possibility oftaking the unusual route of going public in Australia.

“I was highly skeptical going in,”Hulls said. “Why would I fly 7,000 miles? No, thank you. I initially had thatreaction. But as I peeled back the onion and met the investors, I really gotexcited about it.”

Hulls said one of the key things thatattracted him was that the ASX presented a viable way to avoid late-stage U.S.investment firms, who can offer quite a lot of money for start-ups but also addunfavorable terms for founders. For example, their money can come withpreferences that make it hard for employees to make much money in an IPO oracquisition.

“You get these really big valuations, butthey have a ton of structure on them,” Hulls said. “They’re really not cleanterms.”

Meanwhile, there’s rising demand inAustralia for more tech companies to join the ASX and provide some high-growthdiversity, said Max Cunningham, ASX’s executive general manager of listings andissuer services. Currently, about 65% of the company in the S&P ASX 200benchmark index are in the mining and financial sectors, he said.

Australia also has plenty of moneyavailable for investing because of a system that requires companies to makehealthy contributions to their retirement funds.

“The size of capital here quite oftensurprises people,” Cunningham said.

As a result, the ASX has made an effortto reach out to tech entrepreneurs in the U.S., Israel and New Zealand over thepast couple of years and educate them about the benefits of going public inAustralia. There will likely be one or two more U.S. tech companies that IPO onthe ASX in 2019, and as many as six over the next 12 months, Cunningham said.

“We are seeing a lot of money inAustralia going into the tech space at the moment,” he said. “Institutionalinvestors are hungry for good quality tech stocks in our market.”