Atlassian sells US$150m stock to US funds



news Software group Atlassian, which was founded in Australia but has since formally shifted its headquarters to the UK, has sold $150 million worth of stock to United States investment firms T. Rowe Price and Dragoneer Investment Group, in what the company has stated is a move designed to reward the company’s employees through buying their shares.

Atlassian was founded in 2002 by Sydney entrepreneurs Scott Farquhar and Mike Cannon-Brookes to create better software tools for software developers to work and collaborate. It has since grown massively, currently booking around US$200 million in revenue yearly, with more than 800 staff globally and offices in Sydney, San Francisco, Amsterdam, Yokohama and Manila. The company also opened a new office in Austin this week.

The company’s US-based spokesperson issued a fact sheet to media this morning noting that it had raised US$150 million in capital from US investment house T. Rowe Price, placing the company’s valuation at US$3.3 billion. Articles published by the Wall Street Journal and VentureBeat overnight also noted that fellow US-based firm Dragoneer Investment Group also participated in the round.

The financing is the second major round that Atlassian has taken over the past several years. In July 2010, the company revealed it had taken a US$60 million minority investment from US-based venture capital firm Accel Partners, with a long-term view to a public listing in the US. At that stage Atlassian said it did not approach any Australian investment houses for funding as the amount Atlassian was seeking would be difficult to source in Australia, and the level of expertise from US-based venture capital houses could not be matched in Australia.

Atlassian’s US-based president, Jay Simons, told Venture Beat overnight that the main aim of the round was to reward Atlassian staff who currently owned a stake of the company. “None of the money has actually gone to Atlassian’s bank account,” Simons reportedly said. Instead, VentureBeat quoted the executive as stating that the investors were buying shares from employees. “The idea now is to reward the company’s employees for all the hard work they’ve done,” VentureBeat wrote.

The Wall St Journal reported that Atlassian wanted to give its employees some liquidity as it had put off its initial public offering for the time being. Accel will reportedly sell some of its shares as part of the round, although founders Farquhar and Cannon-Brookes, who cashed some of their shares in the Accel round, will not sell shares in this round.

The news comes several months after Atlassian revealed plans to shift its headquarters to the United Kingdom on paper, to aid with its plans to eventually list in the United States.

Cannon-Brookes and Farquhar have been open over the years about the fact that they believe the company will be better served by listing overseas than in Australia, due to a combination of what they see as more favourable regulatory structures and investment options. Additionally, most of the company’s customers are located overseas. However, the company also plans to continue to maintain substantial operations in Australia.

Other facts released by the company today include the fact that its compound annual growth rate over the past five years from financial year 2008 had been over 40 percent; that the company has achieved ten years of positive cash flow; that it now has more than 35,000 customers in 130 countries; that it has “no traditional salespeople” due to its self-serve business model, and that it has a growing ecosystem of more than 350 partners worldwide and more than 1,500 add-ons to its software via the Atlassian Marketplace. More than $20 million has been paid out to third-party developers since the Marketplace launched.

Atlassian has also taken a philanthropic approach as part of its business, with its co-founders investing in Australian technology startups to help grow the local ecosystem and the company as a whole providing other resources to help the local ecosystem. Atlassian has also established the Atlassian Foundation, using a “1% model” where one percent of equity, profit, employee time and software licenses from Atlassian are donated to nonprofits. Its vision is to give the youth of the world access to a world-class education to break the poverty cycle. The company has also donated $3 million to the Room to Read program in Cambodia.

Atlassian has used some of its funds over the past several years to acquire other companies to add to its portfolio. For example, in March 2012 the company revealed that it had acquired San Francisco-based HipChat. A hosted private chat service for companies and teams, HipChat at that stage had over 1,200 customers including Groupon, Wired and Hubspot. In June 2011, Atlassian invested an undisclosed amount in Dutch software as a service business Cloud9. And in September 2010 the company picked up, a web-hosted service that has 60,000 users.

Image credit: Atlassian (photo of the company’s San Francisco offices)