Government assistance & the tech sector

Resources Corner

Depending on your definition ‘startup’ companies are tech based and have the potential for rapid growth through scale. This gives the tech sector a unique trait of seeing companies grow at a rapid pace. The government’s role in this growth has been a matter of debate for some time and pressure is building for the Abbott government to reveal its long awaited National Industry Investment and Competitiveness Agenda.
 
With the review having been delayed, startup advocates have been quick to suggest the government adopt the startup mantra of getting the product to market and then iterating as requirements and demand dictates.
 
The tech sector has seen strong M&A activity in the past few weeks with Digital CC forming a joint venture to enter additional currency markets, Data#3 has acquired Business Aspect Group and iiNet has secured a 60 per cent stake in Tech2 Group.
 
Economic news
 
The government’s R&D Tax Incentive refund has survived the razor gang and at the start of a new financial year a number of companies have declared their refunds. Biotech companies including Bionomics, LBT Innovations and Viralytics have all benefited from the support.
 
Deals and Growth
 
Online job outsourcing company Freelancer Limited (ASX:FLN) has launched a domain and website marketplace called Freemarket.com. Freelancer says the new site will provide its user base with a safe and affordable platform to buy and sell domains and websites. The launch comes after Freelancer paid $US3.2 million to buy Warrior Forum in April, described as the world's largest internet marketing marketplace and community. 
 
ASG Group Limited (ASX:ASZ) says it has strengthened its Federal Government footprint through its latest defence win. The provider of information technology services has inked an eight year deal with Lockheed Martin Australia as a sub-contract partner to Department of Defence’s Centralised Processing Project.
 
Dual-listed Trade Me Group Limited (ASX:TME, NZE:TME) has inked a deal to buy a Wellington-based online credit card processing and payments gateway called Paystation. The online marketplace and classified advertising platform says the purchase price is confidential but not material and will be funded through cash.
 
Shares in Panorama Synergy Limited (ASX:PSY) have shot up almost 50 per cent on news of a significant breakthrough in optical readout technology. The Perth based technology company says its unique MEMS technology can combines stimulation and measurement of sensors using an optical waveguide.
 
Government assistance for growth
 
Bionomics Limited (ASX:BNO) has received a $7.5 million R&D Tax incentive refund to help drive its partnering strategy. The biopharmaceuticals company says its Research and Development efforts focus on treatments for conditions such as cancer, Alzheimer’s disease, anxiety and chronic pain. Shares in Bionomics are trading flat at $0.60
 
LBT Innovations Limited (ASX:LBT) has received a $3 million R&D tax incentive refund in relation to the ramp up of the company’s second flagship diagnostic product, the APAS system. CEO Lusia Guthrie says the funding is a tremendous support for innovative companies commercializing new products for worldwide markets. 
 
Viralytics Limited (ASX:VLA) has received a $1.9 million R&D tax incentive refund which will be directed to the CAVATAK clinical programme to further advance melanoma research in the US and to initiate a tumour study in the UK.
 
M&A action
 
Digital CC Limited (ASX:DCC) has formed a joint venture to enter additional currency markets. The JV will be called digitalX Mintsy and include the owners of digital currency trading site Cryptsy. digitalX Mintsy will provide various crypto-currency mining services to digital currency users.
 
US online travel giant Expedia Inc (NASDAQ:EXPE) launched a $703 million takeover of the company in July which was backed by Wotif’s directors. The Australian Competition and Consumer Commission (ACCC) says it is now seeking more information to determine if the transaction is likely to substantially lessen competition.
 
Data#3 Limited (ASX:DTL) has bought a business and technology consulting firm called Business Aspect Group. The provider of information technology solutions will pay $6 million to acquire the group in addition to $3 million in cash and $3 million in shares subject to its performance.
 
Internet service provider iiNet Limited (ASX:IIN) has secured a 60 per cent stake in Tech2 Group to partner with Tech2 Group’s founder, Glen Powys. Tech2 Group provides professional technology services and solutions to residential and business customers across Australia.