Melbourne tech firm equals VC record with $US350m funding

“They also have a team of 45 professionals that help with operational support if you’re doing M&A, or recruitment … We can always list further down the track when we grow the business.”

Cowen acted as lead financial adviser on the deal, and Morgan Stanley Australia also advised Cyara’s board on the transaction.

While K1’s proposal came through before IPO preparations were in full swing, the Financial Review’s Street Talk reported the company would look to raise as much as $200 million, targeting a $500 million-odd valuation.

Having tipped in close to $500 million in capital, the K1 investment is expected to come at a much higher valuation.

Cyara’s capital raise was a mix of both primary and secondary capital, with early investors such as Greenspring Associates and PeakSpan Capital able to realise some of their gains. PeakSpan remains a minority investor.

It is the second big investment K1 has made in an Aussie tech company in less than three months, having also led job management software company simPRO’s $US350 million raising.

In the past three months simPRO, Bruce Buchanan’s marketing tech company ROKT and now Cyara have all overtaken email marketing technology company Campaign Monitor’s record for the largest local VC round, which had stood since 2014 when it banked $US250 million in a raise led by Insight Partners.

Mr Kulkarni and Mr Tran met in 1996 when they were developers at Japanese tech services firm NEC. Both aspiring entrepreneurs, the pair started a medical practice software company and a hotel management software business, but neither took off.

It was their time working at call centre technology business Genesys that led to the creation of Cyara.

“It’s incredibly humbling, I don’t think it’s hit us yet,” Mr Kulkarni said of the latest raise.

“We didn’t intend to go out and do the largest round, it just happened because K1 had this belief in our mission.

“It’s not possible without the hard work of our team, and support of our customers and partners.”

Cyara, which is now headquartered in Redwood, California, recorded $US35 million in revenue last year, and is on track to grow by up to 40 per cent in 2022.

On a mission to grab market share, the fresh funds will go toward acquisitions, as well as investing in its product to keep up with emerging customer engagement technologies and scaling internationally.

“A big part of our vision is to not only help customers detect customer assurance issues, but also the root cause, and be able to automatically take off any services or components with those flaws offline,” he said.

“About 32 per cent of customers will stop doing business with you after a negative experience. Organisations can succeed or fail based on their customer experience.”

Cyara counts the likes of National Australia Bank, eBay, Oracle, Vodafone and AT&T as customers.

Having flown under the radar for much of its life, Mr Kulkarni said he hoped this latest funding round would put Cyara on the map and help make the company a destination for scarce talent.

“[The talent environment] has been very challenging … hopefully this news comes out, and it helps make people aware of the brand,” he said.

“We’ve put in programs to make Cyara a wonderful place to work. We have meditation four to five times a week, we’ve created a Class Pass for people to use … and we give them flexibility, a learning stipend … and every employee gets a day off a quarter to do charity work of their choosing.

“These are the things every company should be doing.”

While the fresh funds have kept Cyara private for now, an IPO is still firmly on the cards for the future.

But, it’s uncertain if Cyara will be bound for the ASX, or the NASDAQ.

“For the NASDAQ, you want to hit revenue of $US100 million to $US120 million, with a trajectory of $US200 million,” Mr Kulkarni said.

“Last year we looked at the best option as to where to list, but given the scale of the NASDAQ and it being tech sector specific, that’s appealing.“