Atlassian founders hope $US60 million payment from original Facebook investors will promote investment in Australian IT

The co-founder of Australian software group Atlassian, which just received $US60 million from original Facebook investors Accel Partners, hopes the investment will attract other investors to the “anaemic” venture capital market in Australia.

The deal, which was announced overnight, will see Accel pay $US60 million for a minority stake in the company, with the cash to be paid upfront.

The company was founded by Australians Scott Farquhar and Mike Cannon-Brookes in 2002, who were both 22-years-old at the time. Both have been listed on SmartCompany’s Hot 30 Under 30 lists in the past, and came in fifth on the 2007 Smart50 list.

But Cannon-Brookes says he wants the deal to turn venture capital eyes to Australia, where he hopes other software and information technology companies will be able to gain investment and compete on the world stage.

“I would absolutely love that. We’ve been pretty open about what we think this means for Australia, and hopefully it turns people towards there for investment. We hope this can be a watershed moment, because there are definitely some greenshoots in the Australian tech space.”

“Capital is very global now, and it’s not such a big problem to be located in a different country. So we’d like to see more fast-growth oriented companies getting investment.”

But it might not be easy. Cannon-Brookes says the recent tussle with the Australian Taxation Office and equity firm TPG made a number of investors uneasy about the Australian market.

“The American investors we spoke to were very concerned about that, and it made it very difficult. Now there’s a huge grey area, and if you’re investing in a business from overseas you want to be certain. It certainly makes them uncomfortable.”

The deal is the company’s first for outside financing, with Cannon-Brookes calling it “one of the biggest deals in Australian IT within the last few years”. Accel partner Rich Wong will join the company’s board.

The company creates enterprise and developer software, and has over 220 employees with offices in Sydney, San Francisco and Amsterdam. It recorded just under $60 million in revenue for the most recent financial year, and has thousands of customers including Microsoft and Oracle.

The company also hopes to go public sometime in the future.

Accel was the first venture capital firm to invest in social networking giant Facebook, when it handed over $US12 million in 2005. It also counts investments in coupon site Groupon, and gained a significant benefit from the sale of advertising group AdMob to Google, and mobile gaming firm PlayFish to Electronic Arts last year.

Analysts expect Accel to win big from a Facebook IPO, which the social network has said is a definite possibility.

As for now, Cannon-Brookes says the company will be focusing on continued global expansion, particularly in Europe.

“We’re an Australian-founded company, and a pretty Australian company all around, but we’re also a global company. We’ve started an office in Amsterdam to target Europe, and we’d like to move into Europe and Asia as well to deepen our presence there.”

The company had been speaking with a number of investors for some time, Cannon-Brookes says, but ultimately settled on Accel due to its experience with a number of profitable businesses and its proven track-record of success.

“We’ve talked to various firms over the last five years or so, and we’ve had contact with Accel for quite awhile now. About six months ago we decided we wanted this investment, and picked about five firms we wanted to work with. As we got to know these folks more, we found they were head and shoulders above the rest.”

“The deal itself won’t change how we run the company, we’ve always run at a fast pace and we’ll continue to do that. It’ll be great to have them on board as a partner and advisor. It’s also important to know they’re interested in our culture.”

Atlassian places a heavy emphasis on its work culture. Employees are treated to weekly poker games, and regularly attend team-building activities like rock climbing and one-off events like races around the Sydney CBD.

“We place a lot of emphasis on the culture and values of the business. We want to sustain a long-term brand, and culture is really important to that. We have a very positive and fun culture, with a lot of very young, smart people. You have to work on that stuff very hard.”

While Cannon-Brookes would not disclose how he and Farquhar will benefit personally from the deal, he admits the pair are extremely satisfied with their current financial position.

“We’re pretty happy. We are well beyond any expectation we ever had, because a number of years ago we just wanted to earn the equivalent of an IBM consulting grad salary. That was our goal, and we’ve moved on from that and the rest is all good.”