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Data management firm Prospecta scores $20m from Ellerston

Yolanda Redrup
Yolanda RedrupRich List co-editor

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Ellerston Capital has acquired a significant minority position in an 18-year-old data management business, Prospecta, investing $20 million through its JAADE fund in the previously unfunded company.

Prospecta CEO Ranjan Bakshi, whose company has just raised $20 million from Ellerston's JAADE fund. Dominic Lorrimer

The firm had been bootstrapped since it was founded in 2002, with founder and chief executive Ranjan Bakshi saying he wanted the business to “prove itself” and to have already achieved certain milestones before taking on external capital.

“Enterprise software takes time, but once you’re there, you’re there, and the growth is more forward and stable,” he told The Australian Financial Review.

Ellerston is the main investor and the plan now is to get to the IPO phase in the next few years.

“We’re looking at a three- to four-year horizon for IPO and we want a 60 per cent to 70 per cent growth in annuity [recurring revenue] every year.”

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In the past two years Prospecta has achieved about 50 per cent revenue growth annually.

Prospecta's software helps enterprises govern and manage their “master data”, which is data about the business and its divisions or subsidiaries that helps to drive commercial decisions. It is considered to be a company's business-critical data.

Mr Bakshi, who came to Australia from India in 1998 to study an MBA and has previously worked for KPMG in its SAP team, said the business proposition was initially a hard sell, but in 2013-14 the company started to take off.

Today, it counts businesses such as Visy, Dow Chemical, Optus, Mondelez, Fortescue Metals Group and Inghams as clients.

“Data in general has become a much bigger topic,” Mr Bakshi said.

“Thanks to the Internet of Things and digital [acceleration], people understand they need data governance and quality ... If the data isn’t right, there's no point investing in larger transformation projects because it creates more issues.

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“In general our software is sticky. When you have it in place, you can’t take it out. It’s part of your core process.”

Prospecta is the fifth investment from Ellerston's private ventures fund, with it also having stakes in companies like SiteMinder and Tyro.

"We undertook a great deal of research to understand the potential for the master data management solution offered by Prospecta," Ellerston's Anthony Klok said.

The company has been profitable for the past three years and most of its clients are on 10-year contracts, and so the business was unscathed by the COVID-19 pandemic.

However, Mr Bakshi said the pandemic had slowed down enterprise-level decision making, which had given him time to reflect and strategise for the coming years.

“On the positive side, 2020 has been a good year for us because we did a lot of planning, reprioritising and rebranded MDO (its core data management and governance platform) and brought on some new customers,” he said.

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“In general, I feel better prepared for 2021 than I would have.”

The company takes a “land and expand” approach to winning customers – they get them in on their cheapest tier and then sell them additional features as their use of the MDO platform expands.

Its contract sizes range from $150,000 to $600,000 a year.

In the next few years it hopes to grow from its 45 big business customers it has today to more than 150.

Its customers tend to be in process-oriented industry like oil and gas, but its platform also lends itself to sectors like construction and logistics.

“You trust your data a lot,” Mr Bakshi said. “Imagine a gas pump with a measurement and reading – if the data isn't properly defined, that could have serious consequences. It can be life and death.

“There's been a fundamental shift and companies have started hiring chief data officers and governance managers and all these roles that weren't there before.

“Everyone is a data steward and you have to start respecting data so much more. If you don’t respect data, there can be a lot of negative consequences.”

Yolanda Redrup is the co-editor of the AFR Rich List. She previously reported on technology, healthcare and Street Talk. Connect with Yolanda on Twitter. Email Yolanda at yolanda.redrup@afr.com

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