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What are tech unicorns, and what does the landscape look like in Australia? Being aware of these billion-dollar companies can help investors identify up and comers.

Aussies are a pretty tech-savvy bunch, and this business is key to the country's economy.

Australia has created its fair share of tech unicorns in recent years. But what exactly does that mean?

The term "tech unicorn" is thought to have first been coined by a venture capitalist named Aileen Lee in California back in 2013. It refers to a privately held startup company whose value exceeds $1 billion.

There are more than 600 unicorns that have gained entry into this relatively exclusive club, including the likes of Reddit, Bytedance, SpaceX, Stripe, SHEIN, Ola Cabs and Patreon.

Australia's tech unicorn landscape

Australia has a reputation for being home to small businesses and startups. Notable examples of Aussie ingenuity include Wi-Fi technology, Google Maps, black box flight recorders and cochlear implants.

Although the country has produced successful small to medium enterprises like Atlassian (NASDAQ:TEAM) and buy now, pay later business Afterpay (ASX:APT), experts believe a lack of resources is preventing the country from producing more internationally successful technology companies.

In fact, at time of publication, a list of more than 600 tech unicorns included just four from Australia. Leaders in the space are the US with roughly 50 percent of the list and China with 23 percent, followed by the UK with 5 percent and India with 4 percent.

Given that Australia has the 14th largest economy globally, with 2,422,404 actively trading businesses in the nation's economy as of June 2020, there is potential to grow.

Noteworthy tech unicorns in Australia

Although Australia is a relatively small market compared to North America and Europe, it currently has four tech unicorns, as per the CB Insights list mentioned above. They are:

  • Canva — A DIY graphic design app created by Melanie Perkins, Cliff Obrecht and Cameron Adams. At the time of publication, Canva was an impressive 14th on the CB Insights list, having debuted as a tech unicorn in January 2018. With a market worth of AU$15 billion, select investors in the company include Sequoia Capital China, Blackbird Ventures and Matrix Partners.
  • Airwallex — Currently based in Sydney, Airwallex was founded in Melbourne and was the fastest Aussie startup to achieve unicorn status. Valued at AU$2.6 billion, it offers competition to the big banks with cheaper solutions for international payments. Added to the list in March 2019, select investors include DST Global, Sequoia Capital China and Tencent Holdings (OTC Pink:TCTZF,HKEX:0700).
  • SafetyCulture — Founded in Townsville by CEO Luke Anear, SafetyCulture has provided occupational health and safety and compliance documents since 2004. With 30,000 customers, 1,500 products and a valuation of AU$1.6 billion, it's the newest addition to the tech unicorns list, having been added in March 2021. Select investors include Blackbird Ventures, IndexVentures and Tiger Global Management.
  • Judo Bank — This online challenger bank, which offers personal term deposits as well as business loans to small to medium enterprises, is worth AU$1.21 billion. It became a tech unicorn in December 2020, and select investors include Ironbridge Capital, OPTrust and Myer Family Investments.

What about Australia's tech "soonicorns"?

Beyond the tech unicorns mentioned above, there are a number of Aussie startups worth keeping an eye on. Dubbed "soonicorns" by data business Tracxn, these businesses have been tracking well.

  • Nuix — This Sydney-based tech startup has been going from strength to strength since listing in December 2020. Although it had 2020's biggest debut, it's since fallen below its initial public offering price.
  • Octopus Deploy — This company helps businesses automate software development. In April 2021, it had one of the largest venture capital raises in Australia, with investment from Insight Partners rumoured to push its valuation up close to AU$900 million.
  • Siteminder — An investment from BlackRock (NYSE:BLK) in early 2020 put the valuation of this hotel-booking startup at AU$1.1 billion. COVID-19 has been tough on the business, but as the tourism and hospitality sectors bounce back, Siteminder expects it will too. At time of publication, it was back to sitting 60 percent above pre-pandemic levels and working to reposition as the "global hotel commerce platform."

How to identify potential Australian tech unicorns?

Tech unicorns tend to fall into four major categories: fintech, ecommerce, artificial intelligence/robotics and health. It is difficult to predict when a new one will emerge, but investors can keep an ear to the ground by researching media coverage and Australian Securities and Investments Commission filings.

Unicorns can also create a new niche. While some seek to solve an existing problem, many are the first to market. Looking at businesses with the potential rapid growth, and analysing the rate at which a business brings in new users, can be useful — high growth is often the path to a high valuation.

The future for tech unicorns in Australia

Australia is still lacking the right "ecosystem" for propelling big startups, according to a report from Startup Genome, which tracks the top 40 cities in a global startup ecosystem ranking.

Only two Australian cities even made the list. Sydney ranked the highest at 27th (down four spots from the previous year), with Melbourne trailing at 36th — although its debut on the list speaks to growth potential.

Melbourne produces more technology talent than any other city, according to Genome, with both the University of Melbourne and Monash University ranking among the top three Australian universities for technology and engineering. Time will tell whether a post-pandemic Australia strives for new heights or remains low on the totem pole of tech unicorns.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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The Board of Titan Minerals Limited (ASX: TTM) (Titan or the Company) is pleased to present the following update on surface exploration at its Linderos Project in Southern Ecuador. The focus of these programs has been the two main prospects currently known to exist at Linderos being the Mesta Gold Prospect and the Copper Ridge Prospect located <1km to its south. Some very exciting assay results from surface works are beginning to filter through with the key highlights so far being:

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ISR Uranium Acquisition Settled & Vendor Placement Completed

GTI Resources Ltd (GTI or Company) is pleased to advise that the acquisition of Branka Minerals Pty Ltd and the vendor placement of $600,000, as advised to ASX on 18 August 2021, have now both been completed.

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The mining and resources sector now sets its sights on Australia’s largest mining investment forum, Mines and Money @ IMARC, co-located with IMARC from January 31, 2022, to February 2, 2022, at the Melbourne Showgrounds.

It was gold price, lithium demand and China’s appetite for copper that dominated much of the discussion at Mines and Money Online Connect @ IMARC this week at the virtual event running from the 19th to the 21st October.

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carbon emissions

Following international pressure, the Australian government has promised to reach net zero emissions by 2050.

In a last-minute commitment after months of debate, the Australian government has promised to reach net zero emissions by 2050, expecting to meet the goal largely through technology development.

The move comes following international pressure as Australia had previously refused to join countries in pledging to meet the target ahead of the United Nations' COP26 climate conference in Glasgow.

However, the plan unveiled on Tuesday (October 26), which includes a government investment of AU$20 billion, does not strengthen the target set for 2030, with Prime Minister Scott Morrison saying Australia is on track to beat its Paris Agreement goal, cutting emissions by 30 to 35 percent by that decade.

"We will do this the Australian way," Morrison said ahead of a press conference, announcing investments in new energy technologies like hydrogen and low-cost solar.

An Australian hydrogen industry could be worth more than AU$50 billion in 2050, according to the government. Meanwhile, expanding production and processing of metals like lithium, nickel, copper and uranium could together be worth around AU$85 billion in exports in 2050.

That said, Australia will continue to be heavily dependent on fossil fuels as the plan will not shut down coal or gas production. The country is a major coal player, with the third largest reserves in the world, but its reliance on coal-fired power makes it one of the world's largest carbon emitters per capita.

"We want our heavy industries, like mining, to stay open, remain competitive and adapt, so they remain viable for as long as global demand allows," Morrison said. "We will not support any mandate — domestic or international — to force closure of our resources or agricultural industries."

Australia's desire to achieve net zero emissions by 2050 is a step in the right direction, Prakash Sharma, Wood Mackenzie's Asia Pacific head of markets and transitions, said.

"Our analysis shows that Australia can reach net zero emissions by 2050," he said. The country's major trading partners — China, Japan and South Korea — are already in transition towards that goal.

According to Wood Mackenzie, nearly 83 percent of Australia's power generation will come from solar and wind by 2050, as compared to about 20 percent last year. Natural gas, bio energy, geothermal and small modular reactors will supply the remaining 17 percent in power output. Coal into power is expected to be phased out by 2035.

"Although the pathway requires complete transformation of its traditional energy and export sectors, there are significant opportunities to capitalise on and protect future revenues," Sharma said.

"This will require Australia to become a significant player in low-carbon hydrogen trade as well as being able to offer carbon storage and offset services."

Meanwhile, the Australian Conservation Foundation has welcomed the prime minister's commitment to reach net zero by 2050, but said the mid-century goal is only meaningful with deep cuts to climate pollution this decade.

"Unless the government sets the wheels in motion to cut our emissions in half by 2030, it is making climate change worse and turning its back on the opportunities," said Chief Executive Kelly O'Shanassy.

"Australia can become a global clean energy superpower in the next decade by replacing coal and gas with renewable energy," she added. "We have abundant clean energy, tools and talent, but we cannot delay any longer."

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

map showing Victoria, Australia

The state of Victoria completed an inquiry on cannabis earlier this year. Will it actually change anything for the drug?

In August, the government of Victoria, Australia, released the results of its inquiry into the use of cannabis, taking into account 1,475 written submissions, dozens of expert witnesses and two minority reports.

A few months on, Australia-focused cannabis investors are wondering whether the document's findings will have an impact on cannabis use in the state, or even in the country as a whole.

The short answer? Probably not. But there's more to the story than that.

Why did Victoria conduct a cannabis inquiry?

Back in May 2019, Victoria's Legislative Council Legal and Social Issues Committee agreed to complete an inquiry on cannabis in the state. Although it was initially due for completion in March 2020, the deadline was extended twice, first to March 2021 and then again to August 2021.

Chaired by Reason Party Member of Parliament Fiona Patten, whose party supports legalising cannabis, the committee broadly looked at two streams of cannabis policy reform. One, the legalisation of cannabis for adult personal use, and two, a legalised and regulated cannabis market.

The report puts forth 17 recommendations and 21 findings, but Patten said after its release that the Labor-heavy committee banded together to water down certain recommendations prior to the drafting of the report.

For example, according to reports from the Age, the first recommendation of legalising cannabis for adult personal use in Victoria became "Recommendation 1: That the Victorian Government investigates the impacts of legalising cannabis for adult personal use in Victoria."

Evidence from the inquiry suggests that legalising cannabis would keep young and vulnerable people out of the criminal justice system, with state parliament estimates suggesting Victoria would save AU$725 million over 10 years in police and justice costs.

Key highlights from Victoria's cannabis inquiry

Recommendations from the report broadly fall several categories: investigating a legalised and regulated market; health and safety; and education for minors.

Here's a wrap up of the main items the Victorian government was told to look at:

  • Investigate the impact of legalising cannabis for adult personal use in Victoria.
  • Consider referring an inquiry to Victorian Law Reform Commission to investigate state and Commonwealth laws inhibiting legislation and regulation of the cannabis market.
  • Provide ongoing funding to alcohol and drug sector organisations for drug diversion programs, and further funding to areas in regional and rural Victoria.
  • Implement a road safety campaign about the dangers of driving under the influence of cannabis.
  • Look at alternative testing methods for "drug driving," as current methods mean THC can be detected in a person's system long after being "affected by the drug," especially in the case of medicinal cannabis patients.
  • Advocate to the National Cabinet to remove unnecessary barriers for accessing medicinal cannabis.
  • Seek expert help on school drug education, avoid stigmatising users and promote help-seeking behaviour.

Minority reports included in Victoria's inquiry

Liberal Democrat David Limbrick, who participated in the inquiry, was "extremely disappointed" with the last-minute changes mentioned above and submitted a minority report in favour of legalisation.

It broadly supports the public policy Liberal Democrats have towards cannabis which is: "The Liberal Democrats support the legalisation of use, cultivation, processing, possession, transport and sale of cannabis, with protection of minors and penalties for driving while impaired."

A second minority report is also included — it comes from the Liberals and Nationals, both of which are firmly against legalising cannabis in order to protect public health and children. Signed by three members, it states that legalising cannabis only provides ready access and no deterrent to prevent cannabis use. They further wrote:

"The Liberals and Nationals support drug education programs warning of the harms of illicit substances, we support diversion programs that help get people off drugs, and we support other support services for those addicted to drugs. However, we do not support legalising cannabis."

Victoria Police Assistant Commissioner Glenn Weir told the inquiry in June that the use, cultivation and trafficking of marijuana causes "significant harm," and said he is firmly opposed to legalisation.

Will the inquiry impact cannabis legalisation in Australia?

Any hopes of legalisation were quickly dashed after the report's release by Victorian Premier Dan Andrews, whose focus is on job creation and economic recovery from the coronavirus pandemic.

Speaking to reporters after it came out, he said he has "no intention" of legalising cannabis.

"If you want to know why, then have a look at the sections in the mental health royal commission that talk about dual diagnosis, drug-induced psychosis," he told reporters outside parliament.

"Others have a different view, they're entitled to have a different view, but as the leader of the government I've just made the government's position very clear."

The lack of support by major state parties for the Victorian inquiry may speak to a wider delay nationally for supporting decriminalising and legalising cannabis. Combined with the narrow defeat of the cannabis legalisation referendum in New Zealand, it does not look like legalisation is likely anytime soon.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.