Expert: Paul Wilson – Finding Australia’s best tech businesses | Bailador

HOSTS Alec Renehan & Bryce Leske|30 September, 2021

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

Paul is the co-founder and partner at Bailador Technology Investments (ASX: BTI). Bailador specialises in investing expansion capital in fast-growing Australian businesses. In today’s conversation, we’re going to look at the Bailador Portfolio, take a closer look at two specific case studies and then pick his brain, for his thoughts on Australia’s vibrant and successful start up scene.  

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Bryce: [00:00:16] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status, our aim is to break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my Equity Buddy Ren. How are you going? 

Alec: [00:00:30] I'm very good Bryce. I'm very excited for this episode. We've got one of our favourite expert investors returning to the podcast, I think for a third time. That's big. And we we're going to cover a lot in this episode. But yeah, I'm excited to get stuck in. 

Bryce: [00:00:45] It's an absolute pleasure to welcome good friend of the show, Paul Wilson. Paul, welcome to Equity Mates. 

Paul Wilson: [00:00:50] Hi Bryce. Hi, Ren. It's it's great to be back chatting to you guys, a lot has been happening since the last time. 

Bryce: [00:00:56] Yeah. And we always find we walk away from these conversations with you feeling very inspired about investing. So looking forward to understanding what's been happening at the border over the last few months and a couple of the big deals that you've been doing. But for those who are unaware of Paul, Paul is the co-founder and partner at Bailador Technology Investments. The ticker is BTI. They specialise in investing capital in fast growing Australian businesses. In today's conversation, we're going to look at the Bailador portfolio, take a closer look at two specific case studies, and then pick Paul's brains on the vibrant and successful Start-Up scene here in Australia. So let's crack in. 

Alec: [00:01:36] Yeah. So, Paul, we want to you know, we want to cover a lot of ground in this conversation. But I think we have to start with the past 18 months because it's been a fascinating 18 months watching Bailador from the outside. Your share price was cut in half in the early days of the pandemic and has since jumped up one hundred and sixty five per cent, meaning it's blowing past its pre Covid levels and it's up thirty five per cent since the start of 2020. So if we start pretty general, what have you learnt about markets and about Bailadors portfolio companies in the past 18 months? 

Paul Wilson: [00:02:10] Well, I guess it was mainly a reinforcement for us that you have to expect that there's going to be turbulent conditions along the way and you have to be able to withstand that without relying on the market always being there. I think I might have said to you guys before, you shouldn't invest based on an expectation of execution. It's why we focus on the fundamentals of the business much more than the market ups and downs. So every time we invest, we assume that the business is going to have some ebbs and flows and that we're going to be involved for a number of years and be involved through some of those ebbs and flows. So for us, the foundations are always compelling. Product market fit, established customer base with predictable revenue, broad customer base of possible solid business model with high margins and perhaps most importantly, a great management team who can adapt. So that's why we really carefully select our portfolio. We look at hundreds of opportunities for each investment we make. We were concerned, as just about everyone was with the unknown as we went into Lockdown's, but we weren't super surprised that our portfolio companies have all performed quite well, they were set up for success. They had plenty of cash runway and that important factor that I mentioned with great management teams who could adapt. So it's so of more of a reinforcement for us. 

Bryce: [00:03:32] Over the last 18 months, you mentioned there Paul some of the key characteristics that you look for in investments, but have you had to change your approach to, I guess, how often you're investing, how many deals you're willing to do over the over the last 18 months? Has your approach changed at all? 

Paul Wilson: [00:03:48] No, I don't think so. As I said, I think it was more of a reinforcement of our investment approach rather than a change and and just a realisation that you can take advantage of these situations as well. Some some of the companies that we're involved with have been able to expand their markets, some some of the thrive. We've been able to get some realisations and then make a new investment as well. 

Alec: [00:04:13] So, Paul, you know, we've touched on the action that the share price has seen, but behind the scenes, inside the company, there's also been a lot of action as well. You've sold positions in three investment, Docscorp, VioStream and Lendee, one of your portfolio companies, Stackler merged with a Norwegian business. And in case you weren't busy enough, you also raised twenty four million dollars for Bailador as well. Can you just talk about the changes and I guess how you're positioning Bailador for the next stage of growth?

Paul Wilson: [00:04:47] Absolutely. So those transactions that you mentioned were great examples of our business model approach. We achieve solid returns. So in the case of Docscorp, it was 30 per cent IRR, Lendees twenty one percent IRR, happy management teams. Those cash realisations proved out the model to the market. They enabled us to pay at one point four cents per share, fully franked dividend. So that was our second fully franked dividend. It's also allowed us to focus on some some new investments. So I think it's it's a good example of the the life cycle of our fund and our business model will hold these companies for a number of years, will realise them for a multiple of what we paid, and then we'll recycle that cash while maintaining a portfolio somewhere between eight and 12 companies. That's about where we feel we can do our best work and add some value. 

Bryce: [00:05:39] So just on the model that you speak of, there Paul. And for those that may be listening to you for the very first time in our previous conversations, you've stressed that Bailador's philosophy of carrying investments at conservative valuations is so that you can then surprise investors with the upside when you exit. So able to talk to that a little. And then also, I guess the question is, has that actually played out in some of the transactions that you've just mentioned? 

Paul Wilson: [00:06:05] Yes, it certainly did. So all three of those cash realisations were at values above our carrying value and quite substantially so. So Docs Corp., we sold for a valuation fifty three per cent higher than we'd been carrying it at. Lendee was twenty one per cent higher than we'd been carrying it at. So so that makes eight cash realisations now and 20 for third party transactions in the portfolio. And I'm really proud to be able to say that all of them have been at or above our carrying value. David Cook and I set out from the beginning to be conservative in what we say to the market and in setting expectations. And we think it's really important to surprise on the upside. We think it's the right thing to do and we intend to keep doing it. 

Bryce: [00:06:52] Yeah, I think it's a smart game to play because we all know what happens when you don't surprise the market and when it comes to beating expectations. So, yeah, I think it's a really interesting philosophy and approach to to the portfolio. 

Alec: [00:07:04] Yeah, yeah. It is fascinating. Paul, if you weren't busy enough with exiting positions, you've also been looking at the market for new positions and one investment that you've made is in instant's groups. So let's let's start at the beginning, because before we were preparing for this interview, I actually hadn't heard of Instant Script. So tell us about the company. What does it do? And I guess what is Bailador's investment thesis? 

Paul Wilson: [00:07:30] Sure, I love talking about instant scripts, it's it's a really exciting business. First of all, it starts by solving a problem that's been experienced by a lot of consumers. And that is if they want to get a script, often it's a repeat script and they know exactly what they need, but they still have to go through the rigmarole of making an appointment with the GP, going in, parking the car or catching public transport, then sitting in the waiting room until the GPS ready to see them, and then having a chat about perhaps things that aren't relevant to what you really want, just to get a script to go and get filled when you knew that's what you needed all along. And so that's the problem that's being solved. The way it's being solved is consumers can go onto the app or through the web interface. And it's a series of questions that are appropriate for a particular prescription. And we cover the full schedule for drugs that are non addictive. Once those questions are answered, that goes to a real time live GP who takes off. Yes, you can have that script and the consumer can do that whole exercise within minutes and and have a script that they can get filled at any chemist. So you can do it while while you're at the pharmacy, you can do it from home and pick it up later. And there is a service, you can have it delivered to your home. And so it's really such a great experience compared to the rigmarole of how it was historically done. And it's a real light bulb moment for lots of consumers. The first time they use it, I know it was for me and I know it was for my wife. She said, this is great, I'm going to do this from now on. And and there's been over one hundred thousand Australians who've who had that same experience. And so instant scripts is thriving. It's it's growing tremendously well. And one of the other things we like is that it benefits the whole medical community because it just takes out a lot of the time that GP's would otherwise spend on these these routine repeat type situations. And they can then spend that time solving more complex medical issues. 

Bryce: [00:09:31] Yeah, I can certainly see a use case for this. It's often frustrating having to go to fill out that process of getting a script when you just really need to go and get a pretty simple box of tablets from the pharmacy or whatever it may be. It's pretty annoying process. I guess the question is like, what's the moat for this company? Where does it sit in the competitive landscape? Why? Yeah, why can't sort of chemists just do this or, you know, I imagine that and this is probably going to be a naive question, but the tech behind it is pretty easy to replicate. So, yeah. Can you talk us through that? 

Paul Wilson: [00:10:04] Sure. Happy to. So first of all, our thesis is that there will be more than one player involved in this segment. We don't think it's a winner take all type situation. We think. For instance, groups management team really understands the community and the market, it's founded by Dr. Ilesha Freilich, a medical doctor who also had experience in investment banking, spotted the pain point, knew the opportunity for a solution and has executed super well. It's something that has the support of pharmacy. So I don't think pharmacies are typically looking to go out and employ their own coders to make a product. But if someone comes up with something that makes sense for them, they'll get on board. And so more than 40 per cent of the pharmacies in Australia have already registered on the instant scripts platform and are very happy to support it. And so we think the opportunity is is big. Firstly, in that core area that I've described, that is similar experiences in pathology, the similar experiences in cosmetic clinics. So people looking for Botox and the like that still needs a doctor's prescription, even though we all know it's the nurses who are doing the bulk of the work. And so there's lots of other applications in the Australian market as well as potentially overseas. And we're assessing those at the moment. 

Alec: [00:11:27] Yeah, it sounds it sounds fascinating. And it is it is solving a real problem and a real inconvenience, I guess, for for consumers. And I think in the last 18 months with the pandemic, we've seen telehealth and telehealth related businesses become a become a real growth area of the market. But a lot of that has been out of necessity because of lockdown's and people being uncertain about leaving the house. I guess when you think about this consumer shift post pandemic, what gives you confidence that, you know, people aren't just going to want to return and go back to doctors and are going to be willing to, I guess, continue to, you know, get their medical needs serviced online. 

Paul Wilson: [00:12:10] Great question. We're asking ourselves this question about almost every business we're looking at at the moment. In the case of instant scripts, it was a business that was created and was already thriving before Covid, before any lockdown's. And and certainly there's been some tailwinds of people being more willing to try and take on remised services. But what we've seen is when in the Australian market, when the populations have come out of lock down in various jurisdictions, the demand has just continued to soldier on. So so we think that this business is solving an issue that is desperately wanted and needed by a really broad cross-section of the community. And in Covid is probably been the thing that has accelerated them trying it out. But now they've tried it out. We're pretty confident there's going to be a lot of repeat business there. 

Bryce: [00:13:08] So, Paul, you mentioned the founder, Dr Asha. 

Paul Wilson: [00:13:11] Now Freilich Frelich, he'll accept a few different. 

Bryce: [00:13:16] Nice, nice. And, you know, we often hear about the importance of founders and and we imagine that, you know, this is especially true in start up and growth stage companies, which we know and you've you've often spoken about it. What was your process for assessing the founders of Instant Script and, you know, the executives of the team? Can you talk us through that? 

Paul Wilson: [00:13:37] Sure. I think you've touched on a good point that it is more than just the founder. So we spent time talking with each of the members of the senior team, for instance, groups. We interacted with Asha and his right hand man on a number of occasions, both understanding the business, then spent quite a bit of time stepping through the future business plan and the opportunities for expansion both domestically and internationally. And this might sound a little folksy, but also we had a nice long dinner together and then we had a breakfast together and just got to know each other because you're going to be going to be in business in all likelihood over a number of years. And as we touched on at the beginning, things don't always go smoothly every day. And the important thing is how you deal with those speed bumps and challenges along the way. So you need to have confidence that you're dealing with someone that you can get through those hard times together. And and in Dr Freilish, we think we've found a natural entrepreneur who knows his market very well. He's very passionate. He inspires his team, surrounding himself with ideas. And so we're really pleased to be involved. We invested five and a half million dollars just a few months ago, and we've seen terrific progress in the business since then. And we think this is a company that definitely is an IPO candidate in due course because we think it's something the public market investors will understand instinctively. But also we we're already getting out inbound interest from. Employers in industry. 

Alec: [00:15:16] I was going to say it feels like a chemist warehouse. One of those big pharmacy chains would be a natural like acquirer of this business. 

Paul Wilson: [00:15:25] Yeah, I think you're right. I think there's a number of without going into too much detail, but I think there's a number of types of businesses operating in health that that really are starting to see how well this is going. And I'd like to make sure that they are part of the game 

Bryce: [00:15:42] just on the the founder pace. I imagine when you make an investment, you're not the first investor that's ever come on board. So when you're assessing founders and some executives, is there like a threshold that you look at in terms of how much skin in the game or equity they have in the business for you to make an investment? 

Paul Wilson: [00:16:01] There's no hard and fast rule. We always look at the individual, how much equity they hold, how important it is to them, who else holds the equity, what's been their track record in business previously, if they've had outside investors or if they've had business partners? And then it's all a judgement call. In the case of he still holds a majority interest personally in instanced groups, Perennial has come on an investor at about the same time as Piloto, and we're really pretty pleased to be partnering with those guys. Also, I went back and spoke with people who had worked with Ash over his career and I was pleased that I already knew some of those people is. It's one of the reasons David and I focus on business is born in Australia and New Zealand. Almost every time we can find a number of people who've already worked with each bounders in these teams and can give us their view. And it's it's just another data point that gives us that confidence.

Alec: [00:16:59] Yeah, it is. It's a fascinating company. And I think that's why we love talking to you. Paul, you are scouring Australia's Start-Up scene and finding some really interesting businesses. We do. We do want to talk about the Start-Up scene a little bit later, but we want to talk about some of the other big companies in your portfolio. So, Paul, before the outbreak, I mentioned, we want to talk about two of the other big businesses in your portfolio that that seem to be going from strength to strength site minder and insta cluster and site minder has sort of captured headlines recently. They recently raised one hundred million dollars. And there were reports in the AFR last week that they're preparing a nondenial road show suggesting that it may be preparing for an IPO. Now, I know you won't be able to tell us if they're preparing for an IPO or not, but I guess, you know, they're capturing headlines. Can you give us a bit of an update on site minder and for people that maybe haven't heard of it before, a quick 101 on what they do? 

Paul Wilson: [00:18:03] Sure. So siteminder is a software as a service business that serves the hotel industry. So its customers are hotels and someone has about thirty five thousand hotels as customers who pay to access the site line to platform to then helps those hotels distribute their room inventory through online channels. So that's independent online travel agents like booking.com and Expedia. This also through channels like Sea Trip, TripAdvisor, et cetera. So as far as the world leader in that space by some margin and has been performing exceptionally well over a long period of time, it's previously been reported in the press that it went through revenue of one hundred million dollars, has raised money at the last round at a valuation of over a billion dollars. So that's a little snapshot of sideband in terms of how the business has gone. This is one where we were anxious at the beginning of Lockdown's caused by Covid, because when you Hotelbeds, when your customer bases, hotels and people aren't travelling, there's a natural inclination to think, gee, you know what's going to happen. But I'm really pleased to say that Sidewinder has been one of the very best performing businesses worldwide operating in the travel sector. We think it really shows the defensive qualities of the business and its importance in the ecosystem. And if you if you break it down, hotel on average is tiny, sidelined somewhere in two hundred dollars and bothered to access the platform. That 200 dollars is not going to be the difference between a hotel continuing to survive or not survive. But if they turn off the engine and the tap of being able to generate room bookings, then that might be the difference. And so Siteminder plays a really important role there. So we've been very happy with how it's performed and very happy with the uptaking in trade now that various parts of the world are coming out of lockdown. So we took the opportunity during lock down to to double down on product investment and to expand the number of hotels that we're taking up transaction based products from sideband. So someone has introduced a payments product. It's also introduced another demand management product, which I won't go into in this forum. But basically, rather than being a fixed Dollars per month, it depends on the level of volume assortment is generating. And so what that means is that money is better placed than ever to benefit as travel does pick up. And so we're super pleased with how the business and how the management team has performed. 

Bryce: [00:20:47] And that's interesting. Is is that what you just spoke about? Is that what they raised one hundred million for, or is the hundred million going to go towards further expansion? I have to just talk through that. 

Paul Wilson: [00:20:57] Yeah, the company hasn't publicly talked about what they're using one hundred million for, but but I have actually said it's a combination of primary and secondary, which means some of that was fresh capital, which will be used to to drive growth. So a big part of it's just continuing to invest in product. But some of it was secondary. So bringing on new high quality investors for the long term and allowing some of the earlier investors to take some liquidity. And so Fidelity has joined the register. And you've had top ups from from leading names like BlackRock and Ellerston and Aus Super and Pendle. And and that's really all about setting the company up for long term and and life as a public company. 

Bryce: [00:21:42] So as we said, there's sort of reports been circulating that they might be preparing for an IPO. I guess the more broader question, how do you know when it's the right time for a company to go through an IPO, particularly like portfolio companies? What are you looking for and sort of what role do you play in? 

Paul Wilson: [00:21:59] Sure, it's a complex question. It's different for every company. One of the things that I always say to management teams when they start thinking about going public is that it's not the finish line. It's the start line. That's everything. Up to that point in the eyes of the public is being rehearsal. And an IPO is when you step on stage and the spotlight goes on you. So you have to be very. Confident in your ability to repeatedly perform, so you have to have confidence that your products right. That your revenues predictable, as we touched on earlier in this chat, you need to be saying things to the market that you know you're going to deliver or beat. You can't be making predictions and then fall short. And so that's really a threshold issue in the case of Scotland. And why now? Well, someone has performed really well through Lockdown's, but that's not true of every company in the travel sector. And it's not true for some of the smaller competitors around the world. In Sidewinders Space, Trotman is a very global company. About 80 per cent of its revenue comes from outside of Australia and and it sells into well over 100 countries. And so we think the time is really right for cyclone to press home its its advantage to double down on growth whilst the the the competitive set is perhaps a little bit weaker. And we've also identified that there are a lot of investors looking for a way to play the reopening trade so they can see that travel is going to be picking up again. And so they're interested in how they get some exposure to that. And so a company that's high quality excitement and it's demonstrated its defensive characteristics. Well, now it's time to show that it can continue to grow with those really nice rates as well. And and the other factor, as always, is management. And in the case of Scotland, it's an AA plus management team led by Sankt on Orion, who was previously CFO and CEO at Xero. And so he knows what it takes to be growing a software as a service business on a global basis from this part of the world. And he's doing a great job. 

Alec: [00:24:05] He's got some pretty good pedigree to have some CEO positions at Xero before leading your own company. So, Paul, turning to your, I guess, Bailador's thoughts on siteminder. You know, if it goes public, we're not you know, we're not saying that it will, but I imagine at some point in the future it will go public. How do you think about what Bailador will do with their shares? What do you think it's a sell and find the next expansion stage company to or will it be, you know, keep it in the portfolio and keep helping it grow? 

Paul Wilson: [00:24:37] Well, the first thing is we're big supporters of siteminder. As you can probably tell from the way I talk about the business, I will send out most of our most of our position. Having said that, Simon has an outsized proportion of our portfolio. So there's a good chance that if all other things being equal, we might realise a small portion of our holding. And that just enables us to continue on our model of investing that cash in new opportunities, probably paying a frank dividend while still maintaining a really material exposure. 

Alec: [00:25:11] So, Paul, we mentioned that there were two big companies that seem to be going from strength to strength. We've touched on site minder. The other one is instaclustr. So if we start at the top again, for people that aren't familiar with Instaclustr, what does it do and how's it performing for this Covid period? 

Paul Wilson: [00:25:29] Sure. So instead, what it is is quite a technical business. They manage open source databases for corporates. That easiest way to describe this is almost every corporate realises the importance of data in that business and their customer interactions these days. And most corporates will use multiple types of database to manage their data. But they often don't have the resources to become a world leader in all of those types of databases. That's where a company like InstaClustr comes in. Insta Clustr is a world leader in managing a range of particular open source databases that allow companies like Atlassian and Sonos to manipulate massive amounts of data in a very efficient and effective way. And so instict, once again, very global. They've got about 90 per cent of their revenue coming from outside of Australia. It's one of these companies where the growth has been really natural and organic and coming from word of mouth from from customers who are having a great experience and recruiting other customers onto the platform. And so Insta Clustr just absolutely sailed through the whole Covid and lockdown situation. And it's producing really strong numbers. And so it's another company that has been speculated as an IPO and it's certainly capable of IP. But there's multiple pathways for companies like this. Instaclustrs nearest competitor out of Europe raised about 80 million dollars at a valuation that we think we're not sure. We think it was about twenty five times revenue and we hold instaclustr at more like six times revenue. So we we think that there's a lot of upside in our valuation. But in terms of the management and the right way to progress that business, one option is to raise some private capital. All and really double down on super fast growth rates. Another option is to list on the ASX and there's a certain expectation around profitability levels, generally speaking, on the ASX. And so you still might get really healthy growth rates, sort of 40 percent plus, but but a more profitable level. And so we're working through with the management just on what's the right option for that business. But it's just a super high quality problem to have for another really high quality management team. 

Bryce: [00:27:53] It's fascinating when you're thinking about potential IPOs for some of your portfolio companies. And if you know a lot of their business is done offshore, do you ever consider listing potentially in the States? 

Paul Wilson: [00:28:05] Definitely. You know, there's a great example of that. It has probably a bigger presence in the US than it has in Australia. And and there's quite a lot of interest from various US parties for foresight, moderate, slightly different. Mine is actually now quite well known in the Australian institutional investment community, perhaps not retail yet because it's not a consumer facing brand, but certainly mentioning the names that I did before, like Fidelity and BlackRock analyst and so on. It already has a following. And also if it does IPO in Australia, it will immediately be one of the top handful of tech companies on the ASX and we'll get a lot of attention. Whereas if it was to list on the New York Stock Exchange or Nasdaq, it would frankly be one of hundreds that are of about that size. And so it's a lot harder to get share of voice. And so there's always factors like that to think about when you planning out the pathway. 

Alec: [00:29:05] Yeah, well, it's a very high class problem to have polls that 

Paul Wilson: [00:29:10] really we couldn't be happier having those two is to be called. 

Bryce: [00:29:13] Yeah. So severely undervalued. So yeah. 

Alec: [00:29:18] So I guess speaking of, you know, the the fact that if sidelined are listed on the ASX, it would be one of a handful of sort of big tech names. We do. We do want to turn, I guess, to the smaller tech names and the private tech names and the start up ecosystem more generally. You know, you've sort of made made your name at Bailador by finding some of these gems in the Australian Start-Up ecosystem. So we'd love to get your view on, you know, the ecosystems health and how you think it's going more generally. So I guess if we start, General, how do you assess the current state of Australia's Startup scene? 

Paul Wilson: [00:29:57] It's very clearly thriving and from a number of different angles from the emerging success stories from the companies that have already grown into be worth billions of dollars to just the sheer calibre of individuals who are getting involved in start-ups or early stage businesses. And, you know, in a funny sense, I think Covid and lockdown has perhaps accelerated some people's decisions to to to take some leaps that they otherwise had perhaps thought about, never pulled the trigger on. And so so we're definitely seeing some of that, I think these days. This is a very broad awareness in the community that the tech is changing all sorts of behaviours and doing so quite quickly. That's creating investment opportunities. So there's more money flowing into into the sector at all sorts of stages that's manifesting at the moment in frankly pretty high valuations. And that's both in public companies in some cases, but certainly in our expansion stage, a lot of the companies that we see that are generating, say, five to 20 billion dollars of revenue, they they look at a public company and the values that they're trading at and say that the company revenue is one hundred million dollars. And they said, well, we want to be valued like that. So it comes with challenges as well. We have to be quite disciplined. We're happy to pay fair valuations. And our priority is to get the highest quality companies in the highest quality management teams as opposed to necessarily bargains. But that's kind of the dynamic as we're seeing it right now. [

Bryce: [00:31:37] So, Paul, one sector that Australia does particularly well at is buy now, pay later. And it feels like every second day there's a new buy now pay later product on the market. So I think the first part of this question is, A, are you interested in buying our latest space? And then, B, if not, what are some other sectors that are perhaps really exciting you at the moment? 

Paul Wilson: [00:31:58] I say up highlight is probably as good an example as any of where valuations are a little bit tough to to justify the tough. And and, you know, I go right back to one of the first points. We don't believe you should invest and pay up for the assumption of perfect execution and. And I think some of the valuations in that sector are kind of assuming that some of these companies go on and conquer the world, and I think clearly not all of them are going to. So I wouldn't necessarily say we're seeing hot prospects for us in that sector, but it's not to say there aren't other opportunities in fintech. We think that Australia has a track record of producing innovation more broadly in fintech. We think that is a really interesting situation where a lot of the elements of fintech, the Australian market itself is very large. And so the companies can really prove that their model and get some critical mass domestically before being forced to think more, more globally. And so we're interested in a number of opportunities there. Similarly, in health, we've we've made our recent investment in instanced groups that we spoke about, but we see a number of emerging opportunities in health care. And it's a sector that perhaps hasn't fully embraced technology historically, but I think he's rapidly starting to do so now. 

Alec: [00:33:25] So, Paul, you've mentioned valuations. There are a couple of times, I'm sure, in our audience there's a number of people that are either running start-ups or aspire to one day run a Start-Up. How do you think about valuing a Start-Up? Is there like a methodology that you use when so much of the future is uncertain for so many of these businesses? 

Paul Wilson: [00:33:45] That might be a whole separate podcast. 

Alec: [00:33:48] Yeah, big question. 

Paul Wilson: [00:33:51] It's a pretty it's a pretty complex area to talk about because you don't necessarily have a broad suite of reliable, repeatable data. It's one of the reasons that we fail to focus on businesses that have at least five million dollars of revenue. So you've got a little bit more chance to use fundamental valuation techniques. But it's probably a bigger topic, to be honest. Bryce and Ren, 

Bryce: [00:34:16] let's let's do another full episode at some point.

Alec: [00:34:20] crack out the whiteboard and we'll go to town. 

Bryce: [00:34:24] Well, then, following on from Ren's question and to close out today's interview, Paul, we do very much appreciate you coming on as always. For those that are listening that do one day, I hope to start their own business and pitch to you as an investor or to other investors here in Australia. What would be your advice to them? 

Paul Wilson: [00:34:41] My advice to someone starting out, I'd say focus on solving a genuine problem with a great product. Start with that. Make your customers happy. Surround yourself with great people as you grow on the journey. Think big, but put one foot in front of the other from the beginning and just be honest. And and that way I think you'll enjoy the journey and give yourself a good chance of success. 

Alec: [00:35:07] Well well, Paul, if anyone from the Equity Mates community ever does start a business that makes it into the bilateral portfolio, we'll expect a call and the ability to participate in the Bryce on the street. 

Bryce: [00:35:21] Well, Paul, as always, it's been an absolute pleasure chatting with you. As I said at the start, we often leave these conversations feeling very inspired about investing in the Start-Up scene here in Australia. And I think that doesn't change this time around for those listening along at home. Bailador Technology Investments is listed on the ASX. It is BTI, the ticker. So if you want to get involved in the Bailardor journey and back Paul and the team, that's the way to do it. So always appreciate you coming on, Paul. And it's been fun. 

Paul Wilson: [00:35:52] Thanks, guys. It's been a pleasure. Thanks, Paul.

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