Seeking success: venture capital paves way for leading online job company
SEEK Limited, the world’s largest online job ads company, is a fundamental tool for millions of job seekers, but when the company was formed in 1998 few people realised the internet would one day rival newspaper job classifieds.
Fortunately, key investments from far-sighted angel investors and venture capitalists in the company’s early days helped SEEK grow to become one of Australia’s most successful businesses.
SEEK’s innovative website – seek.com.au – enables jobseekers to search for jobs that meet their specific criteria much more efficiently than traditional means, such as newspapers. For employers and recruiters, SEEK’s website delivers access to a huge audience at a significantly lower cost.
SEEK was formed by Paul Bassat, Andrew Bassat and Matthew Rockman, who foresaw that the internet offered a more efficient way of bringing job seekers and employers together.
“My brother was looking for a house and realised the process would be much more efficient once the marketplace was online, SEEK CEO Andrew Bassat said.
“From there we put a business plan together and realised quickly that the opportunity was even more exciting in employment.
“We originally raised angel funds which were of course critical. In our third round we introduced venture capital, and this was a helpful step in our evolution towards a more professional business.
AMWIN, a fund manager of the Australian Government’s Innovation Investment Fund, provided venture capital support by investing $2.5 million in SEEK. The return to investors, during 2003-05, was $16.48 million.
Stuart Wardman-Browne, Executive Director of CHAMP Ventures, which managed the AMWIN Innovation Fund, said AMWIN invested in SEEK because of it’s compelling solution for both job seekers and employers, as well as its motivated and talented management team.
“SEEK had compelling cost benefits by providing a commonsense solution to a market dominated by the print industry, Stuart said.
“Even back in 1998/99 the market size for job advertisements was $700 million, just in Australia alone. This made it a decent market to go after. Many IT innovations need to go global, but because of the size of the domestic market SEEK didn’t need to go global initially.
“There was also a labour shortage in Australia at the time, and because our main competitors – the newspapers – would have to compete with themselves SEEK had great potential to lead the market. Eventually the newspapers did work out a way to go online too, but it took a while and by then SEEK was able to establish a strong market leadership.
As well, SEEK’s management team was a key driver. “In the 20 years I have been in the industry the SEEK management < team is one of the strongest I’ve worked with, Stuart said. “A key part of our assessment is always making sure the management team is strong.
AMWIN assisted SEEK through capital raising, and strategy and investment advice.
SEEK CEO Andrew Bassat: SEEK’s management team was a key driver in AMWIN’s decision to invest.
“An important aspect of this was helping the management team stay focused on key areas for initial success – building the number of jobs available on SEEK and at the same time the number of people using SEEK to look for jobs, he said.
“It was a circle of growth – the more jobs on SEEK, the more popular the website would become for job seekers.
“There were many directions SEEK could have taken in its early days, but the team realised it was important to pick two or three key strategies and nail them. After achieving itself as market leader, SEEK could then go offshore, or expand into different areas, as it has since done.
After establishing itself in Australia, SEEK expanded into New Zealand, where it soon became that country’s most successful internet employment site.
More recently SEEK acquired a 56.1% interest in China’s online job market, Zhaopin. SEEK has significant international investments in south-east Asia, Brazil and Mexico. More than two billion people are exposed to the company’s operations.
SEEK has also diversified into education, forming SEEK Learning and THINK.
Demonstrating one of the many benefits of venture capital development, SEEK’s Australian business now employs 600
people, and has an annual turnover of around $300 million.
SEEK has 150,000 jobs on its Australian website – four times that of its nearest competitor. Each month SEEK has more than 13 million visits to the site, reaching about 14 per cent of the Australian workforce.
SEEK listed on the Australian Stock Exchange in April 2005 and in September of that year was included in the ASX/S&P 200 Index – an index of the leading 200 shares in Australia.
SEEK’s initial public offering (IPO) was heavily oversubscribed, and provided SEEK with a market capitalisation of approximately $587 million.
The forward thinking culture of the company, which helped establish the business in the early days when the internet was relatively new, continues today.
“Hiring the right people and a disciplined execution of the right strategy are critical success factors, Andrew said.
“We have three growth pillars. Our plans for the future are to grow our Australian business while trying to build great businesses in our international markets and education.
Regional Innovation Funds
The IIF Program is a venture capital program that supports new innovation funds and fund managers with expertise in early-stage venture capital investing.
It co-invests with private sector investors in venture capital funds to assist early-stage companies to commercialise the outcomes of Australia’s strong research capability.