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Buddy ready to 'pour gas on the fire' with IPO


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Buddy CEO David McLauchlan's US-based technology company has backing from Microsoft and AF Square - a fund set up by Lady Gaga and her former manager. Nic Walker
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by Max Mason
US-based technology company Buddy, led by Adelaide-born Dave McLauchlan, will list on the Australian Securities Exchange through a backdoor takeover of struggling resources player Potash Minerals.

The deal, announced on Monday, will see the data company look to raise $7.5 million through an initial public offering through the sale of 150 million shares, or just under 20 per cent of the business, as first revealed in The Australian Financial Review's Street Talk column.

Buddy is a data management platform for connected devices – everything from cars, refrigerators, washing machines and ovens – that have not traditionally been connected to the internet.

The Buddy platform manages the data generated from these devices, secures it and makes its accessible – essentially turning raw data into something more legible.


About 65 per cent of the company, 500 million shares, would be given to Buddy's existing shareholders and option holders and 121.4 million shares, close to 15 per cent, to Potash Minerals shareholders.

Buddy was aiming to list on the ASX in early November.

BIG NAME BACKERS
So far, $US3.7 million ($5 million) has been invested in Buddy, with investments from Microsoft and AF Square, a fund set up by US singer Lady Gaga and her former manager Troy Carter.



Mr McLauchlan initially left Australia to join Microsoft in Seattle, where he worked for 11 years before leaving to found Buddy in 2011. He remained an adviser to the Bill & Melinda Gates Foundation.

"After 11 years, I felt like I had learned a tonne at Microsoft and I was keen to deploy that learning elsewhere. I also had a really incredible network," Mr McLauchlan told The Australian Financial Review.

"But, also I had a really good dialogue with Microsoft, I told them what I was planning to do and they were really supportive of this, obviously so much so that they put money in."

Buddy was the first investment made by Microsoft Ventures and the two businesses retain a close relationship.


"We're thrilled to see Buddy take this next step towards a leadership position on the global IoT (internet of things) stage" Microsoft Ventures general manager Scott Coleman said.

Buddy was still in its investment phase and was aiming for profit in the medium to long term. But Mr McLauchlan said the business had several prominent Australian clients, large US organisations including a state government, and a large European consumer electronics firm.

"The beauty of our situation is that the product is live, up and running, operational, and driving revenue. We are not here to go and invest in a new widget, we're here to pour gas on the fire," he said.

"We will enhance and increase our development resources, including putting a development team here in Australia. We will grow our sales force and we will scale the product itself to accommodate much greater volumes of data than it does today."


AUSSIE PRESENCE
Mr McLauchlan also said Buddy was setting up an Australian office.

"I would very much like to take advantage of the technology talent that is here. There's incredible talent here on the engineering side," he said.

"People always talk about the brain drain. But, to the extent that I can bring some of those opportunities back to Australia and bridge US west coast innovation to the talent that's here in Australia."

"With the physical location of data processing becoming a key market differentiator, we look forward to seeing Buddy leverage their global footprint to substantial international growth" said Buddy investor, Acequia Capital general partner, and former Microsoft senior vice-president of partnerships and strategy, Hank Vigil.

Buddy's board and advisers would include former AOL chief technology officer and former technical adviser to Bill Gates Alexander Gounares, and Amazon director of product, Alexa and Echo and former Microsoft general manager of Windows phone, Charles Kindel.




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