There’s a saying that “money is made when you buy, not when you sell”, but looking at the past years – particularly in unlisted investments – most would agree that getting the exit right has become key.

Since 2021, many investors have faced challenges in exiting their investments, with successful exit-sales now at a multi-year low. For the broader economy this means that capital is not recycled into new ventures, stifling economic growth. For investors it simply means that hoped-for returns are not coming.

Exit prospects have therefore moved to the centre of attention, with Australian big data/ AI company Zetaris believing it has all elements in place for a potential billion dollar exit within the next two years.

Founder Vinay Samuel is excited – “The AI revolution has suddenly made us highly relevant to some of the biggest technology companies in the world. Now we are working to create a situation where they are competing to buy us out.”

Zetaris – solving a major AI challenge for big companies

Four key factors to a successful exit are: a strong business, attractive takeover dynamics, a management team that is motivated and experienced in exits and a capital structure to support an exit.

A business that thinks it hosts the necessary elements for a near term exit is Australian big data platform, Zetaris.

The company is solving one of the biggest challenges for any global CEO who wants to deploy Artificial Intelligence (AI).

As McKinsey forecasts that AI has the potential to double GDP growth, every CEO is under enormous pressure to harness the productivity gains promised by AI. The reason is that if they cannot deliver this, their business is under threat by a competitor who can. Subsequently 99% of 1,200 CEOs surveyed by Ernst & Young in October 2023 are either making, or planning to make significant investments in generative AI, with 69% reallocating capital from other projects.

The problem that these CEOs face is that their enterprise data is not AI-ready due to a ‘big data problem’ within companies that has existed since long before the current AI revolution.

Within large enterprises, data is not stored in one place, but across numerous disparate databases sitting in multiple subsidiaries, brands, divisions, servers, and data warehouses. This ‘silo problem’ makes it difficult for companies to access all their data, which can lead to sometimes disastrous decision making.

One example Zetaris uses is a large bank which was cutting non-viable clients based on the information in a subset of their data. Upon seeing further data from another part of the organisation, the bank later found out that one of the clients deemed too small actually owned a private aeroplane and was the heir to a well known billionaire family.

With data now moving to the forefront of the AI revolution, this big data challenge has become a lot more relevant than it already was. If AI tools cannot access all the data, they cannot deliver the right results.

Zetaris consider themselves as extremely lucky, having spent over a decade building a solution to the big data challenge, which now happens to be an essential tool for CEOs to implement AI.

The Zetaris solution acts as a “co-pilot” for an AI-bot, helping the bot access the data at its source – as if there were no silos. This means that companies do not have to go through time and cost-intensive projects to move their data around in order to get it ready for AI.Over the past year, Zetaris has been positioning itself to become a critical part of the AI tech stack – partnering with world leading providers of enterprise AI infrastructure including Nvidia, Dell, IBM and more.

Zetaris’ value proposition (Source: Zetaris investor presentation)

We have a webcast coming up this week with Zetaris, a big data platform company in the AI space that is solving a major challenge facing enterprises. Click here to book your spot.

Positioning for a trade sale by becoming a weapon in the AI arms race

But Zetaris is not just working with these large tech companies to grow its revenues. They think these partners are also the most likely candidates to buy Zetaris out.

This is because Zetaris’ technology could become an essential ‘weapon’ for Dell, Hitachi and others in the AI arms race. The key to success (or survival in some cases) for these tech providers could be by offering a ‘built-in’ solution for their products that solves the big data challenges faced by CEOs right now – and this is what Zetaris is looking to become.

Zetaris proved this with Dell and their client, a large Australian hospital network whose emergency department only had limited information about presenting patients, creating a significant triage bottleneck wherein anyone with chest pain would be sent to a cardiologist, regardless of their medical history.

With Zetaris added, Dell was able to offer in-server infrastructure that allowed its client to access all patient data across internal and external data sources, enabling AI tools to utilise all patient information in triage – potentially reducing capacity issues and inefficiencies.

Zetaris’ solution was key in Dell winning the contract with the hospital network and could serve as a benchmark for future contract negotiations/wins for Dell and other server providers moving forward.

This ‘weapon factor’ – particularly the exclusivity angle – forms a significant element of the investment thesis of Zetaris’ largest investor, Sydney VC fund Exto Partners.

Speaking on a potential acquisition, Exto Managing Director Will Deane stated: “In a competitive acquisition process, the way the Nvidias and Hitachis of this world consider a company like Zetaris is by asking how much could it be worth in our hands? With what’s happening in AI right now, these multi-billion dollar enterprises don’t look at the revenue or profitability of an acquisition today. They consider how much it would add to their future revenue or technology stack if they owned it – and if their competitors don’t!”

Both Zetaris and their main investor Exto believe that one of these partners could acquire them at a billion dollar plus valuation. This could become particularly interesting if several of these players could be drawn into a bidding war over exclusively owning the technology.

Consequently, the strategy that Zetaris is pursuing now is to continue to partner with the biggest players in the AI space, thereby becoming an essential part of the AI tech stack.

Join us for a Live Investor Briefing where Vinay will highlight why he believes Zetaris has the potential to become a critical part of the AI tech stack and become an attractive takeover candidate. Click here to book your spot.

A team experienced in seven figure exits

The team behind Zetaris and their largest investor Exto Partners are veterans of the exit game.

Founder and CEO Vinay has 20+ years of experience in IT, business development, operations and “Tech start-ups”.

Prior to founding Zetaris, Vinay held key leadership positions in data platform companies like Teradata, Netezza, Greenplum and Vertica – several of which experienced a multi-billion dollar exit through spin off or acquisition by a leading US tech firm.

Founder Vinay Samuel’s prior exits (Source:Zetaris)

Exto is Australia’s first secondary venture capital fund. The Exto idea started long before venture capital funds became the big deal they are today.

Over the past 20 years they have invested in a number of Aussie tech companies including many successful exits such as NextEd (ASX:NXD), Airtasker, BuildingIQ, Optalert, Tuned Global, and WhiteSky Labs. On the back of this success they have grown to be a sought-after investor for any proven Aussie tech business which is ready to scale.

Will Deane sits on Zetaris’ board and brings extensive experience in assisting founders and investors to exit from private companies through trade sales, management buy-outs and public offerings.

Join Zetaris Founder and CEO Vinay Samuel for a live investor briefing where he will discuss his views on their pathway towards a potential billion dollar exit. Click here to book your spot.

A simple capital structure with exit-focused investors

To ensure a successful exit, a simple capital structure – where a few key investors control the majority of the capital – can be preferable as long as these investors are exit focused.

Having a streamlined group of large investors can reduce decision-making complexity and potential conflicts among multiple stakeholders, especially crucial for fast-moving tech businesses in the world of AI.

Together, the company’s major investors – Reach Markets, Exto Partners and the founders – control a large majority of the firm’s voting power, making it easier for allowing Zetaris to embrace new strategic investors or to build the business such that it caters to a particular potential acquirer.

With all of these parties exit-focused, this concentrated ownership – emphasised in the shareholder register hosting only 11 lines – is a powerful element which could be helpful once the exit opportunity comes along.

In summary, four key elements are essential for a business to deliver a successful liquidity event for investors: business success, multiple competing buyers with deep pockets, capable and exit-driven management, as well as a flexible capital structure that enables decision-making.

Zetaris has the potential to embody all of these elements, and is likely continuing to demonstrate this as their business continues to grow and develop.

We expect there to be significant demand for this offer that will open this week, so click here to be on the shortlist to receive offer documents. You can also join our live investor briefing with CEO Vinay Samuel, click here to book your spot.