Israeli technology company Security Matters is planning to list on the ASX via an initial public offering (IPO) on 13 September 2018 at an indicative market cap of AUD $18.5-$20 million.
Security Matters is transforming brand liability, authentication, tracking and proactive quality assurance with its technology that permanently and irrevocably “marks” any object in solid, liquid or gas form. The technology was originally developed by the Israeli Government, at the Soreq Nuclear Research Center. It is based on three parts: the chemical-based hidden “barcode” system, along with a unique “reader” to identify the codes, and use of a blockchain record to store and protect ownership data.
The three Co-Founders Haggai Alon, David Rosenblatt and Ed Hofland bring decades of experience in building successful companies in both Israel and Silicon Valley. The company is also backed by a experienced team of Corporate Advisors and Non-Executive Directors.
Haggai Alon, Co-Founder & CEO of Security Matters, said: “We are supported by a highly astute Advisory Board, led by Major General Ami Shafran, Chairman of Elsight Trading (ASX: ELS) and a team of experts that have significant corporate experience in leading highly successful companies globally and have supported companies that have been successful listing on the ASX.”
Dynamic Business spoke to Haggai Alon, Co-Founder & CEO, Security Matters about the industry disruptive technology and becoming an ASX listed company.
Tell us about how the business was created?
Haggai Alon was working for the Ministry of Defence assisting them with the potential commercialisation of their various technologies. He was particularly attracted to this technology and decided to negotiate with the Israeli Govt to acquire it and form a company around it. He did this with two other founders Ed Hofland and David Rosenblatt and Security Matters was born.
Tell us a little bit about the founders- what background do you have? How did you get into the tech business world?
Ed Hofland and David Rosenblatt have been working together for many years across a number of sectors and currently run several very large businesses. Ed’s background is in energy, aquaculture and dietary supplements whilst David is an ex Managing Director at Blackrock (one of the world’s largest fund managers) having concentrated on technology companies for a long period.
Could you explain the technology further?
The technology is quite unique and allows the company to “mark” any object whether in solid, liquid or gas phase. “Marking” means to embed molecules into the structure of the object, similar to a combination of the DNA sequence and a standard barcode, that allows the Company to embed a limitless amount of data into that object. At its most basic level this data may include original producer, date and location of production any ingredients or components although virtually any amount and type of information can be stored within the product. This “marking” is then combined with our proprietary reader which has the unique ability to “read through” barriers or packaging to “read” the signal of the embedded molecules and identify the associated information.
How do you plan to disrupt the industry?
Many of the world’s leading companies currently spend millions of dollars in an attempt to prevent counterfeiting, protect their brand and “track and trace” their products throughout their lifecycle. We are the only Company in the world that can offer a complete solution to all of these industries and to embed our data into any product whether it be solid, liquid or gas. Not only are we offering the ability for our customers to determine genuine / not genuine, but also to track and trace their products and any componentry throughout the life of the product, as well as to provide quality assurance ie: is our product consistent with our manufacturing guidelines (contain the correct amount of UV protection, protecting film etc etc)
What made you bring this business to Australia?
Our first thought was to identify a location where there was a wide variety of industries and sectors which suited our technology. Australia, far more than Israel fitted this bill. We then formed a relationship with our commercial managers, John Poynton from Jindalee Partners who has been active in introducing us to the Perth Mint and other potential customers.
In addition to our business relationships here in Australia, our reasoning for a listing on the ASX is as follows:
- Israel is a fantastic place for venture capital and private equity, but the stock exchange is not yet up to standard.
- While the NASDAQ is the ideal place for a tech listing, companies need to be circa $1 Billion to get any traction. Other exchanges that support tech IPOs such as Hong Kong are also too large. Since the end of the mining boom the ASX has been a good incubator for tech stocks with a number getting good results.
- Security Matters has a strong business relationship with Australia. There is the MOU with the Perth Mint and we hope other customers to come through our relationship with John Poynton and his team who are based in Australia.
- The Australian and Israeli Governments have been working hard over the past couple of years to improve / increase the business relationship between the two countries with several visits both ways by Ministers and the ASX.
- Our Lead Manager, Nathan Barbarich, worked very hard to convince us to come to Australia as he believed our Company would be very well received and further that it would be an excellent opportunity for his clients.
How does the startup industry in Australia differ from Israel?
A large focus of the start up industry in Israel is on the internet, apps and cyber security which of course is not exactly us. We aim to be the link between the Internet economy (IoT, PayPal, Amazon etc) and the real economy (the Perth Mint, Harvey Beef, LVMH brands etc). Also, the start-up industry in Israel tends to be better supported by private equity and venture capital but once the Company has reached an appropriate stage, the majority look to list elsewhere. It is fair to say that there is a greater level of activity in start-ups and also much higher levels of funding available for start-ups in Israel but perhaps not so in a listed environment.
What can the different country’s learn from each other’s start-up scene?
One of the main philosophical differences I believe is that in Israel a failure is seen as a stepping stone to success. Entrepreneurs see their failures as a learning process and almost a badge of honour once they have ultimately become successful. More, the service in the IDF teaches you how to work in harsh conditions and to be very innovative.
What benefits will being an ASX listed company bring?
There are a number of benefits including :
Access to capital in the secondary market
- The additional credibility associated with being a listed entity when dealing with large multinational customers
- The additional focus on regulation, strict business an accounting procedures and professional management
- What makes the company ASX ready?
Well the proof that we are ASX ready is the successful ASX in principle application we made some months ago together with the overwhelming response to our heavily oversubscribed pre-IPO capital raising, along with the clearing of our prospectus by ASIC and ASX. Combined with our initial very positive response to our IPO roadshow we are confident that displays that we are ASX ready.
In terms of what brought us to this point I would say our relationships with the Perth Mint and other potential Australian customers, our strong Australian investor base and our contractual relationship with John Poynton’s Jindalee Partners as our commercial managers, RM Corporate Finance as Corporate Advisers and Lead Managers as well as Holding Redlich our legal advisers and the fact BDO Israel and Australia give effective umbrella.
Plans for the future?
Our technology and its application is incredibly exciting and applicable to a virtually endless list of customers and products. Our main focus for the next 2-3 years is on the already identified verticals of Electronics, Plastics, “Conflict minerals” and “ethical mining” that relate to pre active QA and Precious stones and Metals and Chemical products. We intend to work tirelessly to build on our early positions in these markets and once successful, to identify other verticals that will be profitable for the Company.