ACS has acquired leading Queensland-based start-up catalyst and incubator River City Labs (RCL).
ACS secured the company from founder Steve Baxter, and has already committed $7.5 million to building and expanding the business, including giving RCL – and the companies it serves – a national reach.
The acquisition of RCL Group includes the operations of the RCL Accelerator and Startup Catalyst, with immediate effect.
RCL was founded by Baxter in 2012 to serve Brisbane’s burgeoning start-up community.
It works with Telstra-backed start-up accelerator muru-D to provide services and industry connections for tenants and customers, and also runs River Pitch, a quarterly event that brings together pre-screened start-ups and investors.
More than 700 start-up founders have set up office at River City Labs, and just under 29,000 people have passed through the doors, attending more than 1,000 start-up and community events.
“We’re tremendously excited at being afforded the opportunity to grow River City Labs,” said ACS President Yohan Ramasundara.
“ACS’ vision is for Australia to be a world leader in technology talent, that fosters innovation and creates new forms of value.
“We understand that new jobs growth in a digital economy comes from tech start-ups, and we are pleased to be in a situation where we can contribute to growing the tech ecosystem both in Queensland and more broadly across the country.”
Baxter said he would still be involved with RCL and was excited to see where ACS could take the company.
“After seven amazing years, I’m truly excited to see RCL evolve,” he said.
“When we launched this [search for new owners], it was about finding the right custodian for RCL, not just to maintain business as usual but to take it to the next level.
“The ACS came to the table with fresh new ideas, a compelling vision for supporting tech entrepreneurship in QLD and beyond, and a willingness to invest.”
The value of the deal remains commercial in confidence between the parties.
The search for the right partner
In May of this year, Baxter launched his search for a new owner of RCL, saying the hub had taken up a lot of his time over the prior 7 years, and that “if RCL is to really take advantage of its position, and the opportunity of being a leading platform for tech entrepreneurship in Australia – the buck can’t stop with just me.”
He denied the decision was commercially driven.
“It’s about what’s best for the QLD start-up community, for RCL, our members, and our team.”
At the end of the two-week search period, Baxter revealed he’d received an “overwhelming response” to his call for new RCL custodians.
“I'm really humbled and excited by the various people and organisation who are ready to sign up for the River City Labs mission to empower, support and connect Brisbane start-ups,” he wrote in a LinkedIn post.
What happens now?
For existing partners of RCL there will be no changes to the services on offer, said Ramasundara.
“River City Labs will continue to offer all the same great services it does right now,” he said.
According to Ramasundara, ACS will be using its national and international reach to help RCL customers connect with investors and stakeholders.
“We know many of the key players in government, in industry and education, and can bring that knowledge and experience to the start-ups and scale-ups that join the River City Labs community,” he said.
“We can give them access to that experience that is so critical to the success of a new company.”
Serving as a catalyst
The acquisition is happening at a time when the start-up industry in Australia is booming.
According to the Australian Private Equity & Venture Capital Association, venture capital funding in the country has gone from $124 million in 2014 to $1.32 billion in 2017.
Private equity funding in the same period has doubled.
According to Ramasundara, the acquisition was part of ACS’ commitment to serving as a catalyst for the growth of the ICT industry in Australia.
“We wanted to do more than just talk a big game – we wanted to do our part to make sure Australia has the platform it needs to succeed in an increasingly competitive world,” said Ramasundara.
“It is possible for this country – we’re not too small, we’re not too far behind. We have the ability to become a world leader in technology, and ACS is committed to doing its part to help make that happen.”