ASIC green lights $8 million raise for Scalare Partners back door ASX listing

Startup advisory and investment business Scalare Partners is back in the hunt for $8 million to list on the ASX, after the Australian Securities and Investment Commission (ASIC) lifted its interim stop orders on the prospectus for a reverse takeover of confectionery maker Candy Club Holdings (ASX: CLB).

Last week the corporate regulator intervened today to place two interim stop orders on Candy Club over the prospectus lodged on August 21 for Scalare, which is looking to raise up to $8 million.

ASIC flagged concerns that the prospectus did not adequately disclose all the required information under the Corporations Act, including Scalare’s US expansion plans, which include spending up to $500,000 launching an office there, and up to $200,000 to launch Tech Ready Women in the states

The markets cop also questioned the valuation and performance of underlying investments in the business if the raise goes through, including how each of the underlying investments will be valued and how a dollar value will be attributed to qualitative valuation measures.

“ASIC made the interim stop order to protect retail investors from potentially investing in an offer that may not be suitable for their financial objectives, situation or needs,” the regulator said in a statement last Monday.

But a week later, ASIC’s fears have been allayed by Scalare Partners and the company will now seek to raise between $4m and $8m at $0.25 cents a share for a post-money market capitalisation of up to $26.8 million.

Scalare CEO Carolyn Breeze argues that her business, which has invested in 28 startups – now 27, following an exit – differs from venture companies because it also provides a range of professional services to the startup sector.

When she announced the reverse takeover plan, Breeze said: “We believe that the risk of investing in these speculative early-stage technology companies is significantly offset by the unique services model that Scalare provides across the wider technology ecosystem, while still allowing for the potential significant upside of being involved so early in the company’s scaling journey.”

This year the company acquired the Tech Ready Women academy, and also runs the annual Australian Technologies Competition, which concluded last week.

Scalare Partners bills itself as a tech accelerator that offers fractional services spanning commercialisation, capital raises, finance, marketing, product development, governance, operations, and people & culture to give startups with expert support y when they need it, without the burden of full-time hires. This allows founders to focus on what matters most, innovation and growth.

But it’s also a startup investor and the pitch to those seeking to back its listing raise are that it’s has a solid portfolio of startups it’s backed, and an alternative to being a sophisticated investor for retail investors to gain exposure to startups investments, albeit based on the company’s share price rather than its portfolio returns.

Currently there are two locally listed venture companies: Touch Ventures (ASX:TVL), which has struggled since raising $100m for its IPO three years ago at $0.40 cents a share, but now finds is shares under $0.10 cents and its investment portfolio worth around $24.6 million; and Bailador Technologies (ASX: BTI), which invested nearly twice the proposed market cap of Scalare in two deals recently – $22m for fintech Dash and $20m for telehealth platform Updoc.

The Scalare prospectus proposes spending between $1.6m and $2.4m of the $4-8 million raise on investments in new and existing portfolio startups. Between $1.2m and $3.7m of the raise is earmarked for working capital.