Another tech firm has been sold offshore - but will continue to operate independently from its Auckland base, with all staff and management intact.
Serato, a maker of software for professional and at-home DJs, has been sold to Japan’s AlphaTheta Corporation.
Neither party put a price on the deal, but it does involve an Overseas Investment Office application - putting it north of the $100 million threshold for OIO approval.
The Herald understands it involves an initial payment of US$70m ($113m), with more in earnouts if certain targets are hit over the next couple of years.
Yokohama-based AlphaTheta is the owner of the Pioneer DJ brand - one of Serato’s partners. It was spun out of Pioneer in 2015.
Serato, which has around 160 staff, recently moved into new offices at Auckland’s Ponsonby Central. It will continue to operate from its new digs.
The firm was founded in 1998 by AJ Wilderland (then AJ Bertenshaw) and Stephen West. The pair, who met as Auckland University students in the early 90s, were looking for user-friendly software for DJs. Finding none, they set about making their own.
The company was initially hit for six in the pandemic as lockdowns saw clubs closed and events cancelled, but successfully pivoted to add software for bedroom and living room DJs.
Over the years, Serato came to dominate the global market for software for professional DJs. They also won respect from filmmaker David Lynch and others in Hollywood for developing a tool that could slow down or speed up audio without the usual side-effect of changing the pitch.
Serato’s software was adopted by a who’s-who including DJ Jazzy Jeff and the Beastie Boys’ Mix Master Mike.
Kanye West (2010) and Eminem (2013) both dropped the Kiwi firm’s name into raps, helping to cement its success.
Chief executive Young Ly told the Herald that revenue - running at around $30 million per year pre-Covid - ended up expanding, and the firm returned to hiring mode. Ly said Serato had always been profitable. Wilderland recently moved into a larger property in Coatesville - whose lifestyle blocks in Auckland’s northwest are best known for the property formerly known as the Dotcom Mansion before it was bought by the rich-list Mowbray siblings.
In October last year, Serato released a public beta of a new feature called “Stems”, which allowed the 600,000 monthly active users of its US$9.99/month DJ Pro software or US$11.99 DJ Essentials to separate a song into its individual components in real-time - billed as a world-first capability for regular punters.
Wilderland and West were Serato’s two directors ahead of the deal, and owned most of the shares, with Nicole Hoek and Greg Rathbun holding minority stakes. There was also a 0.65 per cent slice in an employee trust.
The pair both stepped back from the day-to-day running of the firm some years ago.
West cofounded ChargeNet with fellow Serato alumni Hoek and Rathbun. The firm is building a network of EV chargers throughout New Zealand, while Wilderland is involved in a clutch of companies including Aerial Robotics NZ, Cool Story Bro Film and The Ticket Fairy.
Serato is the second big tech deal of the past month. On June 22, one of the NZX’s few remaining tech listings, Eroad, revealed it was the subject of a $232m takeover offer from Toronto-listed Constellation Software.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.