Deal focus: Booktopia prepares for build-out

What was just a side business has become a successful one. After selling an online recruitment agency he founded in the 1990s, Tony Nash started Australia-based online bookseller Booktopia in 2004 with his brother and brother-in-law while working for the family-owned digital marketing agency during the day. But as the business grew – revenue is set to reach A$175 million ($118 million) this year, up from A$4 million in 2011 – it demanded full-time attention.

This month, Nash turned to a consortium of private equity investors for external capital. Backers such as Su-Ming Wong, co-founder of CHAMP Ventures, and John Sampson, founder of public equities manager JBS Investments, contributed A$20 million in equity and debt.

“There was a philosophical meeting of the minds [with the investors] – they understand the importance of the written word and what that can mean to a person’s education, a child’s development,” says Nash.

Booktopia, which rents a 13,000-square-meter warehouse next to Sydney’s Olympic Stadium, needed additional capital to acquire assets relevant to various types of Australian readers.

Before the funding round, it bought University Co-Operative Bookshop, the leading on-campus seller of educational textbooks, out of bankruptcy. Expansion into other English-speaking markets in Asia – such as Singapore, Indonesia and Malaysia – by distributing books on behalf of publishers is under consideration.

Previous attempts to raise external capital didn’t go according to plan. First, an IPO was shelved in 2016 after Amazon entered the market. Then the Booktopia board pulled the plug on a crowdfunding effort last year in favor of trying to reengage with private markets investors. This time, Nash’s team put its house in order before launch, notably implementing data visualization tools that captured the entire business and showed investors what are the levers they can pull with funding.

Independent bookshops are responsible for nearly a quarter of all books sold in Australia. Their position was arguably helped by the collapse of big-name brick-and-mortar retailers like Angus & Robertson and Borders, but the likes of Dymocks and QBD Books are still around.

Booktopia has managed to beat them consistently in online sales, by focusing on niche non-fiction genres, including specialized books related to professional education, and rare collectibles like expensive special boxed sets.

“We very much focused [initially] on backlist titles - the titles that have been published a while ago,” Nash explains. “For example, in romance, a typical bookseller wouldn’t be able to say a romance title with a bare-chested man in a kilt in the Scottish Highlands was great because they would never read it! But we were selling thousands of dollars of such books.”

Nash, an avid philanthropist for the Australian literary community, now has the funds to expand a business that he believes is making a difference in people’s lives.

“We’re involved in either entertaining or educating people,” he says. “People are using books to escape or they’re using books to further their careers, but they also might be using books as art or luxury items.”

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• Topics
• Early-stage
• Australasia
• Media
• Australia