Venture capitalists name Australia’s best tech shares to buy now

Online magazine SmartCompany is reporting that Australia’s 50 best junior tech companies have been named in a Tech Pioneers Report published by venture capital firm H2 Ventures and global asset manager Investec.

The list includes some of Australia’s hottest startups that may hit the ASX boards within the next two years, while it also has multiple entrants already listed and flying high on the local bourse.

Amongst the privately-held startups there’s a lot of representation among peer-to-peer lenders, or businesses that lend small amounts to consumers or small businesses on an online marketplace only basis.

Fast-growing startups in the P2P lending space include Harmoney, Prospa and SocietyOne, all of which feature among the Top-20 junior tech businesses in Australia according to the report.

The rapid growth of peer-to-peer lending and what disruptive impact it could have on small business lenders like Thorn Group Ltd (ASX: TGA) or Silver Chef Limited (ASX: SIV) is something to watch.

The report also names several listed business as amongst the best in Australia based on metrics such as disruptive impacts, growth, customer experience and business model innovation. Let’s take a look at some of them.

XERO FPO NZ (ASX: XRO) (ranked 2/50) is the fast-growing cloud accounting software business with nearly 700,000 users that continues to grow globally. Given its long growth runway, market-leading product, high margins and capital compounding potential the stock looks a buy at $14.58.

Ozforex Group Ltd (ASX: OFX) (ranked 6/50) is the international money transfer business that has delivered strong growth by taking market share from the big banks. I have expressed concern about the commission structures within its business model before and recently Western Union declined the opportunity to pursue a takeover offer after completing extensive due diligence on OzForex.

Freelancer Ltd (ASX: FLN) (ranked 7/50) is the online marketplace that connects freelance workers with businesses seeking to hire temporary staff to complete tasks often in the digital space, like website design, SEO marketing, social media, or mobile app development. It has some powerful digital tailwinds, is cashflow positive and at $1.56 could be considered a speculative buy.

3P Learning Ltd (ASX: 3PL) (ranked 11/50) is the online provider of educational software for school students around the world. Its software is used by 5.3 million students in over 17,000 schools globally and at $1.22 the shares look a buy based on a strong growth outlook and reasonable valuation.

Aconex Ltd (ASX: ACX) (ranked 14/50) provides cloud-based software-as-a-service to participants in the global construction industry. The shares are up 278% since it listed less than two years ago and selling for $6.43 it looks on the expensive side.

Catapult Group Ltd (ASX: CAT) (ranked 34/50) is a business that sells sports analytics equipment that is attached to professional sportspeople to help coaches and clubs scientifically track their performance. The equipment is selling like hot cakes with the shares tripling in value over just the last year to hit a record high of $2.80 today. Given its market-leading product and large global addressable markets it could be argued the stock is still a speculative buy.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned. The Motley Fool Australia owns shares in Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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