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These exciting small cap ASX tech shares could be the stars of 2020

This year tech shares such as Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) have exploded onto the radar of investors across Australia after delivering staggering growth and generating market-beating returns.

And whilst I believe they are still capable of being market-beaters again in 2020, I would be reasonably (and pleasantly) surprised to see them generate the same level of returns next year.

This could make it worthwhile looking for the next Altium and Appen at the small cap side of the tech sector today.

Three small cap tech shares which I think could be the next tech stars of the Australian share market are listed below. Here’s why I like them:

LiveTiles Ltd (ASX: LVT)

LiveTiles is one of my favourite small cap tech shares. Its digital workplace platform helps businesses boost their employee engagement through the creation of internal dashboards, intranet portals, and collaborative online working environments. In FY 2019 the company reported a 167% increase in annualised recurring revenues to $40.1 million. The good news is that management appears confident that there’s still a lot more growth to come and continues to target annualised recurring revenues of $100 million by the end of June 2021. Whilst this is an ambitious target, I believe it is capable of achieving it.

Straker Translations (ASX: STG)

Straker Translations is a company that reminds me a lot of Appen. This is because it uses crowd-sourced human intelligence (and artificial intelligence) to provide efficient language translation services at scale. I’ve been impressed at the company’s strong sales growth and the high level of recurring revenues. I believe this is a testament to the quality of its services, which bodes well for Straker given the translation market is tipped to be worth upwards of US$66 billion by 2022.

Volpara Health Technologies Ltd (ASX: VHT)

Finally, another tech share which I think could shine in 2020 is Volpara. It provides software that uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. The company has been growing its market share in the United States at a rapid rate, leading to strong annual recurring revenue growth. I expect more of the same in FY 2020 and beyond thanks to the quality and importance of its software, recent acquisitions, and its growing footprint.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.