GetSwift looks like another setback for the ASX's tech ambitions

The extraordinary saga surrounding GetSwift is another example of the Australia's uncomfortable relationship with tech stocks.

For years, the Australian investment establishment completely ignored the tech sector - which was not a meaningful part of the resources and financials heavy ASX.

But as tech giants became the world's most valuable and powerful companies, and as tech began to infiltrate every industry and became a priority for every company, that ignorance became untenable.

Now, over the past couple of years we have witnessed a complete reversal. Australian banks, telcos and pizza delivery companies are all trying to position themselves as tech companies. Even financial services executives have tried to position themselves as the next Steve Jobs.

And, as part of this newfound appreciation for tech, some ASX investors have been piling into untested tech companies with gleeful abandon, leading to some truly eye-watering valuations, and what looks like a bubble at the smaller end of the market.

Which brings us to GetSwift, a last mile, logistics software company, founded by a former AFL player. GetSwift's market valuation was recently above $600 million, despite it generating less than $500,000 in annual revenue.

Yesterday, GetSwift was forced to issue a statement on the ASX, in response to reports by Fairfax Media's The AustralianFinancial Review newspaper that cast serious doubts over its credibility.

Whether the statement will be enough to restore investor confidence remains to be seen - the ASX extended its suspension for trading in GetSwift's shares.

The company was also suspended in December following the announcement of an agreement with Amazon that sent its share price soaring.

Sections of Australia's start-up community have been expressing concerns about GetSwift's valuation for months.

Despite these misgivings, the company managed to raise $75 million in fresh capital last month, including from some prominent instutitions.

It is hard not to view this sorry episode as another setback for the ASX's ambitions to be a credible market for tech stocks.

The exchange has been actively courting smaller tech companies in recent years, to make up for a dearth of resources listings.

But this strategy seems to keep creating issues.

For a while, it led to an explosion in 'backdoor listings' or reverse mergers, in which tech companies would 'be acquired' by shell listings of dormant mining companies, via capital raisings on the ASX.

One example of this involved 1-Page, a recruitment company from the US, which debuted amid much fanfare, but has since imploded amid much acrimony.

The ASX has since cracked down on backdoor listings, and tightened its restrictions on smaller listings in general.

Perhaps a bigger question though, is whether it is even appropriate for tiny tech companies to be listing on stockmarkets (where mum and dad investors can freely invest).

Building a tech start-up is not remotely like an early stage mining venture - the type of small, risky company that has proliferated on the ASX for decades.

It takes time and money to develop a product, and then find a market fit for that product - which is not the same thing as exploring for minerals and hoping to strike it rich.

Investors should always ask the question - why would any tech start-up founder want to subject his or her company to the rigours and scrutiny of a public market listing?

The answer, presumably, is because of an inability to get capital from anywhere else.

But venture capital funding is plentiful at the moment. Last year a record $1 billion was raised by VC funds in Australia - funds whose sole raison d'??tre is to back small tech companies.

Global VC funding hit $US155 billion last year - the highest level in at least a decade, according to KPMG.

That's why in the US, many prominent and well known tech companies are putting off listing for as long as they can.

Whatever happens with GetSwift, there is genuine momentum building in Australia's tech sector.

In December, construction software company Aconex was bought by US software giant Oracle for $US1.6 billion.

That was arguably another case of ASX investors getting it wrong. Aconex was one of the most heavily shorted stocks on the market (although this was, at least in part, to it being overvalued, so some investors also got it right).

Just this month, Canva - a highly regarded design online design company, with millions of users, and $25 million in recurring revenue - was valued at over $US1 billion by credible venture capital firms.

Then there is Atlassian, the Sydney-headquartered software company, which famously bypassed the ASX to list on the Nasdaq. It is valued at $15 billion now, bigger than some of corporate Australia's most valuable names, and is on track to hit $1 billion in revenue this year.

"The Australian investment community has a lot of learning to do about technology. It's part of the reason we didn't list here," Atlassian co-CEO Mike Cannon-Brookes once told me.

This week's events would suggest he is not wrong.

This story GetSwift looks like another setback for the ASX's tech ambitions first appeared on The Sydney Morning Herald.