Online classifieds investment firm Frontier Digital Ventures has announced it will exit its investment in Democratic Republic of Congo (DRC)-based online property portal IMCongo due to portfolio optimisation processes and the startup’s underperformance.
Frontier Digital Ventures has invested in a number of African classifieds startups over the last couple of years, including Mozambique’s Propertymaputo, Ghana’s MeQasa, Tanzania’s Kupatana, Nigeria’s ToLet.com.ng and Morocco’s Moteur.
It invested US$175,000 and US$332,500 worth of Frontier shares in IMCongo last year to gain ownership of 65.9 per cent of the company, but has now decided to exit as a result of its portfolio optimisation process and underperformance of IMCongo relative to the high-performance hurdles established across all its investments.
IMCongo recorded revenues of AUD10,924 (US$8,456) in the first half of 2017, compared with total revenue of AUD10.9 million (US$8.5 million) across the whole Frontier portfolio over the same period.
Under an agreement with Frontier, IMCongo vendors have sold their 332,500 Frontier shares for AUD242,725 (US$188,648) to new investors and will use the sale proceeds to repurchase Frontier’s shareholding in IMCongo. The proceeds will add to Frontier’s existing cash balance.
“The exit of IMCongo is an example of portfolio rationalisation and prudent capital allocation,” said Frontier chief executive officer (CEO) and founder Shaun di Gregorio said.
“Due to the overall success of the portfolio to date, our internal hurdle for investment is high. Frontier assesses the performance of each investment on a monthly basis and deliberately optimises our time and financial resources towards investments with the greatest monetisation potential.”