Malaysia-based Frontier Digital Ventures is putting a lot of faith in classifieds startups in frontier markets, including a number in Africa.
Initially focused on Southeast Asia before looking further afield, Frontier Digital Ventures stepped up its activities in Africa last year, investing millions of dollars in classifieds such as Propertymaputo.com, Kupatana, meQasa and Afribaba, as well as others in Angola, the Democratic Republic of Congo (DRC) and Morocco.
Founder Shaun Di Gregorio, who has quite a track record in the classifieds sector, told Disrupt Africa classifieds had proven disruptive all over the world, stealing market share from more traditional media companies.
“We realised that this classifieds model was working pretty well everywhere and we could add value in other markets,” he said.
“We’ve seen that in the last seven or eight years in emerging markets, and in the last two or three years in what we call frontier markets. It’s a very easy business model to roll out, and it works a lot of the time.”
Especially when you have Di Gregorio’s level of expertise. Prior to launching Frontier Digital Ventures, he headed up ASX-listed company iProperty Group, overseeing its growth from a small online business with a market capitalisation of US$15 million into the largest listed internet company in the region, with a market capitalisation of US$600 million.
It is this level of expertise that gives Frontier Digital Ventures the confidence to take a slightly different approach when it comes to investing in startups
“We’re not just a passive investor. We’re specific and targeted, and we really throw ourselves into the task,” Di Gregorio said.
“We’re an operational partner, we go in with a large equity stake and work with the entrepreneur to help them grow the business.”
Though the company starts with a minority stake, it usually builds into agreement the chance for it to become a majority shareholder in future.
“We do see ourselves as long term partners and operators in these businesses,” Di Gregorio said. “Our goal is to build the business in its entirety.”
Africa is a major opportunity in the classifieds space, he said, adding the company is always on the lookout for further investments and is likely to back more startups over the course of this year.
“We’re very bullish about the opportunities there and have come across some very talented entrepreneurs that are doing very cool things. We’re looking forward to more opportunities,” he said.
“We set about trying to find good, smart, motivated entrepreneurs. We know that if we come in as partners we generally end up creating something pretty good. We’re looking right across the continent.”
Frontier Digital Ventures does its research when it comes to African startups, employing three full-time researchers to identify and analyse classifieds businesses across the continent. But Di Gregorio says as his company’s reputation as a classifieds player grows more startups are reaching out directly.
“Our reputation I guess is lucky because we’ve been focused on this industry for a long time so people are familiar with us,” he said.
“It is a relatively small industry in that sense. It is quite an adventure and it continues to be a lot of fun.”