Grove-backed Frontier Digital Ventures goes into ‘aggressive’ mode

• Targeting online classifieds business in frontier and pre-emerging markets
• Founded by former iProperty CEO, Catcha’s Patrick Grove involved too

INTERNET entrepreneur Patrick Grove is certainly casting his investment net wide – even before he announced his Catcha Group’s new unit Catcha Ventures late last month, he had already put his money down on a former colleague’s new venture.
 
Grove is one of the main investors in Kuala Lumpur-based investment firm Frontier Digital Ventures, founded in May by former iProperty Group chief executive officer (CEO) Shaun Di Gregorio. The third member of the founding team is executive director Luke Elliott, also a cofounder of and major shareholder at Catcha Group.
 
Catcha Ventures is focused on minority investments in high-growth new media, technology and mobile companies in South-East Asia.
 
Meanwhile, Frontier Digital Ventures said it aims to become the leading operator of online classifieds businesses in “frontier and pre-emerging markets,” and offers participating entrepreneurs not only necessary capital, but also invaluable expertise in developing, growing and operating online classifieds businesses.

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“Catcha Ventures focuses on great minority stake opportunities in Asean exclusively. Additionally, it does not look at classifieds businesses because iProperty and iCar Asia already dominate in Asean,” Grove (pic) said, referring to two Catcha Group companies.
 
“Frontier Digital Ventures is global and only classifieds,” he told Digital News Asia (DNA) via email when asked how he was differentiating his different investment channels.
 
The fund is targeting up to 30 investments in “disruptive digital businesses,” with a mandate to hit over 50 potential markets across the region including Central and South America; the Middle East and North Africa; Southern Africa; South Asia; and select countries within the Commonwealth of Independent States.
 
When asked how much he was investing into Frontier Digital Ventures, Grove declined to answer and referred DNA to Di Gregorio, also the founder and CEO at the new fund.
 
When asked what Catcha Group and he himself bring to the table, Grove said: “Catcha brings its formidable reputation, support and some funding.
 
“However Shaun Di Gregorio is the key. He has a world-class reputation, with unparalleled experience and track record in online classifieds. He has not only run the most successful property portals in the world, but was instrumental in building their businesses to what they are today.
 
“He was general manager of the REA Group Ltd in its formative years, and as CEO of iProperty, delivered shareholder returns that outstripped every other listed classifieds business of its kind,” Grove said. “The guy is an absolute rock star … we are investing in him.”
 
iProperty operates a network of property portals and is one of largest listed Internet companies in Asean, hitting a market capitalisation of US$600 million during Di Gregorio’s four-year tenure.
 
As general manager of REA Group Ltd, he was instrumental in taking the company from US$25.5 million to US$720 million in market capitalisation, Frontier Digital Ventures said in its statement.
 
When asked how much funds Frontier Digital Ventures has available, and from whom, Di Gregorio said it has a “significant” amount available to invest.
 
“Frontier Digital Ventures is privately funded by its founders – however, we have additionally had significant interest from people wanting to invest in [us],” he told DNA.
 
When asked how he defines ‘frontier and pre-emerging markets,’ and why he chose this particular sector to target, Di Gregorio said, “frontier or ‘pre-emerging’ markets are countries that are less established than emerging markets.
 
“They typically have smaller capitalisations, but demonstrate a relative openness to and accessibility for foreign investors, and are not under extreme economic and political instability,” he said.
 
Two investments in Pakistan
 
Frontier Digital Ventures has already made two investments in Pakistan: Its maiden investment was a 30% stake in property portal Zameen.com, and last it week it announced a US$3.5-million investment in automotive website PakWheels.com.
 
The company also said it has “completed several additional investments to be introduced soon.”
 
“PakWheels.com is just the beginning. Frontier Digital Ventures is already hard at work building a pipeline of similar opportunities in frontier and emerging markets globally,” Di Gregorio (pic) said in a statement announcing the deal.
 
“We are exclusively focused on online classifieds with a priority on property and automotive [portals].
 
“We also look at general classifieds sites in smaller markets where horizontals (such as property and auto) have not yet evolved,” he told DNA when asked what other verticals Frontier Digital Ventures would be looking into.
 
Would Frontier Digital Ventures also look into outright acquisitions?
 
“Our priority is to take minority stakes in well-run local businesses, with the goal to have the founders and entrepreneurs remain fully engaged as significant shareholders,” Di Gregorio said.
 
“In short, the focus of our investment is the local entrepreneur. If over time the business grows and the founders are looking for an exit, we will also consider the option to fully acquire, but our preference is to partner with the founders and go on the journey together,” he added.
 
What are the immediate next steps for PakWheels and Zameen?
 
“The common goal is to consolidate their market leadership,” Di Gregorio said.
 
“There are some clear steps to achieving this, both strategic and operational, but we won’t disclose exactly what those are at this point in time,” he chuckled.
 
Related Stories:
 
Catcha launches new Catcha Ventures division
 
Frontier Digital Ventures launches with maiden investment in Pakistan’s Zameen
 
Catcha buys undisclosed stake in Middle East property portal
 
 
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