By Alexandra Wexler
SAN FRANCISCO -- Naspers Ltd., Africa's biggest company best
known for its bet on Chinese internet giant Tencent Holdings Ltd.,
is building a foothold in Silicon Valley. But unlike many other
tech investors, Naspers isn't solely focused on finding its next
big hit here.
Rather, the South Africa-based media and internet giant, which
opened a San Francisco venture-capital office in 2016, wants to be
closer to the flow of innovation and ideas in the Valley and apply
that knowledge to its decisions across the globe as it repositions
itself as an e-commerce company.
Led by eBay Inc. veteran Larry Illg and eager to invest part of
an almost $10 billion windfall from selling down a small piece of
its Tencent stake last year, Naspers Ventures is concentrating on
businesses focused on emerging markets that fulfill mainstream
global consumer needs such as providing food, education and health
care, as illustrated through their investments.
Mr. Illg, who leads a team of employees working out of a
sparsely populated office with sweeping views of the Bay Bridge,
said the move made sense for Naspers.
"We had visibility into China through Tencent, but we were
missing visibility into the other areas where product and
technology really gets created, in Silicon Valley," he said.
Naspers executives say they reach out to hundreds of companies a
month, and are often approached by founders interested in funding
from the Ventures office. With that, the media-shy firm is finding
its feet in Silicon Valley, where it has struggled with name
recognition and relaying its business model.
"It's only in the U.S. where the conversation takes a little bit
longer, because people are like, 'Wait, are you like SoftBank, are
you like Andreessen [Horowitz],?' Mr. Illg said, referring to big
startup investors. "That's where it takes a little bit longer,
hence the physical presence here," he added.
Naspers has made some bets on U.S. companies including Honor, an
online network of home-care agencies for the elderly; FarmLogs,
which provides technology solutions for row-crop farming; and
Udemy, an online learning marketplace.
But the bigger bets are being made on emerging-market startups.
In December, the Ventures team led a $1 billion funding round in
Swiggy, India's largest food-delivery platform, and a $540 million
round in BYJU's, an educational technology company and creator of a
popular schoolchild age learning app in India. In November, Naspers
committed $400 million in funding for iFood, the leading online
food-delivery platform in Latin America.
"Over time, we're like, 'Wait this is going to be of a scale
that people in the West can't see,'" Mr. Illg said of online-food
delivery in the developing world. "I certainly hope every one of
the segments we're in develops like food."
Naspers also maintains close ties with Tencent, in which it
bought a stake in 2001. Tencent followed Naspers into Swiggy in
last year's $1 billion round. The Ventures office regularly passes
startups and founders that aren't right for them over to
Tencent.
Founded in the wine capital of South Africa, Stellenbosch, in
1915, Naspers was originally De Nationale Pers Beperkt, or the
National Press Ltd., which produced a Dutch-language newspaper for
the country's Afrikaner population and eventually served as a
mouthpiece for the apartheid government.
In the 1980s, the company began expanding beyond its publishing
roots, including into video entertainment. Now the company is
shifting its focus to online classifieds, payments and food
delivery. The Tencent stake transformed the regional publishing
player into a media juggernaut with a market value of about $97
billion. Naspers hasn't disclosed any write downs specific to
Ventures in its public filings.
Naspers Ventures' investments are part of a broader strategy to
reconfigure the company as an e-commerce giant, after it sold its
Tencent stake down to 31.2% from 33.2% in March 2018, giving the
company a $9.8 billion windfall.
Ventures reported revenue of $223 million in Naspers's 2018
fiscal year, up 44% from the previous year, while the unit's
trading loss widened to $134 million from $107 million in the 2017
fiscal year. The unit invests in early, middle and late-stage
funding rounds, and doesn't have funds like a typical
venture-capital firm, freeing it from worries about returning money
to investors in a set number of years.
Sriharsha Majety, chief executive of Swiggy, said he first
approached Naspers in 2016. The following year, when they
approached him to invest, "I wasn't listening, because I was
already sold," he said.
Mr. Majety said Naspers's belief in the startup founders, its
capital and support in areas like corporate development have
enabled Swiggy to grow its order volumes 10 times since Naspers's
first investment in May 2017.
"You can be going after it with a little more courage than if
you're mostly hand to mouth," Mr. Majety said.
Write to Alexandra Wexler at alexandra.wexler@wsj.com
(END) Dow Jones Newswires
March 17, 2019 10:14 ET (14:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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