Big-thinker Bekker wants to see unicorns
Former Naspers CEO Koos Bekker has always been vocal about the lack of good technology entrepreneurs in SA.
It makes many wince and defensively start rattling off a list of successful local tech entrepreneurs. Why, they say, there is Takealot.com, led by former Naspers man Kim Reid, and the edtech business Getsmarter recently sold for $100m. And many more.
But people misunderstand Bekker. He is not talking about these businesses at the level they think he is. When he says the country has no great tech entrepreneurs, he is thinking on a much bigger scale. This is a man who bought a stake in the massive gaming and social network conglomerate TenCent, and who once flirted with buying a stake in a fledgling Linked.in many years ago. (It didn’t happen, and not without regret.)
The truth of the matter is that this country, for all its tech talent, has yet to produce a “unicorn” in the technology wave of the past 20 years.
A unicorn is defined as a privately held startup company valued at more than $1bn. It was a term coined in 2013 by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.
Tech blog TechCrunch says there are about 279 unicorns as of this year, including Uber, Xiaomi, Airbnb, Palantir and Pinterest.
Now Naspers is committing billions to a new fund to support tech entrepreneurs in the country. You could say “it is about time”, but the reality is that Naspers has been investing in tech entrepreneurs for a while. Some time ago the company bought a stake in the doomed MXit, betting that the then wildly popular chat app would be able to export its lowcost communication model to other emerging markets.
Unfortunately Mxit’s main platform caught alight, and not in a good way, and Nokia’s Symbian “burning platform” took the company down and many businesses with it.
Naspers also bought pricecomparison site Pricecheck, but it underperformed, which prompted the founding entrepreneur to buy it back with the help of a venture capitalist. Among other notable local acquisitions, Naspers bought Autotrader and, very recently, webuycars.co.za.
No one can take anything away from the sheer brilliance of Bekker and Naspers. Here was a newspaper company stuck in the old days, in more ways than one, but Bekker took a bet on this new medium called the internet and won and won big with TenCent.
But amid all this success is one area Naspers still has to conquer: a local organic internet success. No one would deny Naspers has been a brilliant tech investment vehicle, but the company has yet to build its own truly successful and we are talking “Koos Bekker successful internet business.
You may point to News24, which has for some time been the biggest news site in the country, smashing all rivals into submission. But it’s a success in terms of readers, not revenue.
Like most online publishing businesses, News24 has been disrupted by Google’s and Facebook’s advertising model, which is chewing up the digital marketing pie. Media24’s top magazines, so-called dinosaur print titles, still make more revenue than the mighty News24.
Naspers’ flagship e-commerce site, Kalahari.net, never quite cracked it either, and was being beaten hands down by Takealot. Naspers eventually invested in Takealot for just under R1bn, and the two businesses were merged, spelling the end for Kalahari.
Another organic build of substance was Showmax, an ambitious and well-executed streaming play. But the business just could not match Netflix’s sheer variety of content. It is now telling that Naspers is exiting its TV business, the next big media format facing huge internet disruption.
So, over the next three years Naspers says it will invest about R4.6bn in the SA technology sector, with R3.2bn allocated to the development of its existing technology businesses, including OLX and Takealot. Of this, R1.4bn will be committed to Naspers Foundry, to help SA technology entrepreneurs grow their startups.
It’s a huge boost for the local startup industry, and just may be where Naspers can find its first organic tech success.
Matthew Buckland is an investor and entrepreneur, and the founder of Ventureburn.com.