Rocket Internet, the Berlin-based incubator founded by the Samwer brothers with a number of notable exits and fundings under its belt, is branching further into Asia, and specifically emerging markets.
It’s partnering with Ooredoo, the main carrier in Qatar (formerly known as QTel), in a new joint venture called Asia Internet Holding to build and fund e-commerce startups, especially those focused on mobile services. The pair are not yet revealing how much money they are investing, but you could look to similar projects from Rocket as one marker: Africa Internet Holding, also formed in partnership with carriers, is building and investing in its regional startup portfolio with $410 million to spend.
Asia Internet Holding says it will focus on 15 markets in the region, with the emphasis on emerging economies. They include Pakistan, Myanmar, Thailand, Malaysia, Singapore, Indonesia, Vietnam, the Philippines and Australia — in other words, mostly places where e-commerce is still growing fast, and in some cases, like Myanmar/Burma, practically nonexistent. The types of businesses that they say they will develop will span the whole continuum of commerce, from online and mobile retailers and marketplaces, through to payment services.
The pair expect to announce their first new ventures in Q2, a spokesperson tells me. But in the meantime, it’s also going to take on several of Rocket Internet’s existing investments in the region, including Daraz.pk, Lamudi.com, Carmudi.com, Kaymu.com, Pricepanda.com and EasyTaxi.com. By “take on”, this means manage existing investments as well as investing more.
For Rocket Internet, the move is an obvious one. Creating a JV with a local partner provides a streamline of investment in the businesses; interesting distribution networks; and in general a strong degree of local knowledge.
That could help it in getting new things off the ground, and potentially share in the risk if it doesn’t work out. Rocket Internet has had some notable failures in far-flung markets its rush to create startups around tried and tested business ideas — or clones if you are less charitable. Partnering is one way of trying to minimise that.
Rocket Internet is not exactly forthcoming about how well its JVs perform — it also works with the likes of Tesco in these arrangements — but I suspect that the fact that it keeps forging more of them could either mean they are performing well, or at least well enough to keep interested parties coming in for more.
Rocket Internet has built its business by spreading its bets across a range of commerce-related startups in markets where the ventures can pick up traction quickly amidst fairly light competition. But that description no longer applies to many of Rocket’s original markets, such as countries in Europe, which have been saturated by US and other local competitors.
So the Samwers have for some time now been turning to emerging markets, which still spell opportunity, both as places to build standalone, sustainable businesses, but to grow companies that might eventually get acquired by other global players looking to expand inorganically. In both cases, and as with all e-commerce efforts, these are games of scale, where returns are based on small margins and high volumes.
“We look forward to working with a partner as innovative and customer-centric as Ooredoo in Asia,” said Oliver Samwer, co-founder of Rocket Internet, in a statement. “Our partnership will accelerate the development of Asia Internet Holding in the region and help our businesses succeed. We feel that by bringing ecommerce models that have worked well elsewhere in the World to Asia, and that by partnering with an operator like Ooredoo, we can jointly bring better services to customers.”
For Ooredoo, as for many carriers these days, the name of the game is to diversify away from basic telco services — or at least built out operations that can better capitalise on those capital assets, and in particular mobile. (In fact, I’d argue that this is part of the logic for Ooredoo rebranding and taking ‘tel’ out of its name altogether.) “eCommerce is part of Ooredoo’s strategy to invest in new businesses that provide growth opportunities and develop new revenue streams,” the company notes in its statement on the new JV. “Increasing disposable income and internet penetration are key drivers for eCommerce growth in Asia and Ooredoo and Rocket are keen to benefit from this trend.” Mobile will be key to this: among Ooredoo’s holdings are Indosat, a 60-million customer carrier in Indonesia, which is the second-largest online market after China in Asia.
“A fundamental shift is happening across our markets, as more people buy goods and services online through their mobile phones,” said Dr Nasser Marafih, Ooredoo Group CEO, in a statement. “This is even more evident in our Asian footprint. We believe that offering eCommerce services will further support our ambition of enriching people’s lives. We are pleased to have entered into a partnership with Rocket and look forward to harnessing their knowledge and experience gained elsewhere into making our joint venture an eCommerce market leader across Asia.”