Australia’s top online shopping group The Catch Group, which boasts annual revenue of A$350 million ($321 million) and a database of 3.5 million customers, wants to give a hand to fledging startups. Its newly launched incubator SketchBook Ventures seeks to identify promising e-commerce companies and help them expand through Australia by giving them access to The Catch Group’s resources.
SketchBook Ventures marked its unveiling last week with the announcement of its first exit, online wine deals site Vinomofo, which sold to a group of private investors for an undisclosed sum.
Hezi Leibovich, who co-founded The Catch Group with his brother Gabby in 2006, tells me that SketchBook Ventures aims to help Australian startups expand domestically, as well as enable international startups to enter the country through the company’s network.
Headquartered in Melbourne, The Catch Group comprises of online retail brands CatchOfTheDay, Scoopon, GroceryRun, Mumgo and EatNow. In May 2011, it landed $80 million in investment for a 40% share from group of investors including Tiger Global, Consolidates Press Holdings, Andrew Basset of job listings site Seek and Gannet Capital. That deal was ranked by the Internet Deal Book, an investment and acquisition database, as the 12th largest e-commerce transaction in the world that year.
“After six successful launches, we now have the formula, resources, experience and expertise to accelerate any business in the e-commerce space to the point of substantial growth and profitability,” says Leibovich.
He explains that Vinomofo was an ideal investment for SketchBook Ventures because the startup had strong supplier relationships, community-driven marketing and a unique approach to selling wine.
“They’re taking on an industry that was quite bland and they really used social media very well,” he says.
The Catch Group first invested in Vinomofo in March 2012, then helped it scale up by marketing through cross promotion with The Catch Group’s user base of 3.5 million shippers and giving the startup access to its supply, technology, production, warehousing and fulfillment resources. Over the last 18 months, The Catch Group says it helped Vinomofo grow four times and sign up almost 200,000 members. In turn, Vinomofo allowed The Catch Group to boost its wine offerings.
Leibovich says SketchBook Ventures’ goal is to focus on steering startups toward profitability instead of just reaching commercialization. The incubators’ team is looking for businesses that are complementary to The Catch Group’s retail properties and will integrate them into the company’s ecosystem, giving them access to the same resources as its retail brands in addition to funding. Leibovich is confident that SketchBook Ventures’ formula will help its other portfolio companies replicate Vinomofo’s success.
“We haven’t seen too many exits in this space [in Australia] yet and I would say compared to the U.S. it’s still an immature market,” says Leibovich. “I think it’s an opportunity for more success stories in the next five years. That’s to our advantage.”