Australian tech incubator Pollenizer has partnered with APN News & Media to fund a vehicle for testing digital business models, after APN invested in Pollenizer-backed start-up Friendorse.
APN has taken a 25% stake in Friendorse following a successful trial of the start-up. Friendorse is a neighbourhood-based community recommendations web service for local businesses.
The online start-up is backed by Pollenizer, a Sydney-based tech incubator that has co-founded more than 25 online companies, including group buying website Spreets, which was acquired by Yahoo for a reported $40 million last year.
In addition to Friendorse, APN and Pollenizer will jointly fund a vehicle that will look for new digital business models complementing APN’s core activities in publishing, radio and outdoor advertising.
“The idea behind this is we’ve got a bunch of great media assets, so there are opportunities around social, local and mobile,” APN chief development officer Matt Crockett says.
“The best way to pursue that is in partnerships with entrepreneurs.”
“They might come up with an idea, which will go through the Pollenizer [incubation] process, or an ‘intra-preneur’ – someone who works for APN – might come up with idea.”
“The idea is to take those start-up ideas and see whether they work… We’re going to start putting through one [idea] a quarter and we’ll see how we go. We’ll see how that process works.”
APN and Pollenizer will fund the vehicle on a 50-50 basis, although no initial funds have been invested. Crockett says Pollenizer was a standout for its unique business philosophy.
“We came across Pollenizer because we are both very active in digital media and the early stage start-up space…. APN liked their philosophy and approach to business,” Crockett says.
“Friendorse interested us… Social commerce opportunities will increase substantially over the next year to five years and beyond. It’s one of the big trends already playing out.”
“Friendorse is focused on recommendations in the local area. So if someone’s looking for a plumbing service, other people basically recommend that.”
“It takes word-of-mouth and puts a social media spin on it. It enriches our local online media proposition.”
“We’ve done a lot of work on our regional online strategy and we think the sweet spot is to make it even more local. We’re looking for things that are new but leverage off our other assets.”
Crockett says APN only took a 25% stake in Friendorse because the business itself is unproven.
“We don’t want to 100% acquire a business too early in its lifecycle… We’re seeing if we can add value and then, depending on what happens, we will increase that stake.”
As part of the deal, Crockett will sit on the Friendorse board. The company will also be directly involved from an operational level, namely ongoing trials and the ramp-up of the business.
“Friendorse management will be working with our Australian regional management business. I’ll be helping to coordinate the activities,” he says.
Pollenizer co-founder Phil Morle says APN’s entrepreneurial approach, combined with a strong position in local markets, provides the perfect platform to facilitate the growth of Friendorse.
“I think the best way to talk about the 25% stake in Friendorse is to provide context about the partnership with APN and Pollenizer,” Morle says.
“Since the Spreets deal, we’ve been in a number of talks with companies about corporate innovation. APN showed recognition that entrepreneurs work a certain way.”
Morle says big companies often suffocate the start-ups they invest in, “so this deal is around not doing that”.
“Friendorse is still extremely independent but has a pathway with APN, which is helping us reach new local markets,” he says.
With regard to the jointly-funded investment vehicle, Morle says APN was attracted to “the inception process that Pollenizer has internally”, so the companies will go through that process together.
“We’re feeding into a number of ideas which they’ve identified as great opportunities in the new media landscape,” he says.
Crockett is encouraging entrepreneurs to come forward, providing they are clear about their ideas.
“Please come and talk to us. We’ve very open and part of what we’re keen to do is get the word out there. We take an entrepreneur-friendly approach,” he says.