The next wave of Australian online success stories will be found in services businesses which provide consumers with options for hiring tradespeople and other products, one of the country’s leading digital entrepreneurs has said.
Patrick Grove, who is the chief executive of the Catcha Group and was listed on the BRW Young Rich list in 2012 with a fortune of $70 million, also told SmartCompany more entrepreneurs need to investigate how to do business in Asia.
“Australia is a market with 20 million people, but you get on a plane for five or six hours and then you’re in the middle of 300 million people,” he says.
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“If you look at the people on the BRW 200, many of them went overseas early in their business careers. You can’t just focus on one country – there’s a lot being done there and a lot of opportunities.”
Grove has a significant history with entrepreneurship in Australia. In 1999 he started Catcha.com, which raised several million from private equity and angel investors. But a plan to go public was abandoned during the dot-com bust.
Shortly afterwards, with the company still suffering under millions of debt, he started a publishing arm through Southeast Asia. By 2005, he had bought the business through a management buyout.
During the second half of the 2000s, Grove acquired a property business, iProperty, which listed on the ASX in 2007. Catcha’s other major project, iCarAsia, sold a major stake to CarSales last year.
Most recently, he said he will invest $150 million in online businesses across Asia.
Grove says the next major trend in successful online ventures in Australia will be connected to sites such as Seek and CarSales. Businesses which focus on services will do well.
“REA has nailed buying and selling a house, but what about renovating a house, or looking at a mortgage?”
“Even websites for finding services like plumbers. Online is becoming a great marketplace for that, and websites with matchmaking experiences such as these will be in the next wave of sizeable online companies.”
The growth of online financial products aggregators is a good example of this, he says. iSelect has enjoyed significant success and is now preparing for an initial public offering.
Valuations in price comparison sites have risen alongside iSelect’s success. Two years ago the business sold a 10% stake valuing the company at $300 million.
Grove says these sites will depend on smartphones, which is another key area small businesses should be focusing on.
“Whether it’s booking a restaurant or a seat at the cinema – anyone who makes that experience painless on a mobile is going to create a good business.”
However, Grove says there is still a lack of venture capital investment in Australia which is holding businesses back.
“There’s plenty of angel investment, but it’s all about getting to the next level,” he says.
“I hear from plenty of guys who make $1 million in a business, so their idea works. But they need funding to get through the next 12-18 months.”
“Asia is experiencing the same situation.”
Grove says budding Australian entrepreneurs should try their luck in Asia, where many ecommerce ideas are still lagging behind the Australian market.
“There are a lot more Australians now in Asia than there were 15 years ago, so there is a lot more infrastructure to rely on there.”
Grove also says while the trend of online investment is heading in the right direction, “more needs to be done”.
“I love it when someone has a great idea, and is able to do something good. I know people have invested in me and my ideas and that’s greatly benefited me… so I hope there are plenty of people out there who can find the funding they need.”