It was reported last week that SPH Media Fund (the venture capital arm of SPH) led a S$2.8 million investment round to invest in MoneySmart.sg. For those of you who are not familiar with the personal finance space (the fact that you are reading this on DollarsAndSense.sg suggests that you already are), MoneySmart.sg is among Singapore’s most well-known finance portals for consumers, offering a mixture of personal finance comparison tools across products such as loans, credit cards and insurances.
MoneySmart.sg also differentiates itself from other comparison websites that sprung up in recent years by maintaining a content arm which has a large and useful library of original personal finance articles relevant for Singaporeans.
SPH Making Investments Across Various Sectors
According to the company, the investment is part of a Series A (a term used to describe the first formal round of fund-raising by a company) and SPH is the lead investor, but not the only investor. Thus, this investment made in MoneySmart.sg is far from a takeover.
Nonetheless, it does send out a signal that is consistent with SPH’s moves for the past 7 to 8 years – that it is looking to make investments across various verticals to expand its traditional media business.
The company is not new to acquiring or investing in media start-ups, having previously paid S$18 million in 2008 for another finance portal in ShareInvestor.com. It also bought over SG Car Mart for S$60 million in 2013 and the HardwareZone Forum for S$7.1 million in 2006. It invested S$30 million for 60% equity in the Singapore Real Estate Exchange (SRX). SRX is in the property sector and allows SPH to gain a foothold into the property market, particularly to compete with PropertyGuru.
These are sizeable investments being made by a big company and it hints that future growth could be about expanding one’s presence in the online scene by acquiring or investing in proven players.
Media Companies With Integrated Marketing Platform
Both MoneySmart.sg and SG Car Mart share very similar core fundamentals in their respective business. For starters, they are both homegrown Singapore companies that provide a hyperlocal approach towards the subject area that they both are in (Personal Finance & Cars). They have proven platforms that enable for the listing of products as well as transaction to take place online. These are incredibly powerful tools.
At the same time, both these companies could potentially stand to benefit from the synergy that could be derived from being part of the SPH Group. SPH as a media company already have their own finance and car sections on their daily newspapers. They also have magazines such as Torque (car magazine), which could always team up with SG Car Mart as part of a bigger network that SPH has.
There are other players in Singapore that are acquiring media start-up as well. In 2012, SingTel acquired HungryGoWhere for S$12 million, best known for being a website that provides independent food reviews in Singapore. SingTel themselves are also making headways towards the online content scene, having its own news aggregator app, NewsLoop.
Acquiring Beyond Just Media Companies That Are Customers Facing
The network for acquisition extends beyond companies that are just “customers or readers facing.” Earlier this year, influencer network Gushcloud was acquired by Yello Digital Marketing (YDM), a US$1 billion company from Korea for an undisclosed sum supposedly beyond S$10 million, not bad for a company which started in 2011, and had to deal with crisis communication prior to their acquisition.
Gushcloud main rival, Nuffnang, could be said to be ahead of the curve compared to other start-ups. Earlier this year, the company, via its holding company Netccentric, raised a total of US$9.35 million during their Initial Public Offering (IPO) on the Australia Stock Exchange.
What was interesting to note was that its founders, Timothy Tiah & Cheo Ming Shen, still owned a massive 98% of the shares of the company prior to the IPO. That meant it took hardly any outside investments into the company since it was founded in 2006. The IPO also meant that the current valuation of the founders stake in their company would be worth about S$24 million each.
Online Publishers That Are Just Getting Bigger
Another online publisher that is starting to grow bigger with every passing day is TechInAsia (TIA). The irony about TIA is the fact that they are subject matter experts themselves when it comes to start-ups. So you would expect, of all start-ups, for them to make the “better” decisions.
Founded in 2011 by Willis Wee, TIA have grown from strength to strength becoming a force to be reckoned with similar to TechCrunch. The start-up raised US$4 million earlier this year, and counts Facebook co-founder Eduardo Saverin among its pool of investors.
TIA have also done its own acquisition, buying over what could be called a similar website in tech blog SGEntrepreneurs in 2013. SGEntrepreneurs co-founder Terence Lee is now Managing Editor of TIA.
According to DealStreetAsia, another tech website, e27, might even be considering an exit with TIA potentially a buyer. This is of course, speculation based on insider information, which cannot be verified. However the point we are making is that building a big enough brand by way of acquisition could indeed be one realistic and lucrative method to growing quickly.
Buying Growth Vs Growing Organically
Back in university, we recalled learning on how merger and acquisition deals usually underperformed for big companies acquiring other big companies. The reasons for that include synergy not being easily realized, as big companies with many employees would find it difficult to merge their culture and operations with another company.
However, the acquisition of start-ups could prove to be an exception to this. Start-ups are typically more dynamic, have lesser bureaucracy and hence, can adapt quickier to changing environment. This makes them easier to absorb and are hence, potentially good assets to pick up.
Maybe, just maybe, the tide could be turning for the start-up scene in Singapore.
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