GCV Powerlist 2017: #4 Larry Illg

It is somewhat ironic that one of the world’s most successful venture investors for nearly 20 years only last year formally set up a unit using the word “ventures”.

Then again, South Africa-listed media and commerce group Naspers has always been iconic following its initial standout success in backing China-based media group Tencent, with its near-$300bn market capitalisation, and then following up with a host of other landmark deals in emerging markets around the world.

But its approach to investing in developed markets changed in late 2015 from avoidance – after some middling deals in Europe in the 1990s – to active investments in the US.

Bloomberg reported Naspers invested $100m in Letgo, a US-based mobile classified advertising application, in September 2015, following up with a $175m in January this year.

Naspers CEO Bob van Dijk said at the time: “We will probably have more focus on the San Francisco Bay area than we have had previously. If we see the right opportunities we could see ourselves put a good amount of capital there.”

This led to the opening of Naspers Ventures in San Francisco in May last year under Larry Illg, a former eBay online auction company executive. Illg joined Naspers in 2013 from real estate listings platform Trulia, where he was general manager of new ventures. He was chief operating officer (COO) of Naspers’ e-commerce assets prior to taking the reins at Naspers Ventures, and last month hired Martin Tschopp as COO for Naspers Ventures.

Naturally, these moves raised the question of whether Naspers would focus on expanding the e-commerce activities that had helped fuel its rise. Also last month, Naspers, a shareholder of the Takealot South African e-commerce platform since 2015, invested about $72m to boost its stake to more than 53%, a few weeks after exiting Middle Eastern e-commerce company Souq in a $650m purchase by Amazon. Separately, its portfolio company Flipkart, raised $1.4bn from Tencent, Microsoft and eBay, which was formally announced alongside the acquisition of eBay’s India business.

But apart from reinvesting in Movile in Brazil, the initial venture deals under Illg and Russell Dreisenstock, head of mergers and acquisitions and international investments at Naspers Ventures, who moved from Singapore to the US last summer, indicate instead the unit is to help Naspers develop beyond media and e-commerce.

Naspers Ventures invested in Brazil-based online lender Creditas as part of a $19m series B round that included the International Finance Corporation and existing backer Redpoint eVentures, and also led a series C round for Farmlogs, a data analytics technology producer focused on agriculture, bringing its overall funding to $37m.

The main move has been into an education division through venturing and M&A, similar to the route taken by Germany-based publisher Bertelsmann over the past few years.

Illg is board director at Codecademy, which is “teaching the world to code”, Udemy, a learning and teaching marketplace, and Brainly, the world’s largest social learning network with 70 million-plus users.

Van Dijk said in a press release announcing Brainly’s round: “Naspers is consistently looking to invest in the leaders in markets that have global scale and the potential to be transformed by technology. The sizeable education market is a perfect fit.

“Improving education delivery is a huge focus in every region around the globe, and Brainly has identified a way that technology can help drive educational impact beyond the traditional classroom model. What is more, they have already proven their business works across geographies and we aim to accelerate their growth and impact worldwide.”

Outside the US, Naspers Ventures has expanded by opening offices in Singapore and India. Ashutosh Sharma has been recruited from venture capital firm Norwest Venture Partners to head the new office and will lead Naspers’ VC and M&A deals in India. Sharma was a vice-president for Norwest in India, having previously been an investment manager at Qualcomm Ventures, the corporate venturing arm of mobile chipmaker Qualcomm, between 2010 and 2012.

Naspers Ventures is already exploring deals in India, and is seeking to invest between $10m and $50m in companies developing consumer internet, e-commerce, healthcare, education and logistics technologies in return for a minority stake.

Naspers has previously invested about $1.5bn in India-based companies, including e-commerce firm Flipkart and Ibibo, the online travel booking platform acquired by competitor MakeMyTrip last year.