Following his exit from Qunar, Fritz Demopoulos has set up his own investment fund, Queen’s Road Capital and he has one simple rule when it comes to making bets.
“I like countries with big population, bad traffic and people don’t follow the rules of the road. That smells like an opportunity to me,” he said.
Which probably explains the investments he’s made so far, all of them in emerging markets and in broad categories.
He said, “I continue to be excited about online travel distribution opportunities. However I am also looking at advertising technologies, artificial intelligence opportunities, online games and entertainment.”
Thus far, he’s invested in a Beijing-based ride-sharing company, Wodache.com (Mandarin for ‘I hail a car’). Described itself as “the most trusted carpooling social network in China”, Wodache was co-founded by CTO Jeff Hsu (formerly at Microsoft Research and Apple) and CEO Eric Wang, who worked at Merrill Lynch and Morgan Stanley.
On their Vimeo channel, they said, “Traffic congestion costs the Chinese government US$150 million a day. Therefore, we are dedicated to relieve China's commute problem by building a mobile platform called Wodache.”
Said Demopoulos, “This is collaborative consumption and is an exciting category. General Motors and Volkswagen have invested in this space.”
He’s also made a bet on IPINYOU, a digital ad technology platform in China, which in March launched the first DSP product (demand-side platform) in the country.
DSP has been described as “an indisputable mainstream trend of Internet advertising development for the future”.
This report in Yahoo Finance says, “DSP plays a significantly important role in the Internet display advertising space, which enables the industry to become more transparent, efficient and controllable.”
Co-founder and CTO Xuehua Shen, explaining the key components of a DSP, said in this interview, “I believe a DSP should have two key components: real-time bidding (RTB) and data-driven audience targeting. Without RTB, we miss impression opportunities. Without data-driven audience targeting, we could not take full advantage of optimization opportunities brought by RTB. Besides real-time bidding and data-driven audience targeting, a nice user interface and multi-dimensional reporting for advertisers are also important.”
Outside China, Demopoulos has invested in the Russian hotel OTA, Ostrovok. In Indonesia, he’s exploring online games and in Brazil, a commerce platform. “I am interested in emerging markets and broad categories.”
He said, “Large emerging markets are exciting. There’s an emerging middle class. Consmers are excited to spend money, travel is an aspirational product. We are seeing that develop in Russia and there are lots of good people and entrepreneurs there.”
Asked if his experience in China would translate well to his investment in Russia, he said, “Broadly speaking, developing markets might have similar challenges, online penetration rates, less developed payment systems, protection stuff– yet at the same time, every market is different in very unique ways.
“Russia is more outbound, more leisure and more packaged. China is largely domestic, more independent-focused, and business travel is bigger than leisure. Any good entrepreneur would like to learn from past experiences and connect the dots, yet he is smart enough to realise that some connections can’t be made.”
While he acknowledges that emerging markets are high risk, “the key is to focus on the areas you know and have synergies with the experience you have”.
He thinks domain expertise is how venture investors have to compete “in terms of adding value to the companies and making a return on investment”.
“There are new model of investing emerging, individuals with informal networks who come together to make deals – I believe more and more things will move in this direction.”
He describes himself as an “active” investor. “I provide value across three vectors – domain expertise, corporate business development and CEO mentoring and proximity to the experiences of China. Every company in the world needs a China strategy.”
In China, one category that’s struggling is deal sites, with 5,000-6,000 sites started last year. “There’s an over-investment of resources in this category. The broad trend is the market continues to ebb and flow very quickly. Deals were hot one time, now they are getting beaten up.
“Social commerce and social media taking of like a rocket and investors chasing that. There are probably 50 clones of Pinterest now. Ganji (a Chinese version of Craig’s List) has come up with a AirBnB clone – there are still questions as to whether it will work – and it’s debatable if anyone over 31 will use it.
“Ecommerce was hot last year, this year there is some consolidation.”
What he’s keeping a watch on are collaborative consumption, big data and analytics and the next gen predictive technology.