Entrepreneur Domenic Carosa’s investment company Dominet has bought SMS services company, SMS Central from D2 Marketing. The acquisition was believed to cost less than $1 million.
The purchase follows two other recent acquisitions in the SMS sector: 199-Bongo, bought from Commquest in April 2009 for $2.35 million, and 199-Query, acquired in July.
“This acquisition further consolidates Dominet’s position in the Premium SMS space,” Carosa says.
“We will be leveraging the SMS Central technology platform to help us achieve further scale and vertical integration across our 199Bongo.com and 199Query.com premium SMS businesses.”
Carosa, who founded digital media and marketing firm Destra, which was placed in administration in 2008, says he now has about 14 investments in companies.
“We are not a traditional venture capital firm but a venture accelerator,” he says. “We build the companies up and then we might package some together for a trade sale or sell them individually, usually to public companies.”
Carosa says he has a number of investors in his group including Simon Baker, Danny Wallace and Andrew Abercrombie, and they are looking for more internet mobile companies that are highly scalable, don’t need too much hands-on attention and “make money while we sleep.”
Carosa says he has indentified a gap in the marketplace.
“There are public companies looking for $2 million to $10 million transactions and they need to buy to either fill a gap or they need to buy an internet company for strategic reasons.”
He says there are a lot of companies that fill that criteria but they lack capital and expertise to prepare for the trade sale. “There is a huge amount of talent in Australia,” he says.
He says entrepreneurs still think their companies are worth more than they are.
The market is still quite conservative in terms of valuations, but the merger and acquisition space is heating up.
“We haven’t had much competition in the space we play in but we have seen more activity this quarter and we will invest in a number of assets in 2010.”
He says that Dominet takes a stake between 20-100% in its investments.
“But typically we take 40% as it gives us skin in the game.”
Success for Carosa is the VC mantra: out of ten investments, a few will fly, a few will flop and the rest will break even.
“So far we are ahead of that curve.”
Carosa says he is keeping the company private for now.
“However Future Capital is one of our funds that we might IPO late next year.”
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