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Business Switch – Takes 5% Equity Stake In Hong Kong Start-up AfterShip: Strategy

Business Switch takes 5% equity stake in Asian start-up

By Michelle Hammond
Friday, 22 June 2012

Sydney-based company Business Switch says small businesses should consider investments as a way to enter foreign markets, after the company took a 5% equity stake in a Hong Kong start-up.

 

Business Switch, founded in November 2008, describes itself as an entrepreneurial company focused on innovation and investing in the B2B online space.

 

The company owns and operates an online business registration service, an online forum for entrepreneurs, as well as niche online business services in Australia and internationally.

 

“We are strong advocates of start-ups and small business,” the company says on its website.

 

Its most recent investment is in Hong Kong-based start-up AfterShip, an online business providing package tracking for online retailers and their customers.

 

Business Switch has taken a 5% equity stake in AfterShip for an undisclosed sum. The specific financial terms of the investment are undisclosed.

 

AfterShip only launched its web application 16 weeks ago, yet it has sent more than 67,000 delivery notifications to customers, and is experiencing more than 42% growth week on week.

 

The funds will be used to improve and scale the current application process across more shopping cart platforms, and also to build international market share.

 

Business Switch managing director Matthew Abrahams says investing in AfterShip “made absolute sense to us”.

 

“We met dozens of companies seeking investment from Singapore, Hong Kong, Beijing and Tokyo during recent visits to the region, and AfterShip was a clear standout,” Abrahams says.

 

“They have a great online product, management team and strategy… AfterShip solves a big post-sale problem for online retailers – managing delivery expectations of customers.”

 

AfterShip co-founder Teddy Chan said in a statement Business Switch has demonstrated a clear understanding of the start-up’s value equation to online retailers and their customers.

 

“We welcome Business Switch as founding investors in our business… It is an exciting time for our business, and the support offered by Business Switch is greatly valued,” Chan said.

 

Abrahams says while there are some great opportunities in Australia and offshore – with regard to investments – they are often overlooked by smaller businesses.

 

“We don’t see enough companies looking at investing in other companies,” he says.

 

“Most companies focus on the organic business growth and less so on the acquisition opportunities.”

 

“While the big players are constantly looking at merger and acquisition opportunities, start-ups and small businesses do not even think about it, and that’s a shame.”

 

Abrahams says investing in an Asian company can be an ideal way to enter the market, but first-timers should set their sights on some of the more western-oriented Asian countries.

 

“For someone looking at a business in Asia or investing in Asia, there are language and cultural hurdles that are significant,” he says.

 

“For first-timers, I would probably consider stepping into the market through Singapore or Hong Kong, where English is spoken at a satisfactory level.”

 

“Where it gets very high-risk in Asian markets is countries like Japan and China, where a business will face significant costs and not be able to deal directly with a prospective partner – they will need an intermediary.”

 

“Markets like Singapore and Hong Kong are a natural stepping stone.”

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Om the money. I lost a small fortune trying to build a business in China without any firsthand experice. Ouch!

It isn't just start up costs. You have to factor in a significant additional charge to all costs. Including confusion costs.

Not being able to pick up a phone and speak directly to a partner can be expensive with middlemen. And incredibly frustrating!



Tom Davies , June 23, 2012
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