Internet veteran Dominic Carosa says investor interest in online businesses is strong

Internet investor Dominic Carosa says appetite among investors for internet companies is strong and says the GFC has helped push cost-conscious consumers towards online businesses offering “lower cost alternatives”.

The prediction comes as Carosa launches a capital raising for one of his websites, MailingLists.com.au, with the intention of pushing into America and Asia.

“There is definitely an appetite for internet companies, particularly internet companies that are dealing with transactions,” he says.

“I actually think we’re going to have a second dotcom boom. We just saw the online advertising industry hit $2 billion in 2010, so I think there’s some real traction for this space and really, the GFC was fantastic for internet companies. People look for lower-cost alternatives.”

The internet veteran also says he will be seeking out a few more internet-based investments in the foreseeable future, but declined to give specifics.

Carosa says he identified a gap in the funding market when thinking about how to raise money for MailingLists. With angel investors only focussing on funding less than about $100,000, and venture capitalists providing amounts over $5 million, Carosa says a capital raising will provide about $1 million of necessary funding to expand overseas.

MailingLists helps businesses develop their marketing databases and create mailing lists, whether digital or online. Carosa claims there is “definitely an appetite for these types of businesses”.

“We found that with this gap in the market, we’re able to use the WholesaleInvestor business to drive up demand for MailingLists. And we do think there is demand, because a recent survey found over 35% investors in Wholesale are interested in internet companies.”

Carosa believes the attraction for internet-based companies is that more Australians are now making traditional offline purchases on the internet.

He says this is why his Future Capital Development Fund pumped some investment into CheapHotels.com.au late last month, in order to capitalise on this growing trend.
Investors in Future Capital include Classified AdVentures boss Simon Baker, software industry veteran Danny Wallis and FlexiGroup founder Andrew Abercrombie.

“If you look at the United States, about 35% of all the hotel bookings there are made online. In Australia, that’s about 17%, but I believe that is growing. I can’t believe people are still booking through agents, but that’s going to change.”

CheapHotels allows users to book on a network of hotels over 100,000 strong, with constant discounts of as much as 75%. Carosa says these types of online booking agents are part of what investors will be seeking out in the next dotcom boom.

“I think we’re going to see Australian hotel bookings move more towards the 35% within the next two years, and I think investors are really looking for these types of services.”

“When I say a boom, I think we’re going to see investments that are based on much more fundamental things, not speculation. So the spaces I see growing are those where there is an existing market offline, and more people start to do that online – like hotel bookings.”

Carosa says this is a relatively simple business model to maintain because it entails moving customers across to a new platform, rather than having to market a completely new product.

“Just watch this space. We’re going to make a few investments in this area, those markets that have traditionally operated offline. We think we can move them online and provide a better service, and better pricing.”