Emerging Online Champions

"They may not have the name recognition of Google or Yahoo!, but they can claim to play in the same league," acknowledges The Economist. DST, Naspers and Tencent have made promising Internet investments in many emerging markets - and are becoming widely recognized in the West.

The websites of Digital Sky Technology (DST) account for more than 70% of page-views on the Russian-language internet. DST was created in 2005 when two Russian investors, Yuri Milner and Gregory Finger, pooled their interests in mail.ru. Naspers is Africa's biggest media group, both online and offline. Based in Cape Town, the company is one of the most ambitious old media companies anywhere in its move online. Last but not least, Tencent is China's largest company by market capitalisation - and the third-largest in the world. In 2009 it had revenues of 1.8 billion in 2009 with much of its profits come from online gaming and their virtual currency.

Despite their differences, the three companies can be seen as one block: the firms are financially intertwined; they on the same mission finding promising internet companies in countries where Western investors rarely dare to go; and their international presence allows them to apply lessons they have learned in one country to another. Alexander Tamas, a DLD friend and partner at DSD calls this "geographical arbitrage".

Generally, DST is of special interest as it figures as the pioneer of applying the emerging-markets lessons in the West. In the case of the Facebook investment, DST agreed to what at the time seemed a high valuation, waived any right to special treatment should things go wrong and was willing to buy stock from employees. That is especially popular with young internet firms because it allows founders and key employees to make money without having to sell the company or go public prematurely. "This is an IPO substitute," explains DLD friend Yuri Milner.

The Economist concludes, that internet investing is going global and the West is losing its monopoly, not just to thinking up clever ideas for web businesses but in financing them, too.

If you want to learn more about the new trends of investment, don't miss to watch the DLD10 panel "Invest" with DST's Alexander Tamas below and be sure to check the Spotlight panel with Yuri Milner and Jim Breyer moderated by David Kirkpatrick over here.