Exclusive: Alan Knott-Craig buys MXit, Herman Heunis steps down

A few weeks ago Memeburn revealed that instant messaging platform MXit was rumoured to be in sale talks with startup investment firm World of Avatar. We can now confirm that those rumours are true.

The acquisition will see current MXit head, Herman Heunis step down, with Alan Knott-Craig Jnr, the World of Avatar boss, taking over as CEO. The deal, which was finalised earlier yesterday, involves World of Avatar buying out both Heunis and Naspers, an US$18-billion emerging market media giant.

Naspers, which also has stakes in Chinese IM TenCent and an indirect stake in Facebook, acquired a 30% interest in MXit in 2007. The new deal will see World of Avatar become 90 percent owners of the company while 10 percent will remain in a staff trust.

The Stellenbosch-based World of Avatar, which appears to be targeting internet startups, is a relatively new investment firm. It was founded by Knott-Craig, the former head of iBurst and the son of former Vodacom CEO Alan Knott-Craig Snr.

Knott-Craig was unable to give the exact figures of the deal, but confirms the funding was raised from private investors such as businessman,Francois Swart. Memeburn sources put the deal at around R500-million.

The World of Avatar has been quietly investing in a range of local startups, including free SMS service FSMS, online organiser Toodu and politics-focused online publishing venture Daily Maverick.

MXit was launched in 2005 by Heunis and has seen impressive growth both locally and globally since its inception. The service now claims to have around 40-million registered users “posting 700-million messages a day” — and is even used by the US-embassy to communicate with African audiences.

“Creating and building MXit has been an enormously interesting journey for me, and I have had a lot of fun, but it is time to inject new and young energy into the company, and I believe that Alan and his team will do a superb job,” says Heunis.

In an exclusive interview with Memeburn, Knott-Craig Jnr revealed that he has been in talks with MXit for the better part of this year: “About seven months ago I got wind that MXit might be selling, so I called up Herman Heunis, we had a coffee and I said to him, ‘if you guys ever wanted to sell let me know’ and that’s how it began.”

The deal, which Knott-Craig says should have gone through in the space of a month, was halted by the global financial crisis, prompting renegotiation.

Knott-Craig claims that he has some changes in mind for the IM platform but that they are “nothing drastic”. Knott-Craig says the core MXit community will remain the same but wants to focus on “what MXIT is good at and that is communication”.

He hinted that MXit would focus on what it does best and that some of its functions, such as advertising, would be handled rather by another arm of his company.

Knott-Craig explains that he would like to tell the story of MXit which he says is “a success story of likes of Facebook in its own context”.

“Twitter does 8-billion messages a month, MXit does 22-billion a month. Your average Facebook user spends 15 hours a month on Facebook, your average MXit user spends 45 hours month on MXit, people don’t know this. It is a massively engaged, massively active audience.

“We have to keep that community trusted, it can never be the case of Facebook where your information is available to advertisers, this is why I am heading there personally to run the show. Herman has done a good job of keeping the community guarded, the data is not sold and that is key and we need to keep that,” says Knott-Craig.

MXit is available in 128 countries. It is represented in international markets that include Malaysia, Kenya, India, Indonesia, United Kingdom, United States, Nigeria, Brazil, France, Germany, Italy, Portugal and Spain, where users have access to MXit’s chat function.

This deal is possibly the biggest of its kind in sub-Saharan Africa, Knott-Craig says.

See video on MXit’s growth below.