16. July 2013–
Was there ever any doubt? The Rocket Internet empire is built on Oliver Samwer's ability to win over investors – and today, the Berlin-headquartered company builder revealed it had raised $500m from major partners AB Kinnevik and Access Industries since May 2012.
Some of that money is old but the implication for how quickly Rocket Internet is raising funds is new. About 80 per cent – or $400m – came in the first half of 2013. Add the $650m raised by Rocket Internet's portfolio companies from other investors in the same period, and it makes over $1bn raised by Rocket Internet in just 26 weeks.
It's not clear how much of a stake Rocket Internet gave up in return for that $500m. A press release from Swedish bank AB Kinnevik today said it maintains a 24 per cent stake in the company builder.
Rocket Internet: 75 companies now, 200 in five years?
German brothers Oliver, Marc and Alexander Samwer set up Rocket Internet in 2007. Before that, they'd built up a track record of investment and company building, including the sale of eBay clone Alando to eBay for about $50m in 1999.
Right now, Rocket Internet spans about 75 ventures in over 50 countries. Together, those companies employ about 20,000 people and have a projected combined turnover of $3bn. Many are classic eCommerce plays – fashion, electronics, furniture – but the company is also active in mobile payments, taxi apps and food ordering. The company said today it "expects to have 200 to 250 companies in five years".
Not all ventures are successful – Rocket Internet has a reputation for shutting shop quickly if needed, with OfficeFab in Southeast Asia as the most recent example – but many have managed to become leaders in important categories and markets.
In fashion eCommerce, for example, Rocket Internet claims Dafiti (Latin America), Lamoda (Russia), Zalora (Southeast Asia), The Iconic (Australia), Namshi (Middle East) and Zando (Africa) are all leaders in their markets. It also helped found and holds a stake in Zalando (Europe).
The same apparently goes for general merchandise eCommerce companies Lazada (Southeast Asia), Linio (Mexico, Colombia, Peru and Venezuela) and Jumia (Africa) and for online furniture plays Home24 (Europe) and Mobly (Latin America). Rocket Internet also claims Westwing is the "market leader for home and living in Europe, Russia and Latin America".
It's hard to check this without knowing the exact figures – the company said today that claims of market leadership are based on "revenue, numbers of orders, funding".
"I believe today you need a lot more money than in the past."
As today's statement points out, Rocket's target regions – Europe, Russia, Latin America, Africa, the Middle East, India, South East Asia and Australia – together cover five billion people and 60 per cent of global GDP.
Building the capacity to service them – and, in emerging markets, doing it quickly enough to overwhelm competition before it can take hold – is expensive. Germany's Manager Magazin, which this year published a series of in-depth articles on the Samwers' plans, has estimated Rocket Internet's burn rate at about €50m per month.
"What I want to talk about today is the Formula One of startups – the top 100," Oliver Samwer told a crowd of would-be entrepreneurs at German business school conference IdeaLab! last year. "I believe today you need a lot more money than in the past. In America, they still tell you in the blogs and so on that you need less money because IT got so cheap. That's true but you need to be the very early guy because if not, there's much more competition."
Kinnevik is one of Rocket Internet's longest-standing and most steadfast investors, joining as a partner in 2008. Access Industries, led by US billionaire Len Blavatnik, was first reported to be joining with an investment of about $200m in May 2012.
Other investors to back Rocket Internet and various of its portfolio companies include JP Morgan (which helped fuel rumours of a pending IPO), Summit Partners and wealthy individuals or families hailing from Colombia, India, Germany and the Ukraine.
Samwer has proven his ability to raise funding and build market leaders in eCommerce, probably more so than anyone else on the planet. The next challenge: doing the same outside of eCommerce – and turning a profit.
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