28. March 2013–
Following news last week of Oliver Samwer, Marc Samwer and Fabian Siegel's new €150m VC fund, we take a closer look at the opportunities and challenges ahead:
In Rocket Internet's Berlin HQ reception, there's an excellent, enormous poster detailing the various venture capital flows in Germany. Who backs what – and what, therefore, are the relationships between investors?
That's one of the questions facing Global Founders Capital, the new €150m investment fund from two of the three Samwer brothers behind Rocket Internet. Oliver and Marc Samwer are partners at the new fund, together with former Delivery Hero co-CEO Fabian Siegel. The latter left his role at Delivery Hero in January 2013.
The Samwers: the road to Global Founders Capital
Global Founders Capital will be stage-agnostic and able to invest anywhere between €100k and €10m. The fund will focus on markets traditional VCs have tended to overlook, including Africa, South America, the Middle East and southeast Asia.
It's likely to lean towards the business model the Samwers and Siegel know best – eCommerce – but, according to an interview with TechCrunch's Ingrid Lunden, is likely to branch out into apps, big data and other areas of online commerce.
One big difference compared to peers: portfolio companies will gain access to Oliver Samwer, one of the most prolific and prominent internet company builders.
Founded in 2007, the Samwers' Rocket Internet now spans over 50 active portfolio companies in over 40 countries. This includes fast-growing copycats of eBay, Amazon and Zappos in Europe, Africa, southeast Asia, the Middle East and South America.
The portfolio also includes Payleven (inspired by Square's first product), Paymill (inspired by Stripe), Dropgifts (a copycat of Wrapp) and Pinspire, a shameless clone of Pinterest. In 2009, the Samwers sold clone CityDeal to Groupon and Marc and Oliver became key influencers in that company's rush for international growth.
Before Rocket and CityDeal, Oliver, Marc and Alexander Samwer made their name with eBay copycat Alando, founded in 1999 and sold to the original for $50m that year. Then came ringtone company Jamba, sold to VeriSign for $270m in 2004.
With a few exits behind them, the brothers set up their first fund, the European Founders Fund (EFF) in 2006. In the next three years, with financial backing from Germany's United Internet, the EFF made about 100 investments including Eventbrite, LinkedIn, HomeAway and Trivago (which sold to Expedia late last year for about €477m).
While the name and strategy are different, Global Founders Capital is essentially a successor to the EFF (which hasn't been active for the last few years). The funds share legal infrastructure and are registered to the same address in Munich.
"Oliver wants to participate in everything"
So why set up the new fund now, apart from having a little extra cash to invest – possibly from the Trivago exit?
Rocket Internet – even with 27,000 employees around the globe – can't do everything. "Rocket does some things very, very well; other things they don't do so well," Siegel (pictured above) explains, from his temporary office at Rocket Internet in Berlin.
"And then there's certain things Rocket is just missing – it's too late, somebody else has done it. Rocket does so many things; it can't do everything. But Oli wants to participate in everything. So that's where the fund comes in."
Keeping a healthy distance from Rocket Internet
The close-yet-separate relationship between Rocket Internet and Global Founders Capital may be a tough balance to nail.
Rocket Internet is not the only company builder to have started a VC fund – in 2011, for example, the investment branch of Team Europe (an investor in our parent company Vertical Media) spun off to become Berlin-based "angel VC" Point Nine Capital.
Still, we note that Team Europe's partners Lukasz Gadowski and Kolja Hebenstreit left Point Nine's investment committee earlier this year. At the time, Point Nine Capital's Pawel Chudzinski said it was a move to help distinguish Point Nine’s independence from the company builder. The VC firm also makes it explicit that they'll strictly honour requests not to share investment proposals with advisers from Team Europe.
How will Global Founders Capital grapple with its relationship with Rocket Internet? For a start, the fund's limited partners are different to the investors in Rocket Internet, according to Siegel. A "big part" of the €150m fund comes from the Samwer brothers, he told the Wall Street Journal. It's not clear who else is involved.
This will help – Oliver Samwer won't be keen to back companies that can directly compete with Rocket Internet. Meanwhile, Global Founders Capital's other investors will have no interest in giving up advantages to Rocket.
But what about entrepreneurs who pitch but don't win investment? Founders are wary enough about sharing info that could later be given to a competitor. What if that potential investor is also a notoriously aggressive company builder?
"I don't think there's a big risk from that perspective – that we pass on a deal and take that info and feed it to Rocket," Siegel says. "I wouldn't do that. But, taking that aside, it's not an efficient strategy... If you really want to learn about something, you look at the website, you talk to the people and you talk to the people around it. So if Rocket's really interested in something, they wouldn't need to set up a fund structure to somehow syphon off information."
Also, he adds, Global Founders Capital is only interested in companies who've launched. "Not because I don't want to see the idea to ensure I would not give it to somebody else – I just don't believe it's our business. I really like to see people to have launched something by themselves. It shows me they're entrepreneurs, that they get it done against all odds."
Maybe it's not fair to put Global Founders Capital under unusual scrutiny – as we noted, they're not the only company builder to have started a VC fund – but the Samwers are not ordinary investors. While Siegel also has a high profile in Germany, founders around the world will most likely pin their thoughts about Global Founders Capital to their thoughts about the Samwers. The next year will tell how that pays off...
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