"Germany's Rocket Internet aims for SPAC in New York, sources say"

 These punks just went private.

Here's all you need to know about these guys, from 2019's "Germany's Rocket Internet Jumps 7.7% on Take-Private Speculation (RKET.GR)":

....We've been messing around with RKET since the IPO when this tidbit caught our collective eye:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)
—Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

 

They were running a little internet business plan clonehaus with one claim to fame, Delivery Hero, which actually wasn't even their deal. Rocket was like a D or E H round investor.

 

From Reuters, February 9:

German tech investment company Rocket Internet plans to list a special purpose acquisition company (SPAC) in New York to tap into investor interest in new offerings, two people close to the matter said.

Rocket, led by tech entrepreneur Oliver Samwer, is preparing to list SPAC shares worth 200 million to 300 million euros ($242 million to $363 million) in a deal organised by investment bank Citi, they said, speaking on condition of anonymity.

Rocket and Citi were not immediately available for comment....

....MUCH MORE

Our most recent mention was January 12's "Germany’s Delivery Hero Introduces Its Own Venture Capital Fund":

Here at Ouroboros Group we believe a self-referential vortex of strange loops is the key to exceptional market depravity and thus dream demon returns at rates essentially double those of typical simple ouroboros techniques and paradigms.*

Delivery Hero is one of only two of Rocket Internet's stable of clones that I could name (Zalando being the other). RKET itself was delisted after a going-private deal at €18.57, down considerably from its IPO price of €42....

"Germany’s Delivery Hero Introduces Its Own Venture Capital Fund"

Here at Ouroboros Group we believe a self-referential vortex of strange loops is the key to exceptional market depravity and thus dream demon returns at rates essentially double those of typical simple ouroboros techniques and paradigms.*

Delivery Hero is one of only two of Rocket Internet's stable of clones that I could name (Zalando being the other). RKET itself was delisted after a going-private deal at €18.57, down considerably from its IPO price of €42.

From PYMNTS:

German food delivery platform Delivery Hero is launching its own early-stage venture capital (VC) firm — DX Ventures — that will be managed independently to focus on advancing founder-led startups.

“Being a family of founders, investing in entrepreneurship is an integral part of Delivery Hero’s journey,” Duncan McIntyre, managing director of DX Ventures, said in a Tuesday (Jan. 12) press release. “We understand the opportunities and challenges these startups are facing because we have gone through them ourselves.” 

Aside from delivering restaurant food and groceries, the Berlin-headquartered company has made it part of its strategy to invest in top technology startups and “guide them on their path to lasting success,” McIntyre said.

DX Ventures will strive to combine global insights and local know-how to help startups grow, while also developing long-term partnerships with founders. The company intends to extend technical support and guidance throughout a startup’s lifecycle and is especially interested in assisting founders bent on disrupting traditional industries.

The early-stage VC firm has 50 million euros of initial capital and is planning to target worldwide startups in on-demand services, food technology, sustainable innovation, artificial intelligence, FinTech and logistics.

The company has extended more than 500 million euros in minority investments that include globally successful startups Rappi, Glovo and Impossible Foods....MORE

Previously:

Berlin's Delivery Hero set to Come Public

Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR) 

*intro last seen in 2018's "Unicorns Backing Their Own VCs? Welcome to Peak Tech"

"The humbling of Europe’s most-hyped startup incubator: Rocket Internet"

A sign there might be a problem with this one was a line in the offering documents:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)
—Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

Yeah, we've been following RKET for a while.*

From Fortune Magazine, September 1:

Rocket Internet, the German startup incubator that was once the darling of Europe’s technology sector and a thorn in the side of the Silicon Valley startups whose business models it shamelessly ripped off, announced Tuesday that it plans to delist from the Frankfurt and Luxembourg stock exchanges after seeing its shares fall 13% this year.

Rocket says it has plenty of access to money to fund its startups from private investors and doesn’t need the public markets anymore. But it's hard to read Rocket’s decision as anything other than a humbling blow for Oliver Samwer, Rocket’s brash cofounder and chief executive officer, who once boasted that he wanted to “own the Internet” and claimed his Berlin-based “startup factory” could churn out one successful tech firm after another.

Founded in 2007 by Samwer and his two brothers, Rocket’s formula was to find promising new online business models—usually copying those of fast-growing U.S. e-commerce firms—and rush to create copycat versions in different parts of the globe before the originals could expand internationally. Samwer claimed its companies could execute faster and better than tech firms elsewhere, giving them a competitive advantage.

Rocket helped put Berlin’s startup scene on the map. Many of the young business school graduates who flocked there to work for companies being incubated by Rocket have gone on to found their own technology startups or became local venture capitalists.

But Silicon Valley entrepreneurs and investors have long griped that Rocket merely produced “built-to-be-bought” clones that did little but exact a tax on American innovation—forcing the U.S. pioneers to spend more to enter new markets. Critics also accused Samwer of pumping up the valuation of Rocket’s startups through venture capital rounds led by his own, separate startup investment fund, Global Founders Capital.

Rocket did not respond to Fortune’s request for comment.

Controversial growth metrics
Rocket's tendency to overvalue its own startups became apparent once the company went public in October 2014. Rocket used a controversial metric, called last portfolio value, or LPV, which valued these startups based on their last financing round—even though those rounds often involved Rocket itself or related funds and might not reflect current market dynamics....

....MUCH MORE

The stock closed on Wednesday at   € 18.68.
The October 1, 2014 IPO price was €42.50 and British hipsters were overrunning Berlin.

*Some previous posts:
Berlin's Rocket Internet Is Not Doing Well After Major Investor Cuts Stake (RKET.DE)
When A Company Issues A Press Release At 11:40 P.M., It's Usually Not Good News (Rocket Internet: RKET)
Rocket Internet May Have A Proven Winner (RKET)
"Tracking HelloFresh’s Growth"
Rocket Internet Struggles to Prove Its Profits Can Take Off (RKET.GR)
Whoa!! Germany's Rocket Internet May Not Be Valued Correctly
Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR)
Climateer Line of the Day: Venture Capital Economy Edition

Dear Berlin, It's Okay If You Want To Send The Hipsters Home
Over the years we've chronicled Berlin's toleration of the hipsters:

October 2013
How Hipsters Ruined Berlin
June 2015
Mathematical Model Explains Why All Hipsters Look the Same
Jan. 2017
Brexit: "Berlin to Send Back Thousands of British Hipsters"
July 2018
"Peak Hipster: Nordic miniature shaving axe"
We've passed the peak haven't we?
Please tell me we've passed the peak, seeing faux lumberjacks in the city is still jarring even after a half-decade....

Brexit: "Berlin to Send Back Thousands of British Hipsters"

Angela Merkel confirmed that British hipsters would be expelled post-Brexit as they have little to offer Germany except basic website design skills and minimal techno club nights. 

She said: “We cannot be expected to support thousands of aspiring musicians and bloggers with names like ‘DJ Leo Fukk’ and ‘Tufty’.

“They are nice enough but utterly useless. We have plenty of local young people who can serve cocktails in a surly way.”...MORE

Germany's Rocket Internet Jumps 7.7% on Take-Private Speculation (RKET.GR)

Meaning it only has to jump another 63% to get back to its October 1, 2014 IPO price of €42.50. €26.00 last.
From Reuters:
Rocket Internet shares rise after report on potential delisting

Shares in German ecommerce investor Rocket Internet jumped more than 7% on Thursday after a magazine reported that Chief Executive Officer Oliver Samwer is planning to delist the company to make more autonomous investment decisions.

The supervisory board of Rocket Internet has discussed the project, Manager Magazin said. It said the most likely scenario was for Rocket Internet to buy back shares using cash on hand of 3.6 billion euros ($4.07 billion) in the company’s treasury.

Holding on to his shares would see Samwer increase his stake to at least 75% from 44% currently.
A spokeswoman for Rocket Internet declined to comment on the report.

It was uncertain whether United Internet and investment company Baillie Gifford, which hold 9% and 7%, respectively, were willing to sell their stakes, Manager Magazin added....MORE

Here's the Manager Magazin story:  
Warum Rocket Internet den Rückzug von der Börse plant

We've been messing around with RKET since the IPO when this tidbit caught or collective eye:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)
—Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

Previously:
Berlin's Rocket Internet Is Not Doing Well After Major Investor Cuts Stake (RKET.DE)
When A Company Issues A Press Release At 11:40 P.M., It's Usually Not Good News (Rocket Internet: RKET)
Rocket Internet May Have A Proven Winner (RKET)
"Tracking HelloFresh’s Growth"
Rocket Internet Struggles to Prove Its Profits Can Take Off (RKET.GR)
Whoa!! Germany's Rocket Internet May Not Be Valued Correctly
Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR)
Climateer Line of the Day: Venture Capital Economy Edition

Delivery Hero, one of their investees, seems to be doing well, the rest of the clones—for that was the business model, find internet related businesses to clone in Europe—the rest of the clones, not so much.

Berlin's Delivery Hero set to Come Public

From Reuters, May 23:

Delivery Hero set to list before summer break: sources

Online food takeaway firm Delivery Hero is set to float before the summer break in a deal valuing one of Europe's biggest start-ups at up to 4 billion euros ($4.5 billion), people close to the matter said on Tuesday.
Delivery Hero, the start-up in the portfolio of e-commerce investor Rocket Internet (RKET.DE) seen as most likely to go public next, plans to announce its intention to list in Frankfurt by mid-June with an IPO four weeks later, they said.

Rocket Internet shares, which have been under pressure over concerns about heavy losses and falling valuations at its start-ups, were 4 percent higher at 1335 GMT (9:35 a.m. ET), making them one of the top gainers on the German small-cap index .SDAXI.

Rocket, which reports first-quarter results on May 31, had early success with online fashion firm Zalando (ZALG.DE), which listed in 2014 and has performed well since. But the e-commerce investor pulled the flotation of meal box start-up HelloFresh in 2015 and has not brought any other companies to market yet.

Earlier on Tuesday, Delivery Hero Chief Executive Niklas Ostberg said the company was ready for a possible initial public offering but declined to comment further on timing or valuation.
"We can go at any point in time if we feel it is the right time," Ostberg told reporters on a conference call.

One of the sources said about a quarter of the company's shares would be sold in the deal, which could value the company at 3.5 billion euros to 4 billion euros.
Another source said shares worth up to 1 billion euros would be sold, with about half that amount coming from new shares.

Delivery Hero said Tuesday its first-quarter revenue rose 68 percent on a like-for-like basis to 121 million euros. The loss-making firm did not publish earnings figures but Ostberg said it was on track to improve profitability as it grows bigger.

"With size comes profitability and our focus is on building size and service levels," he said, adding that he did not rule out further acquisitions....MORE

As noted last August:
Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR)

Truth be told it's not really "Rocket's" deal.
Unlike many of the names at the incubator/copyshop, RKET was late to the Delivery Hero party:

Funding Rounds (12) - $1.39B

Date	Amount / Round	Valuation	Lead Investor	Investors
Jun, 2015	$110M / Private Equity	—	—	0
Mar, 2015	€52M / Secondary Market	—	Rocket Internet	1
Feb, 2015	€496M / Series H	—	Rocket Internet	1
Sep, 2014	$350M / Series G	—	Insight Venture Partners Kite Ventures	3
Apr, 2014	$85M / Series F	—	Luxor Capital Group	1
Jan, 2014	$88M / Series E	—	Insight Venture Partners	8
Jul, 2013	$30M / Series D	—	Phenomen Ventures	8
Aug, 2012	$50M / Series D	—	Kite Ventures	2
Mar, 2012	€25M / Series C	—	Kite Ventures	2
Oct, 2011	€11M / Series B	—	—	3
Mar, 2011	€4M / Series A	—	—	4
Dec, 2010	undisclosed amount / Seed	—	—	2

CrunchBase

The 'proven winners' line is from Rocket's public offering document:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

Berlin's Rocket Internet Is Not Doing Well After Major Investor Cuts Stake (RKET.DE)

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

The company priced its IPO at 42.50 euros on October 1, 2014.€17.78 -3.56 (-16.70%)

From Reuters:

Shares in Rocket Internet (RKET.DE) fell as much as 14 percent on Thursday after major investor Kinnevik (KINVb.ST) sold half its stake in the German e-commerce company as the two increasingly becoming competitors.

Sweden's Kinnevik, which clashed with Rocket last year over the valuations of some of their joint investments, sold a 6.6 percent stake in Rocket at 19.25 euros per share late on Wednesday, netting 209 million euros ($220 million).

At 1155 GMT, Rocket shares were down 13.1 percent at 18.55 euros, off an earlier 2-1/2 month low of 18.275 euros....MORE

Previously:
When A Company Issues A Press Release At 11:40 P.M., It's Usually Not Good News (Rocket Internet: RKET)
Rocket Internet May Have A Proven Winner (RKET)
"Tracking HelloFresh’s Growth"
Rocket Internet Struggles to Prove Its Profits Can Take Off (RKET.GR)
Whoa!! Germany's Rocket Internet May Not Be Valued Correctly
Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR)
Climateer Line of the Day: Venture Capital Economy Edition

"Rocket Internet closes $1B fund, the largest out of Europe to date"

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

The company priced its IPO at 42.50 euros on October 1, 2014.
€19.47 last.
From TechCrunch:

If you thought the problems Rocket Internet has had bringing its portfolio of startups and its business overall into the black would have spelled setbacks for future investing, think again. This week, the firm — based out of Berlin — reported that it had raised a new $1 billion fund, the biggest tech fund of any VC firm to date in Europe, it claims.

The Rocket Internet Capital Partners fund, as it is called, will focus both on early and later stage investments, and marks a shift of sorts for Rocket Internet.

The company will put some of the investment into existing portfolio companies — the company is known for incubating and growing e-commerce businesses around the globe built on models usually pioneered by others (‘clones’ is the less charitable term you may have heard) — but it will also start making more investments in startups beyond those Rocket Internet itself had a hand in starting.

Earlier this month, Rocket Internet was part of a $100 million round for Funding Circle, the P2P lending startup based in London. A spokesperson said that it’s been making investments out of the fund for over a year now.

“RICP has made investments since its first closing in January 2016. The fund seeks to invest in key focus areas of the Internet sector including marketplaces, e-commerce, financial technology, software and travel. Among the investments are Rocket Internet founded companies as well as others,” said the spokesperson.

She declined to comment on which other companies are in the portfolio now or will be in the future, but some of that has been made public anyway. A few of its many recent investments, in addition to Funding Circle, include a seed round for recruitment service UShift; a large cash infusion of $365 million in the Global Fashion Group, an entity created by Rocket to merge several of its online fashion retailing properties under one umbrella (this is one of Rocket’s more problematic businesses and came as a down round); and a smaller round for CaterWings, a corporate catering service....

...MORE

Previously:
When A Company Issues A Press Release At 11:40 P.M., It's Usually Not Good News (Rocket Internet: RKET)
Rocket Internet May Have A Proven Winner (RKET)
"Tracking HelloFresh’s Growth"
Rocket Internet Struggles to Prove Its Profits Can Take Off (RKET.GR)
Whoa!! Germany's Rocket Internet May Not Be Valued Correctly
Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR)
Climateer Line of the Day: Venture Capital Economy Edition

Rocket Internet May Have A Proven Winner (RKET)

The headline is a bit of snark based on the company's offering document:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

The company floated at 42.50 euros on October 1, 2014, €19.53, last.

Here's someone not named Samwer not being cruel to RKET.
From Bloomberg Gadfly:

Rocket Internet Leaves Us Groping in the Dark

Writing about Rocket Internet sometimes feels like assembling a puzzle in the dark. Investors deciding whether to back the German start-up incubator will wish they could find the light switch too.

A French tech publication called le Journal du Net seemed to have found a missing piece of the jigsaw last week. It published a story that included slides of undisclosed and bullish financial projections for HelloFresh, a meal kit start-up backed by Rocket Internet that competes with Blue Apron in the U.S. The slides appeared to show it would more than double revenue this year, turn profitable on an adjusted Ebitda basis next year, and hit a 15 percent margin on the same basis in 2018.

Freshen Up

Rocket Internet's Hello Fresh is growing sales rapidly, while Ebitda losses have narrowed.

Berenberg analyst Sarah Simon then published a note on Tuesday that analyzed those leaked figures and concluded they implied a Hello Fresh valuation higher than the 2.6 billion euros ($2.9 billion) disclosed by Rocket in September. This matters because HelloFresh is the second-biggest holding in Rocket's portfolio and could be a candidate for an IPO in the next year or so. Understanding its health -- along with that of take-out service Delivery Hero, in which Rocket owns a 37 percent stake -- is central to any calculation of Rocket's valuation.

With the already profitable Blue Apron preparing an IPO that may be valued at about $3 billion, the added detail should be good news for Rocket's big bet on food tech. The meal-in-a-box business model is still new, and who knows how it'll fare as people's eating habits change. Already someone who doesn't feel like cooking after work has a dizzying array of options from takeout delivery apps such as Just Eat, GrubHub and UberEats.

Yet the leaked numbers were pretty positive, yes? Especially for Rocket, whose shares have languished because people really can't get a handle on what its assets are worth.
Well, not quite. A HelloFresh spokeswoman told me that the slides published by the French website were incorrect and did not correspond to the start-up's business plan. When I asked Rocket for comment, they refused to say anything about the financial projections or anything else about HelloFresh.

Huh?

Rocket is the majority owner of HelloFresh with a 56 percent stake; it knows if those slides are right. The numbers are in the market, and a respected bank has issued a note republishing them in whole. Meanwhile, Rocket's shares climbed as much as 4 percent in the hours after the note came out even as European markets traded lower, showing that at least some investors thought the information was credible....MORE

Okay, a tad brutal.
Me, I get downright sadistic about these types of deals 

When A Company Issues A Press Release At 11:40 P.M., It's Usually Not Good News (Rocket Internet: RKET)

The company priced its IPO at 42.50 euros on October 1, 2014.
€17.54 last.

From FT Alphaville, Sept. 2:

Participants in this session were: Paul Murphy and Bryce Elder...
 

       ...PM So, finance wise

PM Rather than starting in the UK

PM Can we go directly to Germany

BE Oh, here we go.

PM Well…

PM Rocket

PM We were wondering why it was going up each day

PM And now it’s not!

PM Stick trading at just over 17 euros, live

PM Down 9 per cent

PM This is because it put out a profit warning at 20 to midnight, last night

PM Why the timing? We are not quite sure

PM Might as well share the statement in full

PM As full as it is

PM Cos there’s not much detail here

PM

Rocket Internet SE: Special Items Weigh on Results for the First Half of 2016
- Consolidated loss of EUR 617 million in the first half of 2016
- First half 2016 results negatively impacted by special items, in particular at GFG
Berlin, Germany, September 1, 2016 – Special items, in particular due to impairments at Global Fashion Group S.A. (“GFG”), weighed on the results of Rocket Internet SE (“Rocket Internet” or the “Company”) in the first half of 2016. As a result of the last funding round for GFG, which was announced in April 2016 and which closed in July 2016, GFG wrote-off goodwill and intangible assets. GFG contributed negative EUR 383 million to the Rocket Internet’s first half year results. The result was further impacted by special items such as impairments, fair value adjustments and – to a lesser extent – positive special items. Overall, the consolidated loss for the first half of 2016 was EUR 617 million.
As a result of deconsolidation effects, group revenues in the first half of 2016 decreased to EUR 29 million compared to EUR 71 million in first half of 2015.
“Despite these special items, we remain committed to our goals”, says Oliver Samwer, CEO Rocket Internet. “We still expect at least three of our selected portfolio companies to turn profitable by the end of 2017, and that the aggregate EBITDA losses of the selected portfolio companies will have peaked in 2015. “
Rocket Internet will report detailed results for the first half of 2016 on September 22, 2016.

BE Cripes!

PM We have to wait another three weeks for the proper figures

PM Worth reading this, in the Indian press

PM http://www.livemin…rnet-in-India.html

PM That’s Mint, the WSJ venture in India

PM First of a three parter

BE What’s GFG? Global Fashion Group, isn’t it?

PM Yeah

PM Ragbag of online fashion brands

BE With offices at One Berkeley Square, if I remember right.

BE No slumming in Shoreditch for them.

PM Yeah, was supposed to float, but hasn’t and won’t any time soon

BE Yep, it’s “worth” two-thirds less than it was.

BE Jefferies ….

BE

One of our biggest concerns with RKET was its overconfident valuation methodology, LPV, which saw its valuation of one of the largest assets in which it has a stake, GFG, cut from €3.0bn to €1.0bn on 27 April. Despite the macro environment being out of its control, the more conservative valuation methodology at KINV meant its valuation only reduced by 38%, versus 66% at RKET.

BE Yes, losing €2bn from a €3bn company in five months with no significant changes to operations in that period will raise a couple of questions about your methodology....

...MORE

 

We have had a few posts on the wonder that is Rocket, here's the blog search results page. 

Hey, One of Rocket Internet's 'Proven Winners' May be Coming Public (RKET.GR)

Truth be told it's not really "Rocket's" deal.
Unlike many of the names at the incubator/copyshop, RKET was late to the Delivery Hero party:

Funding Rounds (12) - $1.39B

Date	Amount / Round	Valuation	Lead Investor	Investors
Jun, 2015	$110M / Private Equity	—	—	0
Mar, 2015	€52M / Secondary Market	—	Rocket Internet	1
Feb, 2015	€496M / Series H	—	Rocket Internet	1
Sep, 2014	$350M / Series G	—	Insight Venture Partners Kite Ventures	3
Apr, 2014	$85M / Series F	—	Luxor Capital Group	1
Jan, 2014	$88M / Series E	—	Insight Venture Partners	8
Jul, 2013	$30M / Series D	—	Phenomen Ventures	8
Aug, 2012	$50M / Series D	—	Kite Ventures	2
Mar, 2012	€25M / Series C	—	Kite Ventures	2
Oct, 2011	€11M / Series B	—	—	3
Mar, 2011	€4M / Series A	—	—	4
Dec, 2010	undisclosed amount / Seed	—	—	2

CrunchBase

The 'proven winners' line is from the public offering document:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

Here's today's story from Reuters:

Delivery Hero CEO says listing in 2017 possible: Welt am Sonntag

German online food takeaway service Delivery Hero, one of Europe's biggest start-ups, could go public next year, its chief executive told a German weekly.

"We're in no hurry. Could it happen next year? Quite possibly. But in the end it will depend on whether we find the market conditions that we think will support our long-term vision," Niklas Ostberg told Welt am Sonntag in an interview.

"We have the size and earnings power that is needed."

Delivery Hero is seen as the start-up closest to going public in the portfolio of German ecommerce investor Rocket Internet. Rocket bought into Delivery Hero in 2015 and now holds a 37 percent stake....MORE

Rocket Internet Struggles to Prove Its Profits Can Take Off (RKET.GR)

Rocket was the author of one of the funniest lines ever to be found in a disclosure document:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

The company priced its IPO at 42.50 euros on October 1, 2014
€18.06 last.
From the Wall Street Journal:

German tech company has created 100 startups, many of which remain unprofitable

BERLIN—In 2011, German tech company Rocket Internet SE spotted a Swedish web company delivering ready-to-cook meals—recipes and ingredients packed in a box. So Rocket did what it does best: It launched a copycat business in other countries.

Its knockoff, HelloFresh, boomed on three continents, including in the U.S., where it competes against other imitators such as Blue Apron and Plated. Then trouble hit.

Last November, Rocket pulled the plug on an initial public offering of HelloFresh, which had been valued at €2.6 billion ($2.9 billion). In May, HelloFresh reported first-quarter losses more than tripled, to €27.3 million, despite soaring revenue.

It is just one of many deeply unprofitable companies in Rocket’s stable. The company—essentially a publicly traded “incubator” of startups—has created an empire of 100 companies in 110 countries with 36,000 employees. Several sell food. Some peddle used cars. One offers laundry services.

The company is in many respects a microcosm of today’s global web startup scene. At this point, Rocket and its portfolio of clones are the epitome of the global tech downturn, struggling to prove that they can be profitable.

In April, Rocket slashed the estimated value of one of its biggest—Global Fashion Group—from about €3 billion to approximately €1 billion, citing share-price movement of its peers, its continued unprofitability and its emerging-markets presence.

The same month, Rocket reported the combined adjusted losses before interest, tax, depreciation and amortization of eight of its major companies for 2015 was €1 billion. Investors have dumped shares. Rocket’s stock price is only a third of its peak in 2014. The stock closed at €18.52 on Friday.

Rocket also is losing a longtime partner and co-investor. Swedish conglomerate Kinnevik AB had joined Rocket in pouring money into new companies.

Last year, Kinnevik’s chief executive resigned as Rocket’s chairman. A few weeks ago, Kinnevik removed both its directors from the board, saying the company increasingly was competing with Rocket for investment targets, and adding that board representation would be a conflict of interest.

 Rocket board Chairman Marcus Englert called Kinnevik’s decision “straightforward and understandable.”

Rocket co-founder and Chief Executive Oliver Samwer once was hailed as Europe’s great hope at rivaling the startup prowess of Silicon Valley. These days, the 43-year-old and his executives are explaining why Rocket isn’t another tech-bubble bust.

In a recent interview Mr. Samwer promised to give investors better guidance. “The public market is something that we’re learning,” he said.

Mr. Samwer said over-aggressiveness led to some mistakes, but he remained confident in the company’s strategy. Rocket startups need to spend and expand heavily for five to nine years before turning profitable, he said. Losses are narrowing, and Rocket has plenty of cash on hand, he added.

Rocket’s combined adjusted losses of seven top holdings were €140 million in the first quarter, compared with €180 million a year earlier. Aggregate revenue rose to €530 million in the period from €400 million a year earlier. Rocket said it had €1.8 billion in cash at the end of last year.

“The core of our DNA is execution,” said Chief Operating Officer Johannes Bruder. “Rocket Internet functions like a factory or shipyard for start-up companies. You’ll see a lot of flow charts that summarize the systematic process we use to build our companies.”

Rocket was founded in 2007 by Oliver, Marc and Alexander Samwer, brothers from Cologne, Germany. Their first major success came in 1999 when they started a German clone of auction-website eBay Inc. They quickly sold it to eBay.

Rocket focuses on startups selling food, clothing and other merchandise and services via the internet. It begins with a controlling stake in the startups and either retains those shares or gradually sells them off to outside investors.

Tweaking its strategy two years ago, Rocket now also invests in companies it didn’t create, mimicking what traditional venture-capital firms do.

In 2014, Rocket listed itself on the Frankfurt Stock Exchange in Germany’s biggest tech IPO in a decade, raising €1.6 billion at a €6.7 billion valuation.

On the top floor of its seven-story headquarters, employees monitor tech startups world-wide for businesses to copy. When an idea is approved, Rocket assigns marketers, engineers and managers.

As the business develops, it moves down floor-by-floor, eventually making it to the ground level, where managers start to look for offices outside the building.

Rocket assigns a team of its own employees to start a company and then hires full-time workers for the clone company, which gradually returns them back to Rocket....

...MORE

Previously:
Whoa!! Germany's Rocket Internet May Not Be Valued Correctly

Whoa!! Germany's Rocket Internet May Not Be Valued Correctly

I'm starting to think the writer is dubious of Rocket's promise premise.
The stock is at 19.08 euros.
The company priced its IPO at 42.50 euros on October 1, 2014.

From FT Alphaville:

A Stick Internet update

Rocket really is coming back to earth, moving 4.66 per cent closer at pixel…

It’s a wonder Monday’s damage was not greater, given that Rocket Internet’s founding Samwer brothers seem to have fallen out with their biggest financial backer.

Lorenzo Grabau, chief executive of Swedish digitally-focused investment fund Kinnevik, and his colleague Erik Mitteregger, are leaving Rocket’s board, supposedly to avoid any conflicts of interest. Kinnevik still holds 13 per cent of Rocket and has co-invested in several of the German company’s incubated start-ups....MORE

The headline at Reuters is:

Rocket Internet investors need to think long-term -founder 

And that was the point where Mr. Climateer told the investment policy committee the trade had become an investment.

Previously:

March 26, 2016
"It Is Obvious FT Alphaville Does Not Understand Rocket Internet (RKET:GR)"

That was our headline story a year ago today.
Rocket is the little Berlin-hipster corporate-knockoff-making machine that thinks of itself as an incubator and says stuff like:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

And they get no love from FTAV.

 Proven winners, bub.

The stock was down 5.83% on Thursday, to 23.14 euros.
We've been checking in on Rocket since 2014's "Climateer Line of the Day: Venture Capital Economy Edition" which had the prospectus quote.

FT Alphaville has many more mentions, usually in connection with Rocket's financials or the food takeaway business.  

"It Is Obvious FT Alphaville Does Not Understand Rocket Internet (RKET:GR)"

That was our headline story a year ago today.
Rocket is the little Berlin-hipster corporate-knockoff-making machine that thinks of itself as an incubator and says stuff like:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

And they get no love from FTAV.
 Proven winners, bub.
The stock was down 5.83% on Thursday, to 23.14 euros.

Here's the latest, from Bloomberg Gadfly:

Ground Control to Rocket Internet

Rocket Internet needs to embrace the fact it's a venture capital firm at heart, not an internet business, if it's to win back investor confidence.

When the company went public in October 2014, founder Oliver Samwer pitched Rocket as an "operating platform company" that used its expertise to build e-commerce and financial technology start-ups in emerging markets.

But from the outset, the Berlin-based company has faced criticism it's opaque, overly complex, and difficult to value. With its shares down more than 40 percent since the IPO, Rocket needs to embrace change.

It could start by explaining what it actually is. While Rocket's founders describe it as a start-up incubator with 250 engineers who bring technical know-how to its companies, its model resembles that of a venture capital fund that happens to be publicly traded.

Rocket backs dozens of young firms in the hopes that within ten years one or two of them turn into profitable businesses. It only makes big money when those stars are sold or taken public. If the company had emphasized that it operates like a venture fund, some of the current disillusionment among investors might have been avoided.

Secondly, Rocket needs to do a better job of explaining how it values its investments. Shareholders are clearly skeptical of the valuations the company ascribes to its assets: based on its November valuation of 6.06 billion euros ($6.8 billion), the company trades at a 35 percent discount to its portfolio.

The company has 140 fully consolidated subsidiaries, 330 others, and dozens of legal entities to account for, according to its 2014 annual report. It discloses sales and other metrics for only 13 of its companies, those it dubs "proven winners." The biggest of them are Global Fashion Group, a largely Russian and Latin American e-commerce company, and Delivery Hero, which brings food to your door.

Rocket devises a "last portfolio value" a few times a year for each of its companies based on what outside investors pay to buy a stake in those businesses. More transparency around that process would help persuade investors of those valuations....MORE

We've been checking in on Rocket since 2014's "Climateer Line of the Day: Venture Capital Economy Edition" which had the prospectus quote.
FT Alphaville has many more mentions, usually in connection with Rocket's financials or the food takeaway business.

It Is Obvious FT Alphaville Does Not Understand Rocket Internet (RKET)

From FT Alphaville:

Rocket from the shelf

One of the useful aspects of German corporate filings lodged at the Federal Gazette (Bundesanzeiger) each year is a list of subsidiaries, along with an equity and net profit number.

Click for a Google translated version of the 2013 report for Rocket Internet, the recently listed and super-hyped e-commerce conglomerate, valued by the stock market at more than €7bn.

The list of shareholdings starts on page 14. Note first the proliferation of negative profit numbers. Second: Bambinos, Jades, Jewels and Platinums?...

Now stop right there!

This is all part of the plan.
From our Sept. 24, 2015 post on the treasure that is Rocket:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

Proven winners, bub.

Back to FTAv:

...The names belong to series of so-called “off the shelf” companies, previously inactive corporate shells registered with the relevant authorities and ready for a buyer to use.

Rocket is stuffed with these companies. Here are the Jades and some of the Jewels from the 103 companies listed as direct subsidiaries. Titles for the columns are Name, Seat, Shareholding, Date of last financial statement, Equity (€) and Result (€).

Most of the amounts are inconsequential in the context of a company with Rocket’s valuation, although it looks like those Jades where Rocket owns less than 100 per cent also appear to be the more valuable, 1217 and 1318 for instance.

The company also reports more than 200 further subsidiaries held at the grandchild and great grandchild level, where holdings in more of these off the shelf companies appear....MORE

So typical of big media, beating up on bambinos.

Here's what comes up when I Google Climateer Investing for Rocket, Alphaville:
FT Alphaville Recommends a Cartoon, Hilarity Ensues

Ground Floor: Seeking Out Startups Before They've Even Formed

And no, this isn't the hipsters/cloners/ripoffs at Berlin's Rocket Internet:

Climateer Line of the Day: Venture Capital Economy Edition

"Our proven winners generated aggregated net losses of €442 million" ($568 million)

-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

According to the WSJ:

"Rocket is a cross between a venture-capital fund and a consulting firm that founds startups and helps them grow."

RKET was able to price their Oct. IPO at the top end of the expected range.

From Venture Capital Dispatch:
YL Ventures Seeks Out Israeli Startups Before They Even Form 

Israel is a hotbed for startups focused on hard technology like cybersecurity, partly because of the training that founders receive in the Israel Defense Forces, which drafts both men and women and trains some of them in cutting-edge technical skills.

But for investors, backing the best startups is getting harder.

“There are more and more funds that have figured out Israel has great technologists and are operating in the country, competing with us for deal flow,” said Yoav Andrew Leitersdorf, managing partner of YL Ventures, a seed-stage investor focused on Israeli startups. “There was much less competition seven years ago when we started.”

YL Ventures, which is based in the Bay Area with an office in Israel, has developed an unusual approach to ferreting out Israeli startups–it tries to find them before they’re officially formed. The firm has in-house software and teams in India that track about one million people in Israel, watching for signals online to see who might be coming together to form a company.

The firm receives about 100 alerts a month based on the background of a potential founder and whether their social media activity has changed. Indicators of interest include whether they’re in the IDF, working for a tech company or at a university.

The alerts are given a score, and the firm makes contact with a couple of dozen of the potential entrepreneurs each month to see what’s going on.

YL Ventures found the first two investments from its second fund before the founders had registered their companies or contacted any investors, Mr. Leitersdorf said. They are FireLayers Inc., which protects cloud applications and data, and Hexadite Ltd., which automatically alerts users of cyber incidents....MORE