Rocket Internet Raises $1 Billion Fund, Expanding Its Reach Beyond Portfolio Companies
Despite the challenges Rocket Internet has faced in its portfolio companies and its own financial performance as a publicly traded company, the firm has announced that it has raised a new $1 billion fund. This development comes as a significant boost to the company’s future investing prospects.
The New Fund: A Shift in Strategy for Rocket Internet
The new fund, called Rocket Internet Capital Partners (RICP), will focus on both early and later-stage investments. This marks a shift in strategy for Rocket Internet, which has traditionally incubated and grown e-commerce businesses around the globe built on models pioneered by others.
The company will allocate some of the investment to its existing portfolio companies, while also investing in startups beyond those it had a hand in starting. According to a spokesperson, RICP has been making investments out of the fund for over a year now, with a first closing in January 2016.
Investment Focus Areas
The new fund will seek to invest in key focus areas of the internet sector, including marketplaces, e-commerce, financial technology, software, and travel. Among its recent investments are Rocket Internet-founded companies such as Funding Circle, UShift, Global Fashion Group, and CaterWings.
While Rocket Internet has faced issues with existing portfolio companies, such as a down round for Global Fashion Group, investors still seem to believe that the company can provide decent returns in the long term. A couple of big hits can shift the balance, and Rocket Internet has had enough of these successes over its history, including large sales to Groupon, eBay, and others.
Investor Interest Remains Strong
The new fund’s commitment from investors is a testament to the company’s potential for returns. The $1 billion fund was reached after a diverse group of global investors, including financial institutions, pension funds, asset managers, foundations, and high net worth individuals, contributed the majority share. Rocket Internet committed 14 percent of the total, or $140 million.
Oliver Samwer’s Statement
According to Oliver Samwer, Rocket Internet’s CEO, "RICP having reached the hard cap of $1 billion shows the strong interest of leading investors, who share the enthusiasm for the attractive investment opportunity RICP presents."
Rocket Internet’s Track Record and Future Prospects
Despite its past challenges, Rocket Internet has a good track record with large sales to well-established companies. With this new fund, the company is poised to continue investing in startups beyond its portfolio companies.
Recent Investments by Rocket Internet Capital Partners
- Funding Circle: A $100 million round for the P2P lending startup based in London
- UShift: A seed round for the recruitment service
- Global Fashion Group: A large cash infusion of $365 million, which is one of Rocket’s more problematic businesses and came as a down round
- CaterWings: A smaller round for the corporate catering service
Conclusion
Rocket Internet’s new fund is a significant development in its future investing prospects. Despite past challenges, the company has a good track record with large sales to well-established companies. With this new fund, Rocket Internet is poised to continue investing in startups beyond its portfolio companies.
Key Takeaways:
- Rocket Internet raised $1 billion for its new fund, making it one of the largest tech funds in Europe
- The fund will focus on both early and later-stage investments in key areas such as marketplaces, e-commerce, financial technology, software, and travel
- Rocket Internet will allocate some investment to existing portfolio companies while also investing in startups beyond those it had a hand in starting
- Investors still seem to believe that the company can provide decent returns in the long term
Recommendations for Future Investment:
- Consider investing in marketplaces, e-commerce, financial technology, software, and travel sectors
- Look into startups with potential for large sales to well-established companies
- Research companies with a good track record of growth and profitability