German-based startup investor Rocket Internet is looking to turn around on recent setbacks, having secured a $420 million in new funding to invest in online ventures across Europe.
The firm, whose ambition is to become the largest internet platform outside of the US and China, has backed numerous e-commerce companies, including food delivery services, online fashion retailers and a number of affiliate-based products.
However, the group’s ability to turn a profit in 2015 has come under scrutiny following the cooling of the market for new tech companies, while its portfolio of clients have been operating at a loss.
The announcement of the fund, in which Rocket placed $50 million, has resulted in a 1.4% rise in share prices having been in steady decline since its IPO in October 2014. The coup means Rocket’s startups can now tap into $2.1 billion of capital.
Rocket states that shareholders will take back as much of 25% of the returns. This is providing investors into the fund reach an annual return of 8%.
Renewed confidence
Rocket’s chief executive, Oliver Samwer, has lauded the funding as a sign of confidence in the firm’s ability to stabilise itself, considering it to be on the same playing field as US investors General Atlantic and Tiger Global Management.
With a reported running time of ‘about ten years’, the fund will allow Rocket to invest quickly and “in times of insecurity”, according to Samwer, and cuts reliance on co-investors.
The company recently pledged to meet a number of short-term objectives, including breaking three of its businesses even within two years, and making one public within 18 months.