Technology

New Setback for Rocket Internet

Rocket Internet, which was deemed to be Europe’s best hope for competing with the global tech industry giants a year ago, has had to deal with yet another setback as it lost two of its senior managers. The largest internet firm in Europe, Rocket Internet has managed to establish a buzzing tech industry in Berlin and aims to be the launch pad for stock-market listings of a variety of startups that range from online food delivery to fashion. However, its objective of floating the bigger investments seem to have come to a standstill, which has led to a decline in its stock.

The strategy adopted by the firm of expanding into a horde of other emerging markets had given rise to the possibility that it could manage to outflank even the likes of giants like Alibaba and Amazon and even take on the powerful and well-funded venture capital firms. But, in the last year, the flotations of startups that were planned by Rocket have been put on ice because of a cooling market for tech IPOs (initial public offerings) and investors have become even more unwilling to meet the high valuations. The problems for Rocket have increased because of conflict with an important Swedish investor Kinnevik.

Sources with knowledge of the matter have provided this information and also added that Rocket has had to deal with the slowing growth in various emerging markets. Sources that are close to the firm have now revealed that more upheaval is to be expected as the head of Rocket’s legal department, Franziska Leonhardt and its senior vice president of corporate finance, Uwa Gleitz will be leaving the company for personal reasons. Brothers Marc, Alexander and Oliver Samwer had founded the company in Berlin and is also in search for a new head of communications.

They are trying to replace Andreas Winiarski who departed last year for joining a consultancy. Gleitz and Leonhardt had been part of the team that had steered Rocket to its IPO in October 2014. The offer price had been 42.50 then, but now it has reduced by half and there was also a 0.2% decline in the share price on Tuesday, which brought the valuation of the company to about $4.2 billion. Since it began in 2007, a large number of e-commerce firms have been set up by Rocket all over the world, but they are still making a loss, which means that it has to keep spending its cash hoard for keeping the companies running.

Oliver Samwer is the chief executive officer and he is a serial internet entrepreneur along with his brothers. They became the newest billionaires of Germany with the Rocket Internet flotations and also with the launch of Zalando, a European online fashion site in 2008. Zalando has become a very profitable business now and its share price has increased by nearly 50% since its initial public offering in 2014. Samwer insists that Rocket’s startups will also become profitable just like this venture. Sources have said that the CEO and the firm’s Swedish investor have clashed in some decisions. 

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