Does Rocket Internet’s Deal with Alibaba Validate its Opaque, Unproven, Model? No.

Lazada Vietnam

“Rocket Internet’s deal with Alibaba validates its opaque, unproven, model”, writes Quartz:

Rocket’s latest deal, selling half its stake in Lazada, an online retailer in Southeast Asia, to China’s Alibaba, appears to validate its model. The German group received $137 million for the stake, valuing Lazada—which launched in 2012—at $1.5 billion. Alibaba then put in an additional $500 million in the company, pushing its valuation to $2 billion.

Rocket says it has invested €18 million ($20.5 million) in Lazada to date, so its return on the sale, including the 8.8% stake it retained in the company, is $313 million15 times the amount it invested.

I don’t think this proves that the model works.

Since its IPO in October of 2014, in the slipstream of Zalando’s IPO one day prior, Rocket Internet has been without a proper success story. IPOs by Delivery Hero (where Rocket acted as investor rather than as company builder) and HelloFresh have been anticipated but have yet to happen.

In fact, since October of 2014, this sale has been the first exit one could call a success. That is more than one and half years without a true success story.

That does not look good.

If anything, the jury’s still out on Rocket Internet.

Today is Rocket Internet’s Capital Market Day.1 The documents can be found here. At last year’s Capital Markets Day in September (German) Oliver Samwer told the attendees to “Measure us!”. Lets see.

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  1. Interesting timing. 

3 comments

  1. […] Does Rocket Internet’s Deal with Alibaba Validate its Opaque, Unproven, Model? No. […]

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  2. […] Rocket Internet’s mission statement is still “To Become the World’s Largest Internet Platform Outside the United States and China”. “Platform” here refers not to what we normally talk about these days1 but to synergies in the back-end: Marketing, localization and general execution efforts and technology and access to capital. This may have looked all good and fine on paper but it doesn’t seem to be working too well. […]

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  3. […] Does Rocket Internet’s Deal with Alibaba Validate its Opaque, Unproven, Model? No. […]

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