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Rocket Internet’s Half a Billion Dollar Round Set to Fuel Growth in Emerging Markets

2 mins read
July 16, 2013

We’ve just learned from TechCrunch that Rocket Internet has raised half a billion US dollars to fund its entire operations. That’s USD 500 million from Kinnevik and Access Industries, two of Rocket Internet’s partners and investors that regularly participate in various funding rounds over the last few years. The group’s largest and most successful ventures so far are in online stores and marketplaces although it does have companies in other fields.

Apparently up to 90% of the funds will be used to fuel growth and expansion along its e-commerce companies according to TechCrunch’s Ingrid Lunden and the rest to be invested in other sectors.

We recently spoke to Stefan Jung, who heads Rocket Internet Southeast Asia, regarding its regional operations and he said that the majority of the group’s focus in the region has been towards Lazada and Zalora, the group’s largest online stores, but the group is also looking to expand its other companies such as Food Panda, the online food delivery service.

In March of this year Zalora received €20 million in funding from Tengelmann and built a software development center in Singapore before launching its mobile app for iOS and Android. Shortly after that, it raised US $100 million from Kinnevik, Tengelmann, and JP Morgan among others, in May.

At the other end of the spectrum, Rocket Internet recently shut down OfficeFab due to low growth potentials and last year, Home24 was also shuttered. It has been the group’s M.O to built and invest quickly and expensively in various areas of online commerce and decide whether to continue or to shut down operations after 12 months or less.

Rocket Internet employs hundreds of Indonesians in their local operations and it generally sees a regular stream of employee turnovers due to the pressure that comes with the territory. When Zalora laid off 10% of its staff a few months ago, Jung and Zalora Indonesia co-founder Hadi Wenas told us that it was a necessary lay off due to the way the company operates and to increase efficiency. Quick evaluations and assessments of employees lend the company to a “hire fast and fire faster” strategy. Other times, employees leave for their own reasons. It’s also notable that the company aims to be profitable by 2015 despite losing  €70 million in 2012.

Rocket Internet’s presence in Southeast Asia, especially in Indonesia plays a significant part in accelerating the growth of not just the number of Internet users but also consumers being aware of and adopting online commerce. Zalora’s and Lazada’s aggressive marketing efforts have placed other existing and would be online store owners on high alert and seeking for ways to compete with the two giants. All these have resulted in increased awareness of online commerce among consumers and more comprehensive services from the stores.

Lazada CEO Maximillian Bittner told us earlier this year that entering a market which is still at a very early stage gives Lazada a significant head start, strong brand recognition, and a great potential to grow alongside the market by developing it and educating the consumers. Back in August last year, Managing Director Magnus Ekbom told us that Lazada was going to be very aggressive in its approach to e-commerce in Indonesia.

Their presence also assisted in the formation of Indonesian E-Commerce Association which was initiated and led by Multiply, which ironically no longer exists. The lobby group is playing a strong part in getting the Indonesian government to understand the intricacies of e-commerce and is currently pushing to delay the implementation of the online commerce tax regulations.

Rocket Internet’s fund raising round this time means that it has raised more than a billion dollars in funding in just this year alone.

[Header image from Shutterstock]

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