News Article | October 8, 2014
Another exit for a Berlin tech company, albeit not necessarily a home run. Fyber, the adtech company formerly known as SponsorPay has been acquired by the publicly-listed European media company RNTS Media. Terms of the deal aren’t being disclosed, except to say that it’s a mixture of cash and stock, though we’re hearing from sources that the price is €150 million (which also tallies with the $190 million amount now being reported by VentureBeat, and an advisory issued by Anoa Capital). As a result of the acquisition — which can really be viewed as a merger of sorts, given the size of the respective companies — Fyber will become a subsidiary of RNTS Media and will continue to operate independently under its existing leadership team. Fyber co-founder and CEO Andreas Bodczek will become Managing Director and CEO of the RNTS Media Management Board, and Janis Zech, co-founder and CRO of Fyber, will also join the Management Board. Originally called SponsorPay, the Berlin startup was co-founded by Team Europe, the German-styled company builder, back in 2009 to help free-to-play browser based games find a route to monetisation. However, following wider games industry trends, in 2011 it pivoted to focus entirely on mobile with a unified supply-side-platform to let mobile app developers manage all of their mobile ad revenue, serving approximately 150 million unique users per month. Fyber claims thousands of customers, name-checking Gree, Glu Mobile, Kongregate, and Pixelberry. Our understanding is that Fyber had raised around €10 million in equity-based financing, plus some debt-financing, over the course of two or three rounds. Backers included Team Europe Ventures, Hasso Plattner Ventures, Kite Ventures, and Nokia Growth Partners, an independent venture fund sponsored by Nokia.
News Article | January 13, 2014
In the first big European funding news of the year, Berlin-based food-ordering service Delivery Hero said on Monday that it has raised $88 million. The Insight Venture Partners-led Series E round – one of the largest ever in the German startup scene – brings Delivery Hero‘s overall funding to almost $200 million, and should help it in its ongoing battle with London-based rival Just Eat, which has more than 40,000 restaurants signed up across 13 countries. Team Europe portfolio company Delivery Hero has 55,000 restaurants across 14 countries.
News Article | September 11, 2014
On the heels of Rocket Internet’s food delivery service FoodPanda taking another $60 million in funding, its German rival Delivery Hero is also stepping up its game in a consolidation play. The company today is announcing that it has acquired Pizza.de, another longstanding competitor also based in Germany. The financial terms of the deal were not disclosed but we understand from a source that it is an all-cash deal, with no shares exchanged and that post-acquisition, the total valuation of Delivery Hero is now over $1 billion. Update: A VC advisory group based in Berlin, Cooperativa.vc, noted in a Tweet that the acquisition is actually worth €400 million ($535 million), which it has contacted us to note they made a typo and it is actually $400 million. A German publication, Express.de, notes a price in a similar range: €290 million, or $387 million. Delivery Hero would not confirm the price when asked again. Östberg calls the acquisition of Pizza.de “the largest news in the history of Delivery Hero,” and you can see why. While Delivery Hero has raised $306.7 million since opening for business in 2010 — including over $170 million this year alone — Pizza.de gives Delivery Hero a big boost in scale in its core market. And in the world of e-commerce and logistics-based services, certainly time is of the essence, but scale is, too. As a point of comparison on valuation, UK-based Just-Eat, another European competitor in the space that went public earlier this year, is currently valued at $2.45 billion (£1.47 billion). U.S.-based Grubhub, meanwhile, is valued at $3.56 billion. Delivery Hero, like FoodPanda, remains in private hands, but that may change in the next year, or it may not: “We still aim to be IPO ready in the course of next year,” Östberg tells me, “with IPO as an option to choose from.” While we don’t know FoodPanda’s numbers, it has the mighty power of Rocket Internet behind it. In Berlin’s so-called “startup factory”, the Samwer brothers, founders of Rocket Internet, have built up a global empire of e-commerce businesses (scale again!), and is inching into an IPO with a valuation of around $4.4 billion. Beyond these existing food delivery players, there is the prospect of yet more entrants. Amazon, we have heard from reliable sources, is among those interested in the space, to dovetail with their other efforts to push into local commerce (our source even cited Delivery Hero among those that were a point of comparison for the Seattle giant). And Square recently acquired Caviar. The fact that these companies are larger than Delivery Hero both in terms of valuation and organization does not seem to deter the company for now. “Generally we feel quite comfortable since we have investors backing our company that have billions of dollars at their disposal,” Östberg says. Delivery Hero’s investors include Insight Venture Partners, Luxor Capital Group, Kite Ventures, Team Europe, ru-Net, Tengelmann Ventures, Point Nine Capital and Phenomen Ventures. “Due to our focus on delivering the best takeaway, we feel confident that we will always be able to provide a better service than general e-commerce companies. For that reason not worried as long as we continue to stay innovative.” Today Delivery Hero’s food ordering services cover some 75,000 restaurants across 23 countries, with half of its 800 staff based in Berlin. Delivery Hero’s German brand, Lieferheld, and Pizza.de will continue to operate as separate brands, the company says. Part of the reason is demographics: Pizza.de is popular with students in particular, who like to track their deliveries in real-time as a way of procrastinating from doing their work; no need to mess with a good formula. “Customers of both German brands will benefit from improved services driven by the collective expertise and innovative capacity of both companies,” the company says in a statement. “Restaurants that cooperate with both brands can now be serviced by a single point of contact.” With Germany sewn up, this will also give the company the ability to focus more on Asia and Latin America. There is a bit of backstory worth noting here, too. Pizza.de actually went after Lieferheld in the courts alleging that the latter company had stolen database information from Pizza.de. The claim was that Lieferheld, starting in the business later than Pizza.de, had lifted menu and account names from Pizza.de to build up its business. The two knocked heads, and apparently settled, in two different court cases.
News Article | March 24, 2014
Angel investors, that is: Point Nine general partners Christoph Janz and Pawel Chudzinski are bringing their early stage, SaaS-centric startups to San Francisco in order to be closer to the action. The duo launched Point Nine in Berlin in 2009 because Janz saw firsthand how difficult it was for European startups to raise early stage capital. European investors are loathe to pony up seed rounds in excess of $1 million, Janz said, preferring instead to open wallets usually to the tune of $200,000 to $300,000. Hardly enough for even the best startups to get their legs. In the States, seed rounds — especially lately — often exceed $1 million. But not in Europe. “Angel investors are much scarcer in Berlin and Europe than they are here. There, it’s much harder for startups to raise funding, and its harder there to raise capital at any stage,” Janz said during a recent sit down with VentureBeat. The quiet-spoken, spectacle-wearing Janz, a successful entrepreneur and startup founder who got his chops honed in his teens trading Commodore 64’s to friends and likeminded clients, founded Dealpilot, a comparison shopping website, in 1997. He made serious money when he sold a large percentage of the startup to German media giant Bertelsmann in 1999 for around $30 million. After he started and sold Pageflakes in 2008 — it was a platform that allowed customers to build home pages with custom dashboards, RSS feeds and weather widgets — Janz was wondering what to do with his life. Then he stumbled upon a Danish firm called Zendesk, a leading cloud software play specializing in customer service operations. He became an angel investor. Point Nine has two early stage funds focused on the consumer side of startups. Fund 1 is about $10 million, while Fund 2 is nearly $60 million. The firm has seven employees, and managing partner Pawel Chudzinski said Point Nine was spun out of Team Europe, a Berlin-based incubator and funding operator. The average Point Nine investment is about a $1 million. So far, Point Nine has managed to get almost all of its portfolio companies to open up offices in San Francisco and the Valley, with the exception of Clio, a Canadian SaaS software platform focused on law firms. Cleo is staying up in the Great White North — for the time being anyway. The list of Valley-bound Point Nine companies includes Denmark’s Zendesk, now situated in San Francisco; Algolia, a Paris enterprise software play targeting developers, which is in the process of moving to the Valley; ShiftPlanning, a Panamanian business management software startup, also en route to San Francisco; and Vend, a New Zealand POS software company with personnel now working in San Francisco. A major lure for Point Nine is what the duo said was access to the best salespeople on the planet: Americans. While Europe has some of the best engineers working in tech, the Europeans lack what the two said was a killer instinct to sell, and sell successfully. “When European partners want to scale up sales, its very hard to find them in Europe. We feel Americans tend to be the best salesman,” Chudzinski, who was born in Western Poland, said.
News Article | September 1, 2014
Whenever startup ecosystem commentators discuss how to create European technology businesses of global scale they tend to name one company as a shining example: Skype. Headquartered in Luxembourg and developed in Estonia, Skype is a revolutionary product and, rightly, a European success story. It sold three times in the last seven years; most recently, to Microsoft for $8.5 billion. But there is a Dutch company whose revenue is greater than Skype’s, a company that is seldom talked about, but which offers another template for European entrepreneurs to emulate. Its name is Booking.com and, listing 456,000 hotels and other accommodation in over 190 countries, it is massive. The Booking.com you see today is the product of two predecesssors: Active Hotels, founded in Cambridge, UK, in 1998; and its peer, the original Booking.com, founded in The Netherlands in 1996. These two companies got acquired by the U.S. giant Priceline, in 2004 and 2005, respectively. Priceline’s Netherlands office, which houses the combined Booking.com unit, did $4.1 billion in revenue last year. That’s 60 per cent of the group’s total and likely four times greater than Skype is reckoned to be pulling under Microsoft. “It would be tough to argue that there’s been a better acquisition in Internet history,” according to some. Put that way, it is easy to wonder if Booking.com shouldn’t have remained independent and become Europe’s leading standalone Internet company. When a U.S. company builds a marketplace site, one which connects buyers and sellers, it typically focuses on North America alone (AirBnB being one of the very few exceptions). But when startups in our fragmented and diverse continent build an online marketplace, they have to acquire merchants, customers, users and market share in multiple European countries to get really big. As a result, it has historically been hard to impossible for large U.S. marketplace companies to expand internationally in any way other than through acquisitions. The best example to illustrate this is eBay, the non-U.S. success of which seems to be entirely based on acquired companies. Marketplaces of European origins are much more comfortable in going international, country by country. That isn’t easy, cheap, or quick. It was a decade after its start that Booking.com had its exit. Building a European marketplace takes shoe leather — real, on-the-ground presence in multiple countries, gaining trust and growing relationships. Take Just-Eat or, in our investment portfolio, its counterpart Delivery Hero: You can’t build such a takeaway ordering service without employing dozens or hundreds of sales reps to go into restaurants in each country. But the rewards can be great. Once a business has acquired a sufficient listings and customer base, once it has become the go-to brand, it is supremely defensible, and it is hard for any rivals to unseat it. This is enviable: An inter-European marketplace with top brand positions across the continent will always be an acquisition target or a strong IPO candidate in its own right. There are a number of still-underdeveloped areas open for upcoming European online marketplaces to dominate. My favorite examples are healthcare and beauty, which are highly recurring and very mainstream services representing huge markets of tens of billions of Euros of spend yearly. At Point Nine Capital, we have invested in companies such as Docplanner, an international platform for booking medical appointments, or StyleSeat, a (U.S.-based) platform for booking beauty appointments. But there is much more to come: household cleaning services, handymen, car repair … lots of the services we use every day can make for a great marketplace opportunity. As I pointed out in a recent blog post, I think that there are two types of startups: global and local/multi-local. It is very important for founders to understand which category their company is in, as it will have significant consequences for how they internationalize. Skype will always be a great template for founders, but it’s just one template: one of a global brand and end-user product. I would encourage European entrepreneurs to pursue the Booking.com playbook and creating scalable, multi-local marketplaces in large markets. And if you’re one of those startups, I’d love to hear about you. Before co-founding Point Nine Capital in 2011, Pawel Chudzinski was a co-founder and partner at Team Europe where he led investment activities. Prior to that, Pawel worked as an associate for the U.S. investment banking firm Greenhill & Co. in Frankfurt and London. You can read his thoughts on the European investment scene on his blog.