Is Rocket Internet Going Public?

What's Next In Payments®
4:02 PM EDT January 9th, 2013

The hottest eCommerce rumor on the web this week? Rocket Internet is going public.

That notion started thanks to this blog post by Thomas Baldwin, and has refused to die down in the days following the report.  According to Baldwin, “credible sources close to the company” have indicated that Rocket is in the prepping stages for an IPO in which JPMorgan would serve as Rocket’s advisor.

“Make no mistake. This is a big deal. Big payday for the Samwers. Seismic shift in the way we think about venture formation in emerging markets. Even bigger threat for developed-world startup founders,” wrote Baldwin. “Massive credibility boost for the company belittled as a soulless imitators of other’s genuine innovation.”

How much stock should we put into the report? VentureBeat breaks down some responses from around the web, and goes over what we are and are not likely to see should the IPO rumors be legit.

First – and perhaps most obviously – the article states that if Rocket Internet does go public it’s unlikely to do so as one entity, but would rather go public with individual or groups of individual portfolio companies. For example, two rumors have Zalando as going public separately, or Rocket forming a holding company to have Zalando and Dafiti go public together.

“It would limit Rocket’s flexibility if all companies were listed; it could subject their procedures of starting new companies to more scrutiny than they’d like,” Baldwin wrote in a separate opinion blog piece. “But when these Rocket companies reach profitability, they are really attractive, profitable businesses. And going public would give the Samwers more credibility.”

Second, VentureBeat examines the pros and cons of a Rocket Internet IPO, and points out that it would impact the eCommerce scene as a whole. Rocket investors could benefit from an IPO, as they’d gain a clearer valuation of their assets. But major big tech IPOs in recent history, such as Facebook, Groupon and Zynga, have all been unsuccessful.

Finally, VentureBeat ended its summation with a section titled “Should we care,” and attempted to break down just how big a deal (or how unimportant) a Rocket IPO would be.

Tech journalist Sarah Lacy said Rocket’s IPO wouldn’t do much to move the industry, as the Samwer Brothers would never be respected by real entrepreneurs due to their tendency to mimic established business models.

But according to Baldwin, the move would still be hugely important because at the end of the day, success matters more than ingenuity, and Rocket would be able to further dominate the competition in many of its active regions.

“For emerging markets, it’s going to be difficult to compete with a company that has seemingly bottomless pockets,” he wrote. “So if you want to do fashion or eCommerce in Indonesia for example, you’re going to be crushed.”

What do you make of Rocket Internet’s IPO rumors? Should the company go public? Do you respect their business practices? Let us know in the comments below.

To read more Samwer Brothers rumors, check out the original VentureBeat piece here.

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