German Startups Group shows positive developments in its investment portfolio and was profitable again in the first quarter of 2016
German Startups Group, the second most active venture capital investor in Germany in the period since 2012 (CB Insights, 2015), has recorded many positive developments in its investment portfolio since the beginning of the year. For instance, the portfolio company ayondo announced concrete plans a few days ago to hold an IPO in the near future via a so-called reverse takeover transaction with a company listed on the Singapore Exchange (SGX). The new consolidated group would reach a market capitalisation of EUR 137 million. This would make ayondo the first listed FinTech company on the Singapore Exchange. In addition, the core holding SoundCloud, which accounts for the largest share of the portfolio of German Startups Group, is increasing its monetisation of its, according to the company, 175 million monthly active users. This was made possible because SoundCloud recently signed the long expected licensing agreement with Sony and was thus able to clarify the rights situation of its very large music catalogue. Licensing agreements have been met with all the major labels, Universal Music Group, Warner Music Group and Sony Music Entertainment, and also Merlin Network, which is claimed to have more than 20,000 independent labels. The music platform launched its subscription service SoundCloud Go shortly afterwards, in which the SoundCloud users have access to more than 100 million licensed and user-created songs. SoundCloud is considered one of the best known and most successful German startups.
Delivery Hero, another core holding of German Startups Group and better known in Germany under the brand names Lieferheld, pizza.de, and Foodora was able to increase its marketplace sales (GMV) in 2015 148 percent according to the company and thus further enhance its growth rate (2014 : EUR 657 million in marketplace sales, growth rate of 116 percent). According to Delivery Hero, the net revenue of the online platform for food deliveries increased by 125 percent to EUR 198 million (2014: EUR 88 million in net revenue, growth rate 111 percent). Other holdings significant to German Startups Group, Friendsurance and Scalable Capital, have recorded substantially higher valuations in financing rounds since the beginning of the year. For example, Horizons Ventures, the investment fund of the richest person in Asia according to Forbes magazine, Li Ka-shing, headed a round of financing for 15 million USD for the insurance FinTech startup Friendsurance. Scalable Capital, a leading so-called “Robo-Advisor,” won a new investor in Tengelmann Ventures and collected more than EUR 7 million in the recent round of financing to be used for expansion into Great Britain. Here, Scalable Capital has already received an operating license from the UK financial authority FCA. The traditional asset
management company KSW will integrate the automated portfolio management of Scalable Capital into its range and offer it to its customers in the future. In further financing rounds, partially much higher valuations of the online language school Lingoda, the MedTech startup Medlanes, and the FinTech startup Savedo were achieved.
Furthermore, reBuy, also a holding significant to German Startups Group, was able to increase its turnover to EUR 70 million in 2015. After the ReCommerce vendor expanded to France in December 2015, reBuy is now continuing its internationalisation into the Netherlands. German Startups Group is not satisfied with the development of one major portfolio company, however, and has lowered its stake to EUR 1 for reasons of caution. In total, however, the higher valuations of the portfolio companies in the first quarter of 2016 were significantly higher than the write-offs of investments. Thus, German Startups Group continues to participate sustainably in the booming German startup scene and is showing profitability based on preliminary calculations in the first quarter of 2016. This has consistently been the case since its first full year of operations (2013). In 2015, German Startups Group achieved a net profit of EUR 3.6 million or 0.49 EUR per share and a return on equity of 19.7%.
Three focus investments from the portfolio of German Startups Group, Mister Spex, Auctionata, and SoundCloud were recently classified as EU startups with the prospect of achieving valuations of more than one billion USD by the renowned online magazine tech.eu as “Baby EUnicorns.” Mister Spex and Auctionata are currently valued considerably lower. For SoundCloud, the opinion-leading online magazine TechCrunch recently expressed that SoundCloud would soon be valued higher than Spotify, which is valued at at least 8.5 billion USD according to market information.
Nicholas Nassim Taleb has classed venture capital as „anti-fragile“, in other words a portfolio can add stability to an increasingly fragile market. Peter Thiel, German-born billionaire and American VC-investor, who has invested in Paypal, Facebook, Airbnb, Tesla and many more, recently commented that venture capital is the only asset class he thinks can survive and grow in value during this so-called „bubble“ of high valuations taking place in almost all other asset classes such as property, stocks and bonds. Yale University announced last week that they achieved a return on investment of 93% p.a. in the last 20 years from the asset class venture capital.
Christoph Gerlinger, CEO and founder of German Startups Group, commented as follows, “We believe that our approach is well-suited for acting as an investor in the attractive asset class of German venture capital, in other words acquiring stakes in internationally successful German startups. The business development in the first quarter of 2016 confirms in this belief.”
Source: German Startups Group