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Fire sale is Rocket Internet's India legacy

Rocket Internet had invested around Rs 240 cr in Foodpanda India over three years, a figure very similar to what Ola finally purchased the company for

Alnoor Peermohamed  |  Bengaluru 

Ola is planning to invest $200 million. Photo: Twitter (Olacabs)
Ola is planning to invest $200 million. Photo: Twitter (Olacabs)

The sale of Foodpanda’s India unit to ridehailing company on Tuesday marked the exit of German investment giant from all its major start-up ventures in this country. While Rocket had unloaded Foodpanda’s global operations to Delivery Hero, a start-up in which it owns 37 per cent, the company’s determination to exit all Indian investments led to another had invested around Rs 240 crore in India over three years, a figure very similar to what finally purchased the company for. More, being an all-stock deal, the India unit did not really generate any value for owner Analysts and sector watchers agree the sale of was yet another sale done in distress by The investor was among the first global firms to really take a deep look into India’s start-up sector; it is now completely out. Explanations for the failure range from a whacky corporate structure and entrepreneurs taking advantage of Rocket Internet’s lax governance to plain bad luck. “Their business model was sort of a me-too bone and they did the same thing in India. More, their businesses were not really entrepreneural,” said Devangshu Dutta, chief executive at consultancy Third Eyesight. By July 2016, it was clear the German firm was determined to exit from India. The company sold Jabong, once the feather in its cap, for $70 million to rival Done in such haste that neither party seemed to have seen that customer overlap between the two seemingly similar was only 30 per cent.

For the customer base alone, should have been valued higher. In 2014, when Flipkart acquired for around Rs 2,000 crore, was neck and neck with the latter company. However, once the sale was made and with big bucks to spend, pulled away from The controversy surrounding logistics firm GoJavas added to the German firm’s hasty retreat from the country, many say. While several questions remain unanswered, it’s true that Rocket picked its sectors right but failed on execution. Prior to the sale of Jabong, the company got rid of Fabfurnish, an online furniture and home decor retailer, on the same lines as Urban Ladder and Pepperfry today, by selling it to Kishore Biyani’s Future Group for around Rs 20 crore. Other failures include Asasa, an online retailer, forced to shut shop as it did not follow India’s Other bets such as Printvenue, Cuponation, OfficeYes and HomesandHeaven slowly failed and have withered away. Dutta adds that it’s easy to pick sectors where growth is expected and where inefficiencies exist, something got half-right in India. However, given the lack of entrepreneurial thinking within its India bets, they failed to capture the market and keep up with rivals.

First Published: Thu, December 21 2017. 00:51 IST