Global Fashion Group, Rocket Internet’s consortium of online fashion businesses is continuing to witness its series of tough bouts. The company has today announced that it has managed to add another $33 million to its earlier over $330 million fund raise couple months ago. That’s the good part. The bad ? The consortium has raised about $364 million in total, but with a significant two-third down-grade in valuation.
Rocket Internet, in its latest release, has reported that the current round of funding has valued GFG’s business at a meager $1.1 billion as compared to the previous $3.4 billion. This is a serious down-grade compared to previous valuations, and shows that the GFG is still struggling to find its footing and achieve profitability.
Rocket Internet adds that the funding round was extended and the funding size changed due to high demand, which if you see the condition of the company — will seems more like a hoax. GFG has picked up the investment in multiple tranches, where-in the first tranche of over $330 million was pumped in by heavily-invested Rocket Internet and Kinnevik a couple months ago.
However, if you see the trend, you’ll notice that there are no new investors in this fund raising round and this is sort of a survival amount(even though it’s huge) for GFG. The current $33 million round, Rocket Internet says that the consortium has raised fund from undisclosed investors, but has named only one of them — Rocket Internet Capital Partners fund(a subsidiary of Rocket Internet, huh!?). Rocket Internet has invested a total of $75 million and its total direct and indirect stake in GFG now adds upto 20.4 per cent.
And if sources are to be believed, then TechCrunch reports that GFG CEO Romain Voog met with more than 90 investors around the world, in an attempt to raise more capital — but in vain. The source also tells that the fund-raising round has been arranged in a hurry to save the shinking ship i.e Global Fashion Group.
Commenting on the recent funding, Oliver Samwer, CEO of Rocket Internet, however, adds that,
GFG has successfully built its position as market leader in online Fashion in many key emerging markets. The recent funding round provides GFG with the necessary capital to continue on that path. We are looking forward to continuing to work with the GFG team as well as Kinnevik and the other GFG shareholders.
Jabong — caught amid money laundering allegations
German Internet company Rocket Internet is well-known for its cloning business proposition. It takes a proven business model and clones the same in a consortium of companies, in Europe, Asia, Africa and Latin America. Global Fashion Group is one such collaboration of online fashion business, but it has been marred by the struggle to attain profitability and demonstrate any long-term sustainability.
The Indian fashion e-retailer, Jabong, which is also a part of the GFG had received a $20 million grant from Rocket Internet in the recent past. The funding was a great help for Jabong, which was on a path of transformation from a start-up to a professionally run, profit-oriented company. But, the company hasn’t been able to cope-up from the pressure and is now on the market for an acquisition.
And now the company’s image is also being marred as the former executives are being questioned by Rocket Internet for alleged corporate governance violations. A twitter leak has also ignited more speculations and targeted co-founder and ex-CEO Praveen Sinha for money laundering, which he has obviously denied.