Samwer brothers pump millions from France and Sweden into their German startups
Posted Jan 5, 2010 by Markus Goebel
[Germany] While others hunted for presents, Germany’s most prolific startup founders used the holiday season to collect even more investor money and to start another company. Shortly after Christmas eve, the Samwer brothers switched on MyCityDeal. The Groupon clone will offer daily deals with up to 50 per cent discounts on stuff to do, see, eat and buy in cities across Germany. But until now the site only covers Berlin.
The offers on MyCityDeal change every day. If enough people sign up before midnight they get a voucher by email for a €60 dinner at only €30 or a nicely discounted wellness treatment, for example. Monday’s deal was a hot stone massage with warm salt from the Himalaya. 200 people signed up to get it for €37 instead of €50. Customers have to reserve their coupon by leaving their credit card details but will not be charged if not enough people sign up and the deal doesn’t take place.
Although Germany’s Mr Startup, Lukasz Gadowski of Team Europe Ventures, recently explained that he doesn’t believe in the Groupon model for Europe because it’s very capital intensive and we simply don’t have this American coupon culture, the market is hot right now. At least four German copycats were launched in the last week of December – CoupoMania, DailyDeal, Heimatpreis and MyCityDeal – shortly after Groupon announced a hefty $30 million series B financing.
For the Samwer brothers it seems to have been easy to found MyCityDeal. The nosy startup blog Gründerszene detected that they recently reshuffled a number of personnel inside of their incubator Rocket Internet. The founders of one of their recently busted startups – Beautydeal – simply got a new assignment. Beautydeal offered high class perfumes and cosmetics at discount prices but had to close in December, allegedly after their only supplier ceased working with them under pressure from brand producers who didn’t want to see prices diluted.
A sorry loss for Beautydeal’s other main stake holder, DuMont Venture, who probably has to write off his investment, although the VC company claims it’s only in “winter sleep“. Meanwhile, the Samwers start over and continue with what they do best: Invest other people’s money through their startup assembly line.
December began with a capital injection of an undisclosed amount in Rocket Internet’s Swoopo clone Dealstreet from Crédit Agricole Private Equity, one of Europe’s biggest VC funds which manages more than €400 million. The French VC firm is not only interested in Deal Street’s penny auctions site but also in a long term partnership to “construct and develop of innovative web business models out of Germany”. A weird justification for an investment in a startup clone, but they’re not alone.
Three days before Christmas, the Swedish holding company Kinnevik announced a €35 million investment and a name change for Rocket Internet. Kinnevik will own a mix of equity and warrants that in total gives it a right to acquire 25 per cent over time if all warrants are exercised. The new name is European Internet Holding.
Rumours say that Rocket Internet had to buy out their former investment partner before they could accept the Swedish money. United Interned is one of Germany’s biggest DSL and e-mail providers and also the mothership to one of the UK’s and US’ cheapest web hosters 1&1. They jointly invested with the Samwer’s European Founders Fund (EFF) since 2007.
It strikes us as noteworthy that that the three brothers are now concentrating on partners from outside the industry, to not say that it’s “dumb money”. Crédit Agricole is a retail banking group, owned by 41 rural banks, and the 73 years old Kinnevik also lacks a startup track record. The Samwers had already taken money from mail-order company Robert Klingel GmbH & Co. KG, a vendor of choice for the 50+ generation, to invest in two of their startups Plinga and Ladenzeile.
Controversially, a well know German startup founder recently trashed the Samwer brothers as “ringtone mafiosi”. He alluded to sales practices in their former company Jamba / Jamster, which got sold to Fox Mobile Entertainment, and warned of doing business with them.
Yet in 2007, the companies founded by the Samwers made turnovers of more than €1 billion per year.