German ecommerce investor Rocket Internet (RKET.DE) has set up a new fund it hopes will speed up and simplify capital raising for its start-ups, helping the European tech scene keep up with U.S. rivals that have easier access to finance.
Europe's largest internet firm has set up dozens of companies ranging from online fashion to food delivery, but has had to put several planned flotations on ice in recent months due to a cooling market for tech listings.
The fund - to which Rocket Internet will contribute $50 million (35.15 million pound) of the $420 million attracted so far - means Rocket's start-ups can draw on a capital pool of 2.1 billion euros ($2.3 billion), including Rocket's own 1.7 billion euros of cash.
Chief Executive Oliver Samwer, whose serial internet investments have helped him join the ranks of Germany's newest billionaires, told reporters he had always found "good bargains" through previous downturns such as in 2000 and 2008.
"There is not as much money available to start-ups as in 2014 and 2015. Investors have become more cautious," he said. "For those who have capital, the best time is starting."
Samwer said the fund should help Rocket play in the same league as U.S. investors such as General Atlantic and Tiger Global Management. He said about 50 U.S. start-ups are raising $10 million or more every day, compared to very few in Europe.
"We are the only firm in Europe that has more than 2.1 billion to invest in the internet, that has the expertise to invest it," he said. "This is a further sign that investors in Germany and Europe trust the internet and the company Rocket."
He does not expect the fund to cannibalise demand for Rocket's own stock as it is aimed at institutional investors with a longer-term horizon.
Rocket's own share price, which has fallen by half since its initial public offering (IPO) in October 2014, was up 0.3 percent by 1247 GMT. The company pledged in September not to raise more capital or make big acquisitions for a few years.
The fund will invest in the same companies as Rocket, cutting its reliance on co-investors and allowing start-ups to raise capital more quickly as investors can piggyback on Rocket's own due diligence.
"In this industry, speed is a great competitive advantage," Samwer said.
Samwer shrugged off reports of difficulties after two senior managers left Rocket, saying the core leadership was intact. He also played down suggestions of conflict with major Swedish investor Kinnevik (KINVb.ST).
Rocket said in September that three of its top start-ups should break even by the end of 2017 and it hoped to list at least one in 18 months from then.