More independence for Jumia as venture builder pivots

folarin okunola

January 19, 2017 4:45 PM

This essentially changes Jumia's relationship with Rocket Internet: The new changes at Rocket make it a 'normal' investor in Jumia.

CEO of Rocket Internet, Oliver Samwer

Interesting times could be ahead for the Jumia Group.

Formerly known as Africa Internet Group (AIG), thanks to a brand harmonization strategy adopted in June 2016, the Group has been the subject of much speculation within the African tech industry for the past few years.

The 9-company group has a presence in 23 of Africa's 54 countries, which makes its health a talking point to the overall ecosystem. It has also raised a total of about $460 million in the five years since it launched.

For some perspective, all the startups that got funded on the continent last year collectively raised a total of $129 million. Clearly, Jumia is no small company.

However, the Jumia story cannot be written without its investors and backers. Most prominent of them is Rocket Internet, the German company famous for creating high-growth companies cloned from Western versions in emerging markets (others are AXA Group, CDC Group, Goldman Sachs, MTN, and Orange).

However, 2016 wasn't very kind to Rocket Internet (Jumia's main backer). It posted a loss of $690 million in the first half of the year, saw massive writedowns on a lot of its businesses, and lost investor confidence.

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In 2017, the company is changing its model completely. It will no longer be a holding company with deep interests in all of the businesses under its portfolio.

Instead, it has dissolved into the Rocket Internet Capital Partners (RICP) fund and secured $1 billion in commitments.

Rocket Internet as we know it has been replaced with RICP and the company's motto has been changed from "biggest internet platform outside China and the US" to a more subtle "Incubation. Investment. Growth".

This essentially changes Jumia's relationship with Rocket Internet: The new changes at Rocket make it a 'normal' investor in Jumia and that makes Jumia more independent.

How Jumia will fare with Rocket less involved in its affairs is anyone's guess but the continent will definitely be watching.

folarin okunola