There’s more huge funding news for Lazada, the Rocket Internet-backed Amazon clone for Southeast Asia, after the German incubator announced that it has secured more than $40 million in investment for the service from Swedish retail giant (and long-time Rocket Internet investor) Kinnevik.
That investment has been declared today but it was made during the last quarter when the startup also landed undisclosed funding from serial Rocket Internet backer JP Morgan. Sources within Lazada told us then that JP Morgan invested upwards of $50 million which, combined with Kinnevik’s funds, is quite a war chest for the service, which sells a range of items from electronics to books.
It’s notable that this announcement is the first time that Rocket Internet had confirmed the price of an investment in Asia, since all previous deals have been undisclosed.
A quote from Lazada’s regional CEO, Maximilian Bittner, highlights the strategic value that Kinnevik — which is a Zalando investor, and last month bought up a further 10 percent in the service for $365 million — will bring to the table:
“Kinnevik has a proven track-record of investing in emerging markets and we are very excited to have such a knowledgeable and experienced investor on board. In addition to capital they will provide us with invaluable strategic insight of operating in such markets. It is also a strong testament to what we have accomplished so far and verifies that we are on the right track to achieve our aggressive strategic goals.”
Southeast Asia has been left almost entirely untouched by Amazon, eBay and other global retailers which gives Rocket Internet a huge advantage in the market.
The German clone-specialist jumped into Southeast Asia in March when it launched three Web retail services across five key markets in the region. The company has since expanded support and launched services in new countries — such as Myanmar and Cambodia — while, in addition to Lazada’s funding, footwear and fashion site Zalora brought in undisclosed funding from…yep, you guessed it…JP Morgan.
Lazada is operational in five markets — Indonesia, Thailand, Malaysia, Philippines and Vietnam — and has more than 1,000 employees, however the company, and Rocket Internet generally, has struggled to adapt to Southeast Asia. Seemingly in response to this, and alongside the many millions being pumped into the firm, Rocket Internet made a tactical change when co-founder Marc Samwer took up the group’s reins in Asia, with global MD Mato Peric also more closely involved.
The issues faced by Lazada, and other Rocket Internet businesses, included a ‘revolving door’ of senior management hires and the closing some businesses, while local workers have reportedly had problems adjusting to the demands of the company’s work ethic.
Our sources within Rocket Internet Asia recently revealed that they are upbeat following the changes. At the time that we learnt of the management changes in September, we were also given word of imminent new funding, and, with the Kinnvik injection disclosed, it remains to be seen if there is more capital coming to Zalora, Lazada and/or food delivery service Food Panda before the end of the year.
Here’s the announcement in full.
For immediate release. Singapore, 12/11/12.
LAZADA receives $40 million in funding from Kinnevik
Following the announcement of investments in the third quarter results statement of Investment AB Kinnevik (“Kinnevik”), LAZADA, the leading online department store in Southeast Asia, can confirm that Kinnevik has invested north of USD40 million in its German holding company. Together with the recently announced investment by J.P. Morgan Asset Management this provides LAZADA with an exceptionally well-funded balance sheet to continue its fast growth in Southeast Asia.
The investment will allow LAZADA, which has quickly established itself as the preferred online retailer in the region, to continue building out its product offering and expand its reach. “By focusing on providing superior service to our customers we have grown into a trusted household brand and to broaden our assortment is a natural next step for us”
Maximilian Bittner, Regional CEO, said. LAZADA recently added fashion to its extensive product offering, which includes a range of products from consumer electronics to household goods, toys and sports equipment.
“Kinnevik has a proven track-record of investing in emerging markets and we are very excited to have such a knowledgeable and experienced investor on board. In addition to capital they will provide us with invaluable strategic insight of operating in such markets. It is also a strong testament to what we have accomplished so far and verifies that we are on the right track to achieve our aggressive strategic goals” Mr. Bittner added.
“We are delighted to invest in LAZADA which has obtained a market leading position in a very short time” Henrik Persson, Head of Investments at Kinnevik commented. “The company is perfectly positioned to become the major eCommerce player in this region which counts more than 600 million inhabitants”.
Headline image via 401(K) 2012 / Flickr