Media & Entertainment

Berlusconi Outed As Investor In Square Clone Payleven While Rocket Internet’s Zappos Clone Zalando Hits Breakeven

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A double-dose of details today about the normally secretive e-commerce startups incubated by the Samwer bothers-backed Rocket Internet. Silvio Berlusconi was outed as one of the key investors in Square clone Payleven; and Zalando, inspired by Zappos in the U.S., is reporting 2012 net sales of €1.15 billion and reaching breakeven in its core markets of Germany, Austria and Switzerland.

The two items are significant because Rocket Internet — the German-based e-commerce incubator and investment vehicle from the Samwer brothers that has created a range of businesses effectively recreating ideas first developed elsewhere — is known for being somewhat oblique when it comes to giving out certain facts about its portfolio companies, whether it’s the size of funding rounds, how many users they have, or who is backing them.

TechCrunch understands that Berlusconi and his family invest in Payleven through their B Cinque vehicle — “cinque” meaning five in Italian, and referring to his five children. Furthermore, this was the identity behind last month’s news that Payleven had received an additional “high single digit million dollar” investment from a mystery backer, in addition to named backers New Enterprise Associates, Holtzbrinck Ventures, ru-Net and the Samwer brothers’ Rocket Internet. That news was first published in the German press yesterday.

But TechCrunch also understands that B Cinque may be investing already or plans to invest in further Rocket enterprises: its €40 million investment fund was first made public in December 2012, and our source described it as a “very potent investor.”

Berlusconi, in addition to having been prime minister of Italy three separate times, is also the controlling shareholder of Italian media giant Mediaset, as well as owner of the A.C. Milan football club. He has also been in court for tax evasion and in the press over alleged sex scandals.

Putting all that color aside, though, making an investment in Payleven could pave the way for the mobile payments company to make a move into Italy, and even strike deals for usage through one of Berlusconi’s other operations (for example, selling goods at A.C. Milan games). Italy is a mobile-crazy country, and like other economies in southern Europe, it has a high concentration of small merchants who are not enabled to accept credit cards — meaning there is a natural audience there. One of Rocket’s competitors, SumUp, already offers services in Italy as well as Spain.

You say Zappos, I say Zalando

Perhaps hoping to get Rocket’s name out in a more positive light, today Rocket also put out some numbers on how Zalando, its online shoe/fashion site with some 150,000 styles from 1,500 brands, is doing. Given that Rocket doesn’t generally release these kinds of numbers, it’s worth taking a look:

Its net sales of €1.15 billion, Zalando says, are just over double what the company made a year ago (€510 million). Zalando claims that this makes it the first company in Europe to reach €1 billion in net sales annually within four years of opening for business. It also puts Zalando into breakeven (earnings before interest and taxes) in its core markets of Germany, Austria and Switzerland.

That growth works out to a rate of 125% over the last couple of years across the 14 markets where it operates, as you can see in this chart:

zalando net sales 2010-2012

“By launching shops in several new countries we have now established a broad footprint. This will be the basis for Zalando’s growth for the years to come,” Robert Gentz, Zalando MD and co-founder, said in a statement.

In addition to its three core markets, Zalando is also active in Netherlands, France, Italy, UK, Sweden, Belgium, Spain, Denmark, Finland, Poland and Norway. As with Rocket’s most successful exits — most recently with its daily deals operation CityDeal going to Groupon — the operation continues to complement the work done by Zappos in the U.S., a fact that has not gone unnoticed by investors, who have pumped hundreds of millions into the operation.

Backers of Zalando include Yuri Milner’s DST Global, J.P. Morgan Asset Management, Quadrant Capital, and AB Kinnevik, which is the company’s largest shareholder, in October taking a further 10% stake in the company for €287 million. Zalando also has debt financing of €40.7 million with he Commerzbank and the Sparkasse Mittelthüringen.

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