Inside Rocket Internet’s Ailing Startup Factory

In November 2015, Oliver Samwer had a new investment to pitch. The charismatic founder of Rocket Internet, a Berlin-based incubator famous for churning out copycat startups based on successful U.S. tech companies, was touting his latest baby, a kind of Airbnb for college undergrads called Nestpick. Samwer’s team invited Luxembourg venture firm Mangrove Capital Partners to co-invest and extolled Nestpick’s growth potential and the power of Rocket’s globe-girdling startup machine.

The pitch slid down easy as a third martini, and Mangrove agreed to take part in an $11 million funding round. The hangover wasn’t long in coming. Less than six months later, Nestpick was struggling and had fired most of its 140 employees. Rocket, it seems, had misjudged the basics of the student housing market, where demand spikes just before school starts and evaporates during the academic year. Today, Mangrove Chief Executive Officer Mark Tluszcz regrets getting involved with Rocket and says Nestpick’s survival is far from assured. “You’re super-excited the day you put money in,“ he says. “But within a year you wonder what you were thinking.“