Risk-averse investors lower Jabong’s valuation by 67 per cent

Global Fashion Group (GFG), the parent company of fashion portal Jabong.com, has secured a funding of 300 million euros from German startup investor Rocket Internet and other existing investors. However, the company has seen its valuation drop to one-thirds at one billion euros in less than a year.

In the current round of funding, Rocket Internet will underwrite around 100 million euros (about Rs 762.7 crore) of the financing. It will invest around 85 million euros, including the conversion of an existing investment at the terms of the financing.

“GFG has secured a successful funding round of at least 300 million euros, which has been underwritten by Rocket Internet and other existing shareholders,” Rocket Internet said in a statement. Besides, Sweden’s Kinnevik has committed to invest up to 200 million euros in the company.

The transaction values GFG at one billion euros.

Last July, the German firm had said GFG had a valuation of 3.1 billion euros post its participation in a 150 million euros internal financing round.

Lack of profits has raised concerns over valuations of startups globally, leading to many of these businesses facing difficulty in raising fresh funds.

In the recent past, mutual fund T Rowe Price cut back its valuations in many of its tech startup investments, including India’s Flipkart. Morgan Stanley, too, made a similar move earlier this year.

“Pre-funding has been provided by way of a 50 million euros shareholder loan during the first quarter. The balance is expected to be invested during the second quarter subject to other shareholders’ pa-rticipation and approval,” Mr Kinnevik said.