What's going on?

Rocket Internet, the startup investor and builder based in Germany, saw its stock drop 7% on Friday after it said it lost more than �600 million in the first half of this year.

What does this mean?

Rocket is kind of like a venture capital firm that invests in startups, except that it is also a public company itself � which means that, unlike most private investors, it must publicly report its performance. A large portion of its �600 million loss was because one of its investments, Global Fashion Group, had its valuation cut by two-thirds in its most recent funding round. That specific news had already been announced, but the effect on Rocket�s overall financial position is a reminder to investors that the value of their startups can quite easily go down.

Why should I care?

For the stock: Rocket�s companies are supposed to be �going public� � but they aren�t (yet).
The classic way that an investor in a �startup� makes a lot of money is for the company to become publicly traded (i.e. go through an IPO) and for the investor to sell its shareholding to new investors. Rocket had previously said that at least some of the companies in which it�s invested would �go public� soon – but that doesn�t appear to be happening (as Jefferies, the prominent investment bank, points out). That�s probably one reason why Rocket�s stock price has halved in the two years since it became a public company itself.


The bigger picture: The relatively high valuations of many private companies make it harder for them to �go public.�
The startup space has benefitted from a significant inflow of investment in recent years. That has, naturally, helped support higher valuations of private companies. That�s not necessarily a bad thing, but it can make it more difficult for such highly valued companies to �go public.�