SoundCloud Investor German Startups Sees Non-IPO Options

  • Alternatives include sale to institutional investors, CEO says
  • Investor could execute IPO `quickly' if market improves

German Startups Group Berlin GmbH, an investor in companies including music-distribution service SoundCloud, said it has other options to raise money after postponing a planned initial public offering in July at the height of the Greek debt crisis.

German Startups could raise capital by selling shares to institutional investors or by offering profit-sharing rights, Chief Executive Officer Christoph Gerlinger said in an interview. That doesn’t mean an IPO is off the table, he said.

“We’re sticking to our plan for an IPO and are monitoring the market very carefully,” Gerlinger said. “We’re not under time pressure. The current market environment is very fragile and fear-driven, which is generally bad for IPOs.”

German Startups invests mainly in new ventures in German-speaking countries, including food-delivery company Delivery Hero Holding GmbH and SoundCloud, which competes with businesses such as Google Inc.’s YouTube. The company postponed its IPO after the Greek crisis and the market rout in China deterred investors. It has holdings in about 40 businesses and plans to increase its stakes in some of them, Gerlinger said.

German Startups has recently focused on backing financial-technology companies including peer-to-peer insurer Friendsurance and Munich-based Scalable Capital, which uses an algorithm to advise private investors with a portfolio of 50,000 euros to 200,000 euros ($56,000 to $226,000), which banks don’t serve efficiently, Gerlinger said.

“We’re betting largely on serial entrepreneurs,” who have experiences with starting or building up companies, he said.

If the market situation improves, German Startups could “relatively quickly” realize an IPO, Gerlinger said.

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