Rocket’s Airbnb clone Wimdu burned € 16,5 million in first year
Recently, rumors surfaced that Rocket Internet is trying to sell Wimdu, its Airbnb clone, but that it can’t find any buyers for it. According to the reports, Wimdu is struggling to find traction in a busy European market where Airbnb and HouseTrip are growing market share fast. Wimdu denied the rumors that it was being shopped around and said it was ‘very happy with its numbers’ and its future.
Every player in the segment is burning huge amounts of cash (Airbnb raised $ 120 million, HouseTrip raised $ 60 million), because they are locked in a race to establish what Johannes Reck of GetYourGuide yesterday called ‘marketplace’ advantages: the player who can move the most demand and supply wins. And because suppliers and consumers naturally want to use the largest, busiest marketplace, they keep winning once they establish their dominance beyond doubt.
For now, the rental market may still be up for grabs, but once a player edges ahead, the others have to convince suppliers and consumers that their smaller inventory is also worth a look. As Reck said, citing Ebay as an example of the incumbent who won’t die: there is a strong lock in when you build a marketplace. Competing against a marketplace is ‘very, very hard.’
Thanks to the publication of the annual results of Wimdu, we now know how much money Wimdu is spending, and the answer is: a LOT. In its first year (which ended in december 2011, it should be noted), Wimdu showed a negative result of € 16,5 million. According to Deutsche Startups, Wimdu’s smaller competitor 9flats burned € 5,8 million in 2011.
In its annual report, Wimdu notes:
“Fiscal year 2011 was the first year for Wimdu GmbH. High startup costs and low turnover are key drivers for the negative result in the amount of EUR -16,488,000. The initial phase of the company in 2011 was particularly marked by high spending on legal advice, marketing, customer acquisition and landlord and IT development.”
Wimdu raised $ 90 million in total, so it still has some runway. And it was always the strategy of Wimdu to expand aggressively into foreign markets. In its report, the company says that it wants to double its revenues by 2013.
The question is whether the shareholders still believe in this vision: recently Focus reported that Wimdu had scaled back its international expansion in August 2012.
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