Deal in focus: Neuhaus et al. exit apprupt in trade sale

The trade sale of mobile advertising business apprupt came to pass after its owner, Neuhaus Partners, originally invested in an entirely different company: mobile flirting service Jupidi. After financing several funding rounds, bridge loans and an entirely overhauled business strategy, lead investor Neuhaus, along with T-Venture and KfW Bank, had to make a choice: "To get a bigger market share, we would have to invest more money and we would have to internationalise. The question was whether to take this risk, or whether to sell. We got a really good offer from Opera so all the investors took the decision to sell," says Matthias Grychta, managing partner at Neuhaus.

The investor appointed Netherlands-based M&A boutique Autika to oversee a sale process. Autika singled out Opera MediaWorks, a Silicon Valley-based mobile advertising platform and subsidiary of Norway-headquartered Opera Software. The management team saw potential for apprupt and, although a deal value has not been disclosed, Grychta says the investors were "very satisfied" with the exit.

Flirting fail
Originally, Neuhaus invested in Jupidi – a mobile-based dating coach providing the user with personalised tips – in August 2008. With both apprupt and Neuhaus located in Hamburg, and the approximately €500,000-1m investment made through personal contacts, it was easy for the GP to speak up nine months later when it became clear the company was flawed.

"We have a very good relationship with the founders. Both sides saw that the business model wasn't working and because we were still involved we had to decide whether we wanted to close down the company or to change the business model and to try something new," says Grychta. The decision was made to change tack: "We wrote the new business plan with the company and when we felt confident we injected further financing."

It was at this point T-Venture and KfW Bank became involved in the company. Neuhaus invited T-Venture to co-invest resulting in a €1-5m series-A financing round into newly named apprupt in May 2010. A series-B round of between €5-10m from the three original investors followed 16 months later. Neuhaus remained lead stakeholder and invested via its €70m Neuhaus III fund, which closed in 2007. 

At the beginning of 2012, apprupt recorded a 100% increase on 2011 turnover. This grew to a 150% uptick on 2012 sales according to the company's January 2013 report.

With a 40-strong team across its Hamburg headquarters and Düsseldorf office, apprupt reaches more than 22 million mobile users. It enables brands and advertising partners to engage with audiences on mobile devices through both rich media campaigns and performance advertising solutions. Additionally, the advertiser has a portfolio of more than 250 mobile websites and apps, including clients such as Bauer, IDG and Lovoo.

Difficult market
A similar deal in this space was madvertise, a premium mobile advertising specialist based in Berlin with offices across Europe. Although the company focuses on the German-speaking market, it generates 35% of its revenue internationally. Backed in March 2010 by Earlybird Venture Capital and Point Nine Capital in a deal worth in the region of $5-10m, the mobile advertiser received a further $10m from Earlybird and US-based Blumberg Capital in its October 2011 series-B round.

Grychta admits the mobile advertising market is difficult and competition is rife. Big players such as Google and Facebook have gained a large share of the market, while madvertise's premium network and international operations have meant it outperforms apprupt in terms of both revenue and end results.

However, thanks to the nimbleness and flexibility of its venture backers, apprupt has been able to turn around its fortunes and has now found security through its new trade parents.

People
Matthias Grychta - Neuhaus.

Advisers
Equity – Autika (Corporate finance); Gleisslutz (Legal).

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