For six years, the Mannheim founders have built up their sock shop without investors. For stronger growth, Snocks has now sold shares for the first time.
Back then, cousins Johannes Kliesch and Felix Bauer invested around 4,000 euros in their startup. In 2016 they founded Snocks and sold socks through an Amazon shop. Today they are turning over millions and daring to take the next step in growth: getting an investor on board. The French private equity fund Cathay Capital is investing a “significant double-digit million amount” in the Mannheim startup, according to a statement.
The two entrepreneurs do not want to say exactly how high the sum is in an interview with Gründerszene. They would continue to retain the clear majority of Snocks. According to the website, Cathay Capital is giving at least 15 million euros. The valuation should therefore be in the three-digit million range.
Secondary exit flushes money into the accounts
According to their own statements, Kliesch and Bauer issued new shares in Cathay Capital as part of the financing round, but also sold a few percentage points themselves. Since the company was founded, the two have not paid each other any dividends, says Bauer. Therefore, the secondary exit flushed a fortune into the two cousins’ coffers for the first time.
The online shop for socks and underwear has been profitable for the second year in a row. Last year Snocks had a turnover of 32 million euros. For 2022, the duo plans sales of over 50 million euros. Cathay Capital is now to help the Mannheim startup expand to France and other European countries in order to further increase growth. “We needed a partner to get to the next level. But neither of us have any experience when it comes to internationalization,” says Bauer.
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The founders spoke to several investors, especially corporations as strategic shareholders. But they would have asked for more shares, says Bauer. “In addition, we are not a VC case.” Because Snocks is profitable and is growing strongly anyway, that does not have to be promoted with venture capital. Therefore, Snocks did not address any VCs from the outset. Ultimately, the choice fell on a financial investor and thus a private equity fund. “We wanted to take someone who pushes the rating up,” says Bauer.
The Cathay Capital fund had the longest term, with some private equity investors having to sell their holdings in four years. A key reason why the duo chose the French company. The sale of some of their shares was a first step towards exit, but the Mannheim cousins would not initially consider a complete takeover.
