Venture Capital Report Europe 3Q 2017
The following report presents Dow Jones VentureSource s quarterly findings for European venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market. Highlights for 3Q 2017 include: Both the number of funds and amount raised by European venture capital funds decreased compared to the previous quarter. Venture capital investment into European companies fell by 25% from 2Q 2017 in terms of amount raised, but was up 48% year-on-year. The number of and amount raised through M&As fell 30% and 43%, respectively, compared with the previous quarter. Exits via IPOs saw a steep drop in the third quarter compared to 2Q 2017, both in terms of amount raised and number of IPOs. 2
EUROPEAN VENTURE CAPITAL FUNDRAISING EXPERIENCES SIGNIFICANT DROP IN 3Q 2017 FUNDRAISING 20 European venture capital funds raised 1.58 billion during 3Q 2017. Compared with 2Q 2017, total capital raised experienced a 48% drop, and the number of fund closings decreased by 41%. Compared with the same quarter last year, amount raised increased by 24%, despite closing 13% fewer funds. Partech International Ventures VII, which raised 400 million, was the largest fund of the quarter, accounting for 25% of the total amount raised in 3Q 2017. 40 35 30 25 20 15 10 0.83 1.40 1.30 European VC Fundraising Based on multiple closings (2014 2017) 2.03 1.20 1.70 2.85 2.57 1.27 2.08 2.23 3.04 1.58 3.50 3.00 2.50 2.00 1.50 1.00 5 0.50 0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Amount Raised ( B) 0.83 1.40 1.30 2.03 1.20 1.70 2.85 2.57 1.27 2.08 2.23 3.04 1.58 Number of Funds 22 29 24 27 19 27 29 25 23 24 19 34 20 0.00 3
LARGEST EUROPEAN VC FUNDS RAISED IN 3Q 2017 FUNDRAISING Firm Name Fund Name Amount ( M) Location Offering Status Fund Type Fund Category Closing Type Partech Ventures Partech International Ventures VII 400.00 Paris, France Closed Early-stage Venture Capital Venture Capital Final Cathay Innovation Cathay Innovation Fund 280.05 Paris, France Closed Multi-stage Venture Capital Venture Capital Final Mangrove Capital Partners Mangrove V Fund 148.78 Luxembourg City, Luxembourg Closed Early-stage Venture Capital Venture Capital Final BlackFin Capital Partners SAS BlackFin Tech Fund 1 100.00 Paris, France Open Multi-stage Venture Capital Venture Capital First Abingworth LLP Abingworth Bioventures VII LP 88.11 London, United Kingdom Open Multi-stage Venture Capital Venture Capital Interim 4
INVESTMENT INTO EUROPEAN VENTURE-BACKED COMPANIES PARES BACK GAINS IN 3Q 2017 FINANCING European companies raised approximately 3.29 billion through 513 deals in 3Q 2017. In comparison to the same quarter last year, the amount companies raised increased by 48%, while the total number of deals closed fell by some 5%. Quarter-over-quarter figures show both the amount raised and number deals declining by 25% and 7%, respectively. The quarter s decline in the number of deals continued the year-todate downward trend in this area. Moreover, the correction in the amount raised by European venture-backed companies in 3Q 2017 might suggest last quarter s spike was more of an anomaly and not fully representative of how the rest of the year s equity financings could develop. 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Equity Financings into Europe-based, VC-backed Companies (2014 2017) 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Amount Raised ( B) 2.39 2.09 2.92 4.11 3.43 3.56 2.85 3.21 2.23 3.51 2.97 4.39 3.29 Number of Deals 402 473 497 516 471 591 543 598 539 608 610 554 513 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 5
EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2014 2017) FINANCING 320 Number of Deals 280 240 200 160 120 80 40 0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Seed 43 51 43 61 47 56 58 55 51 63 71 80 79 First 193 230 244 225 219 300 241 292 261 272 253 225 186 Second 72 83 87 82 89 102 106 105 103 121 146 110 118 Later 58 58 81 110 75 78 84 91 74 94 76 80 84 Restart 1 1 1 6
EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (3Q 2014 3Q 2017) FINANCING 2,500 Amount Raised ( M) 2,000 1,500 1,000 500 0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Seed 19 32 36 43 38 43 48 46 42 65 79 83 113 First 495 500 654 683 721 803 757 902 740 1,116 961 1,007 584 Second 247 830 446 937 643 811 800 580 455 597 755 730 827 Later 886 681 1,690 2,295 1,981 1,452 1,053 1,607 902 1,615 846 1,559 1,556 Restart 2 1 2 7
EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES (3Q 2014 3Q 2017) FINANCING 2.50 Median Equity Deal Size [ M] 2.00 1.50 1.00 0.50 0.00 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Median Equity Deal Size ( M) 1.48 1.60 1.59 1.86 1.78 1.86 1.90 1.56 1.81 2.05 2.20 1.96 2.36 8
EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES, BY INDUSTRY GROUP (3Q 2017) FINANCING Consumer Services received the largest allocation of investment during 3Q 2017, raising 996 million through 121 deals. The sector attracted 30% of capital raised by European VC-backed companies in the quarter, and a 24% share of all deals completed in the quarter. Business and Financial Services ranked second, raising some 904 million through 134 deals. The sector attracted 27% of the total amount invested into European VC-backed companies as well as a 26% share of all deals completed in the quarter. Information Technology (IT) placed third in terms of euros invested, raising 641 million, or some 20% of the total amount invested into European VC-backed companies for the quarter. Additionally, IT, with 136 financing rounds, was Europe s most active industry, beating out Business and Financial Services by two deals. 3Q 2017 Industry Breakdown By Number of Deals 3Q 2017 Industry Breakdown By Amount Raised 4% 3% 26% 14% 20% 14% 2% 3% 30% 24% 27% 26% 3% 4% Business and Financial Services Consumer Goods Consumer Services Energy & Utilities Healthcare Industrial Goods & Materials Information Technology Business and Financial Services Consumer Goods Consumer Services Energy & Utilities Healthcare Industrial Goods & Materials Information Technology 9
TOP 5 DEALS INTO EUROPEAN VC-BACKED COMPANIES (3Q 2017) FINANCING Co. Name Location Industry Code Industry Segment Industry Group Brief Description Close Date Round Type Raised ( M) Round Investors (* denotes lead) Roofoods Ltd. (Deliveroo) London, United Kingdom Shopping Facilitators Consumer Information Services Consumer Services Provider of a food delivery platform. 24/09/2017 Later Stage 301.79 Accel Partners, Digital Sky Technologies Ltd., Fidelity Management & Research Co.*, General Catalyst Partners, Index Ventures, T. Rowe Price Group Inc.* SoundCloud Ltd. Berlin, Germany Movie / Music Producers and Distributors Media & Content Consumer Services Operator of an online platform to send, receive, and distribute music. 11/08/2017 Later Stage 142.94 Atlantic Labs Manager GmbH, Doughty Hanson, Temasek Holdings Pvt. Ltd.*, The Raine Group LLC*, Union Square Ventures Lilium GmbH (Lilium Aviation) Gilching, Germany Commercial Aircraft Aerospace & Defense Industrial Goods & Materials Developer of small-scale electric aircrafts. 05/09/2017 Second Round 75.87 Atomico, LGT Group, Obvious Ventures Management LLC, Tencent Holdings Ltd. TTTech Computertechnik AG Vienna, Austria Software Development Tools Software Information Technology Provider of time-triggered systems. 14/09/2017 Later Stage 75.00 Samsung Strategy & Innovation Center* Autolus Ltd. London, United Kingdom Biotechnology Therapeutics Biopharmaceuticals Healthcare Provider of biopharmaceutical solutions. 26/09/2017 Later Stage 64.42 Arix Bioscience Investments Ltd., Cormorant Asset Management LLC*, Nextech Invest Ltd., Syncona Partners LLP, Woodford Investment Management LLP 10
MOST ACTIVE INVESTORS FOR EUROPE-BASED, VC-BACKED COMPANIES (3Q 2017) FINANCING 16 Deals Completed 14 14 13 12 12 11 10 10 10 9 9 8 6 4 2 0 Force Over Mass Capital LLP Bpifrance Investissement SAS Partech Ventures High-Tech Gruenderfonds Management GmbH Kima Ventures Sunstone Capital A/S Balderton Capital Global Founders Management LLP Capital 11
EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES BY COUNTRY (3Q 2017) FINANCING The United Kingdom remained the most favored destination for equity financings in 3Q 2017, attaining some 41% of amount raised and 28% of all deals. The region received 1.34 billion across 146 deals. The amount invested was down 35% from last quarter while the deal flow decreased by 12%. Number of Deals in 3Q 2017 by Country (Top 4) 37% 28% United Kingdom France Germany Germany ranked second with 603 million raised through 70 deals. This represents a 33% decrease in capital invested and a 8% rise in the number of deals compared to last quarter. 6% 14% 23% 15% Russia Rest of Europe France came in third, raising 504 million in 78 deals. It attracted 11% more capital than last quarter, through a similar level of deals. Switzerland, garnering 146 million across 30 deals, was just two financings shy of being in the Top 4 outright for both amount raised and number of deals. Instead, Russia, with 31 deals, rounded out the Top 4 for number of financings. Amount Raised in 3Q 2017 by Country (Top 4) 4% 22% 41% United Kingdom Germany France 15% 19% Switzerland 18% Rest of Europe 12
EUROPE 3Q 2017 VENTURE CAPITAL EXIT ACTIVITY LIQUIDITY During the quarter, 46 venture-backed M&As took place in Europe, a 30% quarter-on-quarter drop and a 39% drop compared to the same quarter last year. The total amount raised through European VC-backed M&As in 3Q 2017 was 1.8 billion, representing a 43% decrease from last quarter and a 52% decline from 3Q 2016. Eight European venture-backed companies completed initial public offerings in the quarter, indicating M&As continue to be the preferred exit strategy for venturebacked companies. Exits for European VC backed Companies (2014 2017) 3Q'17 2Q'17 1Q'17 4Q'16 3Q'16 2Q'16 1Q'16 4Q'15 3Q'15 2Q'15 1Q'15 4Q'14 3Q'14 0 10 20 30 40 50 60 70 80 90 100 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 IPOs 16 11 12 17 8 17 7 11 13 17 10 17 8 M&As 60 59 63 53 64 45 67 66 75 74 62 66 46 13
TOP 3 M&As IN EUROPE (3Q 2017) LIQUIDITY Company Name Location Brief Description Industry Code Industry Segment Industry Group Close Date Round Type Amount Paid ( M) Acquirer Contorion GmbH Berlin, Germany Operator of an e-commerce site for industrial and trade supplies in the maintenance repair and operations (MRO) parts sector. Shopping Facilitators Consumer Consumer Services 26/07/2017 Acquisition 120.00 Hoffmann SE Information Services Cobalt Light Systems Ltd. Abingdon, United Kingdom Manufacturer of laserspectroscopy systems for pharmaceutical analysis, research, security, and biomedical analysis Electronic Components / Devices Electronics & Computer Hardware Information Technology 07/07/2017 Acquisition 45.59 Agilent Technologies Inc. The Social Travel Club Ltd. (Love Home Swap) London, United Kingdom Operator of an international vacation home exchange website. Travel Arrangement / Tourism Travel & Leisure Consumer Services 31/07/2017 Acquisition 45.59 Resort Condominiums International Ltd. 14
EUROPEAN VC-BACKED IPOs (3Q 2014-3Q 2017) LIQUIDITY During 3Q 2017, both the number of IPOs and the amount raised fell significantly in comparison to the prior quarter. Only eight venture-backed companies went public in the quarter, down markedly from the 18 IPOs in 2Q 2017. This figure represents 53% fewer IPOs than last quarter and 38% fewer than the same quarter last year. Furthermore, the 207.60 million raised through the quarter s IPOs constituted a 72% and 57% decline compared to last quarter and 3Q 2016, respectively. The largest European VC-backed IPO during the quarter was NuCana PLC, which raised 84.34 million at a valuation of 450.07 million for its offering on NASDAQ. 2,500.00 2,000.00 1,500.00 1,000.00 500.00 18 16 14 12 10 8 6 4 2 0.00 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Raised ( M) through IPO 447.47 2,264.11 417.40 576.70 699.69 612.93 155.78 227.64 483.22 202.04 357.82 749.81 207.60 Number of IPOs 16 11 12 17 8 17 7 11 13 17 10 17 8 0 15
TOP 3 IPOs IN EUROPE (3Q 2017) LIQUIDITY Company Name Location Brief Description Industry Code Industry Segment Industry Group Close Date Raised through IPO ( M) Exchange: Ticker NuCana PLC United Kingdom Provider of biopharmaceuticals for anti-cancer therapies. Biotechnology Therapeutics Biopharmaceuticals Healthcare 28/09/2017 84.34 NASDAQ: NCNA Nightstar Therapeutics Ltd. United Kingdom Developer of gene therapies for retinal dystrophies, such as choroideremia (CHM). Biotechnology Therapeutics Biopharmaceuticals Healthcare 28/09/2017 63.26 NASDAQ: NITE Rovio Entertainment Ltd. Finland Provider of entertainment products. Recreational / Home Software Software Information Technology 29/09/2017 30.00 HEL: ROVIO 16
ABOUT US & METHODOLOGY Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and partnership opportunities, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It provides accurate, comprehensive data on venture-backed companies including their investors and executives in every region, industry and stage of development throughout the world. The investment figures included in this report cover venture backed companies headquartered in Europe, and are based on aggregate findings of Dow Jones proprietary research for VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. To be included, companies have to receive financing from a venture capital or private equity firm. Our figures do not include companies that have received funding solely from individual, corporate and/or government investors. The data in this report only accounts for equity funding, not convertible debt deals. Figures contained throughout the report are current at time of editorial but subject to change without notice. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice. 17
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