Annual European Venture Capital Report 2017 edition February 2018
Intelligent global database to identify & track growth opportunities and innovative companies
About this report Data sources and transparency The authors of this report Dealroom.co is a proprietary global database providing business intelligence on innovative companies and venture capital Basic access to the database is free. Throughout this report, links are provided to relevant underlying data Data is maintained daily, sourced through a combination of: processing of public news-flow, data feeds, web scraping, crowd-sourced contributions (verified by Dealroom) and manual research Dealroom s clients include world-leading Silicon Valley firms, VC and buyout firms, multinationals and governments. Dealroom s software, database and bespoke research help to stay at the forefront of innovation and identify growth & strategic opportunities Yoram Wijngaarde Founder & CEO yoram@dealroom.co Daryia Paliksha Analyst daryia@dealroom.co Julien Puls Data Scientist julien@dealroom.co Notes on methodology Venture capital funding excludes debt, lending capital, grants and ICOs Secondary rounds, buyouts, M&A and IPOs are treated as exit transactions (excluded from funding data, but included in exit data) Marco Squarci Manager Operations marco@dealroom.co Irina Anihimovskaya Analyst irina@dealroom.co Europe excludes Israel, unless specified otherwise For feedback or questions please get in touch If you like this report, please share! 3
Summary Record investment Growth drivers Investing trends Sources of capital Venture backed exits Venture capital investors are betting on Europe at record levels: 19.2 billion was invested ( 22.1 billion including Israel) The number of investment rounds declined by 12% to 3,513 (including Israel 3,753). But that decline is likely to diminish once all smaller rounds have been accounted for. Dealroom tracked 4,828 funding rounds in total, however this includes debt, ICOs, grants, and other excluded rounds This presentation includes a reconciliation with different reported investment figures and methodologies on page 9 and 10 2017 saw 17 rounds over 100 million (Improbable, Delivery Hero, Farfetch, Deliveroo, ), compared with 13 rounds in 2016 However, even when excluding the 10 largest rounds investment still grew by 30% UK investment grew by 87% to 7.1 billion, more than Germany, France and Sweden combined. But France is #1 by number of VC-backed rounds U.S. investment is still 8x higher per inhabitant, indicating plenty of growth opportunity in Europe Deep tech (1), fintech, and healthcare were the leading investment themes of 2017, approaching combined 8 billion investment. Decreased new activity in SaaS, content, marketing & advertising, travel, booking platforms, ecommerce There is a noticeable trend to fewer larger rounds: fewer but larger early stage rounds, and increase in larger follow-on rounds above 5 million Fundraising by European venture firms slowed down in 2017, but is still at historically high levels with plenty of capital is available to be invested The UK is no longer the undisputed capital of European venture capital. Continental Europe is catching up, while France is almost on par already Investment activity has grown roughly proportionally across funds and corporate investors in 2017 Asia is becoming a significant investor in European tech, thanks to a handful of mega-rounds Number of exits grew to 294, but there were far fewer meaningful exits compared with previous years ( 12bn realised in 2017, vs. 35bn in 2016) Acquirers of European tech are still most likely to come from within Europe, followed by USA However, an extremely strong pipeline of European exits on the horizon (Spotify, Farfetch, Adyen, Klarna, Deliveroo, Auto1 Group, ) 1. Container term which includes robotics, artificial intelligence, autonomous driving & delivery, space-flight, aviation, computer vision, speech recognition, AR/VR. 4
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Contents 1. Venture capital investment 2. Growth drivers 3. Investing trends 4. Sources of capital 5. Venture backed exits
Venture capital investors are betting on Europe at an unprecedented pace Investment in billions 451 407 1.2B 0.2B Europe excl. Israel Nr. of rounds excl. Israel 519 487 0.1B 568 522 1.5B 1.5B 0.5B 590 535 1.8B 0.3B Israel Incl. Israel 650 592 2.1B 0.4B 680 668 629 2.7B 0.2B 609 3.2B 0.5B 628 576 2.6B 0.4B 815 735 737 672 3.6B 3.7B 0.5B 0.5B 1.0B 1.4B 1.0B 1.5B 1.7B 2.4B 2.7B 2.2B 3.2B 3.2B 4.0B 3.2B 4.1B 4.2B 3.0B 3.5B 4.0B 5.1B 5.5B 4.6B Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017 799 732 4.4B 0.4B 973 891 3.8B 0.6B 1,098 1,016 4.7B 0.6B 1,045 966 5.0B 0.9B 990 919 3.7B 0.7B 1,127 1,077 4.1B 0.5B Decline in number of rounds reflects: 1. a trend towards large deals (big tech) 2. time lag: some smaller rounds appear with a 12-24 month delay 1,010 950 4.5B 0.5B 899 845 5.8B 0.7B 1,024 957 6.4B 0.9B 820 761 5.4B 0.8B Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, ICOs, lending capital, grants. 7
Click below to view data & underlying rounds online. Click on the chart columns to see rounds in each year. View to quarterly vs. annually. In 2017 a record 19.2 billion in venture capital was invested in Europe ( 22bn incl. Israel) Investment in billions Europe (excl. Israel) Israel Nr. of rounds excl. Israel Incl. Israel 4,260 Europe & Israel investment 3,324 3,978 3,753 3,513 22.1B 2,626 3,030 17.6B 2.9B 2,128 2,406 15.5B 1.9B 2.7B 1,951 10.6B 1.6B 19.2B 6.1B 1.1B 9.1B 13.6B 14.8B 5.0B 2013 2014 2015 2016 2017 Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, ICOs, lending capital, grants. 8
Comparing 2017 European venture capital reports: differences in scope & methodology Number of rounds tracked Reported US$ investment Key differences Dealroom 4,524 4,828 (1) $ 21B $ 24B Dealroom excludes ICOs, grants, secondary rounds, debt, lending capital from funding amounts Atomico 3,449 3,699 $ 19B $ 22B Based on Dealroom data, but excludes biotech and Israel Otherwise, methodology consistent with Dealroom Pitchbook 3,306 3,556 $ 19B $ 22B Includes debt rounds such as Auto1 360 million. Dealroom excludes such debt rounds from totals Tech.eu 3,150 3,400 $ 24B $ 27B Tech.eu s includes secondary rounds such as Com Hem and Klarna. Includes debt rounds such as Auto1 CB Insights 2,483 2,733 $ 18B $ 21B Includes debt rounds such as OVH 400 million debt round. Dealroom excludes such debt rounds from totals VentureSource 2,250 2,500 $ 16B $ 19B Methodology mostly consistent with Dealroom Gil Dibner 1,541 1,941 $ 16B $ 20B Includes ICOs such as SIRIN Labs. Prioritises Israel location (e.g. SIRIN Labs). Includes secondary rounds such as Klarna, debt round such as Auto1 Group Crunchbase Not available Not available European data not found Europe Israel Source: Israel added for comparative purposes. If Israeli data not provided, Dealroom numbers are used. 1. Total number of rounds tracked including debt, lending capital, ICOs and grants. 9
Atomico s State of European Tech 2017: excluding biotech US$ 18.8 billion was invested Investment in billions Investment in US$ billions 22.1B 26% growth from 2016 $ 24.3B 3.2 6.1B 1.1 0.7 4.3B 10.6B 1.6 1.1 8.0B 37% annual growth 15.5B 1.9 1.8 11.8B 17.6B 2.7 1.2 13.6B 2.9 2.1 17.1B Total Europe = 19.2 bn $ 6.7B 1.2 0.7 $ 4.7B $ 11.7B 1.7 1.2 $ 8.8B $ 17.0B 2.1 1.9 $ 13.0B $ 19.3B 3.0 1.3 $ 15.0B 2.3 $ 18.8B $18.8B compares with $19.1B predicted back in Nov 2017 in Atomico s State of European Tech report. Tom Wehmeier, Partner & Head of Research at Atomico: Europe's entrepreneurial, talent, community and capital foundations are strong. In fact, European tech today is the healthiest it has ever been. As Dealroom.co's data shows, investors from Europe and beyond are backing the region's entrepreneurs at record levels. 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Europe (excl Biotech) Biotech Israel Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital, grants. 10
Contents 1. Venture capital investment 2. Growth drivers 3. Investing trends 4. Sources of capital 5. Venture backed exits
2017 saw 17 rounds over 100 million, compared with 13 rounds in 2016. Click image below to explore the largest Click rounds of below 2017: to view data & underlying rounds online Mega-rounds were a key growth driver, but not the only factor Investment in billions 19.2B Number of rounds (heatmap) Europe & Israel investment 13.6B 14.8B 5.0B 4.1B 9.1B 7.3B 11.1B 12.6B 16.4B 30% growth YoY excluding top-10 largest rounds 2013 2014 2015 2016 2017 Spotify ( 250M) Rocket Internet SE ( 445M) Delivery Hero ( 546M) Spotify ( 500M) Improbable ( 502M) Zalando ( 154M) Delivery Hero ( 350M) Spotify ( 526M) Global Fashion Group ( 363M) Delivery Hero ( 426M) Supercell ( 130M) Adyen ( 250M) Landbay ( 330M) Deliveroo ( 275M) Farfetch ( 397M) Sungevity Netherlands ( 125M) Ozon ( 150M) Zencap ( 253M) OVH ( 275M) Deliveroo ( 385M) Truphone ( 118M) Jumia Group ( 150M) Kreditech ( 200M) Jumia Group ( 248M) Truphone ( 337M) Powa Technologies ( 76M) Jumia Market ( 150M) BlaBlaCar ( 200M) Skyscanner ( 169M) Gryphon Group ( 238M) AVITO ( 50M) The Hut Group ( 132M) Auxmoney ( 165M) SIGFOX ( 165M) OakNorth Bank ( 203M) Ulmart ( 50M) Borro ( 112M) Global Fashion Group ( 165M) Cool Blue ( 154M) Letgo ( 175M) Groupe Santiane ( 44M) BlaBlaCar ( 100M) Reward Gateway ( 158M) Future Finance ( 132M) SoundCloud ( 170M) Arria NLG ( 40M) Klarna ( 99M) Funding Circle ( 150M) Oxford Nanopore ( 126M) Tricentis ( 165M) Source: Dealroom.co. Excludes crowdfunding only rounds, buyouts, secondary transactions, debt, lending capital. Excludes Israel. 12
UK investment grew by 87% to 7.1 billion, more than Germany, France and Sweden combined Main city ( B) Total country ( B) Nr. of rounds 10B Drop in rounds in Italy, Switzerland, Ireland, Belgium 2,000 8B 6B 7.1B UK investment accounted for 37% of Europe s total of 19.2 billion. In previous years this was around 28% of total 5.0B 5.5B 1,540 1,600 1,200 4B 2B 1.3B 2.6B 4.2B 3.8B 765 3.2B 2.8B 2.0B 2.0B 389 0.7B 1.5B 0.8B 1.1B 703 2.9B 2.5B 356 1.0B 1.2B 1.2B 0.4B 0.5B 1.8B 2.8B 3.7B 1.9B 1.6B 1.1B 2.7B 2.9B 240 800 400 0B '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 UK London Germany Berlin France Paris Sweden Stockholm Rest of Europe All main cities Israel Tel-Aviv Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital. Includes Israel & Biotech. 13
Click below to view data & underlying rounds online Click below to view data & Europe & Israel investment underlying rounds online Number of rounds (heatmap) But France has overtaken the UK by number of VC-backed rounds Number of VC rounds (excl. crowdfunding rounds) 800 700 674 692 724 688 France 600 544 629 672 United Kingdom 500 400 387 Germany 300 200 100 186 225 298 353 Caveat: some smaller rounds appear with a 12-24 month delay. This can impact numbers by 10-15% (indicative) Sweden - Click on amounts to see underlying rounds - Switch between quarterly vs. annually - Switch amounts vs. volume 2013 2014 2015 2016 2017 United Kingdom Germany France Sweden Source: Dealroom.co. Excludes crowdfunding only rounds, buyouts, secondary transactions, debt, lending capital. Includes Israel. 14
U.S. investment is still 8x higher per inhabitant, indicating plenty of growth opportunity in Europe Venture capital investment per capita in 2017 (US$) Israel USA Sweden United Kingdom Ireland Finland Austria Netherlands France Germany Denmark Europe (excl. Israel) Belgium Norway Spain Asia Russia Italy Portugal Turkey $2 $2 $1 $0 $31 $30 $26 $24 $21 $18 $42 $41 $40 $38 $61 $82 Opportunity in Italy: investment of $100 million, in a country of over 61 million people. $120 $136 Europe has roughly 700 million inhabitants. Investment of 19 / $21 billion implies $30 per capita USA annual investment is roughly $80 billion (1) and with 320 million inhabitants this implies $250 per capita Asia has roughly 4.5 billion inhabitants and $80 billion invested in 2017 $250 $368 Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital, ICOs. 1. Average of Pitchbook and CB Insights. 15
Across Europe, investment activity is gradually increasing, as local funding options are expanding Number of VC rounds (excl. crowdfunding rounds) 2.0B 1.5B 1.0B 0.5B 0.9B 0.5B 0.6B 0.4B 0.2B Includes Roivant s 1bn Softbank round 0.5B 0.6B 0.3B 1.0B 1.7B 0.2B Amount funding 0.6B 0.5B 0.9B 0.6B Nr. of rounds 0.2B 0.2B 0.2B 0.6B 0.4B 0.2B 0.4B 0.2B 0.3B 0.2B 0.2B 0.2B 0.3B 0.3B 0.1B '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 Spain Switzerland Netherlands Ireland Russia Finland 250 200 150 100 50 Amount funding Nr. of rounds 0.4B 0.3B 0.2B 0.1B 0.0B 0.1B 0.2B 0.2B 0.3B 0.0B 0.0B 0.1B 0.1B 0.2B 0.0B 0.1B 0.2B 0.2B 0.2B 0.0B 0.0B 0.1B 0.1B 0.2B 0.0B 0.0B 0.0B 0.1B 0.2B 0.1B 0.1B 0.1B '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 Belgium Norway Denmark Austria Poland Italy 0.1B 0.1B 120 100 80 60 40 20 Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital. Includes Israel. 16
Contents 1. Venture capital investment 2. Growth drivers 3. Investing trends 4. Sources of capital 5. Venture backed exits
Deep tech, fintech, and healthcare were the leading investment themes of 2017 Amount invested, 2017 (1) Number of rounds, 2017 (1) Deep Tech Fintech Healthcare Marketplace Artificial intelligence Analytics Biotech SaaS Manufacturing ecommerce / Trading Food Transportation Back office Marketing Developer tools InternetOfThings Home Gaming Telecom Classified listing Booking Fashion Travel Security Energy Insurance Virtual reality Cleantech 2.5B 2.4B 2.1B 1.8B 1.7B 1.4B 1.2B 1.1B 1.1B 1.0B 0.9B 0.8B 0.8B 0.8B 0.7B 0.7B 0.7B 0.7B 0.6B 0.6B 0.6B 0.6B 0.6B 4.1B 4.1B 3.8B 3.4B 3.2B Deep Tech Fintech Healthcare Marketplace Manufacturing SaaS Analytics Marketing Artificial intelligence ecommerce / Trading Transportation Content Home Food Back office InternetOfThings Travel Energy Education Booking Cleantech Biotech Security Real estate Advertising Jobs Recruitment Sports Gaming 204 197 177 176 164 162 158 150 143 133 125 118 110 110 105 104 102 362 360 328 303 292 259 242 423 410 557 556 Source: Dealroom.co. 1. Values overlap as companies can be included in more than one investment theme (e.g. both fintech and SaaS, or deep tech and biotech). 18
Decreased new activity in SaaS, content, marketing & advertising, travel, booking platforms, ecommerce Investment activity in 2017 vs. annual average in 2014-16 Deep Tech Fintech Artificial intelligence Healthcare Analytics Biotech Developer tools Marketplace Back office Gaming Insurance Virtual reality SaaS Transportation InternetOfThings Telecom Manufacturing Security Marketing Home Cleantech Food Travel Classified listing Energy ecommerce / Trading Booking Fashion ( 0.0B) ( 0.1B) ( 0.1B) ( 0.4B) Amount invested: increase / (decrease) 1.0B 0.8B 0.6B 0.6B 0.6B 0.5B 0.5B 0.4B 0.4B 0.4B 0.3B 0.2B 0.2B 0.2B 0.1B 0.1B 0.0B 0.0B 0.0B 1.5B 1.8B 2.4B 2.3B 2.2B Trend towards larger deals leading to disconnect in trends by number of rounds vs. amount invested. Example: SaaS saw fewer deals but still more capital. ( 1.0B) 1.0B 2.0B 3.0B Healthcare Fintech Energy Real estate Home Sports Transportation Cleantech Food Back office Jobs Recruitment Security Gaming Artificial intelligence Biotech Manufacturing Deep Tech InternetOfThings Education Travel Booking Analytics ecommerce / Trading Marketing Marketplace Advertising Content SaaS (132) Number of rounds: increase / (decrease) (82) (91) (2) (4) (4) (10) (24) (31) (42) (45) (47) (52) 33 28 25 24 21 19 18 14 10 9 7 3 48 144 129 (200) (100) 100 200 Source: Dealroom.co. 19
New wave of investment in Fintech, Health, Deep Tech dwarfs 2014-2015 investment in B2C marketplaces Investment into B2C verticals such as Fashion, Wellness, Taxi, Travel peaked at 4 billion. Companies focusing on execution & consolidation... whereas investment into FinTech, HealthTech, Enterprise and Deep Tech is already approaching double that amount at 8 billion 7.6B 5.7B Fintech 5.0B 4.2B 1.2B 2.9B 3.4B 3.2B Content Travel Wellness Fashion 1.5B 2.9B Health Food Deep Tech (1) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Source: Dealroom.co. Note: Some companies are included in more than one industry vertical, leading to some double counting of investment data by industry. 1. Container term which includes robotics, artificial intelligence, autonomous driving & delivery, space-flight, aviation, computer vision, speech recognition, AR/VR. In this chart, deep tech excludes fintech and health tech to avoid double counting. 20
Click image below to review Europe s most prominent venture capital investors and their investment activity Where is the smart money investing, relative to the market? Investment themes of top investors are broadly in line with market, but some notable deviations: Most prominent investors Entire European market (1) Rounds by Europe s top 30 investment firms (2) Deep Tech Fintech Healthcare Marketplace Manufacturing SaaS Analytics Marketing Artificial intelligence ecommerce / Trading Transportation Content Home Food Back office InternetOfThings Travel Energy 71 75 43 69 24 54 37 21 44 23 30 16 19 10 28 9 18 11 Source: Dealroom.co. 1. Same data as previous page. 2. As per Dealroom s investor prominence ranking: Index, Holtzbrinck, Balderton, Northzone, Lakestar, Sequoia, Accel, Insight, Rocket, Intel, 83North, Atomico, Goldman Bessemer, IDInvest, Partech, SVB, Naspers, Greylock, Creandum, Benchmark, 360 Capital Partners, DN Capital, HTGF, General Atlantic, Wellington, Mangrove, Acton, Octopus, TA Associates. 21
Median round sizes have come back up in 2017 (and valuations likely increased too) 0.5M Average Median 0.6M Seed rounds 0.7M 0.9M See next slide for data by country 0.7M Average Median 5.7M 5.8M Series A rounds 7.1M 5.9M 8.0M See next slide for data by country 0.2M 0.3M 0.4M 0.5M 0.5M 2.9M 4.0M 3.6M 3.6M 5.5M 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Series B rounds Series C rounds Average Median 11.0M 6.5M 14.0M 13.5M 10.0M 7.9M 11.8M 8.0M 20.1M 11.8M Average Median 12.3M 10.0M 27.4M 18.2M 28.8M 20.9M 22.8M 23.5M 14.3M 12.5M 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Source: Dealroom.co. 22
Number of rounds below 5 million stabilising, growth is driven by larger rounds Rounds up to 5M Rounds above 5M 0-2M 0-2M in UK and Germany 2-5M 5-10M 10-20M 20-50M 50M+ 2,500 2,000 Some smaller rounds appear with a 12-24 month delay 350 300 250 1,500 200 1,000 Noticeable decline in 0-2M rounds in UK and Germany since 2014 (also see next slide) 150 100 500 50 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Source: Dealroom.co. Excludes Israel. 23
Early stage median round sizes have increased, especially seed rounds in the UK and Germany 1.5M Bigger single rounds may have taken place of several smaller rounds (Potential explanation for decline in 0-2M seed rounds in UK and Germany) Median rounds size 1.2M Seed rounds 1.0M 0.5M 0.6M 0.5M 0.4M 0.4M 0.5M 0.0M United Kingdom Germany France Spain Sweden Netherlands 2012 2013 2014 2015 2016 2017 Series A rounds 8.0M 6.0M 4.0M 5.1M 6.9M 6.4M 6.3M 5.7M 5.2M 2.0M 0.0M United Kingdom Germany France Spain Sweden Netherlands Source: Dealroom.co. 24
About 25-30% of seeded companies also graduate to series-a round. About 15% graduate to series B % of startups reaching next funding round 100% 80% 60% Graduation rates: Note: not reaching series-a does not mean that company failed. Some companies become self-sustaining and/or exited. COHORT SEED SERIES A SERIES B SERIES C SERIES D 2011 100% 27% 13% 4% 1% 2012 100% 28% 13% 3% 2013 100% 27% 12% 2014 100% 24% 7% 40% 20% 27% 24% 13% 2014 cohort likely will still improve, especially Series B 0% 4% 1% 7% SEED SERIES A SERIES B SERIES C SERIES D 2011 cohort 2012 cohort 2013 cohort 2014 cohort Source: Dealroom.co. Europe only. Note: the average time between rounds is roughly 18 months. Therefore, it takes an average of nearly three years to move from Seed to Series B. For this reason, the data only includes cohorts from 2014 and earlier. 25
Contents 1. Venture capital investment 2. Growth drivers 3. Investing trends 4. Sources of capital 5. Venture backed exits
The UK is no longer the undisputed capital of European venture capital. Continental Europe s venture capital industry is catching up to the UK. Click below to see how France is nearly on par with the UK, while other countries are also on the rise: Fundraising by European venture firms slowed down in 2017, but is still at historically high levels VC fundraising Investment 19.2B VC fundraising by country 13.6B 13.0B 14.8B 9.1B 9.9B 6.8B 4.6B Plenty of new capital is available to be invested in 2018 and beyond. Investable capital is also less concentrated around the UK, more distributed across Europe than ever before. 2014 2015 2016 2017 Source: Dealroom.co. 27
Investment activity has grown roughly proportionally across funds and corporate investors in 2017 Investment funds Corporate venturing Angels, crowdfunding, other 20.0B 16.0B 12.0B 8.0B 4.0B 14.9B 11.9B 9.8B 8.1B 4.6B 2.2B 1.4B Investment in as % of total 74% 76% 63% 68% 68% 32% 22% 20% 27% 29% 3% 3% 4% 5% 3% Investment Fund Corporate Other 2013 2014 2015 2016 2017 6.4B 5.0B 4.8B 0.2B 0.3B 0.7B 0.8B 0.7B 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2,500 2,000 1,500 1,000 500 Investment Number of rounds 1. U.S based funds = Funds only. Excludes investment by U.S. corporates (Microsoft, GE, ). 28
Asia is becoming a significant investor in European tech, thanks to a handful of mega-rounds Europe USA Asia Rest of World 12.0B 11.0B 11.1B 3,000 10.0B 8.0B 6.0B 6.0B 9.5B 2,520 4.9B 4.6B 6.6B Investment in as % of total 59% 62% 63% 56% 50% 36% 32% 32% 26% 30% 15% 7% 1% 6% 8% 3% 4% 1% 3% 4% Europe USA Asia RoW 2013 2014 2015 2016 2017 2,500 2,000 1,500 4.0B 3.6B 3.4B 3.4B 1,000 2.0B 2.2B 450 0.8B 0.9B 1.4B 500 0.1B 0.2B 0.4B 1.0B 0.5B 147 0.2B 12 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Investment Number of rounds Source: Dealroom.co. 29
Click image below to review over 9,000 active professional investors Investors Number of unique active investors growing, but not as fast as in 2016 Number of firms with one or more investments per year Graph excludes angel investors. Number of angel investors nearly quadrupled from 335 in 2016 to 1,278 in 2017. However, this is partially driven by better data collection by Dealroom. 1,875 97 2,122 80 657 918 66 51 682 480 126 170 1,242 74 905 263 1,341 437 +33% (1) +44% (1) 1,495 +11% YoY (2) 547 +25% YoY (2) 2013 2014 2015 2016 2017 Corporate Investment Fund Accelerator, crowdfunding, other (excl. angel investors) Source: Dealroom.co. Investors who participated in at least one VC round in that year. Excludes Israel. 1. Annual growth between 2012 and 2016. 2. Growth from 2016 to 2017. 30
Contents 1. Venture capital investment 2. Growth drivers 3. Investing trends 4. Sources of capital 5. Venture backed exits
Click image below to view exits data & underlying rounds. Click on the chart columns to see rounds in each year. Switch to quarterly vs. annually. VC Backed exits in Israel and Europe The number of exits grew in 2017, but far fewer meaningful exits, compared with previous years VC backed exits in Europe (excl. Israel) Realised exit value ( B) Unrealized value ( B) Number of exits 60.0B 55.6B 360 50.0B 274 294 300 40.0B 30.0B 38.1B 37.4B 230 29.9B 240 180 20.0B 10.0B 122 83 35.0B 11.1B 21.8B 14.5B 12.0B 7.0B 2013 2014 2015 2016 2017 120 60 Source: Dealroom.co. Excludes Israel. Note: Realised value is based on % sold. Unrealised value is based on remaining % unsold. 32
Healthy ratio of capital returned vs. invested. But to sustain growth in VC activity, exits will need to increase even further How much exits should we expect? A rule of thumb: Ratio of capital returned invested Investment ( B) Total firm value of exits ( B) At the time of exit, VC ownership is typically 60-70% (1) Assume a 2x target return on capital for the VC industry. This implies that the target ratio of exits to VC investment should approach 3x, in order to achieve target VC return of 2x. 11.1B 38.1B 37.4B 55.6B 29.9B Amount of capital invested each year has increased dramatically ( 5.0B) ( 9.1B) ( 13.6B) ( 14.8B) ( 19.2B) 2013 2014 2015 2016 2017 Source: Dealroom.co. Excludes Israel. 1. On average, VC backed companies do three VC rounds before the exit. Each round involves circa 15-25% dilution. 33
European exits by target location: 2017 was a relatively slow year for venture backed exits across the board United Kingdom Germany France Sweden Spain Netherlands (secondary) 10.0B 100 8.7B 8.0B 7.5B 8.0B 80 6.0B 55 66 5.9B 60 4.0B 2.9B 3.6B 2.9B 3.4B 38 3.0B 41 40 2.0B 2.0B 1.2B 1.2B 0.9B 1.0B 0.9B 1.1B 0.7B 0.0B 0.9B 1.0B 1.1B 0.1B 0.1B 0.3B 1.2B 2.0B 15 0.4B 0.0B 0.0B '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 0.1B 20 18 Realised exit value ( B) Number of exits Source: Dealroom.co. Excludes Israel. 34
Acquirers of European VC-backed companies are still most likely to come from within Europe, followed by USA Europe USA Asia IPOs 35.0B 175 30.0B 29.2B 29.1B 150 25.0B 125 20.0B 100 15.0B 10.0B 8.1B 14.6B 7.0B 7.4B 13.3B 11.4B 9.5B 9.3B 9.1B 8.5B 75 50 5.0B 3.6B 1.9B 2.4B 3.5B 2.8B 2.7B 2.2B 0.1B '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 25 Total firm value of exits ( B) Number of exits Source: Dealroom.co. Excludes Israel. VC backed exits only. 35
2017 saw an increase in smaller exits, IPO rounds and secondary exit rounds 250 200 170 214 195 Exits by type (1) 150 100 50 47 82 23 29 31 35 45 7 13 21 8 8 12 4 10 3 4 7 5 Acquisition Buyout Merger IPO Secondary 28 2013 2014 2015 2016 2017 250 Exits by size 200 150 100 50 26 191 178 151 75 59 64 44 43 30 5 10 18 14 12 4 8 4 9 8 5 10 13 14 8 $ 0-100M $ 100-250M $ 250-500M $ 500M+ Size not disclosed Source: Dealroom.co. Excludes Israel. 1. IPOs include also post-ipo followon transactions. 36
Click image below to view the long list of Europe s most valuable private companies However, strong pipeline of European exits on the horizon Selected European unicorns Company Indicative valuation Industry vertical City Investors Companies valued > 750M Cabify 1 bn Transportation Barcelona Rakuten, Endeavor Catalyst, The Venture City, GAT Investments, Seaya Ventures, Winklevoss Capital, Marc Bell Ventures, The Venture City, Red Swan Ventures, Resolute Partners Auto1 Group 3 bn Transportation Berlin SoftBank, Target Global, Baillie Gifford, Barclays, Citigroup, Goldman Sachs, BNP Paribas, JPMorgan, DN Capital, DST Global, Piton Capital Deliveroo 2 bn Food London Accel, Index Ventures, General Catalyst Partners, DST Global, Fidelity, T.Rowe Price, Felix Capital. Greenoaks Capital Management MarketInvoice 1.5 bn Fintech London Northzone, British Business Bank, MCI Capital, Paul Forster Klarna 2.5 bn Fintech Stockholm Visa, Creandum, Northzone, Wellington Management, Sequoia Capital, DST Global, General Atlantic Adyen > 5 bn Fintech Amsterdam ICONIQ Capital, Index Ventures, General Atlantic, Felicis Ventures, Temasek Farfetch > 4 bn Fashion London FundingCircle 1 bn Fintech London Spotify 12 bn Music Stockholm JD.com, Temasek, Oleg Tscheltzoff, Fabrice Grinda, e.ventures, DST Global, Felix Capital, IDG Capital Partners, Eurazeo, Vitruvian Partners Accel, Index Ventures, Rocket Internet, DST Global, Temasek, Baillie Gifford, Union Square Ventures, Ribbit Capital Accel, DST Global, Goldman Sachs, GP Bullhound, GSV Capital, Fidelity, Kleiner Perkins Caufield & Byers, EquityZen, Northzone Transferwise 1.5 bn Fintech London Index, LocalGlobe, Kima, Valar, Seedcamp, IA Ventures, The Accelerator Group, Richard Branson, Andreessen Horowitz, Baillie Gifford Subtotal 30 billion + Source: Dealroom.co. 37