Amadeus Private Equity and Venture Capital Forum Argentina Venture Capital in Emerging markets 1 July 2016
The Digital Prosperity Opportunity Three Converging Megatrends THE EMERGING MIDDLE CLASS A DIGITAL TRANSFORMATION THE CLOUDIFICATION OF IT 100% 80% 60% 40% 20% 0% World GDP 1990 2000 2010 2020 Developed Emerging 1.3 1.6 1.9 2.2 2.4 2.6 34% 38% 43% 46% 50% 52% 2013 2014 2015 2016 2017 2018 Smartphone users (Billions) % of mobile phone users Cost to store 1GB for 1 month $19.00 $0.16 $0.03 2000 2011 2015 Billions of people rising out of poverty in EMs Disproportionate growth in consumer spending as incomes rise SIM penetration >1 per capita in most EMs 2+ billion smartphones by 2016 Much cheaper to start a tech company than 10 years ago Can be done from anywhere Large new opportunities for digital entrepreneurs in emerging markets Sources: Cloudification : NESTA 2011, http://aws.amazon.com/s3/pricing/; Emerging Middle Class: E&Y, Skolkovo, EIU, IEMS; A Digital Transformation: emarketer Dec 2014. 2
Emerging Markets Maturing Notable Technology Exits AMERICAS EMEA ASIA 15
Sectors: Deals E-commerce vs. Search&Booking vs. Delivery&Supply Chain Search&Booking Other Financial Delivery&Supply Chain Social Platform Media&Content Internet Services Advertising/Marketing Software Financial Services E-commerce Data Analytics Games&Apps Security Other Business/Management Hardware Medtech Cleantech Education Communications&Networks 4
Amadeus
Countries Deal Heatmap The global hotspot is India with 160 deals Countries Deal Heatmap The global hotspot is India with 160 deals 6
No of Deals Amadeus Private Equity & Venture Capital Forum Argentina 1 July 2016 Quarterly Trend Growth in general every quarter 100 90 80 70 60 Modi Elected as PM +123% 56 50 40 29 28 47 India Rest 30 20 10 0 4 4 4 16 15 14 14 7 4 11 12 18 7 11 10 8 7 8 13 12 20 20 11 29 27 29 20 33 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 7
Emerging Markets Tech Clusters There are 10 significant tech clusters in the emerging markets: Buenos Aires, Sao Paolo-Rio, Lagos, Nairobi, Istanbul, the 3 Indian clusters (Mumbai, Delhi, Bangalore), Singapore and Hong Kong 8
Argentina is the third largest VC market in Latin America (Capital Raised US$ 2011-2015) No of Funds 9 Source: Latin America Private Equity & Venture Capital Association
Latin American VC Investment by Country (US$) (2011 2015) Peru 2% Colombia 3% Chile 4% Other 7% Argentina 7% Brazil 64% Mexico 13% Source: Latin America Private Equity & Venture Capital Association 10
Emerging Markets Tech Clusters Our coverage Emerging Markets Tech Clusters 11
Amadeus dealflow mirrors the market Amadeus saw 20% of deals done Deals Equity 100% 90% 80% 70% 60% 50% 40% 30% 100+ ($m) 40-100 ($m) 20-40 ($m) 10-20 ($m) 5-10 ($m) 3-5 ($m) 20% 10% 0% All 12
The Digital Prosperity Opportunity A Global Perspective Latin America EMEA South Asia Southeast Asia Depth Unique understanding of local ecosystems Access local dealflow Financial Services Digital commerce/content Breadth Marketplaces/Network Svcs Unique ability to compare key sectors across markets B2B/SMB SaaS & Svcs Pick global best of breed 13
Target Company Key Characteristics Product relevance for emerging markets and demonstrated traction in those markets Strong and (nearly) complete team Series B+ financings Leverage Amadeus experience and partner relationships Strong local syndicate partners Strategic relevance for potential acquirers 14
The Digital Prosperity Opportunity A Global Perspective Amadeus DPF Current Portfolio Latin America EMEA South Asia Southeast Asia Depth Unique understanding of local ecosystems Access local dealflow Financial Services Digital commerce/content Breadth Marketplaces/Network Svcs Unique ability to compare key sectors across markets B2B/SMB SaaS & Svcs Pick global best of breed 15
Bidu Online B2C insurance broker and price comparison 16
Bidu (1) Online B2C insurance broker and price comparison ACTION Deal Generation Company Profile DETAILS Company contacted Amadeus motivated by Amadeus track record of insurance-related investments and reputation in the venture capital community. Leading online broker and price comparison site for consumer motor insurance. Draws traffic through sophisticated marketing strategy, and generates price quotes though deep integration with insurers quote engines. Will eventually add other financial services products such as home insurance, loans and credit cards. São Paulo, Brazil headquartered. 17
Bidu (2) Deal profile and investment thesis ACTION Deal Profile Investment Thesis DETAILS Amadeus led R$20m (US$8.9m) Series B round with R$10m (US$4.5m) 14.3% stake after Series B $1.5 2.0bn brokerage pool exclusively in auto insurance Online insurance penetration <1% and should go to 20 30% in 5 7 years. Scalable business model Strategic industry and channel good M&A prospects if they achieve scale Strengthening management team Currently recruiting 18
Descomplica Online education and test preparation 19
Descomplica (1) Online education and test preparation ACTION Deal Generation Company Profile DETAILS Two existing investors approached us separately about Descomplica s Series C Descomplica is the largest online classroom in Brazil. Their initial market is Brazilian High School students preparing for ENEM (Brazil s largest university entrance exam). Their curriculum consists of 15,000+ proprietary videos and live lessons every day on web and mobile. Reaching a huge audience: 6+ million uniques/month; 800k+ registered users; 25m+ YouTube views Monetization through direct B2C freemium subscription of USD $3-$5 per month On track to achieve ~$6m in revenue 2015 (3X growth vs 2014) 20
Descomplica (2) Deal profile and investment thesis ACTION Deal Profile Investment Thesis DETAILS Amadeus led $7m Series C with insiders (The Social+Capital Partnership, Valor Capital Group and Valar Ventures) participating alongside. Seeded by 500 Startups and local angels Market entry point is test prep for ENEM (Brazilian university entrance exam). 6 million students sat for ENEM in 2014 Affordable pricing (enabled by digital channel) fills gap between high-end private tutorial and mass-market printed materials Opportunities to expand up- and down-stream in education chain, accessing new markets and boosting LTV: Degree equivalence and job readiness products for the ~50 million workers in Brazil who lack a high school degree Remedial tuition to alleviate 20%+ drop-out rates for 1 st year uni students 21
Summary Venture Capital in Emerging markets Long term macro trends are extremely favourable Significant exits are beginning to happen Internet services are the dominant opportunity but: E-commerce is very capital intensive Digital business models are more suited to smaller funds Digital goods (payments, insurance, travel, music, video etc) Marketplaces which do not hold inventory (classifieds etc) Argentina now number three in Latin America but ready to grow Political climate can make all the difference (viz: India) Amadeus has a clear focus on key clusters, and a clear target focus We are already active in Brazil and would love to engage in Argentina 22