Vc's quit early stage financing


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Traditionally, and in the layman’s view of the word, venture is defined as high risk/high reward, early-stage investment. The model comes from Silicon Valley where the maturity of the eco-system makes early-stage a reasonably predictable activity. In Europe however, this part of the market is now left to business angels, government-subsidised funds, and a handful of the larger VCs which can afford to subsidise this largely money-losing activity to feed their larger later-stage funds. VCs have largely deserted early-stage and are now focusing their attention on expansion capital.

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Vc's quit early stage financing

  1. 1. December 2012Technology / Medtech / Internet / Digital Media / Telecoms / CleantechMonthly European TMT PrivateInvestments and M&A TransactionsBulletin – December 2012Published by Go4Venture Research, the Equity Research unit ofGo4Venture Advisers LLP. About Go4Venture Advisers Providing innovative, fast-growing companies and their investors with independent corporate finance advice to help them evaluate, develop and execute growth strategies Equity Capital Markets (ECM)  Equity private placements  Growth equity financings and secondaries  Pre-IPO advisory Mergers & Acquisitions (M&A)  Sellside  Buyside / Buy and build  Valuation services Go4Venture Advisers LLP is authorised and regulated by the Financial Services Authority (FSA). © Go4Venture Advisers LLP, 2013 Page 1 
  2. 2. December 2012ContentsThis Month in Brief 3Private Investments1.1 - Headline Investment Index (HTI) 61.2 - Large Headline Investment Summary 71.3 - Large Headline Investment Profiles 8M&A Transactions2.1 - M&A Activity Index 182.2 - Top 5 Global TMT M&A Transactions Summary 19 Headline European VC & PE-Backed M&A Transactions:2.3 - Summary 212.4 - Profiles 22List of Acronyms 24About this BulletinThe Go4Venture Monthly European TMT Private Investments and M&A Transactions Bulletinprovides a summary of corporate finance activity among emerging European TMTcompanies:  Private Investments, i.e. Venture Capital (VC) and Private Equity (PE) financings, including growth equity, financing rounds with single secondaries components (recapitalisations); and  M&A Transactions where the sellers are VC and PE-backed European companies, including all majority transactions with no new investment going into the business (e.g. acquisitions, MBOs and other buyouts).Investment activity is measured using Go4Venture’s European Tech HeadlineTransactions Index (HTI), which is based on the number and value of transactions reportedin professional publications.M&A activity is measured using data from a combination of external sources, primarilyCapital IQ, with complementary reporting from 451 Group and VentureSource.Europe is defined as Western, Central and Eastern Europe, excluding Israel.For more details, please refer to the Methodology Note available note that no part of the Bulletin can be reproduced unless content is duly attributed toGo4Venture and the details of republishing are notified to © Go4Venture Advisers LLP, 2013 Page 2 
  3. 3. December 2012This Month in BriefDear Clients and Friends,Welcome to the latest edition of the Go4Venture Monthly European TMT Bulletin, featuring our proprietaryHeadline Transaction Index (HTI) of investment activity, as well as a quick summary of VC & PE-backedTMT M&A exits of $50 million or more.2013: Thinking AheadAs expected, 2012 finished on a high, with total investment up 26% compared to 2011, both in value andby number of transactions. December, typically a quieter month, was well ahead of December 2011 bysomething like 50%. This suggests an acceleration of the pace of investment in European technologyventure as noted since August 2012. By contrast, the M&A market continued to slide down.InvestmentAs we have been banging on about for some time, this increasing investment in technology reflectstectonic shifts in European venture. Not only can venture financing and venture capital (VC) fund activitynot be seen as one and the same any longer (as VCs would lead you to believe) but we are also facing afundamental re-evaluation of what venture investing means.Traditionally, and in the layman’s view of the word, venture is defined as high risk/high reward, early-stageinvestment. The model comes from Silicon Valley where the maturity of the eco-system makes early-stage areasonably predictable activity. In Europe however, this part of the market is now left to business angels,government-subsidised funds, and a handful of the larger VCs which can afford to subsidise this largelymoney-losing activity to feed their larger later-stage funds. VCs have largely deserted early-stage and arenow focusing their attention on expansion capital.We elaborated on the theme during a seminar on Growth Capital hosted earlier this month at lawyers TaylorWessing. As pointed out then, the move to growth equity has been accentuated by the poor IPO and M&Aexit market which has resulted in a large pool of VC-backed companies seeking further investment. As aresult approximately half of the “venture” activity (as tracked for instance by our own HeadlineTransactions Index) is essentially late-stage companies, either profitable or not far from break-even. Inshort the venture market now firmly incorporates what, for the lack of a better word, could be described as“mini private equity”. The term is actually quite apt, as private equity (PE) firms, in the absence of debtleverage, are themselves moving to growth equity where growth rather than financial engineering is theactual driver of value creation.December is fully representative of this trend with 5 late-stage and 5 Series B transactions – no realSeries A in the early-stage sense of the term. Even for the Series B companies, two of them have beenaround since 1993 (BRAIN) and 1990 (Objectway) respectively. The other 3 are internet companies able todemonstrate strong growth despite operating in an ex-growth macro environment. © Go4Venture Advisers LLP, 2013 Page 3 
  4. 4. December 2012In short the venture market has been turned on its head - or perhaps the model is returning to its pre-internetbubble roots. To make it simple, except for outstanding internet plays which have their own out-of-the-ordinary economics, it takes a much longer time to get VCs involved. From now on the first steps of anycompany will have to be bootstrapped, funded by family, friends and fools (the FF&F of good old times) orsimply by the founders themselves. And even internet companies (despite – or perhaps because – of theirlow initial investment, high velocity and potentially huge rewards) need to produce real metrics before VCsare prepared to commit.At the other end, VCs find that they themselves may need to wait much longer before being able to exit.Increasingly liquidity and exit have become two distinct events. One could say that for the VC model tosurvive, the whole food chain needs to be reorganised, with VCs agreeing to take out business angels (andsometimes employees), and PE and other later stage investors buying out smaller VCs. As usual, the US isshowing the way, with for instance Evernote’s investor merry-go-round in its December 2012 $85mnfinancing (75% secondary) or Twitter’s latest round at $9bn valuation (50% secondary). In the new venturemodel, VC-backed companies will need to go through various recapitalisations before getting to asubstantial exit outcome. In such a market, larger VCs who can speed up execution through increasedinvestment, and/or have sufficient dry powder to surf over several rounds will be the winners. SuccessfulVCs will have to become more like Sequoia Capital which raised $2.5bn in 2012 alone over 5 funds coveringearly-stage in US, China and Israel as well as growth capital in the US and globally.The corollary is that we can expect considerable suffering at the early-stage end of the market. Thewave of capital light internet plays has created a vast pool of seeded companies which will find it difficult toget to Series A. Some speak of the upcoming Series A crunch. Even VCs with decent Series A plays aregetting increasingly concerned about the refinancing risk and lament the lack of syndication partners asthey are now increasingly reliant on their companies being refinanced (or not) by fewer, larger VCs cherrypicking at will and increasingly dealing among themselves. Good times ahead for Tier 1 funds andestablished advisers such as Go4Venture.ExitsDecember was again a poor month for tech M&A overall, and European VC/PE-backed companies inparticular. Part of it is the paucity of exit activity, part of it reflects the challenge of tracking what is, after all,still a small market and therefore poorly covered by independent researchers. December exemplifies thosechallenges.On the one hand, Trivago was a big European success when it sold for close to €0.5bn to Expedia,something like 5x historical revenues and assuredly a huge premium to the money invested (which weestimate at c. 11x). A trade sale over €100mn is not so common in European venture (our threshold forreporting is $50mn - approximately €35mn): half a billion euros and a “ten bagger” is an exceptional event.At the other end, we had the news that WHEB, a London-based cleantech investor, had sold its stake inFriedola Tech to Silverlake Kraftwerk as reported in our November 2012 newsletter. Somehow furtherinformation was released in December and we learnt that WHEB made c. 2x their money on their €10.8mninvestment 2.5 years earlier. A solid return for WHEB, but too small to be reported. © Go4Venture Advisers LLP, 2013 Page 4 
  5. 5. December 2012Somewhere in between was the news of Ireland-based security software specialist Vordel being sold topublicly-quoted Axway (EPA:AXW) for the dreaded “unreported amount”. Vordel was a client ofGo4Venture Advisers for their late-stage financing in June 2007 so we know that the transaction hit ourreporting threshold and more. But corporates don’t like to mention figures, and neither do VCs sometimes,because the figure is either too high or too low. Which is a real shame because in this case Vordel investorsdid rather well from the investment.One wishes the venture industry was more proactive in broadcasting it successes.Enjoy the reading. Please direct any questions or comments to If you do notwish to receive future HTI updates from us, please send an email with the title “unsubscribe” Go4Venture Team © Go4Venture Advisers LLP, 2013 Page 5 
  6. 6. December 20121.1 - Headline Investment Index (HTI) Go4Venture HTI Index by Deal Value 500 2009 2010 450 Value of Transactions per Month (€mn) 400 2011 2012 350 300 250 200 150 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Go4Venture HTI Index by Cumulative Deal Value 3,500 3,000 2009 2010 Total Value of Transactions (€mn) 2011 2012 2,500 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec December 2011 2012 Year-to-Date 2011 2012 Landmark Deals # 1 4 Landmark Deals # 24 37 €m 117.6 174.3 €m 1,153.9 1,423.5 Headline Deals # 2 5 Headline Deals # 58 77 €m 25.6 55.1 €m 650.6 896.6 Small Deals # 18 25 Small Deals # 243 300 €m 54.3 65.4 €m 703.5 843.7 All Deals # 21 34 All Deals # 325 414 €m 197.5 294.7 €m 2,508.1 3,163.8© Go4Venture Advisers LLP, 2013 Page 6 
  7. 7. December 20121.2 - Large Headline Investment Summary(>£5mn / €7.5mn / $10mn) Company Sector Round €mn Description Investors 1 BRAIN (Germany) Industrial B 60.0 Specialises in the discovery MIG Fonds, MP Beteiligungs. Biotech of enzymes and other bioactives. 2 Beauty Trend (Germany) Internet Late 55.2 Operator of a subscription- Holtzbrinck Ventures, Services Stage based service which delivers Investment AB Kinnevik, selected beauty products to Rocket Internet. male and female customers on a monthly basis. 3 Biocartis (Switzerland) Diagnostics Late 34.5 Developer of a molecular Benaruca, Debiopharm, Stage and immunodiagnostics Individual Investors, Johnson platform. & Johnson Development, Korys, Philips, PMV, RMM (Rudi Mariën), Valiance. 4 (Jersey) Internet Late 24.6 Online beauty products Palamon Capital Partners, Services Stage retailer. Sirius Equity. 5 Auctionata (Germany) Internet B 15.3 Operator of an online Bright Capital,, Services auction house and sales Holtzbrinck Ventures, Kite portal for art, antiques and Ventures. collectibles. 6 CloudPay Solutions (UK) Software Late 12.2 Provider of payroll software Pinnacle Ventures, Rho Stage and services. Ventures, Unknown Strategic Investor. 7 Trustpilot (Netherlands) Internet B 10.0 Operator of a platform for Index Ventures, Northzone Services sharing of reviews of e- Ventures, SEED Capital tailers - effectively a social Denmark. review service. 8 Objectway (Italy) Software B 10.0 Provider of software and Futurimpresa. technology services for the financial markets. 9 Mebelrama (Russia) Internet B 7.6 Online retailer of furniture Rocket Internet. Services and household goods. 10 ECO Plastics (UK) Cleantech Late 7.4 Recycler of plastics. Ludgate Investments, SAM Stage Private Equity.Source: Go4VentureKeyBold indicates lead investor(s)* Internal round** Led by existing investors © Go4Venture Advisers LLP, 2013 Page 7 
  8. 8. December 2012 Company Sector Round €mn Description Investors BRAIN (Germany) Industrial B 60.0 Specialises in the discovery of enzymes MIG Fonds, MP Biotech and other bioactives. Beteiligungs. Biotechnology Research and Information Network (BRAIN) (Germany), a company which specialises in enzyme and bioactivediscovery, raised €60.0mn in a Series B round led by MP Beteiligungs with support from MIG Verwaltung.The money will be used for a combination of acquisitions and organic growth.BRAIN is a so-called ‘white biotech’ company. In other words, it concentrates on industrial applications ofbiotechnology rather than those in the healthcare and pharmaceutical industries. It makes its money from thediscovery and development of enzymes and bioactive compounds for the chemical, food and cosmeticsindustries.BRAIN was founded as an independent research organisation in Darmstadt, Germany in 1993. The firm’s ®approach to discovering new enzymes and bioactives has been to develop a BioArchive . This libraryconsists of metagenomes – genetic materials recovered from environmental samples – and other biologicalmaterial. The firm then uses a proprietary technology platform to screen this library for anything useful.Since 99% of all microorganisms from habitats such as soil samples cannot be cultivated, these non-cultivated organisms have yet to be tapped as sources of new enzymes and bioactives. This is of greatcommercial importance at a time when amino acid substitutions of existing molecules are rapidly becomingpatented. The other advantage is that rather than adapting chemical processes to use sub-optimal catalysts,BRAIN’s library can be used to find better ones.To date BRAIN’s primary modus operandi has been a series of over 80 joint ventures and strategicpartnerships with firms such as BASF, Ciba, Henkel, RWE, Sandoz and Schering.BRAIN has now taken the strategic decision to become a fully integrated industrial company through acombination of acquisitions and organic growth – a buy-and-build approach for which this round provides thewar chest. Some of the money will also be used for further development of BRAIN’s technology platforms.In addition to its commercial expansion, BRAIN is also part of two collaborations funded by the GermanMinistry of Education and Research (BMBF) – NatLifE 2020 and ZeroCarb FP. Led by BRAIN, NatLifE is acollaboration of 22 industrial and academic partners developing healthier food and cosmetics. ZeroCarbFP –a similar collaboration of 21 partners led by RWE Power – aims to use micro-organisms to recycle carbon-rich industrial waste into useable raw materials.This round was led by MP Beteiligungs which also participated in BRAIN’s €12.5mn first round in January2007. MP is a family office making investments on behalf of the Putsch family which runs an automotive andaircraft seating company, the RECARO Group.MIG Verwaltung (€80mn (2013), AUM €800mn) provides management services for the MIG funds which arepublic venture capital funds. The MIG funds have a total volume of more than €800mn and provide venturecapital to young, un-listed companies located in Germany, Austria and Switzerland. © Go4Venture Advisers LLP, 2013 Page 8 
  9. 9. December 2012 Company Sector Round €mn Description Investors Beauty Trend Internet Late 55.2 Operator of a subscription-based service Holtzbrinck Ventures, (Germany) Services Stage which delivers selected beauty products Investment AB Kinnevik, to male and female customers on a Rocket Internet. monthly basis. Beauty Trend (trading as Glossy Box) (Germany), operator of a subscription-based service which delivers selected beauty products to male and female customers on a monthly basis, raised €55.2mnin a Late Stage round from Holtzbrinck Ventures, Investment AB Kinnevik and Rocket Internet.Glossy Box operates a member’s club whereby subscribers receive a selection of beauty products everymonth. Beauty Trend buys in bulk and provides the manufacturers of beauty products with a new saleschannel with low customer acquisition costs, whilst minimising Beauty Trends’ own costs. In return GlossyBox’s customers get an easy way to follow trends and explore new products.When the service launched in March 2011 it was only available for women. After twelve months, however,the firm expanded to cover men and teenagers of both sexes, as well as introducing products targetingmothers. Operating at the same price point – €15 a month in all cases – subscribers get five products in theladies’ selection and between six and eight in the selection for gentlemen. Subscriptions can be cancelled atany time, although fixed term subscriptions of three and six months are also available. Even at this price, oneor two premium brands can be included in each selection by varying the sample sizes.Beauty Trend has grown rapidly and now has over 300 employees serving some 200,000 subscribers in 16countries (Austria, Brazil, Canada, China, France, Germany, Israel, Italy, Japan, Korea, Netherlands,Poland, Spain, Sweden, the UK and the USA), generating revenues of €36mn a year.This is not the first time that Holtzbrinck Ventures, (€180mn (2011)), Investment AB Kinnevik and theSamwer Brothers’ Rocket Internet (AUM €850mn) vehicle have worked together. In our June issue wecovered their participation in a €39mn investment in online furniture shopping club Westwing Home & Livingled by Summit Partners with support from Access Industries. Prior to that, the team worked alongsideeVenture Capital Partners (now in a €10mn Series B round for online collective buying portal CityDeal, in March 2010. As is well known, Rocket’s principal investor is Kinnevik so Kinnevik-Rocketcollaborations are effectively Kinnevik following its money to later stages.Holtzbrinck and Kinnevik have also worked alongside each other on similar e-commerce plays: in 2011Holtzbrinck and Kinnevik made an undisclosed investment in Russian fashion e-tailer Lamoda (which hadoriginally been incubated by Rocket Internet); in October 2012, Kinnevik partially bought out Holtzbrinck,Rocket and Tengelmann Ventures’ from their investment in fashion e-tailer Zalando for €287mn.Rocket’s presence in this relatively large deal is worthy of interest as there are obvious synergies with thefirm’s newly revamped fashion strategy.Listed Swedish investor Kinnevik, which we described more fully in our June issue, has just won an appealwith the Swedish Administrative Court of Appeal in a tax dispute. Kinnevik may now treat the gain on thesale of its shares in financial services company Invik in 2007 as tax free. With profits from the disposal ofabout €29mn, this is material and may be partly responsible for the recent rise in the firm’s share price. © Go4Venture Advisers LLP, 2013 Page 9 
  10. 10. December 2012 Company Sector Round €mn Description Investors Biocartis Diagono Late 34.5 Developer of a molecular and Benaruca, Debiopharm, (Switzerland) stics Stage immunodiagnostics platform. Individual Investors, Johnson & Johnson Development, Korys, Philips, PMV, RMM (Rudi Mariën), Valiance. Biocartis (Switzerland), a developer of molecular diagnostic and biomarker detection platforms for personalised medicine, raised CHF42.0mn (€34.5mn) in a Late Stage round led by existing investor PMV with support from existing investors Benaruca, Debiopharm, Johnson & Johnson, Korys, Royal Philips Electronics and Valiance, as well as new investor RMM.This is the third time that Biocartis has appeared in our bulletin. Previous investments we have coveredinclude €10mn in November 2009, €30mn in April 2010 and €71mn in November 2011. Just like the nowrelatively unfashionable semiconductor industry, building diagnostic platforms for personalised medicinerequires significant investment to ramp-up to commercial success. Another company in a very similar space,Curetis, has also been written up in our bulletin twice. It appeared in December 2009 and October 2011 andalso contributed to our Headline Transaction Index (HTI) with a €6mn round in May 2011, even though theround was too small to warrant a write-up.Biocartis launched its Dynamic Multi-Analyte Technology (DMAT) platform for biomarker analysis in earlyDecember. As Biocartis’ press release states, this means Biocartis has moved from being a puredevelopment company to a commercial organisation. The DMAT platform is, however, initially available forresearch use only; not only is the research marketplace smaller than the ultimate clinical marketplace but itcan also be extremely sensitive to price.Nevertheless, this latest round will be used to launch the firm’s Apollo diagnostics platform (for which the firmhired a platform development project manager last year), to increase the variety of oncology tests the firmcan supply and to grow the commercial arm of the firm.Much of the press coverage of this investment focusses on the fact that it brings total investment in Biocartisto about €150mn. This must be seen in the context of the total market size. According to Business Insight,the global market for molecular diagnostics in oncology was about $0.4bn in 2010 and one of the fastestgrowing segments of the $4bn global molecular diagnostics market.Also of interest is the fact that this is very nearly an internal round. Indeed, the only new investor, RMM, is afamily office representing the chairman of Belgian biogenetics company Innogenetics Rudi Mariën, who maywell have been one of the individual investors who also participated in the previous round.Most of this round’s investors – Debiopharm, Johnson & Johnson, Korys (the family office of the Colruysfamily which specialises in cleantech, consumer goods, retail and life sciences), Philips Electronics and co-investment specialist Valiance (€30mn (2010), AUM €230mn) – also participated in the €71mn November2011 round. The exception is Benaruca, a Luxembourg-incorporated investment vehicle represented byDutch lawyer Peter Verhaeghe, which first participated in Biocartis’ €35mn April 2010 round. © Go4Venture Advisers LLP, 2013 Page 10 
  11. 11. December 2012 Company Sector Round €mn Description Investors Internet Late 24.6 Online beauty retailer. Palamon Capital Partners, (Jersey) Services Stage Sirius Equity. (Jersey), an online retailer of beauty products, raised an estimated £20.0mn (€24.6mn) in a Late Stage round from Palomon Capital Partners and Sirius Equity.Feelunique is the second investment in the beauty sector in this issue. Just as we saw a plethora of onlineinvestments in fashion e-tailing from about 2007, the beauty sector seems to be heating up. Growth slowedfor the global beauty industry in the wake of the global recession but, according to research firm Sanford C.Bernstein, not only is the global market now worth well over €250bn, it is also growing at over 5% a year.Furthermore, it appears that the consumer beauty dollar – or in our case euro – is finally moving online.Feelunique was founded in June 2005 as Island Cosmetics with each of its two founders contributing half ofthe initial £80k funding. Launching in October of the same year, the firm grew by spending on advertising,making losses for the first two years, during which time the two founders took no salary. Though it took timeto convince well-known brands that their products should be sold through feelunique, a deal with Clarinswhich took four and a half years to secure provided a range of well-known cosmetics that formed thefoundation of feelunique’s online store.Feelunique now has 125 staff working at its headquarters and logistics centre in the Channel Islands andstocks over 18,000 products from more than 500 brands. Last year its turnover exceeded €35mn, havinggrown at over 57% in the first half, well in excess of the company’s original forecast of c. €30mn. As part ofits quest to become a household name the firm has opened a salon, a spa and a club hotel, as well asphysical outlets in Jersey and Guernsey.Founder and Jersey-born CEO Aaron Chatterley has had a variety of jobs, building a web developmentcompany which he sold for £5.5mn in 2000 just before the dot com bubble burst. Notoriously, he got the ideafor Feelunique from needing to buy moisturiser while hungover at Dublin airport and realising that men canfind it intimidating to buy cosmetics in department stores.This round, which is partly a secondary deal, values feelunique at £26mn (€30mn) and gives investorsPalomon Capital Partners (€670mn (2005)) and Sirius Equity a majority stake.European growth investor and transaction leader Palomon targets services businesses. It stronglyemphasises its pan-European outlook, with a distribution of investments roughly matching that of theEuropean venture industry as a whole; it makes investments of €15-80mn. Note that as well as servicebusinesses which depend on technology such as software services, media and communications businesses,the firm also invests in non-technology companies such as business services, healthcare, financial services,leisure and retail.As well as private equity and early stage venture investments, the firm also participates in recapitalisations,turnarounds, buyouts and deleveraging transactions. In September 2012, Palamon Capital made a 3.4xreturn on the sale of Swedish coffee chain Espresso House to Norwegian private equity firm Herkules.Palomon was supported in this round by specialist luxury goods and branded retail investor Sirius Equity.Founded in 2008, Sirius’ investments to date include LK Bennett and Italian sportwear brand Jeckerson. Thisis their first investment in a pure online retailing play. © Go4Venture Advisers LLP, 2013 Page 11 
  12. 12. December 2012 Company Sector Round €mn Description Investors Auctionata Internet B 15.3 Operator of an online auction house Bright Capital,, (Germany) Services and sales portal for art, antiques Holtzbrinck Ventures, Kite and collectibles. Ventures. Auctionata (Germany), operator of an online auction house and sales portal for art, antiques, collectibles and vintage luxury goods, raised €15.3mn in a Series B round from new investorsBright Capital and Kite Ventures, supported by existing investors and Holtzbrinck Ventures.Founded in January 2011, the development of Auctionata’s sales and auction portal was supported by anundisclosed round from well-known early stage investor Holtzbrinck Ventures and automotive dealer theRaffay Group in December 2011.Like a traditional auction house, Auctionata has a team of experts (c. 250) who value any item offered forauction. Unlike a traditional auction house, this team is both global and virtual. Although its focus isEuropean, this expert network extends as far as Singapore, South Africa, South America and the USA. Thefirm has a physical presence in New York as well as at its home in Berlin.Low value items are valued on the basis of photographs and information on provenance from the owner,whereas more valuable items need to be looked at in person. Currently, Auctionata offers free estimates forthe first five items sold. By virtue of its expert opinions, Auctionata is able to offer a twenty-five yearguarantee of authenticity.Unlike eBay but just like a traditional auction house, the firm operates regular general auctions together withad hoc themed sales and a fixed price shop. Launched in September 2012, the site completed its first liveauction in December 2012 with revenues of €350k. Auctionata’s 70 employees currently curate over 3,600items in the firm’s online store and aim to increase this to over 10,000 items by the end of Q1 2013.Existing investor Holtzbrinck Ventures (€180mn (2011)), which appears elsewhere in this issue with a €55mninvestment in Beauty Trend, last appeared in our bulletin in June 2012 with a €39mn round for onlinefurniture shopping club Westwing. Founded in 2000 as the venture arm of the Georg von HoltzbrinckPublishing Group, early stage internet specialist Holtzbrinck is now on its fourth fund and has made c. 100investments over its lifetime, some 50 of which are in its current porfolio.Fellow existing investor is also an early stage specialist. The firm started life as BV Capital in1998 but rebranded as in the summer of 2012 to emphasise the firm’s global footprint and the factthat it operates funds in Europe ( Europe), the US (BV, Russia ( Russia),South America (Redpoint and Asia (Infinity investor Bright Capital (€270mn (2012)), is another firm with a global perspective. Stage agnostic,Bright operates five funds and targets cleantech and new materials businesses as well as digitalopportunities. Bright made its debut in our bulletin with an €8mn round for wastewater treatment firmEpuramat in August 2012.Kite Ventures confines itself to Russia and Europe. It also appeared in our August 2012 issue when it led an€80mn round for Delivery Hero. © Go4Venture Advisers LLP, 2013 Page 12 
  13. 13. December 2012 Company Sector Round €mn Description Investors CloudPay Solutions Software Late 12.2 Provider of payroll software and services. Individual Investors, Rho (UK) Stage Ventures, Unknown Investors. CloudPay Solutions (UK), a provider of payroll software and services, raised $16.0mn (€12.2mn) in a Late Stage round from new investor Pinnacle Ventures and existing investor Rho Ventures, with support from a further undisclosedstrategic investor. The money will be used to augment the firm’s technical, service and sales capabilities.Originally known as Patersons, CloudPay started developing its payroll outsourcing technology back in 1996,well before this model was dubbed Software as a Service (SaaS). The firm last featured in our December2008 bulletin when it received a €23mn round from Rho Ventures. This round was also to be used for theexpansion of sales, operations and customer support.By this stage in its history, CloudPay had launched in the UK and expanded into the rest of Europe but hadonly just begun opening international offices – in China, France, Singapore and the US. Alongside apartnership with IBM dating from 2006 and winning Siemens as a client in 2008, the Rho investment seemsto have achieved the desired objective of stimulating international growth: in 2009 the firm won a major newclient with over 10,000 employees in over 70 countries. The firm also expanded its offering both organicallywith the advent of full US payroll processing capability, as well as through synergistic partnerships with otherSaaS vendors such as HR management services vendor Workday, business execution software specialistSuccessFactors and ERP firm NetSuite.In 2012 Patersons changed its name to CloudPay, to match the product name it had adopted in 2011.Following a mezzanine round in October 2011 (also provided by Rho Ventures) to support a multi-countryexpansion, specialist SaaS consulting firm Montclair Advisors named CloudPay as one of its SaaS Top 250by bookings and revenue growth rate in November 2012.For new investor Pinnacle Ventures, this investment marks its debut in our bulletin. Pinnacle’s investment isanother example of a trend our readers will be familiar with – US investors backing European companies.Based in Silicon Valley and investing in healthcare as well as technology, Pinnacle is somewhat unusual inrunning both equity and debt funds.Used in the US since the 1960s, until the late 1990s venture debt was practically unheard of in Europe.According to a BVCA report in 2010, this is slowly changing. At its peak just before the credit crunch, venturelending accounted for about 10% of venture funding in the UK and 6% in the rest of Europe. The largestventure debt (as distinct from factoring) loans are made to internet, biotech and semiconductor companies.Given the current preponderance of late stage investments and associated lack of mid-stage equity, venturedebt is often used as a way to extend an investee company’s cash runway.Existing investor, US-based Rho Ventures first backed CloudPay when it was the sole provider of a €25mnround in December 2008. Having started life as a family office in 1981 the firm has evolved into a privateequity firm running three funds – Rho Ventures, Rho Ventures Canada and fund-of-funds investor Rho FundInvestors. Stage agnostic, Rho Ventures is currently investing from its $510mn sixth fund which targets newmedia, IT, telecoms, energy and healthcare deals where total commitments over the lifetime of an ivestmentcan be up to $50mn. © Go4Venture Advisers LLP, 2013 Page 13 
  14. 14. December 2012 Company Sector Round €mn Description Investors Trustpilot Internet B 10.0 Operator of a platform which facilitates Index Ventures, Northzone (Netherlands) Services the sharing of reviews of e-tailers - Ventures, SEED Capital effectively a social review service. Denmark. Trustpilot (Denmark), operator of a platform which facilitates the sharing of reviews of e-tailers – effectively a social review service, raised €10.0mn in a Series B round led by Index Ventures withsupport from Northzone Ventures and SEED Capital. The money will be used to enter the US market.Founded in Denmark in 2007, Trustpilot’s business model is best explained by the company’s stated aim ofcreating ‘the best, most trustworthy website for consumers to share their online shopping experiences andmake it the global standard in customer reviews’.Reviews are obtained in one of two ways: firstly, having registered with Trustpilot using either their e-mailaddress or Facebook login, consumers can submit reviews; secondly, e-tailers and other businesses sellingthrough the web can invite their customers to submit reviews using Trustpilot’s platform. This is how the firmmakes its money. Fees scale with the number of domains, the number of orders per month that can bereviewed and whether or not the client wishes to use additional features such as technical support orintegration with Facebook.Since the firm was founded in 2007, the platform has processed 7mn reviews of more than 100,000merchants, 1.5mn of which have been in the last twelve months. Over 1.3mn people read the reviews onTrustpilot every month. Well-known customers include Vistapring, Telia, Toys’R’Us and Spartoo. Currentlypresent in 18 countries with a stronger position in France, Germany, Italy, the Netherlands and the UK,Trustpilot now intends to enter the US using the funds raised in this round.It has been a busy year for transaction leader Index Ventures (€350mn (2012), AUM €2.0bn), which hasappeared in our bulletin an average of once a month throughout 2012. In our October issue the firmappeared no less than three times with investments in Zendesk, HouseTrip and Secret Escapes.This is perhaps not surprising as the original premise for Index’s US founders was to export the SiliconValley mindset to Europe. A decade on, the bet on Europe seems to be paying off and, when Indexannounced its €350mn early stage technology fund in June 2012, the firm repeated something that we havebeen saying for some time – namely that European start-ups are finally coming of age. At the time, Index’sportfolio included over 20 European companies of significant size and combined 2011 revenues of €1.3bn.Almost as prolific is Northzone Ventures (€130mn (2011), AUM €410mn), which led Trustpilot’s €3.3mnSeries A round back in November 2011 and last appeared in our bulletin in June as part of a €25mn roundfor iZettle.Much less well known is SEED Capital (€200mn (2013)), which provided two rounds of seed funding forTrustpilot in November 2008 and December 2010. SEED Capital is Denmark’s largest seed fund and, as it isbacked by public as well as private money, is able to pursue earlier stage opportunities more aggressivelythan many venture firms. The firm invests in IT, cleantech and life sciences companies and will follow itsmoney in later rounds if a seed investment is successful. From the 400 or so business plans the companyreceives every year it aims to back a dozen or so. © Go4Venture Advisers LLP, 2013 Page 14 
  15. 15. December 2012 Company Sector Round €mn Description Investors Objectway (Italy) Software B 10.0 Provider of software and technology Futurimpresa. services for the financial markets. Objectway (Italy), a provider of software and technology services for the financial markets, raised €10.0mn in a Series B round from Futurimpresa. The money will be used for European expansion, particularly in the UK.ObjectWay was founded in 1990 as ‘Praksis Engineering and Computer Science’ to develop applications forthe institutions of the European Commission. Adopting an object-orientated approach to development, whichwas cutting edge in the early 1990s, the firm changed its name to ObjectWay in 1997. Following a brief forayinto technology transfer, which still exists in the form of the ObjectWay University, the firm landed its firstbanking clients in 2000. It went on to receive financial backing from Italian Jupiter Venture SA (now knownas JVcapital) in 2002.Since this time the firm has developed two core lines of business – financial software and technologysolutions. The financial software business provides applications to large tracts of the financial servicesindustry covering sales of financial and insurance products, advisory services, fee and revenue managementsoftware, as well as supplementary applications such as salesforce management and more marketorientated software for securities processing and asset management. The technology solutions businessoffers custom software to support banking processes – examples include enterprise portals, BusinessProcess Management (BPM) software and Business Intelligence (BI) applications – by piggybacking on theexpertise developed in building the firm’s off-the-shelf software.ObjectWay has achieved all this though a combination of organic growth and acquisitions. Acquisitions haveincluded Eurotech in 2004, a business division acquired from MET Sistemi in 2005 which added 40 banks tothe customer base, and a division of Computer Sharing Finance in 2005. The firm now has more than 450employees in Bari, Brindisi, Milan and Rome and a 2011 turnover of €25mn with an EBITDA margin inexcess of 20%. In addition to a plethora of mid-tier financial services clients, ObjectWay’s customers includewell-known names such as Allianz, Citibank, Credit Suisse, Deutsche Bank and ING Direct.ObjectWay has already expanded into France, Ireland, Portugal and Spain and this round will be used forfurther European expansion, particularly in the UK. It is likely that such expansion will involve ObjectWay’stechnology vendor partners which include Computer Associates, IBM, Microsoft, Oracle and TIBCO.Futurimpresa, owned by the Chambers of Commerce of Milano, Bergamo, Brescia and Como, is a quasi-regional fund centred on the Lombardy plains. Together, these Chambers of Commerce represent about10% of all Italian companies. Futurimpresa takes minority stakes in Lombardian SMEs with a turnover of€10-50mn with an investment time-horizon of 5-6 years and a preference for capital structures with no debt.This investment will give ObjectWay a post money valuation of €30mn and comes in the form of stagedpayments which could take Futurimpresa’s equity holding up to a maximum of 30%. The first payment stagehas been used to finance the acquisition of the AMS Group, which specialises in outsourcing services forasset management companies and financial intermediaries, and of Thomson Reuters subsidiary Eximius,which provides software for private client wealth management. Interestingly for the future of the company,ObjectWay’s founder Luigi Marciano managed to buy out investor JVcapital in 2006. © Go4Venture Advisers LLP, 2013 Page 15 
  16. 16. December 2012 Company Sector Round €mn Description Investors Mebelrama (Russia) Internet B 7.6 Online retailer of furniture and household Rocket Internet. Services goods. Mebelrama (Russia), an e-tailer of furniture and household goods, raised $10.0mn (€7.6mn) in a Series B round from Rocket Internet. The money will be used to expand the firm’s productrange, move into a new warehouse and build a distribution network.Mebelrama was founded in September 2011 by Manuela Stoll and Nino Ulsamer, the Russian co-founders ofanother of Rocket’s portfolio companies – Westwing. Mebelrama also received support from Rocket in theform of a $4-6mn Series A round in December 2011.Like many furniture and household goods e-tailers, Mebelrama has moved rapidly to offer a range of over15,000 products. Just as with other companies operating successfully in Russia, however, Mebelrama’sbusiness model has some features specifically tailored for local market conditions. For example, in a countrywhere credit card payment over the web is still rare Mebelrama offers a 5% discount for prepayment.The firm also intends to build its own distribution network to give it independence from the vagaries of theRussian postal system. This is the same strategy as that adopted by another Russian e-tailer in Rocket’sportfolio – Lamoda. It will be interesting to see whether the various logistics operations in Rocket’s Russianportfolio are ultimately consolidated and spun-out.According to co-founder Stoll, the firm aims to reach a turnover of $100mn within three years and possiblymore depending on expansion into the rest of Eastern Europe.Regular readers may have been following Rocket Internet’s (AUM €850mn) bid to build a billion dollar e-commerce company in either furniture or fashion – or possibly both. Previous coverage of this saga hasincluded a €39mn investment in Westwing Home & Living in June 2012, a €13mn round for fashion e-tailerZalando in August 2012 and a €47mn round for Russian fashion e-tailer in September 2012.The online fashion industry is slightly more mature than the furniture e-tailing business – again readers willbe familiar with our coverage of the wave of fashion deals going back to about 2007. For this reason, RocketInternet’s strategy is more visible in the online fashion sector and is described in our coverage of Zalandowhere we also outline the JP Morgan–Rocket partnership’s fashion investments outside Europe. Thesetotalled some hundreds of millions of Euros, even excluding the pair’s more recent investment in Asianfashion e-tailer Zalor which closed in September.The strategy seems both clear and simple – global domination. This will not, however, be entirelystraightforward, at least not in Russia where the furniture and home e-tailing market is evolving rapidly.Ironically, there may be significant competition from venture-backed clones of furniture e-tailing businesses.These include, which raised a $5mn first round in May from AddVenture, ABRT andLuxembourg’s Mangrove Capital Partners, and Apartama which raised $1mn in October from Russianinvestor Aurora Venture Capital. There is also a new entrant called The Furnish targeting the premium end ofthe market. In addition, clicks-and-mortar firm, which is backed by Russian consumer electronicsgiant Svyaznoy, will have furniture as one of its core offerings. © Go4Venture Advisers LLP, 2013 Page 16 
  17. 17. December 2012 Company Sector Round €mn Description Investors ECO Plastics (UK) Cleantech Late 7.4 Recycler of plastics. Ludgate Investments, SAM Stage private Equity. ECO Plastics (UK), a recycler of plastic bottles, raised £6.0mn (€7.4mn) in a Late Stage round from new investor SAM Private Equity together with existing investor Ludgate Investments, as well as additional debt facilities from the Close Brothers Group. The money will be used tactically forshort-term value added expansion opportunities.When we last saw ECO Plastics in July 2011 it had just raised €27mn (€11mn of equity and €16mn of debt)from Coca Cola, Ludgate Investments and debt provider the Close Brothers Group. The money was to beused in a joint venture with Coca Cola Enterprises (CCE) to construct a £15mn facility which would increasethe firm’s production of bottle-grade recycled plastic from 15,000 to 40,000 tonnes a year.Christened ‘Continuum’ and built on the firm’s existing site in Lincolnshire, this new facility was opened bythe UK Environment Minister in May 2012. More importantly, ECO Plastics was able to say that it had beencompleted on time and on budget. The additional capacity allows the firm to produce 150,000 tonnes ofmixed plastics a year (including 40,000 tonnes of bottle-grade rPET) and makes the firm’s Lincolnshire plantthe largest plastics reprocessing facility in the world.To put this into context the UK recycles roughly 420,000 tonnes a year. Not only is this a huge increase fromthe mere 25,000 tonnes that were being recycled when the firm started out, but legislation such as the EUWaste Framework Directive and governmental policy such as the UK Department for the Environment, Foodand Rural Affairs’ (DEFRA’s) Waste Action Plan is driving further growth.In the UK, DEFRA’s target of increasing plastics recycling by 5% a year has encouraged local authorities toincrease kerbside collection of recycling. Commercially, this means that ECO Plastics has been able toexpand from three products to eleven and is expected to reach a turnover of £40mn in 2012, more thandouble the previous year’s £18.5mn. It is not yet clear how much of this was due to extra recycling for theOlympics.The CCE joint venture is not the only project ECO Plastics has been involved with over the last year and ahalf; in February 2012 the firm also received a £1.2mn loan from not-for-profit organisation WRAP (Waste &Resources Action Programme). Supported by Government funding, WRAP was set up in 2000 and has amandate to help increase recycling. The money will be used to extend ECO Plastics’ existing bottle sortingand processing facility, increasing overall capacity by a further 15,000 tonnes and improving the firm’s abilityto process rigid plastic packaging such as tubs, pots and trays.Ludgate Investments (AIM: LEF.L) is a publicly-listed specialist investor focussing on resource efficiency thatwas founded in 2001. Ludgate’s total invesment in ECO Plastics now amounts to just under £6mn. Havinglisted on the AIM market in August 2007, Ludgate’s portfolio of 13 companies is currently valued at about£42mn.Switzerland-based SAM Private Equity, which is owned by Rabobank, is a cleantech specialist. Founded in1995, the firm has been owned by Dutch asset management firm Robeco since 2007. The firm does notmake primary investments but invests in funds or co-invests alongside other private equity managers.Unusually the firm also makes secondary fund investments, buying out portfolios from other firms. © Go4Venture Advisers LLP, 2013 Page 17 
  18. 18. December 20122.1 - M&A Activity Index Disclosed Global & European TMT M&A Transactions European Deals 2011 (€mn) European Deals 2012 (€mn) 600 Global Deals 2011 (€mn) Global Deals 2012 (€mn) 35,000 # of Global Deals 2011 # of Global Deals 2012 500 30,000 Deal Value per Month (€mn)# of Deals per Month 25,000 400 20,000 300 15,000 200 10,000 100 5,000 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Capital IQ; Go4Venture Analysis Disclosed European VC & PE-Backed TMT M&A Transactions >£30mn / €35mn / $50mn Value of Deals 2011 (€mn) Value of Deals 2012 (€mn) 20 4,500 # of Deals 2011 18 # of Deals 2012 4,000 16 Deal Value per Month (€mn) 3,500# of Deals per Month 14 3,000 12 2,500 10 2,000 8 1,500 6 1,000 4 2 500 0 0 (1) (2) (3) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Capital IQ, The 451 Group, VentureSource (including transaction value estimates); Go4Venture Analysis (1) Includes NDS acquisition by Cisco Systems for €3.8bn (2) Excludes Skype acquisition by Microsoft, but includes Landis+Gyr acquisition by Toshiba for €1.8bn (3) Includes Elster acquisition by Melrose for €2.3bnDisclosed European VC & PE-Backed TMT M&A Transactions (2012)> £30mn / €35mn / $50mn Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMonthly Number # 3 2 3 2 4 3 5 6 3 3 4 1 Value €mn 159 1,117 4,459 398 372 2,553 1,412 511 895 319 1,270 479 Median €mn 54 558 623 199 89 210 150 65 322 69 263 479Cum. Number # 3 5 8 10 14 17 22 28 31 34 38 39 Value €mn 159 1,275 5,734 6,133 6,505 9,058 10,469 10,980 11,875 12,194 13,464 13,943 Median €mn 54 60 205 199 135 153 152 127 121 118 105 104 © Go4Venture Advisers LLP, 2013 Page 18 
  19. 19. December 20122.2 - Top 5 Global TMT M&A Transactions SummaryRanked by Price (€mn) in descending order (includes announced and/or completed deals) Price Rev. Target & Acquirer Target Sector (€mn) (€mn) P/R Noteworthy Sellers1 Eloqua (US NASDAQ:ELOQ) Application 730 69 10.6x Bessemer, Bay, JMI Software Equity. Oracle (US NASDAQ:ORCL), a diversified provider of enterprise software and IT hardware, will acquire Eloqua, a provider of business-to-business(B2B) marketing automation Software as a Service (SaaS). Founded in 1999, Eloqua was an early player in marketing automationand a pioneer of delivering cloud software. It has grown organically through its history to become the worlds largest marketingautomation software provider, with 70,000 users. Eloquas SaaS product has functionalities that allow marketers to develop andpromote brands, improve the discovery of their company, optimise click-through rates on websites and leverage social media formarketing purposes. The acquisition of Eloqua will strengthen Oracles position in the marketing automation market, expected togrow at 8.2% annually through to 2015. Oracle is already active in this space, having acquired the intellectual property assets ofMarket2Lead, another early marketing automation software provider, in May 2010. Furthermore, it seeks to integrate severaladjacent products into a unified SaaS offering; Eloqua, together with Vitrue, the social marketing SaaS company acquired for€241mn in May 2012, will form the basis of Oracles Customer Experience Cloud, a serious competitor to Salesforce.coms similaroffering. The last marketing software deal covered in the HTI was Teradatas €117mn acquisition of eCircle in the May 2012issue. The marketing software market is undergoing significant growth and transformation with both major players consolidatingtheir positions (as evidenced by Salesforce.coms acquisition of Radian6 for €241mn in March 2011, Oracles acquisition of Vitrueand Googles acquisition of Wildfire in July 2012) and new entrants coming to market (as evidenced by startups such asConversocial, Awerness and Attensity).2 TNS (US NYSE:TNS) Communication 671 422 1.6x - Services Siris Capital (US) www.siriscapital.comSiris Capital, a US private equity firm, will take private TNS, a provider of transaction network services. Launched in 1990, TNSscore business is the provision of transaction, trading and telecoms services based on a global backbone network, an alternativesecure network that carries TNSs clients data. TNS serves customers in over 60 countries. Having raised €67mn in a March2004 IPO, TNS has increased revenues by over 12% per annum since then. Since going public, TNS has made 11 acquisitions,the two largest of which were the Communications Services group of VeriSign for €183.3mn in March 2009 and Cequint, a value-added technology provider to mobile network operators, for €87.7mn in September 2010, both aimed at building out its telecomsbusiness. TNS had previously been the subject of an attempted management buyout backed by Parthenon Capital in 2006, butthe proposed deal was rejected by shareholders. Siris Capital was founded in 2011 by private equity industry veterans FrankBaker, Peter Berger and Jeffrey Hendren when they spun-out of Steve Cohens SAC Capital Advisors. TNS is the secondacquisition Siris has made in the telecommunications space, following the acquisition of a majority stake in communicationsequipment provider Tekelec.3 Intermec (US NYSE:IN) Supply Chain 528 618 0.9x - Optimisation Honeywell (US NYSE:HON), an aerospace, automation, logistics, materials and transport conglomerate, will acquire Intermec, a provider ofautomated data capture and management systems. Intermec provides barcode scanners, printers, Radio Frequency ID (RFID)systems, rugged mobile computers and supply chain optimisation software. Intermecs hardware products are used in logisticsand manufacturing for the management of production and transit information; barcode and RFID readers allow customers tocentralise information on, and track products and equipment as they progress along the supply chain. Intermecs software allowsfor efficient analytics of supply chain data. Intermec also provides many technologies as white-label devices for integration byoriginal equipment manufacturers (OEM)s. Founded in 1966, Intermec, has faced difficult times since the global financial crisis,failing to return revenues to pre-crisis levels and reporting a net loss since 2009. Honeywell, itself expecting reduced profitabilityin 2013, has stated that the acquisition of Intermec will strengthen its offering in rugged computing and voice recognitiontechnologies, a strategic move reflecting the shift in defence expenditure away from aerospace and armoured systems towardman-portable field technology. The deal also brings Honeywell into the new markets of RFID, voice and data management, part ofthe consolidating Automatic Identification and Data Capture (AIDC) industry (consider Motorolas acquisition of Intermeccompetitor Psion for €159.5mn in July 2012).© Go4Venture Advisers LLP, 2013 Page 19 
  20. 20. December 2012 Price Rev. Target & Acquirer Target Sector (€mn) (€mn) P/R Noteworthy Sellers 4 Trivago (Germany) Internet 479 100 4.8x Insight Venture Content & Partners, Howzat Media, Commerce European Founders Expedia (US NASDAQ:EXPE) Fund, Team Europe Ventures. Expedia, a diversified online travel company, will acquire 62% of Trivago, a hotel booking search provider. Trivago provides an engine that searches multiple hotel booking sites, aggregates the data and presents the consumer with the lowest price for rooms that meet their requirements. Trivago generates revenue from the partnered hotel booking websites when consumers click through to a booking website. Trivago was founded by two ex-entrepreneurs and an investment banker in Dusseldorf, with its website going live in 2005. Between 2008-2012, Trivago has doubled revenues annually and now operates search engines in 27 countries. The acquisition of Trivago can be seen as strengthening both Expedias European and metasearch activity, especially in light of competitor Pricelines €1.4bn acquisition of Kayak, which was highlighted in the November 2012 HTI. Trivago will continue to operate out of Dusseldorf and be managed by its founders, who own the remaining stock. 5 Peer 1 Hosting (Canada TSX:PIX) IT Infrastructure 462 106 4.4x Clairvest Group, Gibralt Capital, TCIB. Cogeco (Canada TSX:CCA) Cogeco, provider of a high-speed fibre optics network, will acquire Peer 1 Hosting, a provider of cloud hosting and colocation services. Peer 1 provides a variety of cloud hosting solutions, including public cloud hosting and hybrid cloud hosting, with its 19 data centres in Europe and North America being connected by a proprietary fibre-optic network. Peer 1 also offers colocation services to its customers, housing their servers in Peer 1s facilities while providing power, connectivity and security. Peer 1 was founded in 1999 with a focus on serving small and medium business customers, most notably hosting YouTube before its acquisition by Google. Between 2001-2012, Peer 1 made five acquisitions, expanding into the US by acquiring Texas-based competitor ServerBeach for €6.1mn in October 2004 and into the UK by acquiring London-based competitor NetBenefit for €30.9mn in June 2012. Peer 1 is Cogecos second acquisition of 2012, following its July acquisition of Atlantic Broadband for €1.6bn. The acquisition of Peer 1 is expected to strengthen Cogecos colocation offering, as well as providing several opportunities to cross-sell Peer 1s other offerings. There has been a recent trend of telecoms and cable companies acquiring cloud hosting infrastructure, as telcos seek to expand their traditional service offering, for example CenturyLinks acquisition of Savvis in April 2011 for €2.1bn and Time Warners acquisition of NaviSite in February 2011 for €240.7mn. We have also seen consolidation of cloud hosting providers, for example the acquisition of Star by Claranet as profiled in the November 2011 HTI.Source: Capital IQ, The 451 Group; Go4Venture AnalysisKeyBold indicates name of TargetItalic indicates name of AcquirerP/R – Price / Last 12 Months Revenues © Go4Venture Advisers LLP, 2013 Page 20 
  21. 21. December 20122.3 - Headline European VC & PE-Backed M&A TransactionsWhere transaction value is available (>£30mn / €35mn / $50mn), includes announced and/or completed deals LTM Target Price Rev. Funding # Target & Acquirer Sector (€mn) (€mn) P/R (€mn) P/F Noteworthy Sellers 1 Trivago (Germany) Internet 479 100 4.8x 45* 10.6x Insight Venture Partners, Content & Howzat Media, European Commerce Founders Fund, Team Expedia (US Europe Ventures. NASDAQ:EXPE) * Estimated fundingSource: Capital IQ, The 451 Group, VentureSource; Go4Venture AnalysisKeyBold indicates name of Target P/R – Price / Last 12 Months RevenuesItalic indicates name of Acquirer P/F – Price / Total FundingP/F>1x indicates an investment where all investors have made a positive return on their investment.P/F<1x indicates poor returns for some, but early or late investor entrants may still show a positive return on their investment. © Go4Venture Advisers LLP, 2013 Page 21 
  22. 22. December 2012 LTM Target Price Rev. Funding # Target & Acquirer Sector (€mn) (€mn) P/R (€mn) P/F Noteworthy Sellers 1 Trivago (Germany) Internet 479 100 4.8x 45* 10.6x Insight Venture Content & Partners, Howzat Commerce Media, European Expedia (US NASDAQ:EXPE) Founders Fund, Team Europe Ventures. * Estimated fundingSource: Capital IQ, The 451 Group, VentureSource; Go4Venture AnalysisTrivago (Germany), provider of a hotel booking search engine, will be majority (62%) acquired by Expedia(US NASDAQ:EXPE) for €479mn in cash and stock. The primary sellers include the venture capital firmsInsight Venture Partners, Howzat Media, European Founders Fund and Team Europe Ventures byreverse chronological order of known first investment. Germany-based Trivago offers a search engine that indexes and aggregates hotel price data from a range of hotel booking sites. The company’s website allows users to screen for the lowest priced rooms meeting their requirements, without checking individual hotel booking websites. Trivago partners with the booking websites it indexes, and generates revenue when users click through from its search results. Trivago was founded in Dusseldorf by the two ex-entrepreneurs behind (a consumer web portal that merged with Ciao in February 2000) and aninvestment banker, its site going live in 2005. Since its inception it has expereienced strong organic growthand currently has hotel booking search engines operating in 27 countries both within and outside of Europe,doubling its revenue annualy since 2008, to approximately €100mn in 2012. All four sellers invested directlyin Trivago over several rounds. In April 2011, Insight Venture Partners acquired 25% of the company in a€40mn Round D. Howzat Media acquired its stake in January 2008, when it invested €0.8mn in Trivago in itsB Round and European Founders Fund acquired 10% of the company in its October 2007 A Round for anundisclosed sum. Team Europe Ventures became involved through an undisclosed investment. Founded in 1996 as a division of Microsoft and listing on the NASDAQ in November 1999, Expedia is an international online travel agency. It owns over 100 brands, the most visible of which is, but also including, Egencia and eLong. The company operates in two segments: Egencia / Business Travel and Leisure (9% and 91% of 2011 revenues, respectively). provides full travel agency services, including hotel,flight, rental car and tour booking, as well as travel insurance. Expedia has websites in 60 countries acrosssix continents.Trivago is expected to strengthen Expedia’s position in European hotel booking markets, where it facescompetition from US competitor Priceline (which had acquired Kayak in the US as featured in our November2012 HTI and whose has 55% market share of hotel bookings in Europe), as well asTripadvisor which indexes both Expedia’s and Priceline’s sites. Expedia stands to benefit from Trivago’sstrong search technology and established partner network. The Trivago brand will continue to operate out ofits Dusseldorf headquarters, managed by its founders who own the remaining 38% of the company. © Go4Venture Advisers LLP, 2013 Page 22 
  23. 23. December 2012Insight Venture Partners (€1.1bn (2010); AUM €2.4bn), is a global private equity and venture capital firmcovering venture, growth capital and buyout deals and specialising in the technology, media,telecommunications and medical technology sectors. Investment sizes range between €2-150mn. Foundedin 1995, Insight is headquartered in New York. Insight featured in our September 2012 HTI for leading aninvestment in Mimecast, in our June 2012 HTI for co-leading an investment in B2B-Center and in our March2012 HTI for its attempted acquisition of Quest Software (ultimately acquired by Dell). Prior to that it featuredin our April 2011 and March 2011 issues with investments in collective buying site Groupalia and socialshopping site Privalia, respectively.Howzat Media (€7.6mn (2007)), is a British venture capital firm founded in 2005 by the former managementof Cheapflights, a travel search website, as well as the founding team of Stellant Partners, a managementconsultancy firm. It specialises in seed and venture capital investments, as well as incubating very early-stage companies. Howzat aims to invest globally in online media, information technology and travel-relatedcompanies.European Founders Fund (AUM €75mn), is a German venture capital firm founded in 2007 set up by theSamwer brothers, founders of the incubator Rocket Internet, previously founders of alando (the Germanonline auction room sold to eBay for €52.0mn in June 1999), and well-known European copycat investors. Itinvests in China, Europe and the US, focusing on companies with internet, software and wirelesstechnologies. Investments for seed stage companies range between €100k-1mn, €1-3mn for venture stagecompanies and €3-8mn for companies in the growth stage. The firm featured in our September 2012 HTI forits €322mn sale of to Ringier and Tamedia, as well as in our April 2011 and March 2010 issues forits investments in Borro.Team Europe Ventures (€6mn (2007)), is the venture capital arm of German incubator Team Europe. Itfocuses on seed and venture capital deals. The firm only invests in internet-related companies, with ageographical focus on German-speaking countries and wider Europe. Investment sizes range between €25-500k. Founded in 2008, the firm is headquartered in Berlin. Team Europe was featured in our September2012 HTI for its connection to Brille24, in our August 2012 HTI for its investment in Delivery Hero and in ourOctober 2011 HTI for its connection to madvertise. © Go4Venture Advisers LLP, 2013 Page 23 
  24. 24. December 2012List of AcronymsFinancial Terms:AUM: Assets Under ManagementFYE: Fiscal Year-EndLTM: Last 12 monthsmn: millionP/E: Price to Earnings ratioP/F: Price to Funding ratioPIPE: Private Investment in Public EquityBusiness Terms:AIDC: Automatic Identification and Data CaptureB2B: Business-to-BusinessBI: Business IntelligenceBPM: Business Process ManagementDMAT: Dynamic Multi-Analyte TechnologyOEM: Original Equipment ManufacturerPET: Polyethylene TeraphthalateRFID: Radio-Frequency IdentificationSaaS: Software as a Service © Go4Venture Advisers LLP, 2013 Page 24 
  25. 25. December 2012Go4Venture Advisers LLP48 Charles Street +44 (0)20 7529 5400Berkeley Square g4vbulletin@go4venture.comLondonW1J 5ENDisclaimerThis report has been prepared and issued by Go4Venture Advisers LLP who areauthorised and regulated by the Financial Services Authority.All information used in the publication of this report, has been compiled frompublicly available sources that are believed to be reliable, however norepresentation, warranty, or undertaking, express or limited is given as to theaccuracy or completeness of the information or opinions contained in this report.Opinions contained in this report represent those of Go4Venture Advisers LLP atthe time of publication. This research is non-objective. This document is providedfor information purposes only and should not be construed as an offer orsolicitation for investment. Furthermore, as the information contained in thisdocument is strictly confidential it may not be reproduced or further distributed.The value of investments and any income generated may go down as well as up.Past performance is not necessarily a guide to future performance. Investors maynot get back the amount invested. This publication is not intended to be reliedupon in making any specific investment or other decisions. Appropriateindependent advice should be obtained before making any such decision.This report has been compiled by Jean-Michel Deligny, Managing Director – forand on behalf of Go4Venture.Copyright: 2012 Go4Venture. All rights reserved Registered address: 10 Wellington Street, Cambridge, CB1 1HW Incorporation number OC336611 Authorised and Regulated by the Financial Services Authority © Go4Venture Advisers LLP, 2013 Page 25 