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2013 07 go4_bulletin
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  • 1. July 2013 Technology / Media / Telecoms / Internet / Healthcare / Cleantech / Materials Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin July 2013 Published by Go4Venture Advisers Research, the Equity Research unit of Go4Venture 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 Conduct Authority (FCA). © Go4Venture Advisers 2013 Page 1 
  • 2. July 2013 Contents This Month in Brief 3 Investments 1.1 - Headline Transactions Index (HTI) 6 1.2 - Large Transactions Summary 7 1.3 - Large Transactions Profiles 9 M&A Transactions 2.1 - M&A Activity Index 27 2.2 - Top 5 Global TMT M&A Transactions Summary 28 Headline European VC & PE-Backed M&A Transactions: 2.3 - Summary 31 2.4 - Profiles 32 List of Acronyms 35 About this Bulletin The Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin provides a summary of corporate finance activity among emerging European TMT companies:  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, Management Buyouts (MBOs) and other buyouts). Investment activity is measured using Go4Venture’s European Tech Headline Transactions Index (HTI), which is based on the number and value of transactions reported in professional publications. M&A activity is measured using data from a combination of external sources, primarily Capital 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 on our website. Please note that no part of the Bulletin can be reproduced unless content is duly attributed to Go4Venture and the details of republishing are notified to g4vbulletin@go4venture.com. © Go4Venture Advisers 2013 Page 2 
  • 3. July 2013 This Month in Brief Dear Clients and Friends, Welcome to the latest edition of Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin, featuring our proprietary Headline Transaction Index (HTI) of investment activity, as well as a summary of VC & PE-backed TMT M&A exits of $50 million or more. A Time of Acceleration (and Caution) July 2013 was an awesome month for investment. By contrast M&A activity remained soft, with IPOs markets seemingly easing, at least in London (on the back of strong stock performance from recent IPOs such as Wandisco PLC (LON:WAND) and Blur (Group) PLC (LON:BLUR)). Investments In fact, July 2013 was our largest month ever on record, in part due to the biggest ever deal, a whopping €300+ million late stage financing for Amsterdam-based Mobileye, a car driving automation technology company originally from Israel. Even if this particular transaction was taken out (the next largest on record being Plastic Logic’s €225 million late stage round of December 2010), July would still be the second largest month ever logged (after September 2012). As a result the year-to-date numbers (by value) are nearly 60% up against last year, and still a respectable 40% up even without Mobileye. Interestingly, these results are in line with what is happening in the US as reported in the MoneyTree™ Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA, which shows a 12% value increase of cumulative investments to June 2013 compared to the same period last year). This suggests that European venture is actually growing much faster than the US – obviously from a much lower base (the US market is approximately 4x to 5x larger). At the risk of being repetitive, the market in July was pulled by (what else?) late stage transactions, confirming the inverted nature of European venture now dominated (by value) by growth equity plays – although many would define growth equity more strictly as profitable-only companies, in which case several of this month’s late-stage companies would not qualify. Nevertheless, we would argue that companies where the technology, value proposition and go-to-market strategies have been validated and the financial metrics are somewhat stable, even if not quite profitable, cannot surely be classified as “venture” in the layman understanding of the word. From a sector standpoint, of course internet was the champion, followed by software and somewhat more surprisingly hardware, including two semiconductor investments (Crocus Technology and Movidius). The creeping up of hardware plays makes us think that we are coming to the end of the semiconductor stigma as investors slowly realise that the Lapsing of Moore's Law opens up opportunity in chip design and that Micro- and NanoElectroMechanical Systems (MEMS and NEMS) innovations open up brand new, high volume markets (such as movement detection). It also reflects the growing risk appetite of investors, both by VC fund survivors spurred by their growing success in a decimated VC landscape (such as Idinvest in the case of Crocus or DFJ Esprit for Movidius), and opportunistic institutional investors or corporates which are bursting with cash and ambition (as in the case of Robert Bosch Venture Capital for Movidius). © Go4Venture Advisers 2013 Page 3 
  • 4. July 2013 This upbeat mood and acceleration confirms our analysis that we have entered the up phase of the investment cycle (see “The Beginning of the Hype” in our May Bulletin). The theory goes that each cycle starts with a phase of Downturn (2001-2003; 2008-2009), followed by a phase of Recovery (2003-2006; 2009-2012), which then accelerates into a phase of Hype (2006-2008). We feel we have entered this phase in the current cycle. The good news is that, if the 1990s cycle is anything to go by (market up between 1996 and 2000), we are facing another few years of good investment returns. Why then call it a phase of Hype with a pejorative connotation? Because this is the phase when outsiders join in, egged on by insiders, which inevitably results in a relaxation of investment criteria and inflated valuations leading to exaggerated momentum investing (where investors try to get ahead by outspending the opposition) until the merry-go-round stops and the market crashes. An illustration of this build-up is Rocket Internet, which is now the world’s largest incubator after raising $500mn (€375mn) since May 2012 from partners Investment AB Kinnevik, a long-established €7bn market cap public investment company, and Access Industries, the investment vehicle of Len Blavatnik, who sold his $7bn (€5.4bn) stake in BP’s ill-fated Russian venture TNK-BP in March 2013 (in addition to previous investment by JP Morgan). As our readers will probably know, Rocket Internet is the operating vehicle of the high profile Samwer brothers who describe themselves as “the most aggressive guys on the internet”. Caveat Emptor. M&A Transactions By contrast with investors who are already getting ahead of themselves, (overall) corporates have been pretty disciplined since the last bubble burst (2000-2002) despite their vast cash reserves. This stronger sense of discipline by corporate buyers may explain the unexciting state of the M&A exit market. There are of course exceptions, especially as the big tech giants try to remain relevant in fast growing mobile, SaaS, security and storage, and buy their way into these exciting areas. An example in July was Cisco’s acquisition of security specialist Sourcefire for a neat $2.7bn (€1.8bn) equivalent to no less than 10.7x revenues. Even then the acquisition was rather well received by analysts, who think that Cisco should be able to make the acquisition pay for itself. Other Top 5 Global Tech M&A transaction were more reasonable deals to do with Nokia buying out its joint venture partner in Nokia Siemens Networks, Intuit disposing of a non-core online financial services asset, or (as expected) consolidation in banking software or hosting services. On the exit front for VC and PE-backed European venture and growth companies, much of the action was PE-related rather than VC, except for Albion Ventures’ laudable exit from Opta Sportsdata to publiclyquoted Perform Group (UK LSE:PER) for £40mn (€47mn). The other two reported transactions which made our threshold ($50mn) were PE groups rotating their holdings, with Montagu PE selling their stake in Host Europe Groupe to Cinven, and Tiger Global selling out from AlloCiné to local publicly-quoted investment holding company Fimalac (ENXTPA:FIM) – at a loss. So nothing to really boast about on the M&A front, but the excitement on the investment front makes for an exciting July Bulletin. Enjoy the reading. Please direct any questions or comments to g4vbulletin@go4venture.com. If you do not wish to receive future HTI updates from us, please send an email with the title "unsubscribe" to g4vbulletin@go4venture.com. The Go4Venture Team © Go4Venture Advisers 2013 Page 4 
  • 5. July 2013 Where to Meet the Go4Venture Advisers Team in September 2013 September 3 – London, UK – E2Exchange - ‘Investor Meets Entrepreneur’ Forum September 5 – Stockholm, Sweden – CEO-CF Open Day September 12 – Lisbon, Portugal – Portugal Ventures CEO Day September 23-24 – Berlin, Germany – Tech Growth Summit September 25 – Helsinki, Finland – Tekes Investor Day About the Headline Transactions Index (HTI) Where does the HTI measure? The HTI is compiled based on the transactions reported in major publications and news feeds. It is therefore a derivative index which measures both:  The actual level of investment activity in the European Technology sector; and  The level of reporting (“the hype factor” – even though each transaction is only recorded once) Since its inception in August 2002, the HTI has proven to be a good early indicator of the actual level of private investments in Europe as reported by established industry surveys (e.g. VentureOne Quarterly Venture Capital statistics). For more details, please always refer to this document. © Go4Venture Advisers 2013 Page 5 
  • 6. July 2013 1.1 - Headline Transactions Index (HTI) Go4Venture HTI Index by Deal Value 800 2010 Value of Transactions per Month (€mn) 2011 2012 700 2013 600 500 400 300 200 100 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Go4Venture Advisers HTI Database Go4Venture HTI Index by Cumulative Deal Value Total Value of Transactions (€mn) 3,500 2010 2,500 2011 2012 3,000 2013 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Go4Venture Advisers HTI Database July Large Transactions Other Transactions All Headline Transactions Of Which: Landmark Transactions 2012 2013 # €mn # €mn # €mn 8 151.0 28 68.8 36 219.7 18 649.3 41 87.8 59 737.1 # €mn 2 84.0 6 516.3 Year-to-Date Large Transactions Other Transactions All Headline Transactions Of Which: Landmark Transactions 2012 2013 # €mn # €mn # €mn 65 1,140.3 178 507.6 243 1,647.8 81 1,922.4 224 605.8 305 2,528.2 # €mn 18 608.5 21 1,222.8 Definitions Large Transactions: > £5mn / €7.5mn / $10mn Other Transactions: < £5mn / €7.5mn / $10mn Landmark Transactions: subset of Large Transactions > €20mn / £13mn / $27mn © Go4Venture Advisers 2013 Page 6 
  • 7. July 2013 1.2 - Large Transactions Summary (>£5mn / €7.5mn / $10mn) # 1 Company Mobileye (Netherlands) www.mobileye.com Sector Hardware Round Late Stage €mn 305.9 Description Provider of automated onboard driver assistant systems. Investors BlackRock Private Equity Partners, Enterprise Holdings, Fidelity Investments, Sailing Capital, Wellington Management. 2 Zalando (Germany) www.zalando.com Internet Services Late Stage 100.0 Online Fashion Retailer. Investment AB Kinnevik. 3 Shazam (UK) www.shazam.com Internet Services Late Stage 30.6 América Móvil. 4 Crocus Technology (France) www.crocustechnology.com Hardware Late Stage 34.0 Provider of a real-time music recognition service available as an app and also as part of interactive TV. Developer of Magnetic Random Access Memories (MRAM). 5 Withings (France) www.withings.com Hardware B 22.9 6 Delivery Hero (Germany) www.deliveryhero.com Internet Services Late Stage 22.9 7 Scality (France) www.scality.com Software C 16.8 Software-driven storage technology for unstructured data. FSN-PME, Galileo Partners, IDInvest Partners, Iris Capital, Menlo Ventures, Omnes Capital. 8 Open-Xchange (Germany) www.open-xchange.com Software C 15.3 Provider of SaaS-based office applications suite BayBG, eCAPITAL entrepreneurial Partners, Hermann-Josef Lamberti, United Internet Ventures. 9 Zimory (Germany) www.zimory.com Software B 15.3 Provider of cloud infrastructure deployment solutions. Creathor Venture Management, Deutsche Borse, High-Tech Gruenderfonds Management, IBB Beteiligungsgesellschaft, KfW Mittelstandsbank, T-Venture Holding. © Go4Venture Advisers 2013 Provider of devices and smartphone applications that monitor personal health. Online food ordering platform. IDInvest, Industrial Investors, Innovation Capital, NanoDimension Management, Rusnano, Sofinnova Ventures, Ventech. Bpifrance, Idinvest Partners, 360 Capital Partners, Ventech SA. Holtzbrinck Ventures, Kite Ventures, Kreos Capital, Phenomen Ventures, ru-Net Ventures, Team Europe Ventures, Tengelmann Ventures. Page 7 
  • 8. July 2013 # 10 Company Movidius (Ireland) www.movidius.com Sector Hardware Round Late Stage €mn 12.2 Description Fabless semiconductor company developing low power video processing chips for the mobile market. Investors AIB Seed Capital Fund, Atlantic Bridge Ventures, Capital-E, DFJ Esprit, Robert Bosch Venture Capital. 11 ARKeX (UK) www.arkex.com Software Late Stage 11.5 Provider of non-seismic geophysical imaging services. 4D Global Energy Advisors. 12 Ocapo (UK) www.e-prospects.com Internet Services A 11.0 BOOST&Co, Management, Northzone Ventures. 13 Luxury for Less (UK) www.bathempire.com Internet Services A 9.9 Provider of performance-based customer acquisition technologies for the consumer finance and insurance industries. Provider of bathroom products via an online platform. 14 Coldway (France) www.coldway.com Cleantech Late Stage 9.3 CDC Entreprises, CMCIC Capital Finance, Emertec Gestion, Sudinnova. 15 Grand Cru (Finland) www.grandcrugames.com Digital Media B 8.5 Provider of portable thermochemical cooling systems and self refrigerating containers for the transport of fresh produce and other temperature-sensitive products. Developer of mobile social games. 16 Vivino (Denmark) www.vivino.com Internet Services B 7.9 17 Chemist Direct (UK) www.chemistdirect.co.uk Internet Services B 7.6 18 XConnect Global Networks (UK) www.xconnect.net Telecom Services C 7.6 Provider of a mobile application that can recognise wine labels using image recognition technology. Provider of prescription medicines and health and beauty products online. Provider of voice over internet protocol (VoIP) peering and clearing service. ISIS Equity Partners. Idinvest Partners, Nokia Growth Partners, Qualcomm Ventures. Balderton Capital Management, Creandum, Seed Capital Management. Atomico, DMG Media Investment, Lepe Partners. Crescent Point Group, Young Associates. Source: Go4Venture Advisers HTI Database Key Bold indicates lead investor(s) © Go4Venture Advisers 2013 Page 8 
  • 9. July 2013 # 1 Company Mobileye (Netherlands) www.mobileye.com Sector Hardware Round Late Stage €mn 305.9 Description Provider of automated on-board driver assistant systems. Investors BlackRock Private Equity Partners, Enterprise Holdings, Fidelity Investments, Sailing Capital, Wellington Management. Mobileye (Netherlands), a developer of vision-based driver assistance systems for the automotive industry, raised $400.9mn (€305.9mn) in a Late Stage round from new investors BlackRock Private Equity Partners, Enterprise Holdings, Fidelity Investments, Sailing Capital and Wellington Management. We last saw Mobileye in March 2010 when it had raised a €27.3mn round to support the development of its Advanced Driver Assistance Systems (ADAS). These systems provide car drivers with collision warnings, alerting them when they stray from their lane, fail to maintain an adequate distance from the vehicle in front or exceed the local speed limit. They also help to adjust the angle of their headlights. Since being launched commercially in 2007, Mobileye’s products have been adopted on an OEM basis by 19 automotive manufacturers including BMW, Chrysler, Ford, General Motors, Honda, Mitsubishi and Volvo. By the end of 2013 over three million cars will have shipped with the firm’s technology. Mobileye can also retrofit its ADAS either as a standalone system or integrate it with location devices, fleet management and other telematics systems. In this context the firm is targeting primarily insurance companies, fleet operators and car leasing companies. From its research base in Israel, Mobileye is in the process of developing systems to allow vehicles to run largely on autopilot by 2016. While the firm does not anticipate fully driverless cars for another 15-20 years it has several competitors in this area. Apart from Google’s high profile efforts, BMW, Bosch and Volvo have all recently tested driverless cars on public roads. A vehicle developed jointly by the University of Oxford and Nissan is scheduled to begin road trials later this year. Prior to this round, Mobileye had raised about €80mn over eight investment rounds since it was founded in 1998 as a spin-out from the Hebrew University of Jerusalem. This round is much larger than the previous one in 2010 and gives Mobileye a pre-money valuation of $1.5bn. In addition to providing new capital, it also buys out some of the earlier investors. According to Israeli financial daily Calcalist, some early investors who went in at $15 (€12) a share were bought out at $35 (€27). All this is good preparation for the prospective IPO which Mobileye anticipates in about a year and a half. Goldman Sachs led the firm’s previous round in 2010 (Morgan Stanley acted as placement agents), clearly with an eye on underwriting the IPO. None of the participants in this round are traditional venture investors. The majority are US asset managers or financial services firms. BlackRock Private Equity Partners (€604mn (2009); AUM €11.3bn) is the private equity arm of well-known asset management firm BlackRock, Fidelity Investments (AUM €178bn) is the wellknown mutual funds manager (this time not investing through its venture funds) and Wellington Management is one of world’s largest private, independent investment management companies. Similar in some ways, Sailing Capital was established by the Shanghai International Group in September 2011. Operating under the guidance of the People’s Bank of China and with the support of the Shanghai Municipal Government, Sailing should be able to help Mobileye access Chinese markets. Strategic investor Enterprise Holdings is the owner of well-known car rental firms Alamo, Enterprise and National and has annual revenues of more than $15mn (€11mn). © Go4Venture Advisers 2013 Page 9 
  • 10. July 2013 # 2 Company Zalando (Germany) www.zalando.com Sector Internet Services Round Late Stage €mn 100.0 Description Online Fashion Retailer. Investors Investment AB Kinnevik. Zalando (Germany), a fashion e-tailer, raised €100.0mn in a Late Stage round from Investment AB Kinnevik. We last saw fashion e-tailer Zalando in August 2012 with an estimated €13mn from JP Morgan and Quadrant Capital. The money was intended to be used for expansion into Poland and Norway, as well as for the construction of a new logistics centre. Over the course of 2012 Zalando actually went live in Belgium, Denmark, Finland, Spain and Sweden, in addition to Poland and Norway. Its new logistics centre in Erfurt (former East Germany) opened in December 2012 and the firm started work on a second logistics centre in Mönchengladbach (near the Dutch border) in January 2013. It has also increased its range from roughly 1,000 brands to over 1,500. This expansion allowed Zalando to generate net sales (i.e. revenues less any discounts offered or items returned) of €1.15bn in 2012. This is roughly double the 2011 figure of €0.51bn and almost eight times the 2010 figure of €0.15bn. Perhaps more importantly, the firm has achieved break-even at the EBIT level throughout its core DACH region. Its overall EBIT margin for 2012 was minus 8%, which again was an improvement on the 2011 figure of minus 12%. This round is actually a follow-on from October 2012 when Investment AB Kinnevik (AUM €7.6bn) acquired another 10% of Zalando’s equity from three of the firm’s early stage investors – Holtzbrinck Ventures, Rocket Internet and Tengelmann. This left these three early investors with 56% of the company but Kinnevik had the option to acquire an additional 3.5% on the same terms. It is this option which Kinnevik has just exercised. The result is that Kinnevik, which first backed Zalando for its fifth round in 2010, now owns 29% of Zalando directly. In addition, regular readers may remember that Kinnevik is also the principal backer of Rocket Internet, through which the firm owns an additional 9% indirectly. Not only is Kinnevik the principal backer of the Samwer brothers’ Rocket Internet vehicle, but the firm is keen to continue this relationship. In mid-July Kinnevik announced that it had invested €67mn into Rocket Internet as part of the firm’s new share issue. This maintains Kinnevik’s current 24% equity stake and means that Rocket has raised roughly $0.5bn in the last twelve months. The emerging markets exposure this deal gives to Kinnevik is entirely compatible with its modus operandi so far. Founded in 1936, Swedish investor Kinnevik invests beyond technology, into business in the telecoms, online or financial services, media and other industries, and has a long history of investing in emerging markets. Moreover, the firm has considerable exposure to the consumer sectors within these markets. While over half (56%) of Kinnevik’s portfolio companies are in Western Europe, 8% are in Africa, 10% in Eastern Europe and Russia and almost a quarter are in South America. Only about 1% are in the North American market. In addition to its equity backing, in October 2012 Zalando agreed long-term debt financing of €40.7mn with Commerzbank and Sparkasse Mittelthüringen. The money was used for some of the fit-out of Zalando’s logistics facility in Erfurt, as well as for working capital. © Go4Venture Advisers 2013 Page 10 
  • 11. July 2013 # 3 Company Shazam (UK) www.shazam.com Sector Internet Services Round Late Stage €mn 30.6 Description Provider of a real-time music recognition service available as an app and also as part of interactive TV. Investors América Móvil. Shazam (UK), a music recognition service and app for smartphones, raised $40.0mn (€30.6mn) in a Late Stage round from América Móvil. The money will be used to grow the firm’s user base more quickly and to expand its management and overhead structure ahead of a $1bn (€765mn) IPO planned for next year. Shazam last featured in our bulletin in June 2011 with a €22mn round from DN Capital, Kleiner Perkins and Institutional Venture Partners. The money was to be used for expansion into television and, possibly, acquisitions. On the television front the firm has certainly succeeded. In late 2011 it partnered with Twentieth Century Fox to launch a Shazam-enabled movie promotion campaign, where the Shazam app displays ancillary information to the movie content on the user’s mobile device; the much-discussed ‘second screen’. A variety of media-events and advertising series were also Shazam-enabled. Examples include the Cornetto and Pepsi adverts in Australia, various advertising campaigns running during the US Superbowl, a partnership with the UK broadcaster ITV to make the Britain’s Got Talent final Shazam compatible and an agreement with NBC to make the 2012 London Olympics coverage interactive. In Q3 2012, the firm expanded its Shazam for TV service to cover any US TV show at any time of day. Branching out into TV seems to have paid off, as the firm is now generating $300mn (€230mn) of affiliate sales – where Shazam takes a cut every time one of its users buys a song they've tagged. The firm has also doubled its user base to 350mn (70mn monthly users). As anticipated, the firm also made some acquisitions. Firstly it bought synchronised lyric technology from Silicon Valley based Tunezee more or less concurrently with its June 2011 round. Secondly, it reacquired the rights to its Audio Recognition technology from Broadcast Music Inc. (BMI), one of three US performing rights organisations. It had sold the rights in 2005 in order to fund development. Shazam’s London office will grow in line with the company’s user base – it is expected to double in size over the next two years. Currently, the firm has about 130 employees. Headquartered in Mexico City, strategic investor América Móvil is one of the largest mobile network operators in Latin America. Its Chairman and Chief Executive is Carlos Slim who, according to Forbes, is one of the richest people on the planet. Across all of its networks, the company has just under 250mn mobile subscribers in 18 countries. This transaction values Shazam at a little over $400mn and brings total investment to date up to just over $105mn since the firm was founded in 2000. It will give Shazam access to América Móvil’s subscriber base, which may provide a big boost in advance of its proposed IPO next year. This will be needed if the firm is to increase its valuation to the $1bn number that has been mooted. It is not unusual for América Móvil to invest outside of Latin America – prior investments include stakes in Dutch telecoms operator KPN and Telekom Austria. It is, however, the first time that the firm has invested outside of the telecoms sector. From América Móvil’s point of view, the deal will help increase the use of data services by its Latin American users. © Go4Venture Advisers 2013 Page 11 
  • 12. July 2013 # 4 Company Crocus Technology (France) www.crocus-technology.com Sector Hardware Round Late Stage €mn 34.0 Description Developer of Magnetic Random Access Memories (MRAM). Investors Idinvest, Industrial Investors, Innovation Capital, NanoDimension Management, Rusnano, Sofinnova Ventures, Ventech. Crocus Technology (France), a developer of Magnetic Random Access Memories, raised €34.0mn in a Late Stage round led by new investor Idinvest. Idinvest was supported by fellow new investor Industrial Investors and existing backers Innovation Capital, NanoDimension Management, Rusnano, Sofinnova Ventures and Ventech. The money will be used to expand manufacturing of its products. Founded in 2004, Magnetic Random Access Memory (MRAM) developer Crocus has appeared in our bulletin three times in October 2008, May 2010 and most recently May 2011. As previously described, Crocus’ technology is essentially a faster, lower power version of the existing non-volatile memories that are used in devices including USB sticks and solid-state disk drives. While semiconductor investments – even fabless ones – have been quite rare for some time now, readers will be aware that it is normal for such investments to have a very long runway, requiring significant investment before they show a profit. As total investment in Crocus to date amounts to over €130mn, however, one might legitimately ask when revenues might be expected, particularly as at the time of its Series E round in 2010 the firm said it anticipated revenues by mid-2011. Crocus says it now expects its first revenues this year, profitability in 2015 and an IPO in 2015-2016. There is some backup for this claim. Firstly, since our May 2011 bulletin, the firm has productised its technology as the memory component of secure smart cards. It is developing this in partnership with IBM in the US. Readers may remember from our 2008 coverage that IBM had previously walked away from MRAM for technical reasons. Secondly, Crocus has licensed its Magnetic Logic Unit™ (MLU) technology to Tower Jazz (NASDAQ:TSEM) a specialist foundry manufacturing embedded System-On-Chip (SoC) applications. Crocus anticipates $10mn (€ 8mn) in licensing revenue this year. Finally, although far from commercialisation, the US Intelligence Advanced Research Projects Activity (IARPA) has contracted Crocus to develop its MLU technology to enhance chip security and crypto-processors. Competition in this sector includes Avalanche Technology which raised $35mn (€27mn) in July 2012, Spin Transfer Technologies which raised $36mn (€28mn) in early 2012 and Everspin Technologies, one of the oldest companies in this space, which released a new generation of products at the end of last year. Readers will be familiar with transaction leader Idinvest (€281mn (2013); AUM €4bn) (formerly AGF Private Equity), which features again later in this issue with an investment in Withings. Fellow new investor Industrial Investors is a Russian industrial investment group which backs companies with a turnover of $50mn-$1bn (€38-765mn). Normally, Industrial Investors targets companies where there is the possibility of acquiring a controlling stake. It is not clear how this might be done with an IPO in the offing. Existing investors returning for this round include French technology and life science venture firm Innovation Capital (€36mn (2007); AUM €63mn), nanotechnology specialist NanoDimension Management whose portfolio company BIND Therapeutics has just filed for an $80.5mn (€61mn) IPO, together with well-known investors Sofinnova Ventures (€337mn (2011); AUM €10.7bn) and Ventech (€150mn (2007); AUM €438mn). Perhaps the most important returning investor, however, is Rusnano (AUM €3.6bn). In combination with $55mn (€42mn) from Crocus’ other backers, Russian government-backed fund Rusnano provided $245mn (€187mn) for the construction of a manufacturing facility in Russia back in 2011. © Go4Venture Advisers 2013 Page 12 
  • 13. July 2013 # 5 Company Withings (France) www.withings.com Sector Hardware Round B €mn 22.9 Description Provider of devices and smartphone applications that monitor personal health. Investors Bpifrance, Idinvest Partners, 360 Capital Partners, Ventech SA. Withings (France), a developer of devices connected to a smartphone app that monitors personal health, raised €22.9mn in a Series B round led by Bpifrance with support from new investors 360 Capital Partners and Idinvest Partners together with existing investor Ventech. The money will be used for international expansion and continued product development. Founded in 2008, Withings released its first product – the WiFi Body Scale – in 2009. This consisted of a set of bathroom scales paired with an iPhone app. Having measured a user’s weight and body fat percentage, these scales were able to upload data to a web dashboard via the user’s home WiFi network. By exposing the API of its product, Withings enabled other players in the health and fitness industry such as DailyBurn.com (which had 350,000 members at the time), RunKeeper.com (which had over 900,000 iTunes app downloads), FitOrbit.com, gymtechnik.com, Google Health and Microsoft’s HealthVault to make use of its technology. This greatly expanded the number of sites on which users could track their fitness and enriched the value of the device. Withings’ products now integrate with over 100 partner apps and devices. Since then, Withings has released a range of products including blood pressure, pulse, sleep and activity monitors, as well as a baby monitor. The firm has also released a more advanced version of its bathroom scales – the Smart Body Analyser – which can measure heart rate and air quality in addition to traditional weight and body composition measurements. Industry information and market research company IHS forecasts that there will be almost 250mn global installations of mobile apps for sports and fitness purposes by 2017 – an expansion of 63% from 2012 levels. While this is the first time that French transaction leader Bpifrance (AUM €22bn) has appeared in our bulletin, readers may be familiar with its constituent parts. It was formed this year from a combination of existing French institutions – including FSI (Fonds Stratégique d'Investissement) and FSN-PME (investing in businesses strategic to the French economy), OSEO (the state-backed bank providing soft loans to innovative SMEs) and CDC Entreprises (the equity investment subsidiary of Caisse des Dépôts). Bpifrance is supported 50/50 by the French State and the Caisse des Dépôts et Consignations. A more familiar name is Idinvest (€281mn (2013); AUM €4bn), which provides investment in funds of funds, secondary transactions, LBO co-investments and growth equity, as well as mezzanine finance. Having marked its fifteenth anniversary at the end of last year by announcing plans to double its AUM within five years, the firm has had two IPOs in 2013 – a $442mn (€338mn) IPO for Dutch biotech Prosena on Nasdaq and a much smaller €15mn IPO for Erytech Pharma on the NYSE Euronext Paris market. Based in Milan, Italy with offices in France, Germany and Luxembourg, we last saw 360 Capital Partners (€60mn (2011); AUM €160mn) in our February 2013 issue with a €15mn round for baby-care e-tailer Windeln.de. Both stage and sector agnostic (apart from an aversion to biotech) the firm announced the first close of a new fund at €70mn at the end of 2012. Paris-based but with investment teams in China and Asia, Ventech (€150mn (2007); AUM €438mn) is a familiar presence in our bulletin which we last saw in March 2013 with a €7.7mn round for Oktogo.ru, an online hotel reservations platform. © Go4Venture Advisers 2013 Page 13 
  • 14. July 2013 # 6 Company Delivery Hero (Germany) www.deliveryhero.com Sector Internet Services Round Late Stage €mn 22.9 Description Online food ordering platform. Investors Holtzbrinck Ventures Adviser, Kite Ventures, Kreos Capital, Phenomen Ventures, ru-Net Ventures, Team Europe Ventures, Tengelmann Ventures. Delivery Hero (Germany), operator of a portal that provides centralised ordering from a variety of take-away food suppliers, raised $30.0mn (€22.9mn) in a Late Stage round led by Phenomen Ventures with support from fellow new investor Holtzbrinck Ventures. Existing investors Kite Ventures, Kreos Capital, ru-Net Ventures and Tengelmann Ventures also participated in the round. Founded in October 2010, we last saw Delivery Hero in August 2012 with an €80mn round led by Kite Ventures. At the time it was operating in 11 countries and had 22,000 restaurants in its network. In just under a year the firm has added another 13,000 restaurants and expanded into China, Denmark, India and Mexico, giving it a network of 35,000 restaurants in fourteen different countries. This has driven annual revenues of c.$400mn (€306mn). The company has some 600 employees worldwide, with 300 of these based in its Berlin headquarters, but at scale the take-away portal business has relatively low marginal costs. For this reason the firm expects to be profitable this year. As we highlighted in our May 2013 issue in our coverage of Delivery Hero’s rival Foodpanda, food delivery portals have been a very hot sector for at least the last 18 months. The same is true on the other side of the Atlantic with a plethora of similar companies including delivery.com, ChowNow, Campus Special, eat25, grubHub and Seamless. We have also commented on more than one occasion that the critical issue in this business is reaching critical mass in each country of operation. For these reasons one might anticipate some consolidation and it looks as though this is beginning to happen. At the time of writing, Chicago-based GrubHub and New York-based Seamless had just announced the completion of their merger, with the combined business covering c.25,000 restaurants. Of course the art to such a merger or acquisition is to balance entry into new territories (which is expensive) with achieving critical mass/profitability and removing competition in existing territories. We therefore expect most M&A activity in this sector to focus on companies with a high degree of overlap in their countries of operation. We may also see the acquisition of local niche players which are strong and profitable in their home countries as the larger firms seek to achieve scale ahead of IPOs. An interesting candidate for this might be Yemek Sepeti, which appeared in our September 2012 issue. This latest round brings Delivery Hero’s total funding to date to $116mn (€89mn) of equity plus an additional $10mn (€8mn) in venture debt from Kreos Capital (€120mn (2011); AUM €600mn). Intriguingly, given our earlier discussion of M&A, this round was led by Russian investor Phenomen Ventures (€229mn (2013)) which participated in Foodpanda’s €15mn round in May. Holtzbrinck Ventures (€177mn (2011)) is another venture firm which has worked with Rocket Internet. Most recently it backed Rocket’s ‘Asian Amazon’ Lazada as part of a $100mn (€77mn) round in June. Russian and European investor Kite Ventures led Delivery Hero’s previous round and alongside ru-Net Ventures (AUM €503mn) will play a key role in Delivery Hero’s Russian expansion. Team Europe Ventures has just made Markus Fuhrmann a partner. Mr. Fuhrmann co-founded not only Delivery Hero but also Lieferheld. Well-known e-commerce pioneer Tengelmann Ventures last appeared in our bulletin in November 2012 with a €12mn investment in Trademob, an app marketing technology provider. © Go4Venture Advisers 2013 Page 14 
  • 15. July 2013 # 7 Company Scality (France) www.scality.com Sector Software Round C €mn 16.8 Description Software-driven storage technology for unstructured data. Investors FSN-PME, Galileo Partners, Idinvest Partners, Iris Capital, Menlo Ventures, Omnes Capital. Scality (France), a provider of a software-only data storage solution running on standard hardware, raised $22.0mn (€16.8mn) in a Series C round co-led by Iris Capital and Menlo Ventures (which put in $5mn) with support from fellow new investor FSN PME (now part of Bpifrance) and existing investors Galileo Partners, Idinvest and Omnes Capital. The money will be used for sales and marketing activities targeting the enterprise and service provider markets, as well as to support new R&D initiatives. Big data analytics, cloud solutions and data centres – all very much part of the current venture wave of value creation – are underpinned by data storage. Traditional network storage – e.g. SAN (Storage Area Network) dealing with blocks of data or NAS (Network Attached Storage) operating at file level – and other storage solutions are typically provided in the form of proprietary hardware from vendors such as EMC, Netapp or HDS. Not only is this expensive but it can be difficult to achieve the reliability and scalability required at a commercially viable cost. Moreover some enterprise users are still uncomfortable with using cloud-based solutions which they do not own. Scality has developed a software-defined storage solution called RING, which runs on off-the-shelf x86 servers with whatever SCSI, ATA, SAS, SATA or SSD (we’ll spare you the spelling!) storage they happen to have. Able to scale to petabyte applications, Scality’s solution is a shared-nothing architecture with no single point of failure. It belongs to the category called “object storage” (no relationship with object database or object language whatsoever), but with two points of differentiations it is built for mixed load (serving both High Performance and Archival of data) and it is compatible with traditional storage interfaces such as NFS. Scality was spun off in 2009 from French e-mail security company Bizanga when the latter was sold to antispam company Cloudmark. Bizanga was a client of Go4Venture Advisers, and we became angel investors and have remained a trusted advisor to the company ever since. While Scality has moved its head office to Silicon Valley and opened sales and support offices in New York, Tokyo and Washington, it has kept its R&D in France. This round was co-led by Silicon Valley-based Menlo Ventures (€306mn (2010)) and Paris-based Iris Capital (€170mn (2012); AUM €850mn). Veteran Valley firm Menlo Ventures is stage agnostic and commits anywhere from $250k (€191mn) of seed money to $30mn (€23mn) for growth equity. Founded in 1976, this firm is currently targeting companies in mobile, social, cloud, big data and advertising with its $400mn (€306mn) Menlo XI fund. Iris Capital is a regular in our Bulletin and targets digital economy companies with a European angle, providing €1-20mn per round with a 4-5 year time-horizon. Although the third new investor in this round was FSN-PME (€300mn (2011)), this should now more properly be known as Bpifrance (AUM €22bn), as explained in our coverage of the Withings deal earlier in this issue. The existing investors were Galileo Partners (€160mn (2006); AUM €314mn), Idinvest (€281mn (2013); AUM €4bn) and Omnes Capital, all of which supported both Scality’s €4mn Series A in June 2010 and its €6mn Series B in February 2011. Scality’s approach, where a firm leaves its R&D in its home country but opens a headquarters in Silicon Valley, is now becoming familiar – following the path well-trodden by Israeli companies in the 1990s. © Go4Venture Advisers 2013 Page 15 
  • 16. July 2013 # 8 Company Open-Xchange (Germany) www.open-xchange.com Sector Software Round C €mn 15.3 Description Provider of SaaS-based office applications suite. Investors BayBG, eCAPITAL entrepreneurial Partners, Hermann-Josef Lamberti, United Internet Ventures. Open-Xchange (Germany), a provider of a SaaS-based office applications suite, raised €15.3mn in a Series C round co-led by United Internet Ventures and former Deutsche Bank COO Hermann-Josef Lamberti, with support from existing investors BayBG and eCAPITAL. The new funds will be used for further product development, professional services, international expansion and to buy out an existing investor. Founded in 2005, Open-Xchange has its headquarters in Nuremberg (Germany) with offices in Olpe (Germany) New York and San Jose (California). One of the first providers of collaboration software to make its products accessible through a browser, its tools are targeted at telcos, mobile and web operators and web hosts. Well-known hosting provider 1&1 was an early adopter of the company’s first SaaS office suite, and other customers include Bull, Host Europe Group and STRATO. Revenue has grown 50% year-on-year for the past three years, and total seats sold are now over 80mn. Moreover, the firm has recently signed a deal with Polish web host home.pl, which will deliver another 1.5mn seats. Gartner recently predicted that enterprise usage of cloud-based office applications will rise from 8% of all office suite users today to 33% of users by 2017, and a total of 695mn users worldwide by 2022. In early 2013 the company launched OX Text, the first product in its new cloud-based OX Documents productivity suite. Over the next few months, spreadsheet and presentation editing products will be added, as well as further enhancements covering usability on touch screen devices, accessibility for those with disabilities, and social messaging. This latest generation of the suite is being built by key members of the original OpenOffice team, and is partially open source. The complete groupware suite, OX App Suite, also includes email, task and calendar tools, allowing hosting companies to provide functionality that competes with Google Docs, Microsoft’s Office 365 and other offerings such as Zoho Docs. Versions of the software can be installed free of charge, but any hosting company requiring support from Open-Xchange or advanced features must pay for them. Listed transaction co-leader United Internet Ventures (UTDI.DE) is the operator of well-known internet host 1&1, web-mail provider GMX and German e-mail and new service WEB.DE. It has been a customer of Open-Xchange for several years and is one of Europe’s largest internet specialists, providing 13mn subscription accounts and around 31mn ad-supported free accounts. Unusually, one of the co-leaders of this transaction was an individual - former Deutsche Bank COO Hermann-Josef Lamberti. His presence as a transaction co-leader on an internet investment is less surprising, however, when one realises that he spent thirteen years working in senior positions with IBM. Existing investor BayBG (Bayerische Beteiligungsgesellschaft) (€50mn (2008); AUM €300mn) is a sectoragnostic Bavarian investor in SMEs which prefers to limit itself to minority stakes. While the majority of its investments are in growth equity, the firm is also able to provide venture capital, turn-around funds, MBO finance and other funding solutions. German technology investor eCAPITAL (€50mn (2010); AUM €150mn) invests at any round from seed to growth equity, but has different preferences depending on deal stage. It has been a long time since Open-Xchange last sought finance with a €7.5mn round in 2008. It is one of the investors from this 2008 Series B round, which was also Open-Xchange’s initial investor in its 2006 Series A round – BayTech Venture Capital – that is being bought out now. © Go4Venture Advisers 2013 Page 16 
  • 17. July 2013 # 9 Company Zimory (Germany) www.zimory.com Sector Software Round B €mn 15.3 Description Provider of cloudinfrastructure deployment solutions. Investors Creathor Venture Management, Deutsche Börse, High-Tech Gruenderfonds Management, IBB Beteiligungsgesellschaft, KfW Mittelstandsbank, T-Venture Holding. Zimory (Germany), a developer of cloud infrastructure deployment solutions for enterprises and service providers, has raised $20mn (€15.3mn) in a Series B round led by new investor Deutsche Börse and supported by previous investors Creathor Venture, High-Tech Gruenderfonds, IBB Beteiligungsgesellschaft, KfW Mittelstandsbank and T-Venture Holding. The new funding will be used to accelerate sales, marketing and product development initiatives. Founded in 2007 as a spin-off from Deutsche Telekom, Berlin-based Zimory developed a ‘Cloud Suite’ which permits the rapid creation and management of various types of cloud services on an Infrastructure-as-aService basis. These include public, private (in-house), virtual private (secure externalised) and hybrid cloud environments. Zimory makes extensive use of open-source software in its solutions. This latest round of funding follows shortly after Zimory and Deutsche Börse announced their Deutsche Börse Cloud Exchange joint venture. Due to open early in 2014, cloud computing capacity will be traded electronically using Zimory’s technology to run the settlement process. Cloud marketplaces already exist. Examples include Reserved Instance Marketplace by Amazon Web services and SpotCloud by Virtustream (launched in early 2011 but yet to gather momentum). Zimory claims its offering will be the world’s first vendor-neutral cloud computing exchange. In the last year Zimory has quadrupled revenues, created a US subsidiary and made significant enhancements to its product suite. In addition to its headquarters in Berlin it has development centres in Erfurt (Germany) and Minsk (Belarus) as well as a new office in New York City. Its existing customers include Deutsche Börse, Deutsche Telekom, the Austrian Government, the Technical University of Berlin and The International Securities Exchange (ISE) in New York. Zimory is one of a recent flood of cloud-related investments, which also includes Scality, a provider of a software-only cloud storage solution, reported this month. The presence of Deutsche Börse as transaction leader is yet again another example of the growing involvement of corporates in venture financing. The prevalence of strategic investors has been increasing ever since we first published our bulletin in 2003, and has accelerated since 2008. Strategic investor Deutsche Börse already has experience of launching a new market – it launched the EEX European Energy Exchange in 2002. Other existing investors include early stage technology investors Creathor Venture (€80mn (2011); AUM €140mn) and High-Tech Gruenderfonds (€289mn (2011); AUM €566mn), State and Europe-backed IBB Beteiligungsgesellschaft (€30mn (2008); AUM €82mn), German regional bank KfW Mittelstandsbank (€250mn (2004); AUM €943mn) and T-Venture Holding (€50mn (2004); AUM €622mn). Unsurprisingly, TVenture (the strategic investment arm of Deutsche Telekom) participated in both Zimory’s €1.5mn seed round in 2008 and its €4.0mn Series A round in 2010. © Go4Venture Advisers 2013 Page 17 
  • 18. July 2013 # 10 Company Movidius (Ireland) www.movidius.com Sector Hardware Round Late Stage €mn 12.2 Description Fabless semiconductor company developing low power video processing chips for the mobile market Investors AIB Seed Capital Fund, Atlantic Bridge Ventures, Capital-E, DFJ Esprit, Robert Bosch Venture Capital. Movidius (Ireland), a fabless semiconductor company developing low power video processing chips for the mobile market, raised €12.2mn in a Late Stage round co-led by three new investors – Atlantic Bridge Ventures, DFJ Esprit and Robert Bosch Venture Capital. Some of the existing investors – AIB Seed Capital Fund and Capital-E – also participated. The money will be used to help bring a computational imaging chip to market early next year. Surprisingly given the recent paucity of semiconductor investments, along with Crocus, Movidius makes two such deals in this issue. Movidius was set up in 2005 by three students at Trinity College in Ireland. It is developing an image processing chip for the mobile market and has in mind new applications such as postcapture refocusing, high-quality zoom, augmented-reality simulation, eye-based user interfaces, gesture controls, location-based services and scanning for 3D printing. While most mobile chips use the ARM architecture, Movidius is creating its own new architecture specifically for low power devices such as smartphones. While this will allow Movidius to tackle problems that existing processors cannot even address, it is also extremely ambitious considering how much work Movidius will have to do in establishing a new ecosystem for its chips. They have, however, managed to get to 1 teraflop performance using only hundreds of milliwatts of power, and are targeting a 28nm manufacturing process. Movidius has announced partnerships with Chinese electronics manufacturer Keen High Technologies (Shenzhen, China) for consumer mobile devices (that should generate $25mn (€19mn) of sales in the next three years), poLight (Horten, Norway) for autofocus cameras and Toshiba Electronics Europe for a reference design of 3D image capture system for use in smartphones. Movidius has appointed as Chairman Dan Dobberpuhl, co-founder of chip design firm PA Semi, which was sold to Apple for $278mn (€213mn) in 2008 enabling the latter to move away from Intel and Samsung for chip design. Prior to PA Semi, Dobberpuhl started networking chip company SiByte in 1998 and sold it to Broadcom for $2bn (€1.5bn) in 2000. He was also lead designer for DEC’s Alpha processor. To date Movidius has received slightly less than €40mn in equity funding. Early investors included Celtic House and Capital-E, which co-led the firm’s €12mn first round in 2008, Emertec Gestion which supported each of Movidius’ three previous rounds, as well as AIB Seed Capital which has participated in all rounds. Like Mobileye (see earlier), Movidius has moved its headquarters to Silicon Valley but left its R&D activities in Europe, although part of the proceeds from this round will be used to expand its research team in Silicon Valley. Technology investor Atlantic Bridge Ventures (€250mn (2005)) also has offices in Dublin and Silicon Valley. It targets semiconductor and software opportunities which are relevant to the big data, cloud and mobile sectors. Fellow new investors DFJ Esprit (€100mn (2009); AUM €841m) and Robert Bosch Venture Capital are both well-known and frequently grace our pages. The presence of AIB Seed Capital Fund (AUM €53mn) as an existing investor belies Movidius’ Irish origins, as the firm was established by Allied Irish Bank in partnership with Enterprise Ireland. Belgian investor Capital-E concentrates on early stage micro/nanoelectronics and advanced materials deals. © Go4Venture Advisers 2013 Page 18 
  • 19. July 2013 # 11 Company ARKeX (UK) www.arkex.com Sector Software Round Late Stage €mn 11.5 Description Provider of non-seismic geophysical imaging solutions. Investors 4D Global Energy Advisors. ARKeX (UK), a provider of non-seismic geophysical imaging solutions, raised $15.0mn (€11.5mn) in a Late Stage round from 4D Global Energy Advisors. Normally when somebody in the oil and gas industry talks about a ‘geophysical survey’ they are referring to a seismic survey. Such a survey can be conducted either from the surface, from within a borehole or offshore using specialised air guns as the seismic sources. As the computing power required to process the results of a seismic survey has become more readily available, seismic surveys have become more common. Founded in 2004, ARKeX is a spin-out from a collaboration between Oxford Instruments and ARK Geophysics. ARKeX has developed an alternative to conducting a seismic survey by measuring the variation of the earth’s gravitational field. The company’s technology is a superconducting instrument for measuring gravity gradients which can be flown in a light aircraft, making the survey much cheaper than the seismic equivalent. The technology was developed between 2002 and 2005 with support from Shell, Anadarko Petroleum and integrated Fortune 100 oil company the Hess Corporation (formerly Amerada Hess). In 2007, ARKeX acquired its spin-off parent ARK Geophysics and has since grown to a staff of 60 people, based in Cambridge and with other offices in Houston (US) and Sherrington (Southwest England). Another well-known player in the field is Spectraseis, which repurposed Russian-originated passive submarine detection technology to survey large areas for oil deposits, as a way to make expensive seismic surveys more targeted. Since 2004 the company has raised about €30mn from private equity firm Warburg Pincus, Statoil Technology Invest and Saudi Makamin Company (the Saudi Arabian oilfield services firm). Historically, smaller and less well capitalised oil, gas and mining companies have gone straight to drilling with relatively little data, owing to the costs involved with seismic surveys. Some struck it lucky; some didn’t. With the full tensor gravimetric surveys offered by ARKeX and its competitors costing less than one per cent of a full seismic survey, more such companies can afford better data and reduce the risk of failure. Moreover, such surveys are quicker to conduct and can significantly reduce the time from license to well. 4D Global Energy Advisors (AUM €165mn) is a Parisian growth capital and private equity investor specialising in the energy sector. Established in 2002, the firm targets companies active anywhere in the hydrocarbon value chain. It will also invest in companies that offer relevant technology or services to the hydrocarbon industry. At nine years, 4D Global’s funds are slightly longer lived than those of most venture firms. To date, the firm has raised three funds – an $81mn (€62mn) fund in 2003, a $181mn (€139mn) fund in 2007 and a $216mn (€165mn) fund in 2010. Only the latter is still investing and is aiming for investments of $10-40mn (€8-31mn). These are normally made in equity but the firm may use other equity-related instruments such as warrants, convertible notes, mezzanine funding, etc. Although it is investing in the oil and gas industry, 4D Global will not invest in companies whose success depends purely on the success of future exploration, nor will it provide project finance or finance for operating assets. © Go4Venture Advisers 2013 Page 19 
  • 20. July 2013 # 12 Company Ocapo (UK) www.e-prospects.com Sector Internet Services Round A €mn 11.0 Description Provider of performance-based customer acquisition technologies for the consumer finance and insurance industries Investors BOOST&Co, Management, Northzone Ventures. Ocapo (UK), a provider of performance-based customer acquisition technologies for the consumer finance and insurance industries, raised £9.5mn (€11.0mn) in a Series A round led by Northzone Ventures with support from BOOST & Co and management. The money will be used for expansion into Brazil, China, Russia, Southeast Asia and Turkey. Founded 2007, Ocapo serves fifteen different websites specialising in the consumer finance and insurance industries. Ocapo has a very tight focus on industry verticals in the financial services sector. It targets only a dozen different product types - debt management services, equity release schemes, health insurance, home insurance, income protection, investments, life insurance, loans, mis-sold PPI, mortgages, pensions and Personal Injury (PI) claims. What distinguishes Ocapo from other customer acquisition services is its proprietary software and focus on Search Engine Optimisation (SEO) and Search Engine Marketing (SEM). While SEO focuses purely on the content and structure of a web page, SEM uses a broader range of internet marketing techniques to increase a particular site or product’s visibility in Search Engine Results Pages (SERPs). The firm’s proprietary software, about which it has understandably said very little, matches user web searches with products in real time. Ocapo, which claims to be one of the top three lead generators in the UK, runs online marketing campaigns for over 170 global advertisers. The firm’s 35 strong team, based in London’s Docklands, is able to generate over 60,000 leads a month. Moreover, their conversion rates (the proportion of web clicks which turn into purchases of financial services products) can be over 20%. Their typical rates for life insurance, debt and mis-sold PPI are 23%, 25% and 27%, respectively. We last saw transaction leader Northzone Ventures (€130mn (2011); AUM €394mn) in December 2012 with a €10mn round for review sharing platform Trustpilot. Well-known to readers of our bulletin, technology investor Northzone has offices across the Nordic region in Copenhagen, Oslo and Stockholm, as well as in London. It will, however, invest anywhere in the world. Since the firm was set up in 1996, it has backed over 75 companies. This is the first time that venture debt provider BOOST & Co (€47mn (2013); AUM €188mn) has featured in our bulletin. The firm was set up in 2011 by former ETV Capital and Noble Venture Finance personnel. Based in London and Paris, it prefers to focus on a small number of life science and technology sectors: cleantech, hardware, internet businesses, late stage drug development, and software and services. All of BOOST’s loans are structured specifically for the deal in question. In the case of Ocapo the firm provided a mix of debt and equity. © Go4Venture Advisers 2013 Page 20 
  • 21. July 2013 # 13 Company Luxury for Less (UK) www.bathempire.com Sector Internet Services Round A €mn 9.9 Description Provider of bathroom products via an online platform. Investors ISIS Equity Partners. Luxury for Less (UK), an e-tailer of bathroom products via bathempire.com, raised £8.5mn (€9.9mn) in a Series A round from ISIS Equity Partners. The money will be used for relocation and new hires. Founded in 2006, Luxury for Less is an e-tailer of up-scale bathroom suites, furniture and related items. The company started when serial entrepreneur Chris Li and his partner Vicky Wang were sourcing taps for a property development project. Initially operating on eBay, selling taps and showers from a spare room at home, the pair turned over £1mn (€1.2mn) in their first year. In 2008 the firm relocated from Brighton on the south coast to Nuneaton in the West Midlands, to take advantage of the area’s transport links and the availability of commercial space, and in 2009 the pair moved to a dedicated online store at their current URL. Having relocated a couple of times within the same area as it expanded, the firm turned over £14mn in 2012 and expects to do £20mn in 2013. The proceeds of this round will be used firstly to relocate the firm to a 169,000 square feet complex on an industrial estate in the West Midlands. This is more than double the size of the company’s existing base and will allow significantly more room for warehousing, as well as enabling the firm to create and stock many more product lines. The fit-out will include 28,000 square feet of new offices and possibly the company’s first physical showroom. Once the new premises are commissioned, the firm plans to expand its 100-strong workforce to around 300 over the next three years. The firm is already looking for a CTO and a marketing director. The firm has won a number of awards including the Daily Telegraph’s Small Business and Business Start-Up award and the Small Online Business of the Year at the National Business Awards in 2012. Founder Chris Li is the current Young Entrepreneur of the Year in the Growing Business Awards and also a winner of the Nectar Small Business of the Year and Achiever of the Year awards. From its offices in London, Birmingham and Manchester, independent private equity investor ISIS Equity Partners (€60mn (2013); AUM €763mn) invests in British companies valued at anywhere between £2-100mn (€2-117mn). A typical investment round will be anywhere from £2-40mn (€2-47mn). The firm is not a technology specialist and will invest in most sectors, preferring to focus on the team ahead of the industry sector. ISIS originated in 1997/1998 when a small number of senior executives were given a chance to rebuild an established private equity unit for Friends Provident. The unit was sold to its management team in 2005 as a result of changed accounting standards. In practice this means that ISIS’ principals have worked together for a very long time and have a strong culture, which revolves around backing teams and relationships between people. This is reflected in the variety of approaches the firm will take, ranging from growth equity and secondary transactions through to MBOs and straight acquisitions. We last saw ISIS with a €16.5mn investment in technology consultants Hurleypalmerflatt (HPF) in February 2011. © Go4Venture Advisers 2013 Page 21 
  • 22. July 2013 # 14 Company Coldway (France) www.coldway.com Sector Hardware Round Late Stage €mn 9.3 Description Provider of portable thermo-chemical cooling systems and self refrigerating containers for the transport of fresh produce and other temperature-sensitive products. Investors CDC Entreprises, CMCIC Capital Finance, Emertec Gestion, Sudinnova. Coldway (France), a developer and manufacturer of portable thermo-chemical cooling systems for the transport of foodstuffs and other temperature-sensitive products, raised €9.3mn in a Late Stage round led by Ecotechnologies (managed by CDC Entreprises, now part of Bpifrance) with support from fellow new investors CM-CIC Capital Finance and Sudinnova as well as existing investor Emertec Gestion. Incorporated in 2001, Coldway has developed a range of thermo-chemical cooling and heating systems, based on research originally financed by French research body the CNRS, at its IMP-UPR laboratory in Perpignan. The novel aspect of their technology is the use of solid-gas systems of the chloride ammoniac type. Not only do these systems avoid the use of the environmentally unfriendly chloro-fluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs), which have been banned by international agreement, but they are also more energy-efficient than competing systems and can provide more heating or cooling capacity per unit volume. In practice this means that the firm has been able to develop a range of self-refrigerating containers. With no moving parts, there is no noise or vibration and maintenance is greatly reduced. Moreover, the system does not require an electrical power supply while in operation. Some of the firm’s containers can maintain their temperature for periods as long as ten hours. These advantages can be very significant from a logistics point of view. For example, rather than having to use specialised vehicles for transport, ordinary vehicles can be leased and filled with Coldway’s thermally regulated storage systems. The firm is working with a number of partners in the pharmaceutical, foodprocessing, logistics and other industries. This is the fifth round of investment for Coldway since a small amount of angel funding in 2003 and an initial €0.9mn institutional seed round in November 2004. By the time the firm received its first institutional investment, it had demonstrated a prototype and sold some of its refrigerated containers to pilot clients in the healthcare industry. As we described in our earlier coverage of Withings, transaction leader Ecotechnologies, (€150mn (2012)) managed by CDC Entreprises (€400mn (2011); AUM €1.1bn) should now more properly be referred to as Bpifrance (AUM €22bn) under whose name it has been subsumed. Fellow new investor CM-CIC Capital Finance (€120mn (2006); AUM €300mn) was created in 2011 by the merger of CIC Finance, the Bank of Vizille and IPO. Also a new investor, Sudinnova focuses on life science and technology companies located in the south east region of France. Existing investor Emertec Gestion (€60mn (2008); AUM €120mn) participated in both of Coldway’s €0.9mn rounds in November 2004 and March 2006, but did not participate in the intervening rounds. Emertec was set up in Grenoble in 1999 to stimulate start-up funding, and has since grown into a national venture capital firm. © Go4Venture Advisers 2013 Page 22 
  • 23. July 2013 # 15 Company Grand Cru (Finland) www.grandcrugames.com Sector Digital Media Round B €mn 8.5 Description Developer of mobile social games. Investors Idinvest Partners, Nokia Growth Partners, Qualcomm Ventures. Grand Cru (Finland), a developer of mobile social games, raised €8.5mn in a Series B round led by existing investor Idinvest Partners with support from new investors Nokia Growth Partners and Qualcomm Ventures. Grand Cru – which the company pronounces as ‘grand crew’ – was founded in January 2011 in Helsinki and incubated by specialist health, web and games incubator Lifeline Ventures. Lifeline, which is also based in Helsinki, incubated Finnish games developer Supercell which featured in our May 2011 issue and completed a $130mn (€100mn) funding round in February 2013 at a rumoured $770mn (€580mn) valuation led by Index Ventures, with Institutional Venture Partners and Atomico joining together with existing investors. For the past eighteen months Grand Cru has been recruiting a team of experienced mobile games developers and putting together its debut game ‘Supernauts’. Inspired by well-known social world-building game Minecraft and other 3D creative social games, Supernauts allows players to build their own unique worlds whilst also travelling to a flooded Earth to rescue humans. The social aspect comes from inviting others to see what one has built, or from working together to optimise construction resources. The game will be free to play and is scheduled for launch on iOS during 2013. Slightly unusually for a firm which has not yet published a game, Grand Cru has won a number of awards. Most notable was winning the Amazon Web Services (AWS) Start-Up Challenge in 2013, but the firm also qualified as a finalist in the 2013 London Web Summit and was named one of the hottest start-ups in Europe by Wired Magazine. Grand Cru has received two rounds of investment prior to this one – an undisclosed seed round from Lifeline in May 2011 and a €1.7mn Series A round led by Idinvest in March 2012. Part of Allianz until 2010 when it became independent, Paris-based Idinvest Partners (€281mn (2013); AUM €4bn) has been very active recently. It has four investments in this issue of our bulletin alone. In particular, the firm has made a number of games investments – especially in social games. Recent examples include €5.3mn for Kobojo (France) in April 2011, $2.8mn (€2.1mn) for Plumbee (UK) in March 2012, $3.6mn (€2.8mn) for Pretty Simple (France) in May 2011 and $7.4mn (€5.7mn) for Social Point (Spain) in June 2012. By backing such a diverse portfolio of games, Idinvest is taking the same approach as games publishers – backing lots of games in the anticipation that at least one will be a blockbuster, very much the way that the venture industry used to be before so much emphasis was put on industry expertise and trying to pick winners. Grand Cru is the only time we have seen Idinvest back a Finnish company. This further underlines the growing trend towards investments by areas of expertise rather than geography. Strategic investors Nokia Growth Partners (€191mn (2013); AUM €600mn) and Qualcomm Ventures (€76mn (2011); AUM €382mn) are the investment arms of mobile manufacturer Nokia (HLSE:NOK1V) and wireless technology giant Qualcomm (NASDAQ:QCOM), respectively. © Go4Venture Advisers 2013 Page 23 
  • 24. July 2013 # 16 Company Vivino (Denmark) www.vivino.com Sector Telecom Services Round B €mn 7.9 Description Provider of a mobile application which can recognise wine labels using image recognition technology. Investors Balderton Capital, Creandum, Seed Capital Management. Vivino (Denmark), provider of a mobile application which can recognise wine labels using image recognition technology, raised $10.3mn (€7.9mn) in a Series B round from Balderton Capital Management, Creandum and Seed Capital Management. The money will be used primarily for marketing throughout Europe and the Americas. Founded in 2009, Vivino has developed an app which allows users to identify, rate and share wines they have tasted as well as receiving personalised wine recommendations. Users take a photo of the wine label using the Vivino app, which is available for both iOS and Android. The image is then matched against a database of some 1.3mn wines in order to provide the user with information about the wine’s producer, brand, name, grape varieties and vintage. The firm recently added Optical Character Recognition (OCR) technology which has helped double the percentage of wines the app recognises to 86%. Not only does this allow users to identify wines but it also lets them store wines they like, get personalised wine recommendations, share their wine experiences with their friends and – crucially from an investor’s point of view – locate the wines in nearby stores. Alongside the free version of its app, the firm also offers a paid for version with extra functionality (such the ability to do a text search of the database). While the functionality to add tasting notes exists, this app is targeted primarily at those who do not take their wine too seriously rather than the committed wine buff. For this reason, the database consists primarily of wines that can be found on the high street rather than fine wines. The idea is that the app should be popular enough that it can be a commercial success. At the moment, Vivino users are scanning some two million bottle labels per month compared with only 80,000 scans when the service first launched in April 2012. Building apps has been a hobby among IT developers for some time, with many having an app on the iTunes Store or Google Play which they have developed in their spare time. The reason that most developers build apps in their spare time rather than giving up their day job is that they realise just how difficult it is to make money from apps, and that most apps are doomed to obscurity. With the recent plethora of investments in payment apps (iZettle (June 2012), mPowa, Payleven and SumUp (August 2012)) and taxi hailing apps (Hailo (March 2012, February 2013) and myTaxi (January 2012)), app investments are now a fixture of the European venture market. With VC firms able to pick from a huge selection of apps, the question is whether they can pick winners. Well-known Balderton Capital Management (€371mn (2009); AUM €1.5bn) seems to be taking a lead on app investment. We last saw Balderton in this context in our May issue with a €10mn round for mobile social media app Urturn. Other recent investments by Balderton include £10mn (€12mn) for WorldStores in last month’s issue and seed money for mobile CMS Contentful and a $2.7mn (€2.1mn) in Series A money for collaborative web operations platform Opbeat in June. Balderton’s experience at taking its start-ups into North America may soon see Vivino being used more often in the Napa Valley than Europe. Nordic technology investor Creandum (€135mn (2012); AUM €210mn), which focuses on consumer, software and hardware deals, is also an investor in payments firm iZettle. We last saw Creandum in last month’s issue with an investment in Wrappsody. Existing backer Seed Capital (€91mn (2011); AUM €201mn) is technically early stage but able to invest up to €9mn per company over the lifetime of a deal. © Go4Venture Advisers 2013 Page 24 
  • 25. July 2013 # 17 Company Chemist Direct (UK) www.chemistdirect.co.uk Sector Internet Services Round B €mn 7.6 Description Provider of prescription medicines and health and beauty products online. Investors Atomico, DMG Media Investment, Lepe Partners. Chemist Direct (UK), retailer of prescription medicines and health and beauty products, raised $10.0mn (€7.6mn) in a Series B round from Atomico, DMG Media Investment and Lepe Partners. The money will be used to expand the firm’s product range and its ‘online doctor’ advisory service. While in the US entrepreneurs traditionally start businesses out of their garage, ChemistDirect is uniquely British in that it was started in a garden shed. When former blue-chip management consultant Mitesh Soma visited his wife’s independent pharmacy, he realised just how high the mark-up was in high street chemists. Given his technical background, it was obvious that here was an opportunity for a classic internet disintermediation play. The firm was first launched in 2007 with a personal investment of £100k (€117mn) and a bank overdraft of £150k (€176mn). Even for an entrepreneur with a consulting background and significant personal equity in the business, it is difficult to see a high street bank providing this sort of support today. ChemistDirect’s turnover has now reached ‘double digit millions of pounds’ which the company and its investors attribute to a focus on customer service. Two thirds of ChemistDirect’s sales are from repeat customers and the firm has increased its revenues five-fold since its first institutional investment in 2009. Apart from starting to provide veterinary pharmaceuticals 18 months ago, going forward the firm intends to target the £35bn (€41bn) health and beauty market, which is also moving online, as exemplified by Palamon and Sirius’ investment in Feelunique featured in our December 2012 bulletin. Another interesting feature of this investment is that, just like Luxury for Less which we featured earlier in this bulletin, the company is based in the West Midlands. Clearly retail businesses have strong logistical reasons for wanting to be in the middle of the country with good transport links and infrastructure. It is notable, however, that despite the media hype surrounding Silicon Roundabout in London, many of the investments we feature in our bulletin are based in the same places they always have been – Silicon Fen around Cambridge, the M4 corridor, the region around Oxford and Scotland for energy businesses. Technology investor Atomico (€126mn (2010)) first became involved with ChemistDirect in early 2009 when it was the sole investor in the firm’s £3mn (€4.4mn) Series A round. Since it was founded by Skype cofounder Niklas Zennström in 2006, Atomico has become a truly global investor with offices in Beijing, Istanbul, London, Sao Paulo and Tokyo. Many of the best known and most successful VC firms have taken a similar approach over the last five years, not just to gain exposure to emerging markets but also because their investee companies are demanding local investors when they wish to expand into these markets. A classic example of this is Atomico’s portfolio company Fab, which recently insisted on Asian investors for its $150mn (€115mn) Series D round. DMG Media Investment is the investment division of newspaper publisher Daily Mail & General Trust, while Lepe Partners describes itself as an independent merchant bank for media and consumer entrepreneurs. © Go4Venture Advisers 2013 Page 25 
  • 26. July 2013 # 18 Company XConnect Global Networks (UK) www.xconnect.net Sector Telecom Services Round C €mn 7.6 Description Provider of voice over internet protocol (VoIP) peering and clearing service. Investors Crescent Point Group, Young Associates. XConnect Global Networks (UK), a provider of a Voice over IP (VoIP) peering and clearing service, raised $10.0mn (€7.6mn) in a Series C round from existing investor the Crescent Point Group and new investor Young Associates. Back in the 1990s, IP traffic had to be limited to plain text as there was not enough bandwidth for anything else. As bandwidth increased, websites became more graphical, and later on people started using the internet’s IP communications infrastructure to send things other than web-pages. In other words, people started developing applications like Skype and other Voice over IP (VoIP) services, broadcasting using Internet Multi-casting Services (IMS) and using video-conferencing systems. In the corporate world there has long been a drive for so-called Unified Communications (UC). This is fine if both all those who want to communicate are sitting in the same office on the latest corporate fibre-to-the-machine network, but they typically are not. More often they are on different ‘islands of IP’ and the problem is how to communicate between the two without using the legacy PSTN (Public Switched Telephone Network), which is inefficient, costly and low bandwidth. Founded in 2005, XConnect provides a secure, neutral and trusted interconnection between the IP networks of different service providers. This means that rich IP communications are not confined to individual ‘islands of IP’. In addition, XConnect provides ENUM (E.164 Number to URI Mapping) services which translate between telephone numbers in the E.164 standard and the URIs (Uniform Resource Identifiers) used for internet telephony. This means improved call quality by being able to route calls as ‘IP all the way.’ XConnect also takes care of managing multiple interconnect agreements and settlement rates. While currently only some 5-15% of calls have IP at both ends, this proportion is set to increase. With headquarters in London and offices in the USA, EMEA and Asia, XConnect's customer base spans more than 70 countries. Customers include over a hundred major carriers and service providers such as AT&T, TalkTalk and Vonage. Competitors include Arbinet, IntelePeer, NetNumber, Spring-PIN, Syniverse and Telcordia, amongst others. New investor Young Associates (no web site) is an independent private equity firm specialising in telecom, internet and IT services companies in the UK led by Lord Young of Graffham. In addition to spending twenty years as an entrepreneur before serving in the British Government in the 1980s, Lord Young also spent five years as Executive Chairman of Cable & Wireless. While Lord Young is notoriously secretive about his investments, the firm is known to have invested in Spectrum Interactive (a WiFi operator sold to Arqiva in 2012) and Eurotel (a telecom service provider sold to private equity in 2007). Other investments include Cambridge Display Technology, KashFlow, Neos Networks and Pixology. Existing investor Crescent Point Group is a sector-agnostic investment management group targeting emerging market investments in the Asia-Pacific and MENA regions. © Go4Venture Advisers 2013 Page 26 
  • 27. July 2013 2.1 - M&A Activity Index Disclosed Global TMT M&A Transactions European Deals 2012 (€mn) 500 European Deals 2013 (€mn) Global Deals 2012 (€mn) # of Global Deals 2012 Global Deals 2013 (€mn) # of Global Deals 2013 30,000 25,000 # of Deals per Month 400 350 20,000 300 250 15,000 200 10,000 150 100 Deal Value per Month (€mn) 450 5,000 50 0 Jan Feb (1) 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Capital IQ; Go4Venture Advisers Analysis (1) Includes Dell acquisition by Silver Lake for €22.3bn (2013) Disclosed European VC & PE-Backed TMT M&A Transactions Value of Deals 2012 (€mn) Value of Deals 2013 (€mn) # of Deals 2012 # of Deals 2013 20 18 # of Deals per Month 16 4,500 4,000 3,500 14 3,000 12 2,500 10 2,000 8 1,500 6 4 1,000 2 Deal Value per Month (€mn) >£30mn / €35mn / $50mn 500 0 Jan Feb Mar (1) Apr (2) May Jun (3) 0 Jul Aug Sep Oct Nov Dec Source: Capital IQ; The 451 Group; VentureSource (including transaction value estimates); Go4Venture Advisers Analysis (1) Includes NDS acquisition by Cisco Systems for €3.8bn (2012) (2) Includes ista International acquisition by CVC Capital Partners for €3.1bn (2013) (3) Includes Elster acquisition by Melrose for €2.3bn (2012) Disclosed European VC & PE-Backed TMT M&A Transactions (2013) > £30mn / €35mn / $50mn Jan Feb Mar Apr Jun Jul Monthly Number # Value €mn Median €mn 1 360 360 3 202 72 3 275 83 4 5 7 3,479 1,746 1,728 157 100 129 3 625 67 Cum. 1 360 360 4 562 65 7 837 85 11 16 23 26 4,315 6,061 7,790 8,414 83 94 94 122 Number # Value €mn Median €mn May © Go4Venture Advisers 2013 Aug Sep Oct Nov Dec Page 27 
  • 28. July 2013 2.2 - Top 5 Global TMT M&A Transactions Summary Ranked by Price (€mn) in descending order (includes announced and/or completed deals) Price Rev. # Target & Acquirer Target Sector (€mn) (€mn) 1 Nokia Siemens Networks (Netherlands) Telecoms 2,964 13,227 www.nokiasiemensnetworks.com Equipment P/R 0.2x Noteworthy Sellers - Nokia (Finland OMX:NOK1V) www.nokia.com Nokia, a multinational communications and IT corporation (and until the evolution of smart phones, the world’s largest mobile phone manufacturer) acquired Siemens' 50% stake in their joint venture, Nokia Siemens Networks. Nokia Siemens Networks was established in 2007, combining Nokia's Networks business group and Siemens' Communications division (fixed and mobile networks business units only), to focus on wired and wireless infrastructure. It quickly proceeded with the acquisitions of Atrica, an Israeli provider of carrier Ethernet transport systems for metro networks (c.€75mn, 2008), Apertio, a UK data platform and apps provider for telecoms operators (c.€140mn, 2008), and the wireless network equipment division of Motorola (c.€745mn, 2011). Due to harsh competition from other mobile network giants, including Sweden's Ericsson and China's Huawei Technologies and ZTE, the joint venture underwent a restructuring in 2011, cutting 23% of its workforce (17,000 jobs) and narrowing its focus to mobile broadband and related services. Since the restructuring, Nokia Siemens Networks has made a comeback, reporting €820mn operating profit in 2012 (a 145% increase from 2011), primarily driven by its LTE carrier deals in the US, Japan and South Korea, as well as its additional networks deployed in more than 150 countries. Following the acquisition, Nokia Siemens Networks has become a wholly owned subsidiary of Nokia (renamed to NSN - Nokia Solutions and Networks), and while the governance of the company is expected to remain unchanged, NSN is considering a further reduction of 8,500 employees. Through the reunion, Nokia aims to become the last integrated package wireless company in the West, able to offer every element of the mobile chain, from handset to base station to mobile packet core. It is worth noting that this transaction also highlights the unclear path of the global mobile industry: while in the past it was common for the world’s biggest network equipment vendors to also be the biggest mobile phone makers – as is still the case with Asian vendors Huawei, ZTE or Samsung – in recent years, large vendors such as Ericsson, Motorola, Alcatel, Siemens have either sold or spun out their handset divisions. 2 Sourcefire (US NASDAQ:FIRE) www.sourcefire.com Security 1,832 171 10.7x - CISCO (US NASDAQ:CSCO) www.cisco.com Cisco, one of the world's largest enterprise networking and communications technology providers, will acquire Sourcefire, a security software and hardware provider. Founded in 2001, US-based Sourcefire provides government, enterprise and consumer hardware and software for securing IT networks and endpoints. Its FirePOWER security appliance line consists of physical devices connected to (and usually at the entry point of) a network, capable of running Advanced Malware Protection (AMP) software that logs security events and prevents zero-day (previously unidentified) virus incursion. Sourcefire also offers Snort (an open-source intrusion detection software), as well as consumer endpoint security through the Immunet brand. It is currently installed across 2,500 large enterprises and has a sizeable consumer user base through Immunet; Snort has also been downloaded 4mn times since launch. Sourcefire has over 560 employees and had revenues of $223mn (c.€171mn) in 2012, up 35% from 2011 and forecasted to grow 50% year-on-year. Through this acquisition, Cisco aims to cross-sell security to its large enterprise and government client base, which it admits generally do not buy security products from its Ironport subsidiary. Especially attractive is the ability to offer AMP software or AMP-enabled hardware, enabling Cisco to provide insurance against the fact that traditional anti-malware programs increasingly fail against advanced persistent threats (e.g. DDoS strikes) and zeroday viruses. Installing AMP software on Cisco's clients' networks will allow its Security Intelligence Operations (SIO) to update a cloud definition database almost as soon as malware is detected by any Cisco-protected company, and use these definitions to protect other clients. Furthermore, Cisco expects to be able to cross-sell its own products into Sourcefire's customer base. Sourcefire is Cisco's seventh and largest acquisition in 2013, bringing the total reported to c.$3.5bn (c.€2.7bn), as well as its second security acquisition this year (following the acquisition of Cognitive Security for an undisclosed sum in January 2013). We also covered Cisco's acquisition of Ubiquisys for $310mn (c.€238mn) and Joulex $107mn (c.€82mn) in our April and May issues, respectively. © Go4Venture Advisers 2013 Page 28 
  • 29. July 2013 # 3 Target & Acquirer Harland Financial Solutions (US) www.harlandfinancialsolutions.com Target Sector Application Software Price (€mn) 918 Rev. (€mn) 227 P/R 4.0x Noteworthy Sellers - Davis + Henderson (Canada TSX:DH) www.dhif.com Davis + Henderson (D+H), a provider of banking, lending processing and payment software, will acquire Harland Financial Solutions (HFS), a provider of lending and compliance, core banking and channel management software, as well as related services. HFS was founded in 2000, when John H. Harland Company, its original parent, acquired Concentrex (c.€125mn, 2000), a provider of software and services to financial institutions, and combined its existing software businesses with Concentrex’s capabilities. Today, operating as a subsidiary of Harland Clarke Holdings – itself a subsidiary of MacAndrews & Forbes (the holding company with a diversified portfolio of public and private companies, owned by businessman and investor Ronald Perelman) – HFS offers its lending and core banking technology to over 6,000 financial institutions. Its lending platform includes LaserPro®, an automated loan compliance solution, while its core banking platform supports a wide range of customer-related activities, such as customer account openings, payment processing, etc. With 1,350 employees, 16 offices in the US and 3 more in Ireland, Israel and India, and $297mn (c.€227mn) in 2012 revenue, HFS claims that it is the fourth-largest core banking technology company in the US. On D+H’s side, D+H claims to be the largest provider of personal and business checks in Canada, having aggressively broadened its suite of solutions with a number of strategic acquisitions. HFS is expected to provide 5,400 additional US banking customers, bringing D+H's total client base to over 6,200 in North America (after accounting for shared relationships) and contribute high, single-digit earnings growth in 2014, with pro forma 2012 combined revenue of approximately $1.1bn (c.€841mn). This acquisition will also extend D+H's product offering, as it does not currently address core banking functions. This is by far D+H's largest acquisition to date, followed by that of Filogix, a provider of information and transaction technology for the residential mortgages and real estate markets in Canada (c.€170mn, 2006) and Mortgagebot, a provider of web-based mortgage Point-Of-Sale (POS) solutions to banks and credit unions in the US (c.€165mn, 2011). D+H stated that it may also make smaller US “bolt-on” acquisitions in the near future. 4 Digital Insight (US) www.digitalinsight.com Application Software 784 289 2.7x - Thoma Bravo (US) www.thomabravo.com Thoma Bravo, a Chicago-based middle-market private equity firm, acquired Digital Insight (previously the Financial Services division of Intuit, a developer of financial and tax preparation software for individuals, professionals and small businesses), to form a stand-alone company that provides digital banking and payment capabilities to financial institutions. Founded in 1995 and originally backed by Menlo Ventures and HarbourVest Partners, Digital Insight floated on NASDAQ in 1999 and remained a public company until its acquisition by Intuit in 2007 for $1.4bn (c.€986mn). The company started as a pioneering Internet banking provider and today has grown to become one of the largest providers of Online Financial Management (OFM) consumer and business solutions, distributed through c.1,800 US financial institutions. Its consumer solutions have 11mn users and include FinanceWorks™ (which transforms a financial institution's website into a financial management hub for consumers, allowing them to manage all financial accounts in one place leveraging connectivity to 16,000 financial institutions), TurboTax for Online Banking™ (according to the company, the only tax preparation software designed to integrate with the institution's Internet Banking platform) and Mobile Banking Solutions (SMS and Consumer Mobile Web Banking). Its business solutions cover a wide range of business banking needs, from financial management to customer service and security offerings. It is also worth noting the success of the company's mobile banking suite, which includes 600 applications in the Apple App Store and Google Play, adopted by more than 4mn customers. In 2012, Digital Insight had 730 employees and $378mn in revenues (c.€290mn). The divestment is part of an ongoing reorganisation by Intuit, following a decline in profitability, through which it intends to refocus on its tax-preparation and small business accounting activities (and as part of which it has also announced plans to sell its Health group). It comes as little surprise as the Financial Services division had consistently underperformed others. From Thoma Bravo’s perspective, this acquisition fits its focus on application and infrastructure software and financial and business services. In software, it has invested in 27 companies that have completed 62 add-on acquisitions to produce total annual pre-tax profits of c.$1bn (c.€765mn).Similarly, it plans to expand Digital Insight's offering for financial institutions, organically and through strategic acquisitions. Thoma Bravo last featured in our newsletter for its €864mn acquisition of Deltek (a US-based provider of enterprise software) in August 2012. © Go4Venture Advisers 2013 Page 29 
  • 30. July 2013 # 5 Target & Acquirer Host Europe WVS (UK) www.hosteuropegroup.com Target Sector Internet Services Price (€mn) 511 Rev. (€mn) N/A P/R N/A Noteworthy Sellers Montagu Private Equity. Cinven (UK) www.cinven.com Cinven, a private equity firm, will acquire Host Europe, a cloud host and server colocation provider. Host Europe Group was founded in 1997 and currently provides cloud application hosting, website hosting and server colocation services to SMEs in Europe and North America. It operates via its brands 123-reg, BrandFortress, Domainbox, Domainmonster.com, Heart Internet, Host Europe, RedCoruna and Webfusion, and has five business units: domains, application hosting, cloud hosting, managed hosting and reseller hosting. Host Europe has over one million customers and c.600 employees. It claims to be the largest privately owned hosting company in Europe, with the majority of its revenues coming from the UK and Germany. The company has achieved a CAGR of 16% in revenues over the past four years, while also increasing EBITDA margins. Since Montagu Private Equity financed Host Europe’s €267mn MBO from Oakley Capital in 2010, the company has grown its business through five acquisitions: web hosting providers Heart Internet (c.€25mn, 2011), Dynamic-net (undisclosed amount, 2011) and RedCoruna (undisclosed amount, 2012), domain name registrar and management provider Mesh Digital (including Domainbox and Domainmonster.com, for an undisclosed amount in 2003), and the assets of the virtualisation provider Vanager (€2.4mn, 2010). Host Europe fits Cinven's general acquisition strategy (buyouts of European companies with enterprise values greater than €300mn), and allows it to capture value from the expansion of European cloud hosting services. We have recently covered three cloud hosting acquisitions: Peer 1 Hosting by Cogeco for €68mn and Star by Claranet for €462mn in our November and December 2012 HTI issues, respectively, as well as Nebula by Ratos for €83mn in our March 2013 issue. Cinven believes that Host Europe is well placed to grow with its support. Additional information about this deal can be found in the Headline European VC & PE Backed M&A Transactions section. Source: Capital IQ; The 451 Group; Go4Venture Advisers Analysis Key Bold indicates name of Target Italic indicates name of Acquirer P/R – Price / Last 12 Months Revenues E – Estimated © Go4Venture Advisers 2013 Page 30 
  • 31. July 2013 2.3 - Headline European VC & PE-Backed M&A Transactions (> £30mn / €35mn / $50mn), includes announced and/or completed deals where price is available LTM Target Price Rev. Funding # Target & Acquirer Sector (€mn) (€mn) P/R (€mn) 1 Host Europe WVS (UK) Internet 511 N/A N/A 267 www.hosteuropegroup.com Services P/F 1.9x Noteworthy Sellers Montagu Private Equity. Cinven (UK) www.cinven.com 2 AlloCiné (France) www.AlloCiné.fr Internet Services 67 20 3.3x 120 0.6x Tiger Global Management. Internet Services 47 15 3.1x 2 19.2x Albion Ventures. Fimalac (France) www.fimalac.com 3 Opta Sportsdata (UK) www.optasportsdata.com Perform Group (UK LSE:PER) www.performgroup.co.uk Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis Key Bold indicates name of Target Italic indicates name of Acquirer E – Estimated P/R – Price / Last 12 Months Revenues P/F – Price / Total Funding P/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 2013 Page 31 
  • 32. July 2013 # 1 Target & Acquirer Host Europe WVS (UK) www.hosteuropegroup.com Target Sector Internet Services Price (€mn) 511 LTM Rev. (€mn) N/A P/R N/A Funding (€mn) 267 P/F 1.9x Noteworthy Sellers Montagu Private Equity. Cinven (UK) www.cinven.com Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Advisers Analysis Host Europe Group (UK), a provider of colocation and web application hosting services, will be acquired by Cinven (UK) for €511mn. The seller is Montagu Private Equity. Founded in 1997, UK-based Host Europe Group provides colocation and web application hosting services to businesses (and particularly Small and Medium Enterprises (SMEs) in Europe and North America. It operates via its brands 123-reg, BrandFortress, Domainbox, Domainmonster.com, Heart Internet, Host Europe, RedCoruna and Webfusion, and has five business units: domains, application hosting, cloud hosting, managed hosting and reseller hosting. The group has over one million customers and about 600 employees, and claims to be the largest privately owned hosting company in Europe, with the majority of its revenues from the UK and Germany. The company has achieved revenue CAGR of 16% over the past four years, while increasing EBITDA margins. Montagu became involved in 2010 when it financed Host Europe’s €267mn MBO from Oakley Capital. Since then, it has grown the business through five acquisitions: web hosting providers Heart Internet (c.€25mn, 2011), Dynamic-net (undisclosed amount, 2011) and RedCoruna (undisclosed amount, 2012), domain name registrar and management provider Mesh Digital (including Domainbox and Domainmonster.com, for an undisclosed amount in 2003), and the assets of the virtualisation provider Vanager (€2.4mn, 2010). Founded in 1977, UK-based Cinven is a private equity firm focused on buyouts of large companies with substantial operations in Europe. It typically invests in companies with an enterprise value greater than €300mn, requiring an equity investment of €100mn or more. It focuses on the Business Services, Consumer, Financial Services, Healthcare, Industrials, and Technology, Media and Telecommunications sectors, and its portfolio companies employ c.73,000 staff. Since its founding, it has completed over 103 buyout investments with a combined enterprise value in excess of €70bn. Cinven currently invests through its €5.3bn fifth fund and has already completed four acquisitions in 2013, this one being the second largest behind that of provider of ceramic components CeramTec (c.€1.5bn, June). Cinven’s acquisition of Host Europe Group is underpinned by the belief that the highly fragmented European hosting industry will continue to expand rapidly, driven by the growing adoption of cloud computing and increased web-presence amongst SMEs. It further believes that due to its strong track record, the company is well placed to continue growing organically and via acquisitions. Montagu Private Equity (€2.5bn, (2011); AUM €4.7bn), the former buy-out arm of HSBC, is a UK-based private equity firm that focuses on MBOs of middle market companies. It typically invests in companies worth €100mn to €1bn, based in Northern Europe (with a focus on the UK, France, Germany and the Nordic region) and Latin America. Since its founding in 1968, it has invested in over 400 companies. © Go4Venture Advisers 2013 Page 32 
  • 33. July 2013 2 Target Sector Internet Services Target & Acquirer AlloCiné (France) www.AlloCiné.fr Price (€mn) 67 LTM Rev. (€mn) 20 P/R 3.3x Funding (€mn) 120 P/F 0.6x Noteworthy Sellers Tiger Global Management. Fimalac (France) www.fimalac.com Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Advisers Analysis AlloCiné (France), an operator of film information portals, will be acquired by Fimalac (France ENXTPA:FIM) for €67mn. The seller is Tiger Global Management. Founded in 1993, France-based AlloCiné operates an interactive website that provides free information about films (such as reviews, release dates, etc.) and e-commerce services (i.e. advanced ticket purchasing). Since its founding, the company has completed five acquisitions. Today, it has operations in France, the UK (as Screenrush), Germany (as Filmstarts), Spain (as SensaCine), Russia (as Kinopoisk), Turkey (as Beyazperde) and Brazil (as AdoroCinema). According to digital analytics company comScore, it is the world’s third largest entertainment information platform with more than 25mn unique monthly visitors. In 2012, its revenue grew by 150% to €20mn. Tiger Global Management acquired AlloCiné from management and CITA Gestion for €120mn in 2007. France-based Fimalac is a holding company currently organised into three operating segments: financial services, via Fitch Group which has itself two business lines – data and analytics (Fitch Solutions) and credit ratings (Fitch Ratings); real estate, via North Colonnade; and other activities, such as facilities operator Vega and three other 40%-owned associated companies: production companies Gilbert Coullier and Auguri, as well as hotels and leisure provider Groupe Lucien Barrière. With respect to digital entertainment, Fimalac operates web portal group Webedia and woman’s web portal Terrafemina. Fimalac operates internationally with operations in the US, Europe, Asia and Latin America with c.2,500 employees as of December 2012. The company has completed 10 acquisitions to date, AlloCiné being the third largest behind those of hand tools manufacturer Facom (€1.5bn,1999) and hotels/leisure company Groupe Lucien Barrière (€188mn, 2011). The acquisition of AlloCiné will allow Fimalac to form a new group with its web subsidiaries Webedia and Terrafemina, creating France’s fourth largest digital media business. Outside France, Fimalac would use its expertise to drive faster growth in the new group, in countries such as Latin America, Germany, Turkey and Brazil. This sale may be motivated by Tiger’s investment cycle, as it has already held AlloCiné for more than five years, while the low price suggests an uncompetitive sale process; Tiger was rumoured to have started the process as far back as March 2012. The price may also have been impacted by the fact that AlloCiné’s 40% stake in Kinopoisk (a Russian counterpart) will be sold separately, though this remains to be confirmed. Tiger Global Management (€1.2bn (2012); AUM €4.6bn) is a privately owned hedge fund sponsor which also invests in public and private equity markets. It invests across the globe in various sectors, including IT, real estate, telecommunications, energy, media and retailing. Its current investments include Facebook, Google, Apple and Amazon. Tiger Global Management was founded in 2001 and is based in New York, with an additional office in Beijing, China. It last featured in our bulletin in September 2012 for investing in the €31.5mn financing round of ivi.ru Media (a video and music streaming service). © Go4Venture Advisers 2013 Page 33 
  • 34. July 2013 # 3 Target Sector Internet Services Target & Acquirer Opta Sportsdata (UK) www.optasportsdata.com Price (€mn) 47 LTM Rev. (€mn) 15 P/R 3.1x Funding (€mn) 2 P/F 19.2x Noteworthy Sellers Albion Ventures. Perform Group (UK LSE:PER) www.performgroup.co.uk Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Advisers Analysis Opta Sportsdata (UK), a provider of online live sports data and analysis, will be acquired by Perform Group (UK LSE:PER) for £40mn ( €47mn). The seller is Albion Ventures. Founded in 1996, UK-based Opta Sportsdata (Opta) provides online live sports data and analysis to the media sector and to sports clubs, leagues and federations. It tracks key player and team performance statistics such as distance covered, shots taken and defenders beaten. The data and analysis it provides is used by media companies to highlight trends, as well as by sports clubs (e.g. Arsenal and PSG), to evaluate individual and team performances. 80% of Opta’s sales come from its media products arm, which supplies data to websites, broadcast feeds and databases. The other 20% comes from scouting and performance tools sold to professional football clubs. With additional offices in France, Germany and the US, it has over 300 corporate clients and 600,000 Twitter followers. Its 2013 revenue grew 16% to £12.5mn (c.€15mn) and its EBITDA grew 46% to £1.3mn (€1.6mn). Albion Ventures has backed Opta since 2008, having invested £2.1mn (€2.5mn) over three funding rounds. UK-based Perform commercialises sports content across digital platforms. It licenses a large portfolio of digital sports rights related to more than 200 sports leagues and events. It also creates a range of products combining sports, video, editorial and data content, that are distributed directly to consumers and to business clients (sports bodies, rights agencies, publishers, etc.). In 2012, Perform had c.900 employees; its revenue and EBITDA grew 47% and 246% to £151.6mn (c.€187mn) and £37.5mn (c.€46mn), respectively. It has recently been very acquisitive, completing 5 deals since 2012, this being the second largest after that of real time sports data provider RunningBall Holding (€121mn, June 2012). The acquisition is expected to strengthen Perform’s content distribution offering and its European business, which has historically been advertising and betting focused with limited distribution revenues from the media sector. Perform also plans to re-launch Opta as a multi-lingual, multi-platform destination for fans wanting to dive deep into sports data, complementing its other global football destinations: Goal.com (global football news) and Soccerway (global football fixtures, scores and form). Albion Ventures (€58mn (2006); €270mn AUM) is one of the UK’s largest managers of Venture Capital Trusts (tax efficient, closed-end collective investment schemes listed on the LSE) with seven currently under management. Created in 2009 by the spin-off of Close Ventures from Close Brothers Group, Albion acts as a sector-agnostic VC investing £1-10mn (€1-11mn) per company. The last time it featured in our bulletin was in April for participating in the €8.7mn financing round of DySISmedical (developer of non-invasive imaging systems for the in-vivo detection of cervical cancer). © Go4Venture Advisers 2013 Page 34 
  • 35. July 2013 List of Acronyms Financial Terms: k: used as abbreviation for 1,000 (for example, €1k means €1,000) mn: million bn: billion AUM: Assets Under Management CAGR: Compound Annual Growth Rate EBIT: Earnings Before Interest and Tax EBITDA: Earnings before Interest, Taxes, Depreciation and Amortisation ECM: Equity Capital Markets EIS: Enterprise Investment Scheme EV: Enterprise Value IPO: Initial Public Offering LBO: Leveraged Buyout MBO: Management Buyout LTM: Last Twelve Months M&A: Mergers and Acquisitions P/E: Price to Earnings ratio P/F: Price to Funding ratio PE: Private Equity PIPE: Private Investment in Public Equity VC: Venture Capital Business / Technical Terms: B2B: Business-to-Business B2C: Business-to-Consumer BPE: Business Process Excellence ETS: Enterprise Transactions Systems BPO: Business Process Outsourcing CDN: Content Distribution Network CPI: Cost Per Install eCPMs: earnings per thousand impressions ENUM: E.164 Number to URI Mapping CRM: Customer Relationship Management © Go4Venture Advisers 2013 Page 35 
  • 36. July 2013 CRO: Contract Research Organisation ICs: Integrated Circuits IP: Intellectual Property LTV: LifeTime Value MCUs: MicroController Units rAAV: recombinant Adeno-Associated Virus RF: Radio Frequency IaaS: Infrastructure-as-a-Service IMS: Internet Multi-casting Services PaaS: Platform-as-a-Service NAS: Network Attached Storage SaaS: Software-as-a-Service SMEs: Small and Medium Enterprises VoIP: Voice over Internet Protocol Other: CIS: Commonwealth of Independent States © Go4Venture Advisers 2013 Page 36 
  • 37. July 2013 Go4Venture Advisers LLP 48 Charles Street +44 (0)20 7529 5400 Berkeley Square g4vbulletin@go4venture.com London W1J 5EN This report was published on August 30, 2013 Disclaimer This report has been prepared and issued by Go4Venture Advisers LLP who are authorised and regulated by the Financial Conduct Authority. All information used in the publication of this report, has been compiled from publicly available sources that are believed to be reliable, however no representation, warranty, or undertaking, express or limited is given as to the accuracy or completeness of the information or opinions contained in this report. Opinions contained in this report represent those of Go4Venture Advisers LLP at the time of publication. This research is non-objective. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment. Furthermore, as the information contained in this document 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 may not get back the amount invested. This publication is not intended to be relied upon in making any specific investment or other decisions. Appropriate independent advice should be obtained before making any such decision. This report has been compiled by Jean-Michel Deligny, Managing Director – for and on behalf of Go4Venture Advisers. Copyright: 2013 Go4Venture Advisers. All rights reserved. Registered address: 10 Wellington Street, Cambridge, CB1 1HW Incorporation number OC336611 Authorised and Regulated by the Financial Conduct Authority © Go4Venture Advisers 2013 Page 37 

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