Presentation by Per Roman, GP Bullhound

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Presentation by Per Roman, GP Bullhound

  1. 1. Being an Entrepreneur in  Financial Turmoil  May 2010
  2. 2. New Threats on the  New Threats on the Horizon?
  3. 3. Eyjafjallajökul (The Icelandic Volcano) Proved to  be s upt e be Disruptive  The disruption caused by the Icelandic volcanic ash cloud could have  cost airlines across Europe up to €2.5bn1 1)  Source: EU Transport Commissioner
  4. 4. Greece Faces Some Serious Obstacles... EU seeks mechanism to contain Greek debt crisis Fears that a euro zone debt crisis could rock banks and the global economy like the  September 2008 collapse of U.S. bank Lehman Brothers swept through markets last  September 2008 collapse of U S bank Lehman Brothers swept through markets last week, pushing global stocks to around a three‐month low. ‐ Reuters, May 9
  5. 5. ...Raising Questions About Who will be Next? "The euro zone is going through the worst crisis since its creation" ‐ French President Nicolas Sarkozy in Brussels
  6. 6. So, the Current Markets in Summary
  7. 7. What is the Economy  Wh t i th E Telling us? Telling us?
  8. 8. Unemployment has Reached its Peak... 10.3 9.7 EU US 9.1 91 8.5 7.9 (%) 7.3 6.7 6.1 61 5.5 4.9 4.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 Source: OECD
  9. 9. ...With Germany and Scandinavia Doing  Relatively Well… e at e y e 20 Germany Ireland 18 16 Norway Spain 14 Sweden UK 12 (%) 10 8 6 4 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 Source: OECD
  10. 10. …But GDP Growth is Showing Signs of Instability 2 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 (%) 2007 2008 2009 2010 (1) EU US (2) (3) Source: OECD
  11. 11. Interest Rates Remain Low... 6 5 4 (%) 3 2 EU US 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 Source: OECD
  12. 12. ...Helping Improve Business Sentiment... 3 2 1 0 (1) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (2) 2007 2008 2009 (%) (3) (4) (5) (6) EU US (7) (8) Source: OECD
  13. 13. …As Well as Consumer Sentiment 2 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (1) 2007 2008 2009 (%) (2) (3) (4) EU US (5) (6) Source: OECD
  14. 14. Internet…For Real! Internet For Real!
  15. 15. With Better and Better Internet Access... Helped by spread of broadband, internet penetration and cheaper  p y p , p p usage fees Internet Household Penetration1 95 75 55 % 35 15 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 North America EMEA Asia Pacific Latin America 95 Internet Advertising Spend2 86.7 75.0 75 65.7 59.9 58.5 60.2 $bn 51.8 55 US$ 38.7 35 26.8 17.9 15 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 North America EMEA Asia Pacific Latin America Other Source: PriceWaterHouseCoopers 2008, Wilkofsky Gruen Associates 1. Includes broadband and dial‐up 2. Includes wired and mobile advertising
  16. 16. ...Resulting in Online Advertising Spend  O e ta g ad t o a Overtaking Traditional Media ed a In spite of the overall economy downturn 2009 set record revenue of  €1.5 billion for the German online advertising industry US Advertising Spending Share by Media (% of total) 20 Newspapers 18 Internet 16 Local and national TV 14 Customer publishing 12 Cable TV 10 Broadcast network TV Broadcast network TV 8 Terrestrial radio 6 2007 2008 2009 2010 2011 2012 Consumer magazines g Source: eMarketer, September 2009
  17. 17. We all Remember the Well Publicised Internet  Company Failures... Co pa y a u es... Boo.com – Online Sports Retail Webvan – Online Grocery & Delivery Founded 1998 Founded 1999 Bankrupt 2000 Bankrupt 2001 Source: GP Bullhound, Capital IQ
  18. 18. ...However, Times Have Changed... Online Grocery Shopping & Delivery  Online Designer Private Sales – vente‐ Service ‐ Tesco.com privee.com 2009 Revenue: $3.0 billion 2009 Revenue: $1.0 billion Source: GP Bullhound, Capital IQ
  19. 19. Market Indices Have Taken a hit Recently but Have  Rebounded Since Early 2009… ebou ded S ce a y 009 OMX Stockholm 30 (76%) 270 Germany DAX (63%) G DAX Paris CAC 40 (44%) Dow Jones Composite Average (71%) 220 NASDAQ Composite NASDAQ Composite (89%) FTSE 250 (82%) (% increase since low) 170 120 70 Jan 03 Jan‐03 Jan 04 Jan‐04 Jan 05 Jan‐05 Jan 06 Jan‐06 Jan 07 Jan‐07 Jan 08 Jan‐08 Jan 09 Jan‐09 Jan 10 Jan‐10 Source: Capital IQ
  20. 20. Internet Companies Have Witnessed a Recovery... As the recession takes its toll consumers have migrated online,  g , evidenced by rallies in internet company shares1 since 2009 450 MSCI Europe 400 European Internet Index 350 300 250 200 150 100 50 0 Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Source: Capital IQ  1 Internet Index: United Internet, Meetic, Moneysupermarket.com, Net Entertainment, XING, TradeDoubler, ASOS
  21. 21. …A Recovery That is Reflected in Valuations 6.0x Semiconductors Internet 6.0x 5.0x 5.0x 4.0x 4.0x 3.0x 3.0x 2.0x 2.0x 1.0x 1.0x 0.0x 0.0x 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 6.0x IT Services 6.0x Enterprise Software 5.0x 5 0x 5.0x 5 0x 4.0x 4.0x 3.0x 3.0x 2.0x 2.0x 1.0x 1.0x 0.0x 0.0x 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 Source: Capital IQ Note 1: Q1 06: 8.8x; Q2 06: 6.9x
  22. 22. Growth Capital and Exit?
  23. 23. Commitments to European VC Funds Have  S o ed... Slowed... 12 10 bn) 8 Funds Raised ($b 6 2010 $11.2 Projected $10.4 4 $7.3 $3.6 $5.0 2 $1.2 0 2006 2007 2008 2009 2010 YTD 2010 YTD Source: Venture Source Source: Dow Jones VentureSource
  24. 24. ...And European Venture Investments Continues  its Decline ts ec e 0.7 IT Companies  200 3.5 IT Companies  400 ―Europe ―US 180 350 0.6 3.0 160 300 unt Invested (€bn) unt Invested (€bn) 0.5 140 2.5 Nu Nu 250 umber of Dea umber of Dea 120 0.4 2.0 100 200 0.3 1.5 80 150 Amou als Amou 0.2 60 als 1.0 100 40 0.1 0.5 50 20 0.0 0 0.0 0 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 1 3 1 3 1 3 1 1 3 1 3 1 3 1 Source: Venture Source No. of Deals Amount Invested
  25. 25. UK Leads European Investment Investment in Europe by Country, Q1 2010 p y y 6% 3% 4% 32% United Kingdom France 17% Germany Scandanavia Netherlands Spain Others 18% 20% Source: Venture Source, all sectors
  26. 26. Internet VC Funding Remains Stable European Internet Software and Services and E commerce Private  European Internet Software and Services and E‐commerce Private Placements1 8 Number of Deals Median Deal Size ($M) 60 7 50 n Deal Size ($m) 6 Nu 40 umber of D 5 4 30 Deals Median 3 20 2 10 1 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 Source: Capital IQ  1 Disclosed funding round size of more than $1m
  27. 27. IPO Markets Opening up Slowly… Forty‐three venture‐backed companies are currently filed for an  y p y 40 initial public offering with the SEC 35 European IPOs European IPOs 30 US IPOs 26 Q4 2009 25 Number of IPOs 25 20 18 16 15 11 12 N 9 8 10 6 6 5 3 3 2 3 1 1 1 1 Q1 2010 Q1 2010 0 0 0 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2007 2007 2010 Source: Venture Source, all sectors
  28. 28. …With Internet Companies Among Those  Having Gone Public or Planning to IPO a g Go e ub c o a g to O Yoox SpA – Online Fashion Retail Ocado Ltd. – Online Grocery & Delivery IPO December 2009 Raised €105m Looking at 2010 IPO Value at IPO €217m Planned Value at IPO €1.2bn
  29. 29. European Exit Volumes Begin to Increase...But  Deal Sizes Remain Low... ea S es e a o ... 70 Number of Deals Median Deal Size ($M) 300 60 250 dian Deal Size ($m) 50 Number of Deals 200 40 150 30 100 Med 20 10 50 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 Source: Capital IQ 1.  Median deal size excludes deals with no disclosed transaction value; data from all sectors, only private venture backed companies
  30. 30. ...But a Number of Recent Deals Point Toward a  Recovery  eco e y Sale – September 2009, $200m Sale – September 2009, $3bn Enterprise Value / Revenues = 5.7x Enterprise Value / Revenues = 3.2x S l O b 2009 $183 Sale – October 2009, $183m S l O t b 2009 $299 Sale – October 2009, $299m Enterprise Value / Revenues2 = 7.9x Enterprise Value / Revenues = 5.5x Sale – November 2009, $400m Sale – May 2010, $580m Enterprise Value / Revenues1 Enterprise Value / Revenues = 5.3x = 5 3x Enterprise Value / Revenues = 3.2x Enterprise Value / Revenues = 3 2x Source: GP Bullhound, Capital IQ 1.Unconfirmed revenues of $75m 2.Based on 2008 revenues of $23m
  31. 31. ... And Recent High Profile Internet Deals Point  Toward Renewed Investor Appetite in the Sector...  o a d e e ed esto ppet te t e Secto ... Private Placement  May 2009 Private Placement – May 2009 Private Placement  August 2009 Private Placement – August 2009 Investment valuing Facebook at $10bn Investment valuing Spotify at $250 million Private Placement – September 2009 Acquisition of Remaining Stake – April 2010 Investment valuing Twitter at ~$1bn Valuing company at $530 million Source: GP Bullhound, Capital IQ
  32. 32. Per Roman | per.roman@gpbullhound.com | +44 (0) 7736 858 450

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