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Kaedan Capital: Seed Investment Trends Report for 2016-2017

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Kaedan Capital's annual deal-flow report. This report is part of our internal, annual deal-flow analysis. We are conducting this report to track trends in average funding ask, venture's areas of operation and more for self-improvement.
This year, we have decided to share some of the main insights from our internal report.
Our hope is that this report will provide some perspective for any of you who are now looking for funding or to start a venture. Specifically, the report might help you to better understand the funding environment and trends in the market in the domains you are planning to operate in. All from the eyes of a venture capital investor.
Kaedan Capital is a private investment group active for over a decade. We are entrepreneur-centric investors with co-founder mentality, focused on Israeli related, seed to early stage ventures in diverse technology areas

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Kaedan Capital: Seed Investment Trends Report for 2016-2017

  1. 1. KAEDAN SEED INVESTMENT TRENDS IN ISRAEL: H2-2016 TO H2-2017 www.kaedan.com/blog October 2017
  2. 2. KAEDAN Kaedan Capital is a private investment group active for over a decade. We are entrepreneur- centric investors with co-founder mentality, focused on Israeli related, seed to early stage ventures in diverse technology areas.
  3. 3. KAEDAN 1427 NEW COMPANIES FOUNDED BETWEEN JUNE 2016 - JUNE 2017 THE ISRAELI SEED MARKET GEEKTIME POWERED BY INTERNET & MOBILE MEDIA SOFTWARE CLEAN-TECH HARDWARE TELECOM & COMMUNICATION UNDISCLOSED
  4. 4. KAEDAN NEW COMPANIES (14% INCREASE OVER JUNE 2015-JUNE 2016)1427 SEED ROUNDS (ROUND SIZE UP TO $3M)215 INCREASE IN NUMBER OF SEED ROUNDS VS. JUNE 2015-JUNE 201670% AVERAGE SEED ROUND$1.52M 2 YEARS AVERAGE COMPANY STAGE WHEN IT RAISED ITS SEED ROUND THE ISRAELI SEED MARKET KAEDAN GEEKTIME POWERED BY June 2016-June 2017
  5. 5. KAEDAN A VC FUNNEL FROM THE INSIDE We review 800 business opportunities/year • Number of monthly incoming investment opportunities • 90% similar flow year over year • Hard to initiate interest when starting a fundraising process during the holiday seasons. On the flip side, you might rise above the noise during these slow months. * We don’t see all deals in the market * This report is based on deals we’ve evaluated between June 2016-June 2017 Multiple meetings (48)20% 800 Business summaries 30% First meeting (240) January April July October 0
  6. 6. KAEDAN A fintech/marketing-tech/e-commerce, mobile first solution, with a pilot in Israel, targeting SMBs in the US market, @ Pre-seed stage, looking for $1.5M THE TYPICAL ISRAELI SEED PITCH WE HEARD IN THE PAST YEAR
  7. 7. KAEDAN VENTURE’S AVERAGE FUNDING ASK It’s A Founders Market • Proliferation of funding options: more accelerators, angels, micro-funds, OCS, ICOs • Growth in free capital available for investment continues to translate into higher average seed rounds • Israeli seed numbers getting closer to the US Growth in avg. ask for seed stage 2014 2015 2016 2017 1,500,000 1,125,000 750,000 375,000 0
  8. 8. KAEDAN OUR DEFINITION: Pre-seed = partial team to core team at the idea stage / POC Seed = core team with an MVP Post seed = core team, first product and initial results VENTURE’S AVERAGE STAGE Entrepreneurs raise at an earlier stage, yet they ask for more. Although we’ve seen more companies at the pre-seed stage in the past year, the average funding ask increased 2016-2017 breakdown SEED 45% PRE-SEED 52% POST SEED 3%
  9. 9. KAEDAN PLATFORM Clear software dominance; Mobile growth leveled up with non-mobile software in the last couple of years; Israeli entrepreneurs caught up on the Android mobile OS importance after years of iOS preference Go to platform HARDWARE 10% SOFTWARE 90% WEB/SAAS 47% MOBILE (SDK/APP) 53% ANDROID 45% IOS 55%
  10. 10. KAEDAN BUSINESS VS. CONSUMER Israeli founders still predominantly focused on B2B as opposed to B2C in the US; Despite G2M & monetization challenges of SMBs, most ventures focus on this segment Following a consumer hype between 2012-2015, fueled by the app economy, we’ve seen a decline in portion of B2C from 41% in 2015 to 31% last year B2C 31% B2B2C B2B 16% 53% ENTERPRISE SMBS 31% 69% KAEDAN
  11. 11. KAEDAN • Indirectly: Lenovo (Canaan Partners), Alibaba (JVP), Baidu (Carmel), Tencent (Singulariteam)* • Directly: Baidu (Taboola), Alibaba (Visualead), Ping An (eToro) • Via dedicated funds: Emerge, CE Ventures The growth in the amount of Chinese capital coming into market in recent years hasn’t led to more founders looking at Asia Only 5% of ventures relate to it as a target market PRIMARY TARGET MARKET Are Israeli founders missing the Asian growth story? ASIA 5% EUROPE US 10% 85% *https://www.themarker.com/technation/1.2659993
  12. 12. KAEDAN DOMAINS AND MORE….. * % Change vs.previous 12 months AND MORE... * -50% 9% AD-TECH & MARKETING-TECH * +260% * -80% * -85% OTHER 8% FINTECH 7% GAMING 8% ECOMMERCE 68% +400% AR/VR +250% AI Bots Shipping Security +30% E-health Automotive Real-estate +100% Insure-tech Transportation +100% Drones Smart-cities Ag-tech Customer Support Developer Tools Sport-tech Communication Marketplaces Social Networks -50% Video Art Logistics Ed-tech -30% Travel -50% HR Content -20% IOT CRM Entertainment Cloud Sales tools Events -60% Photos Search Declining Unchanged Growing
  13. 13. KAEDAN Inspection & Monitoring Mission Planning Data Analytics HardwareSecurityCounter Drones Navigation Sense&Avoid Insurance Autonomous Privacy & Safety are a growing concern in this space OPPORTUNITIES Vertical solutions are still limited in potential; hardware is challenging given DJI dominance; Counter drones niche is becoming crowded RISKS DRONES The height represents the number of ventures we’ve seen in each sub-domain
  14. 14. KAEDAN Search Health Fitness Games e-commerce AR/VR UGC enablement; applications for professional markets; hands-free interfaces; focus shifts to AR/MR Slower than expected VR consumer adoption; requires significant capital to keep head above the water; no “killer app” as of yet OPPORTUNITIES RISKS Gestures Tracking Hardware Content Environment creation Platforms Marketing Social ProcessingInfrastructure
  15. 15. KAEDAN FINTECH Regulate / help organize the fast growing crypto & blockchain ecosystem; solutions for the unbanked markets Large financial institutions move slowly; these firms are busy audience using legacy IT systems OPPORTUNITIES RISKS ICOs mania - Skipping traditional VCs International Trade Compliance Infrastructure Payments Trading systems Crypto- Currencies Robo- Advisors Crowdfunding & Alternative Financing Insurance Cyber Auto, Aviation Health, Life, Businesses Data analytics, Claim handling
  16. 16. KAEDAN AUTOMOTIVE Utilizing sensory advancements (sound, vision) for in-vehicle technologies, telematics, HMI, V2X; Cyber security; Aftermarket services suitable for the electric & autonomous automotive future; new car insurance models Long sale cycles (OEMs + Car manufacturers), extremely long release cycles, making every experiment an expensive one; Competing with tier 1 companies that take over technologies early on OPPORTUNITIES RISKS Parking Route & Traffic Optimization Safety & Maintenance Data Analytics Sensors/ Hardware Autonomous Electric Drivers Network Cyber Security
  17. 17. KAEDAN AI / DEEP & MACHINE LEARNING Data (+ network effect) is still KING; Automate expensive recurring processes (vertical application) Deep/Machine Learning infrastructure solutions will be commoditized by the giants (Google, Amazon, etc) OPPORTUNITIES RISKS Applications using AI Search Automotive Marketing, Sales & Design Customer Service/ Support (bots) Data Analytics Smart City Security Law & Education Health Underlying tech in AI Computer Vision NLP/NLU
  18. 18. KAEDAN E-COMMERCE International operations & logistics (e.g. shipping, crossborder); automatic warehousing management Building a feature; market ruled by a few giants OPPORTUNITIES RISKS Product Visualization Data Analytics Tools for Sellers Product Recommendations/ Placement Cross- border Conversion uplift tools Price Comparison Social Commerce Giftings
  19. 19. KAEDAN MARKETING & ADVERTISING TECHNOLOGIES Offline-online. Tie online marketing with offline actions and vice versa Funding: Lack of investors' appetite for ad- tech due to small/lack of exits, consolidation, Google & FB OPPORTUNITIES RISKS Lead management Content marketing Mobile branding & presence Campaign management & optimization Engagement & re-engagement tools Influencer marketing Referral marketing Ad- blockingCustomer success And more: social marking, events marketing, attribution, analytics……
  20. 20. KAEDAN www.kaedan.com | @kaedancapital | contact@kaedan.com THANKYOU The design of this presentation was contributed by Blackboard Studios Creating videos, business presentations & marketing materials for startups http://blackboardvfx.com/

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