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2020 Accel Euroscape: Decacorn Unleashed

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2020 has been a challenging year. Yet, amidst the various trials, widespread digital transformation has sparked several triumphs in SaaS. For instance, UiPath made history this summer when they became the first European Cloud Decacorn. Now we’re 10 months in, the question on everyone’s lips is what’s just happened and what’s coming next? In this keynote presentation, Philippe Botteri, Partner and Varun Purandare, VP at Accel will present original findings from Accel’s 2020 Euroscape. They'll explore the biggest trends in SaaS, deep dive into COVID's impacts on the ecosystem and share the region’s top 100 cloud companies.

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2020 Accel Euroscape: Decacorn Unleashed

  1. 1. SaaStock EMEA, October 13th, 2020 Philippe Botteri, Candice du Fretay, Varun Purandare 2020 Accel Euroscape DECACORN UNLEASHED
  2. 2. A new era for software: the rise of the giants Software companies > $100bn market capitalisation Introduction 2010 2020 $172bn $271bn $123bn $1,592bn $235bn $186bn $108bn $125bn $134bn $229bn $180bn 3 Companies $566bn market cap 8 Companies $2.7tn market cap 1 Note: As of January 1, 2010 and September 30, 2020 Source: Capital IQ
  3. 3. New cloud generation is coming... Introduction Note: As of January 1, 2010 and September 30, 2020 Source: Capital IQ 10 Companies 2010 8 Companies 16 Companies 49 Companies None Market Cap 1 Company 7 Companies 2020 75 Companies $100bn < & >$30bn >$10bn >$1bn 2
  4. 4. Historical Data Accel Estimate 2015 A 2019 A 2025 E US$275bn US$310bnTotal Software Cloud US$36bn US$101bn US$376bn US$477bn c. 50%+ c. 50%- c. US$900bn We anticipate cloud will overtake software by 2025 Cloud players estimated market shares: c. 17% c. 12% c. 10% c. 5% c. 5% Introduction ...and soon cloud will overtake software 3 Note: 2025 estimates assume market growth rates in line with historical growth rates Source: Accel analysis, Statista, Synergy Group
  5. 5. Europe is jumping into the race 1st European-born Cloud Decacorn July 2020 World’s Largest Ever Software Buyout August 2020 Origin: Bucharest, Romania Founders: Daniel Dines & Marius Tirca Series A: 2017 Rev. $400M+ Origin: Oslo, Norway CEO: Merete Hverven Owner: HG Capital Rev. $1.5B+ Introduction $10.2B $12.2B 4
  6. 6. Our global platform US EUROPE & ISRAEL INDIA Series A 2005 Seed 2009 Series A 2011 Series A 2017 Seed 2009 Seed 2011 5 Introduction
  7. 7. We love cloud globally 250+ companies $5bn+ invested $45B $30B $8B $40B $4B $8B $15B $10B Source: Capital IQ, market cap as of September 30, 2020 6 Introduction
  8. 8. Success can come from anywhere! Europe & Israel Accel Investments 2011-2015 2016-2020 Expanding fast in Europe & Israel Unicorns/IPOs 35 $740M 20 14 $149M 7 Number of new investments Capital invested (during period) Number of cities Success can come from anywhere! Not public Not public Not public 7 Introduction
  9. 9. Agenda Market Snapshot COVID Impact 2020 Accel Euroscape What’s Next? 2 3 4 1 8
  10. 10. Unstoppable: is the sky the limit? Market Snapshot Market cap of public cloud companies, USD trillions Public Cloud Index Sep 2019 Sep 2020 $1.7T $0.8T 0 100 200 300 400 500 600 700 800 900 1000 Dec, 13 Jun, 14 Dec, 14 Jun, 15 Dec, 15 Jun, 16 Dec, 16 Jun, 17 Dec, 17 Jun, 18 Dec, 18 Jun, 19 Dec, 19 Jun, 20 BVPNasdaq Emerging Cloud Index NASDAQ Index Sep, 20 +212% +725% c.$1 Trillion created in one year Unstoppable momentum? Note: As of September 2019 and September 2020 Source: Capital IQ 9 BVP Nasdaq Emerging Cloud Index NASDAQ Index +$0.9T
  11. 11. Revenue multiple breaking historical record Cloud Average EV / Forward Revenue Multiples 2005-2020 Average 6.6x Note: Selection of global cloud companies, as of September 30, 2020 Source: Capital IQ 0x 2x 4x 6x 8x 10x 12x 14x 16x 18x Jan, 05 Oct, 05 Jul, 06 Apr, 07 Jan, 08 Oct, 08 Jul, 09 Apr, 10 Jan, 11 Oct, 11 Jul, 12 Apr, 13 Jan, 14 Oct, 14 Jul, 15 Apr, 16 Jan, 17 Oct, 17 Jul, 18 Apr, 19 Jan, 20 Max: 17.1x Sep 2020 Min: 1.8x Dec 2008 Sep, 20 10 Market Snapshot
  12. 12. IPOs: Supersize me! $19bn $16bn $11bn $11bn $7bn $6bn $5bn $5bn $3bn $3bn $2bn $2bn $1bn $1bn $70bn $18bn $16bn $13bn $10bn $8bn $6bn $6bn $5bn $5bn $5bn $3bn $3bn $3bn Market Cap, USD billions Market Cap, USD billions 2019 Cloud IPOs 2020 Cloud IPOs (YTD) Note: Represents market cap at close of first day of listing. Includes direct listings Source: Keybank, Capital IQ 14 IPOs Average: $6bn 14 IPOs Average: $12bn EU/IL-born companies US-born companies 11 Market Snapshot
  13. 13. Twice as much capital raised in 2020 vs. 2019 2019 $2bn $4bn $2bn $1bn $1bn $1bn 2019 2019 2020 YTD IPO Secondary offering Convertible $1bn $1bn $1bn $1bn $1bn $1bn $1bn $2bn $1bn $1bn $1bn $1bn 2020 YTD2020 YTD $8bn $12bn $5bn $9bn $8bn $17bn Note: IPOs include primary and secondary issuance Source: Keybank, Pitchbook Market Snapshot 12
  14. 14. $95.5bn 10 companies Combined market cap Countries Growth: 2013-2020 +506% What about Europe? Unveiling the Accel Euroscape Index Note: As of September 30, 2020 Source: Capital IQ 1st IPO: Wix in 2013 13 Market Snapshot
  15. 15. 0 100 200 300 400 500 600 700 800 Dec, 13 Jun, 14 Dec, 14 Jun, 15 Dec, 15 Jun, 16 Dec, 16 Jun, 17 Dec, 17 Jun, 18 Dec, 18 Jun, 19 Dec, 19 Jun, 20 Accel Euroscape Index NASDAQ Index Accel Euroscape Index is outpacing the NASDAQ Source: Accel analysis, Capital IQ Sep, 20 +212% +506% 14 Market Snapshot
  16. 16. And the next generation is growing fast! $1B+ $2.5B+ $5B+ $10B+ 2019 2020 European Cloud Unicorns 16 companies 25 companies+56% Source: Accel analysis 15 Market Snapshot
  17. 17. Fuelled by very large rounds $165M Notable rounds 2016-2017 USD Millions Notable rounds 2019-2020 USD Millions $568M $300M $284M $268M $230M $110M $88M $75M $75M $413M $479M $400M $400M $381M $340M $253M $180M $180M $131M Source: Accel analysis, Crunchbase, Pitchbook, Company S-1 Filings Average: $103m Average: $330m Average: $231m Average: $400m Fuelled by very large rounds $165M Notable rounds 2016-2017 USD millions Notable rounds 2019-2020 USD millions $568M $300M $284M $268M $230M $110M $88M $75M $75M $413M $479M $400M $400M $381M $340M $253M $180M $180M $131M Source: Accel analysis, Crunchbase, Pitchbook, Company S-1 Filings Average: $103m Average: $330m Average: $231m Average: $400m 16 Market Snapshot
  18. 18. As VC cloud funding continues to catch-up Source: Accel analysis, Crunchbase, Pitchbook US VC cloud funding: c. $20B Europe close to 50% of the US market $7-7.5bn 2019 YTD 2020 YTD $9-9.5bn Investment in private cloud companies born in Europe and Israel 17 Market Snapshot
  19. 19. Agenda Market Snapshot 2020 Accel Euroscape What’s Next? 1 3 4 2 COVID Impact 18
  20. 20. Digital transformation: Shifting into 6th gear Note: As of September 30, 2020 Source: Capital IQ 10 biggest jumps in value = $446bn created in 9 months $134bn Market Cap $229bn Market Cap +$115bn +$84bn +$79bn +$40bn +$27bn +$16bn+$20bn+$20bn+$22bn+$23bn $125bn Market Cap $93bn Market Cap $40bn Market Cap $37bn Market Cap $42bn Market Cap $30bn Market Cap $31bn Market Cap $45bn Market Cap COVID Impact 19
  21. 21. Growth in cloud spending is at or below historical levels Enterprise Cloud spending QoQ change Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1% 9% 14% -3% -3% 10% 9% 7% 5% 13% 9% 20% 4% 8% 2017 2018 2019 2020 Source: Bain & Company 20 COVID Impact Q2 growth slightly below historical average of 10%
  22. 22. Private cloud companies: COVID proof? Median values for companies with $5M+ in 2019 ARR ARR Growth Gross New Bookings as a % of Starting ARR Gross Dollar Churn FCF Margin Blended CAC Ratio Europe & Israel US 40% 38% 53% 51% (26%) (21%) (9%) (15%) $1.25 $1.32 $1.11 $1.39 2020 Original Forecast 2020 Original Forecast 2019 2019 2019 2019 2019 2019 2020 Current Forecast 2020 Current Forecast 2020 YTD 2020 YTD 2019 2020 YTD Annualized 2019 2020 YTD Annualized 2020 YTD 2020 YTD 2020 Current Forecast 2020 Current Forecast 27% 20% 14% 14% 12.5% 13.4% 11.9% 13.3% Respondents: Europe & Israel: 53, US: 223; May-20 survey Source: Keybank SaaS Survey 21 COVID Impact
  23. 23. Covid Impact One of a kind crisis: navigating uncertainty Europe & Israel NO 51% YES 47% 2% NO RESPONSE US NO 63% YES 37% % of companies that have made reductions in workforce SaaS Survey 22 COVID Impact Respondents: Europe & Israel: 53, US: 223; May-20 survey Source: Keybank
  24. 24. Doctolib video 23 COVID Impact
  25. 25. UiPath Foundation video 24 COVID Impact
  26. 26. Agenda Market Snapshot 2020 Accel Euroscape What’s Next? 1 4 2 3 COVID Impact 25
  27. 27. 2020 Accel Euroscape Who? How? What’s New? 1,500+ • Market attractiveness • Differentiation • Technology • Team strength • Momentum (MRR, EEs) • Customer Reviews from G2 • COVID resilience • New payment/banking infrastructure category • Unicorns only in Champions League category 2020 Euroscape 26 EU & IL born SaaS Companies countries 20+
  28. 28. Accel Euroscape 2016 - 2020: Looking back Total financing Amount raised by Euroscape winners, USD billions Top 100 Champions Largest round raised Amount raised, USD millions 65 2016 2017 2018 2019 2020 YTD 88 265 568 300 14.1 2.5 2.5 2016 6.7 2020 YTD 7.4 27 2020 Euroscape 6x Source: Accel analysis, Pitchbook, Crunchbase
  29. 29. Euroscape 2016 - 2020: Global impact UnicornsJobs 73,300+ employees 25 Private Unicorns $60bn+ combined value 3,000 1,400 3,977 1,000 1,000 1,000 1,2001,2951,447 Companies with employees > 1,000 displayed 1,095 28 2020 Euroscape Source: Accel analysis, Linkedin, Pitchbook
  30. 30. 2020 Accel Euroscape: Champions League Unicorns, high growth, category-defining $48B $6.7B 12 9 $350M 42% Value Created Total Funding Cities Countries Avg. Funding LTM FTE Growth Source: Accel analysis, Linkedin, Pitchbook, Crunchbase 29 2020 Euroscape
  31. 31. 2020 Accel Euroscape: Champions League Unicorns, high growth, category-defining 30 2020 Euroscape Source: Accel analysis, Linkedin, Pitchbook, Crunchbase
  32. 32. 2020 Accel Euroscape: Champions League 31 2020 Euroscape $48B $6.7B 12 9 $350M 42% Value Created Total Funding Cities Countries Avg. Funding LTM FTE Growth Unicorns, high growth, category-defining Source: Accel analysis, Linkedin, Pitchbook, Crunchbase
  33. 33. Top 100 EU & Israel cloud companies with revenues above $1mn and valued at less than $1bn 2020 Accel Euroscape Source: Accel analysis, Euroscape Survey SALES / SUPPORT PROD. / COLLABORATION COMPLIANCEECOMMERCE / MARKETING FINANCE / HR / LEGAL VERTICALS FINANCE OTHER DATA / ANALYTICS AUTOMATION PAYMENTS / BANKING INFRA SECURITY DEVELOPERS / INFRASTRUCTURE 32 2020 Euroscape
  34. 34. 2020 Accel Euroscape: Success can come from anywhere $7.4B23,300 $74M 118% The Silicon Valley State of Mind Perm Oslo Copenhagen Stockholm Vienna Prague Wuerzburg Bucharest Istanbul Athens Sofia Munich St Gallen Madrid Barcelona Dublin Manchester London Ramillies Ghent Aarhus Stuttgart Paris ZurichLyon Chemnitz Bonn Cologne Berlin Tel Aviv Helsinki Lysaker Tallinn Riga Source: Accel analysis, Linkedin, Pitchbook, Crunchbase Total FundingEmployees 34 Cities Avg. Funding LTM FTE Growth 21 Countries 33 2020 Euroscape
  35. 35. 2020 Accel Euroscape: Where is the money going? Total financing eCommerce / Marketing Funding by category, USD millions Security Finance / HR / Legal Payments / Banking Infra Verticals Developers / Infrastructure Compliance Automation Productivity / Collaboration Data / Analytics Sales / Support Total Raised ($mn) • eCommerce / Marketing boosted by COVID • Security becoming pervasive • Data analytics still early but growing # of Cos. 13 12 13 10 10 11 5 7 6 9 4 34 2020 Euroscape Source: Accel analysis, Linkedin, Pitchbook, Crunchbase 2,500 1,875 1,250 625 0 1,372 977 909 850 706 668 458 416 399 344 308
  36. 36. 2020 Accel Euroscape: Customer centric Sales / Support Security Productivity / Collaboration eCommerce / Marketing Finance / HR / Legal Payments / Banking Infra Data / Analytics Dev / Infrastructure Automation 78 78 75 74 73 72 70 68 67 Note: Companies with more than 10 reviews Source: G2 33 EU1k Employees Euroscape 2020 72+118% 105% EU1k Employees Euroscape 2020 216%2x G2 Average Score G2 Average Review Growth Score by Category Score Review Growth 35 2020 Euroscape
  37. 37. 2020 Accel Euroscape: Demographics # of Employees 0-99 100-199 200-299 300-399 400+ 14 27 30 16 13 Capital Raised $0-25M $25-50M $50-100M $100-150M $150M+ 15 34 15 1322 16 Founding Country UK FRANCE GERMANY ISRAEL OTHER (17 COUNTRIES) 25 20 32 8 15 Category DATA / ANALYTICS PRODUCTIVITY / COLLABORATION ECOMMERCE / MARKETING SALES / SUPPORT SECURITY VERTICALS 7 9 6 4 12 10 13 10 5 13 11 PAYMENTS / BANKING INFRA COMPLIANCE FINANCE / HR / LEGAL DEV / INFRASTRUCTURE AUTOMATION 36 2020 Euroscape Source: Accel analysis, Linkedin, Pitchbook, Crunchbase, Company data Number of companies by category
  38. 38. How long does it take to be on the list? 13 20 #companies Year founded 2010 2011 2012 2013 2014 2015 2016 2017 2018 10 0 7 17 12 10 12 12 10 7 3 0 5 2010 Year founded 2011 2012 2013 2014 2015 10 # companies 8 2 3 1 2 2017 Median = 6 years Median = 9 years Year founded - Euroscape Year founded - Champions 37 2020 Euroscape Source: Accel analysis, Crunchbase
  39. 39. Agenda Market Snapshot 2020 Accel Euroscape What’s Next? 1 2 3 4 COVID Impact 38
  40. 40. 5 What’s next in cloud? 4 3 2 1 Work coming home Doctors now online Hyperautomation - Bots and citizen developers transforming the Enterprise Fintech stack moving to the cloud Cybercriminals feasting on COVID 39
  41. 41. Work coming home Doctors now online Hyperautomation - Bots and citizen developers transforming the Enterprise Fintech stack moving to the cloud Cybercriminals feasting on COVID 1 2 3 4 5 What’s next in cloud? 40
  42. 42. 1 3 4 5 2 What’s next in cloud? Work coming home Doctors now online Hyperautomation - Bots and citizen developers transforming the Enterprise Fintech stack moving to the cloud Cybercriminals feasting on COVID 41
  43. 43. 1 2 4 5 3 What’s next in cloud? Work coming home Doctors now online Hyperautomation - Bots and citizen developers transforming the Enterprise Fintech stack moving to the cloud Cybercriminals feasting on COVID 42
  44. 44. 1 2 3 5 4 What’s next in cloud? Work coming home Doctors now online Hyperautomation - Bots and citizen developers transforming the Enterprise Fintech stack moving to the cloud Cybercriminals feasting on COVID 43
  45. 45. 1 2 3 4 5 What’s next in cloud? Work coming home Doctors now online Hyperautomation - Bots and citizen developers transforming the Enterprise Fintech stack moving to the cloud Cybercriminals feasting on COVID 44
  46. 46. 45 Work coming home Source: World Economic Forum 50% of workers want to work from home 3+ days per week Workers adapting to the new normal Productivity during COVID-19 Key driversExamples of companies • Entire companies moving remote • Need to stay connected becoming even more critial • Physical events moving online How productive have you been during COVID-19? Slightly more 32% Considerably more 24% Considerably less 5% Slightly less 23% No change 18%
  47. 47. 46 Doctors now online Telehealth is here to stay Key drivers Likelihood of continuing to use telehealth Note: Responses of “I don’t know” excluded from survey data Source: Bain US Healthcare Trends 2020 Purpose of telehealth Primary care physician Medical oncologist Endocrinologist General surgeon Non interventional cardiologist Orthopaedic surgeon Percentage of respondents likely to continue using telehealth 0% 20% 40% 60% 80% 100% Neurosurgeon Cardiac surgeon 18% Substitute for in-person care 82% Complement to in-person care • Healthcare systems under immense pressure - needs productivity boost • Telemedicine regulation changed overnight • Patients used to video conferencing • Doctors and hospitals ready to adopt new technologies after lagging historical investments in technology Less than now Same More than now
  48. 48. 47 Hyperautomation - Bots and citizen developers transforming the Enterprise Low-Code dev platform market Predictions 2017 $0B $12.5B $25B 2018 2019 2020 2021 2022 By 2023, # of active citizen developers will be 4x # of professional developers Source: Forrester, Gartner, Statista RPA market $6B $12B “One robot for every person” 2018 2 3 4 5 7 10 2019 2020 2021 2022 2023 • Digital transformation initiatives moving processes online • Data availability enabling digitisation of complex processes • Growth of best of breed cloud services pushing companies to automate data flow 4 4 7 10 15 21 $0B
  49. 49. Fintech stack moving to the cloud 48 Status quo Banking-as-a-Service Stack Key drivers Examples of companies Source: Pymnts, 11:FS • Modern microservices and APIs making monolithic banking and payment infrastructure obsolete • Growing number of cloud companies ready to add financial services to complement their offering • New regulations opening doors to innovation (e.g., Open Banking) of bank IT costs spent on maintenance 75% Time it takes for incumbents to launch a new service 6-12months User interface Compliance Risk management Financial crime Payments Customer operations Products Treasury General ledger
  50. 50. Cybercriminals feasting on Covid 49 COVID-themed attacks Top 5 cybersecurity CIO investment areas (since COVID) Key drivers 20% MFA Week 22Week 18Week 14Week 10Week 6 0mn 3mn 6mn Endpoint device protections Anti-phishing tools End-user education VPN 17% 16% 14% 12% Source: Microsoft “Cybercriminals are developing and boosting their attacks at an alarming pace, exploiting the fear and uncertainty caused by the unstable social and economic situation created by COVID 19”, Jurgen Stock, INTERPOL Secretary General • Increasing number of attacks during COVID making need for security more acute • Distributed workforce creating new vulnerabilities, pushing companies to zero trust architecture and data encryption • Need for new developer security tools (shift left) as software development becomes ubiquitous in the enterprise
  51. 51. Thank you
  52. 52. Legal Disclosures This document has been prepared by Accel Partners Management LLP (hereinafter Accel). Accel is a limited liability partnership incorporated in England and Wales with registered number OC303424, having its registered office at 1 New Burlington Place, London, W1S 2HR. Accel is authorised and regulated by the Financial Conduct Authority (the FCA) and is entered on the FCA register with registration number 222503. This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This document forms part of a presentation to persons who have been invited to attend such presentation and must be read and considered in the context of that presentation only. This document does not contain personalised recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of Accel and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of Accel. 

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