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SaaS Wars: Europe Awakens. The Accel Euroscape 2016

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Software is eating the world, and Software-as-a-Service (SaaS) is eating software. But where does Europe stand on the SaaS front? This presentation gives an overview of the SaaS landscape in Europe and Israel and identifies the top 100 most promising SaaS companies in the region.

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SaaS Wars: Europe Awakens. The Accel Euroscape 2016

  1. 1. 1 SaaS Wars: Europe Awakens Europe & Israel 100  most promising SaaS companies
  2. 2. 2 Subtitle
  3. 3. 3Source: Accel Global footprint
  4. 4. Source: Accel 4 We love SaaS 2000 Today
  5. 5. 5 My Background $11B(1) Source: Accel
  6. 6. Source: Gartner, Statista, Forrester Research, AMR 6 SaaS is eating Software Reflecting a shift from legacy IT services to cloud-based services $11B(1) Global Software and SaaS revenues ($B) Salesforce launch Peak in 2014 1999 2001 2003 2005 2007 2009 2011 2013 2015 325 335 358351348 338 315 296290 280275271 255 245 230 210 199 180 106 87 72 56 4341 191210874221110 -$10B +$19B
  7. 7. Source: Gartner, Statista, Forrester Research 7 Faster adoption curve $11B(1) Years to reach $5 Billion in revenue Salesforce Oracle SAP 26 2019 15
  8. 8. 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x Jan 05 Jun 05 Dec05 M ay06 Nov06 Apr07 Oct07 M ar08 Sep 08 Feb 09 Aug 09 Jan 10 Jul10 Dec10 Jun 11 Dec11 M ay12 Nov12 Apr13 Oct13 M ar14 Sep 14 Feb 15 Aug 15 Jan 16 Jun 16 Source: Pacific Rest Securities | Capital IQ; depicts average EV / NTM revenue consensus estimate valuations of the SaaS universe on a weekly basis (Based on price at end of week) 8 Even though multiples went down… SaaS EV / Forward 12-Month Revenue Multiples Since 2005 Note: SaaS universe index is equally-weighted and includes the following (when each was publicly traded): ALRM, AMBR, APPF, ATHN, BCOV, BNFT, BOX, CSOD, CTCT, CVT, DMAN, DWRE, ECOM, EOPN, ET, FIVN, FLTX, HUBS, INST, KNXA, LOGM, MB, MIME, MKTG, MKTO, MRIN, N, NEWR, NOW, OMTR, PFWD, QTWO, RALY, RNG, RNOW, RP, SFSF, SHOP, SLRY, SPSC, SQI, TLEO, TRAK, TWOU, TXTR, VEEV, WDAY, WK, XTLY, YDLE and ZEN 2011 Average 4.9x 2012 Average 5.5x 2013 Average 7.3x 2014 Average 6.9x 2015 Average 5.6x Average Since Jan 2005 4.9x High Jan 17, 2014 9.4x
  9. 9. 50 60 70 80 90 100 110 120 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Source: Centaur Partners, Capital IQ 9 …SaaS market is more resilient than other tech segments Note: IT Security Index: AVG, SYMC, CHKP, FTNT, PANW, FIRE, IMPV, VDSI, PFPT, FEYE, QLYS SaaS Horizontal Index: CRM, N, ULTI, JCOM, TRAK, APPF, BCOV, DWRE, LOGM, CTCT, CSOD, LPSN, MKTG, VOCS, IL, TNGO, SPSC, SQI, ZIXI, NOW, WDAY, LOC, FLTX, QLYS, MKTO, MRIN, NEWR, CARB, TNET, CALD, BOX, PCTY, BV, ZEN, RNG, CVT, FIVN, ECOM, AMBR, SAAS, UP, XTLY SaaS Vertical Index: ATHN, MODN, VEEV, GWRE, RP, FLTX, ELLI, MDSO Big Data Index: EMC, TDC, INFA, MSTR, SPLK, DWCH, ATTUF, NTAP, DATA, FIO, FALC IT Infrastructure Index: VMW, CTXS, NTAP, CA, RHT, SWI, OTEX, CVLT, CPWR, QLIK, PEGA, MVSN, PRGS, JIVE, NTCT, BLOX, GUID, MGIC, FALC, FIO, GIMO, SSNI, CYNI SaaS (Vertical) 6% NASDAQ 3% SaaS (Horizontal) 2% IT Infrastructure 16% IT Security 19% Big Data 34%
  10. 10. Source: Gartner, Statista, Forrester Research 10 Europe has traditionally lagged behind the US in IPO… $11B(1) Number of SaaS IPOs Add logos US Europe & Israel 4 58 Combined Market Cap: $137 B Company IPO Year Market Cap 2010 $2.9 B 2013 $1.7 B 2014 $3.0 B 2015 $1.0 B $8.6 B
  11. 11. Source: CB Insight, PitchBook, Crunchbase 11 … and in VC funding Total SaaS VC funding 2015 Top SaaS companies in terms of VC funding $522M $540M $559M $583M $631M $1107M $60M $75M $84M $87M $91M $110M $111M $116M $117M $7B $0.9B
  12. 12. 12 Europe Awakens
  13. 13. Source: Mattermark 13 The number of SaaS companies created is exploding… Number of SaaS companies created in Europe x4 2007-2009 2013-2015 701 179
  14. 14. Source: Crunchbase 14 … as well as SaaS funding Funding for SaaS companies created in Europe Base 100 x2 2007-2009 2013-2015 220 100
  15. 15. Source: Accel 15 The next generation 1,000+ SaaS Companies 12+ countries • Market attractiveness • Differentiation • Team • Momentum (MRR, employees)
  16. 16. 16 Accel Euroscape 2016 Marketing/Content Management Sales/Lead Gen/Support Finance Productivity / Collaboration Developers /
 Infrastructure Human Resources Vertical Data / Analytics RetailFinanceHealthOther 28 companies raised $30M + $2.5B in Total Funding $0.8B in 2015
  17. 17. 17 UK, France and Israel are the top 3 represented countries (1) Only including countries with > 1 SaaS company in the ranking • UK, France and Israel are the top 3 represented country in our ranking with 20 companies each, far far ahead of Germany which has 8 companies • The rest of Europe is very fragmented 4 4 20 19 3 4 X 4 73 2 Number of SaaS companies in Accel Top 100 3 18
  18. 18. 18 Marketing is dominating, Vertical SaaS is emerging Split by category Europe vs. US % Marketing/Content mgmt Sales/Lead Gen/Support Finance HR Vertical Productivity/Collaboration `Data/Analytics Developers/Infrastructure 18 8 9 23 10 7 12 13 14 10 5 17 12 4 16 22 Accel Euroscape US Top 300 SaaS companies Marketing is dominating, Vertical SaaS is emerging • Marketing is the leading SaaS industry in Europe, followed by Sales/Lead Gen Support and Developers/ Infrastructure • Europe is underrepresented in vertical SaaS solutions
  19. 19. 19 Average funding in Europe is 30-40% lower than in the US Source: Accel, Crunchbase, Mattermark Average total funding ($M) Average ARR ($M) Seed Series A Series B Late Stage 113 37 19 5 72 21 11 2 Accel Euroscape Top 300 US companies 3 4 8 26 +43% +43% +36% +60%
  20. 20. 20 Building European champions B2B Global Platforms B2C Local Champions Success Criteria: Examples: 10x dominance in a specific geography “Local Winner takes all” Success Criteria: Examples: US footprint “US Champion”
  21. 21. 21 Cristal balling • AI & ML technologies coming to age (data, algorithms, computer power) • Potential to reinvent existing workflow and make them smart • Examples: Shift Technology, Slack BOTs AI & Machine learning API & Infrastructure Vertical Apps • APIs are now ubiquitous • Global competition pushed developers to build faster and concentrate on core product • Examples: Algolia, Intercom • Vertical Apps have a slower refresh cycle but legacy are getting old • Few winners yet, mobile and AI opening new perspectives • Examples: Doctolib, Metapack
  22. 22. 22 Contact: saas@accel.com
  23. 23. 23 Disclaimer 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, SW1. Accel is authorised and regulated by the Financial Services Authority (the "FSA") and is entered on the FSA 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 personalized 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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