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Europe and Israel 1Q16 Venture Capital Deals Done

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A comprehensive review of Venture Capital investment trends in Europe and Israel in 1Q16

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Europe and Israel 1Q16 Venture Capital Deals Done

  1. 1. Venture Capital in Europe & Israel Venture Investment Data: First Quarter, 2016 Prepared by Gil Dibner The London Shard Tallest building in Western Europe, at 306 m (1,004 ft) blog
  2. 2. The data • The data in this report consists entirely of data I’ve gathered manually based on publically available, free sources • No paid data sources or API calls were harmed in the making of this dataset, every investment was manually classified • This allows analysis of some aspects of the data I consider important – aspects that don’t appear in other data sources • Seed investment is still under-reported, but I got a bit better at capturing it in the fourth quarter. Rounds smaller than $500K are generally excluded from this analysis • The analysis is limited to ICT categories and excludes life sciences • The analysis excludes Turkey and FSU countries • I’m converting all currencies into USD using monthly average exchange rates 2@gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
  3. 3. Quarterly pace of venture investment • In 1Q16, Europe & Israel saw $3.751 billion flowing into 463 venture transactions • This set a new quarterly record for both numbers • These numbers, and the rest of this deck, do not reflect the $1B in debt raised by Spotify in March 3 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1,703 1,916 2,873 3,139 3,248 2,856 3,751 122 204 270 271 286 357 463 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0 50 100 150 200 250 300 350 400 450 500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel Invested amount (US $M) Number of investments
  4. 4. Monthly pace of venture investment • Most of the increase was concentrated in January, which was a record-breaking month with nearly $1.7 invested across 164 investments • February and March were more in line with historical averages, with both up slightly YoY @gdibner blog: yankeesabralimey 4Syndicate for European & Israeli Enterprise Companies 905 971 997 791 787 1,561 1,517 568 1,164 1,083 1,059 714 1,661 1,052 1,038 92 75 103 78 95 98 119 65 102 111 124 122 164 149 150 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2015 2016 Numberofinvestments VC Investments in Europe & Israel, January 2015 - March 2016 Invested amount (US $M) Number of investments
  5. 5. Mega-rounds skew the investment totals • This analysis breaks down VC investments into brackets by size: • Seed (less than $2M) • Early venture ($2-8M) • Venture ($8-20M) • Growth ($20-100M) • Mega ($100M+) • Four mega-rounds took place in Europe this quarter – all of them consumer-oriented businesses in the UK: • Skyscanner, a UK-based travel company, raised $192M in January • Deezer, a French music company, raised $109M in January • MindMaze, a Switzerland-based VR company, raised $100M in February • FutureFinance, a Irish financial services company, raised $170M in March • Even adjusting for mega-rounds, 1Q16 is a record-breaking quarter 5 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 248 349 285 354 368 507 602345 312 556 716 567 559 731 539 935 1,154 813 1,513 1,187 1,669 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 AmountInvested(US$M) Pace of VC Investment in Europe and Israel Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
  6. 6. Strong year-over-year growth • 1Q16 total investment volume in Europe & Israel was up 29% over 1Q16 (excluding seed deals, where data is more spotty) • Early venture volume grew by 111% - more than doubling • Venture volume grew by 31% • Growth volume grew by 45% • Mega round volume dropped by 25% 6 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 285 602 556 731 1,154 1,669 766 571 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Qtr1 Qtr1 2015 2016 TotalVCinvestment(US$M) VC investment volume in Europe and Israelby bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  7. 7. Number of investments, by bracket • Excluding seed deals, the total number of VC investments per quarter was 262 in 1Q16, 18% higher than 4Q15 • This growth was spread evenly across all brackets 7 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 60 83 77 85 93 139 15330 26 42 62 44 46 61 13 26 33 26 38 35 45 3 1 6 6 4 3 4 0 50 100 150 200 250 300 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 NumberofVCinvestments VC investment volume in Europe and Israelby bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  8. 8. Corporate VC activity, by bracket • Excluding seed deals, the total number of corporate VC investments was 48 in 1Q16, exactly double the number of corporate VC investments in 1Q15 • Once again, corporate VC activity in Europe & Israel hit the highest level since this data set was started 8 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 6 4 5 16 7 22 19 4 3 9 12 7 12 6 4 4 7 8 7 7 20 3 1 3 0 10 20 30 40 50 60 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 NumberofVCinvestments Corporate VC investment volume in Europe and Israel by bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  9. 9. Corporate VC activity, by country • During the first quarter of 2016, Israel saw the highest number of corporate VC investments, with 19 • The UK saw 11 corporate VC investments during that period • Ten other countries saw corporate VC activity across Europe, but at much lower levels • Corporate VCs participated in three mega rounds 9 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 5 5 1 1 1 1 1 2 1 1 3 1 1 1 11 4 1 1 1 1 1 1 1 1 0 2 4 6 8 10 12 14 16 18 20 Israel UK France Finland Sweden Switzerland Germany Iceland Portugal Denmark Spain Belgium Numberofinvestments Number of corporate VC investments in Europe and Israelby bracket (1Q16) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  10. 10. Average round size • Previously, I presented this broken down by bracket, but I think the data is more meaningful when taken in aggregate. • This average excludes seed rounds and mega rounds, so it reflects all rounds done in Europe & Israel between $2M and $100M • From February to June 2015, average round sizes across all venture rounds were hovering between $10M and $12M • The third quarter saw consistently higher average round sizes – between $13M and $14.5M on average • In the fourth quarter, however, the trend reversed itself, with average round sizes dropping to $11M in October, $10.5M in November, and $9.2M in December • 1Q16 was mixed: January saw a return to the large average round sizes of 3Q15, but February & March saw a return to the recent trend 10 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 11.1 17.6 6.8 11.7 11.3 12.7 15.8 11.2 11.9 11.1 10.1 11.4 13.9 13.2 14.6 11.1 10.5 9.2 13.4 11.1 9.9 4 6 8 10 12 14 16 18 20 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 AmountInvested(US$M) Average investment size in Europe and Israel (Round sizes of 2-100M)
  11. 11. Total venture investment by country, 1Q 2016 • The UK again took the top spot in 1Q15 with over over $1B in total capital invested • Israel took second place with just over $960M in venture capital investment • France with $392M in VC investment jumped ahead of Germany which took fourth place with $333M 11 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1,084 963 392 333 203 141 140 107 81 61 45 32 29 25 25 22 20 17 11 7 3 3 2 2 1 UK Israel France Germany Ireland Switzerland Sweden Finland Portugal Denmark Serbia Spain Belgium Italy Poland Luxembourg Iceland Netherlands Austria Estonia Latvia Norway Albania Greece Romania 0 200 400 600 800 1,000 1,200 Total VCinvestmentvolume by country, 1Q16 (US $M)
  12. 12. Total venture investment by country, 3Q14 to 1Q16 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • In a reversal from last quarter, Investment volumes increased in all of the top five markets except Germany, which retained its third place ranking 12 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 315 567 543 475 628 699 963 369 267 719 437 621 444 892 180 284 389 209 379 341 333 29 163 118 232 279 225 283 74 123 89 112 140 84 140 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 0 200 400 600 800 1000 1200 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 1Q16 (top 5 countries, excluding mega-rounds) Israel UK Germany France Sweden
  13. 13. Total venture investment by country, 3Q14 to 1Q16 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • The “second five” countries for VC investment were Finland, Denmark, Spain, Ireland, and the Netherlands • Note that in recent quarters, investment trends across these countries have been whipsawing intensely • In 1Q16, all countries except Finland saw a decline in investment volume compared to 4Q15 13 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 0 20 40 60 80 100 120 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 1Q16 (countries ranked 6-10, excluding mega-rounds) Spain Finland Denmark Netherlands Ireland
  14. 14. Average venture round sizes, by region • Until this quarter, the data had been generally supporting the idea that average round sizes across Europe were converging • This quarter, the data does not support this conclusion – with round sizes increasingly divergent across countries 14 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Benelux, 4.5 Benelux, 5.6 DACH, 12.5 DACH, 10.4 France, 9.2 France, 6.7 Iberia, 9.4 Iberia, 11.9Israel, 11.5 Israel, 16.1 Nordic, 8.0 Nordic, 8.1 UK & Ireland, 11.2 UK & Ireland, 13.9 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Qtr4 Qtr1 2015 2016 Averageroundsize(US$M) Average investment size in Europe and Israel(rounds of $2-100M)
  15. 15. Total venture investment by region, 1Q16 • When VC investments across Europe are aggregated into regions, UK & Ireland, Israel, DACH, France, and the Nordics are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments, but the volumes are still low 15 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies UK & Ireland, 1,287.5, 34% Israel, 963.0, 26% DACH, 485.3, 13% France, 392.3, 10% Nordic, 341.7, 9% Iberia, 113.5, 3% South. Eur., 74.0, 2% Benelux, 67.9, 2% East. Eur., 26.0, 1% Total VC investment by region, 1Q16
  16. 16. Rounds by bracket & region • To get a better sense of deal volume, this analysis excludes seed deals which are often poorly reported • Excluding seed deals, the UK led in the number of announced deals, with 66 investments announced • Israel took second place with 59 • The Nordics & DACH tied for third place with 37 deals each • France reported 36 16 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 34 26 27 23 24 7 6 3 3 16 16 6 7 10 3 1 1 14 17 4 6 1 2 1 2 1 1 0 10 20 30 40 50 60 70 UK & Ireland Israel Nordic DACH France Benelux Iberia South. Eur. East. Eur. Numberofinvestments Number of investments in Europe and Israelby bracket, 1Q 2016 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  17. 17. Participation rate of US VC firms, by bracket • Year to date, US VC firms participated in 10% of the venture rounds in Europe; down from 14% in 2015 • US VCs participated in only 1% of seed rounds, 8% of early venture rounds, 21% of venture rounds, and 38% of growth rounds • In a marked change from the past, US VCs did not participate in any of Europe’s four mega-rounds in 1Q16 17 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1% 8% 21% 38% 99% 92% 79% 62% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Seed (.5-2) Early Venture (2-8) Venture (8-20) Growth (20-100) Mega (>100) Percentageofrounds Did US VC firms participate in European VC rounds? (1Q16) No Yes
  18. 18. US VC firm participation hits a new low • Excluding seed rounds, US VC firm participation in European & Israeli venture rounds dropped in 1Q16 to 16%, down from 17% in 4Q • In fact, 1Q16 saw the lowest US VC participation rate since I started tracking the data in 3Q14 18 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 16% 24% 20% 22% 21% 17% 16% 84% 76% 80% 78% 79% 83% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 PercentageofRounds Did US VC firms participate in European VC rounds? (3Q14-1Q16) No Yes
  19. 19. Participation of US VC firms by country • In 1Q16, US VCs firms were active in 11 different European countries • US VC firms were most active in Israel, where they participated in 16 investment rounds out of 71 (23%) • The UK saw 10 investments with US VC participation out of 91 total rounds (11%) • Germany saw 5 investments with US VC participation 19 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 16 10 5 2 2 2 2 2 1 1 10 10 20 30 40 50 60 70 80 90 100 Israel UK Germany France Sweden Finland Ireland Portugal Switzerland Poland Estonia NumberofVCinvestments In which countries are US VCs most active? 1Q, 2016 No US VC involved US VC involved
  20. 20. Participation of US VC firms by country • This chart shows US VC activity within Europe throughout 2015 and 1Q16 • The overwhelming bulk of US VC activity is in Israel, the UK & Ireland, DACH, and the Nordics 20 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Israel, 12 Israel, 14 Israel, 14 Israel, 14 Israel, 16 UK & Ireland, 10 UK & Ireland, 13 UK & Ireland, 9 UK & Ireland, 8 UK & Ireland, 12 DACH, 8 DACH, 6 DACH, 4 DACH, 9 DACH, 6Nordic, 2 Nordic, 3 Nordic, 5 Nordic, 5 Nordic, 5 Iberia, 3 Iberia, 4 Iberia, 3 Iberia, 2 Benelux, 5 France, 3 France, 2 France, 2 East. Eur., 2 South. Eur., 2 0 5 10 15 20 25 30 35 40 45 50 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2015 2016 NumberofVCinvestments Investments with US VC participation
  21. 21. Dimension Categories Explanation/Example 1. Target market Consumer, SMB, Enterprise, Government, Telecom, OEM What sort of customer does the company target? 2. Vertical market Adtech, Communications, Data, Development, Durables, Education, Electronics, Employment, Energy, Fashion, Financial, Food, Gaming, Health, HMI, Industrial, Infrastructure, Lifestyle, Logistics, Marketing, Media, Productivity, Real Estate, Security, Sports, Storage, Transportation, Travel, Water What type of problem does the company solve? 3. Business model Commerce, Components, Content, Marketplace, SaaS, Semiconductors, Services, Software, Systems, How does the company make money? What are customers paying for? Segment descriptor Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers Three-dimensional approach to sector mapping
  22. 22. • Excluding mega-rounds, investment activity increased in both consumer and enterprise in 1Q compared with 4Q • Enterprise-oriented investments hit a new high of $1.6B in 1Q16 22 @gdibner blog: yankeesabralimey What target markets are attracting the most VC investment in Europe & Israel? Syndicate for European & Israeli Enterprise Companies 475 595 980 850 1,177 930 1,078 494 798 953 814 907 1,112 1,678 78 133 121 153 275 135 224 78 114 47 106 182 150 166 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 TotalVCinvestments(US$M) European & Israeliventure financing by target market 3Q14 to 1Q16 (excluding mega-rounds, US $M) Government Telecom OEM SMB Enterprise Consumer
  23. 23. • When Israel is excluded from the sample, 53% of all VC dollars in Europe went to consumer-oriented companies • OEM-oriented companies continued to rise slightly in importance, accounting for 6% of all VC dollars in Europe 23 @gdibner blog: yankeesabralimey Consumer investment leads Europe Syndicate for European & Israeli Enterprise Companies 62% 36% 56% 63% 62% 57% 53% 18% 49% 34% 22% 24% 31% 35% 6% 10% 4% 12% 8% 6% 5% 5% 4% 2% 4% 5% 6%6%8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 European venture financing by target market 3Q14 to 1Q16 (excluding Israel, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  24. 24. • When the sample set is limited to rounds under $20M, the ratio of consumer to enterprise investments shifted significantly • Early-stage investors favored enterprise and SMB • Consumer investments as a percentage of rounds hit an all-time low of 38% of early rounds 24 @gdibner blog: yankeesabralimey Early investors cut back on consumer Syndicate for European & Israeli Enterprise Companies 39% 50% 46% 41% 46% 50% 38% 41% 37% 50% 47% 39% 36% 47% 9% 7% 9% 6% 9%11% 7% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 European venture financing by target market 3Q14 to 1Q16 (excluding Israel, rounds up to $20M, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  25. 25. Breakdown by region & target market • Once again, almost all regions except Israel saw more consumer investment than enterprise/SMB investment • Spain and Benelux also saw more enterprise investments than consumer • OEM-oriented investments were particularly strong in DACH and Israel 25 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 825 76 213 230 151 385 677 113 120 163 91 44 87 107 107 0 200 400 600 800 1,000 1,200 1,400 UK & Ireland Israel DACH France Nordic Iberia Benelux Totalamountinvested(US$M) Investment in Europe and Israel by target market by region 1Q, 2016 (US $M) Government Telecom OEM SMB Enterprise Consumer
  26. 26. Distribution of investment rounds by country • Across Europe & Israel, 40% of VC investment rounds were in consumer companies in 1Q16 26 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 17% 32% 40% 43% 43% 47% 53% 75% 61% 52% 43% 43% 38% 38% 32% 13% 8% 12% 10% 11% 10% 11% 16% 6% 13% 5% 4% 6% 3% 6% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Israel Benelux UK & Ireland DACH Nordic France Iberia South. Eur. Investment in Europe and Israel by target market by country 1Q16 (Number of investments) Consumer Enterprise SMB OEM Telecom Government
  27. 27. Growth rounds by target market • From 4Q14 to 2Q15, there was an upward trend towards consumer-oriented companies in growth investing, but this trend reversed itself in 3Q15 and continued into 1Q16 • For the first time, enterprise companies accounted for over 50% of all growth rounds in Europe & Israel 27 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 56% 37% 46% 56% 43% 39% 37% 25% 41% 46% 25% 38% 50% 51% 6% 7% 5% 9% 12% 6%6% 11% 6% 7% 5% 6%6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 Investment in Europe and Israel by target market (Rounds over $20M, number of investments) Government Telecom OEM SMB Enterprise Consumer
  28. 28. • Fintech was the most popular vertical across Europe & Israel, with 52 investments in the category • Marketing was second, with 33 • Security was third, with 25 28 @gdibner blog: yankeesabralimey Finance returned to being the top vertical Syndicate for European & Israeli Enterprise Companies Financial, 52 Marketing, 33 Security, 23 Infrastructure, 23 Employment, 22 Lifestyle, 20 CRM, 20 Electronics, 19 Logistics, 18 Industrial, 17 Health, 17 Data, 15 Adtech, 15 Development, 14 Gaming, 13 Food, 13 Payments, 12Energy, 11Fashion, 11 Real Estate, 11 Communications, 10 Social, 10 Travel, 10 Entertainment, 9 Education, 9 Productivity, 8 HMI, 6 European & Israeliventure financing by target market 1Q 2016 (number of investments)
  29. 29. • This graph shows number of investments in the top 10 verticals across 1Q15 and 1Q16 • All of the top ten verticals increased in frequency, except for adtech which declined slightly YoY • Fintech-related investments more than tripled from 15 in 1Q15 to 52 in 1Q16 • Security investments more than doubled in popularity YoY 29 @gdibner blog: yankeesabralimey How have the most popular verticals grown? Syndicate for European & Israeli Enterprise Companies Financial, 15 Financial, 52Marketing, 20 Marketing, 33 Infrastructure, 17 Infrastructure, 23 Lifestyle, 18 Lifestyle, 20 Employment, 13 Employment, 22 Security, 11 Security, 23 Electronics, 14 Electronics, 19 Adtech, 17 Adtech, 15 Logistics, 10 Logistics, 18 Health, 10 Health, 17 0 50 100 150 200 250 300 Qtr1 Qtr1 2015 2016 European & Israeliventurefinancing by vertical market (top 10 verticals, number of investments)
  30. 30. • Finance was the most frequently funded vertical, with about half of the investments aimed at consumer finance • Marketing was the second most frequently funded vertical, with enterprise-oriented marketing taking the lion’s share within that category • Security took third place with a heavy emphasis on enterprise security • IT infrastructure and employment tech made strong showings • Consumer lifestyle, CRM, electronics, logistics, health, and industrial also made the top ten verticals 30 @gdibner blog: yankeesabralimey Which verticals for which segments? Syndicate for European & Israeli Enterprise Companies Industrial Health Logistics Electronics CRM Lifestyle Employment Infrastructure Security Marketing Financial 0 10 20 30 40 50 60 European & Israeliventure financing by target market 1Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Government
  31. 31. • This chart shows the ten most commonly funded verticals across Europe & Israel by quarter • Fintech, marketing, infrastructure, and security show continued strength • Employment, health and adtech seem to have rebounded as areas of investor interest 31 @gdibner blog: yankeesabralimey The most popular verticals in the past 12 months Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 0 50 100 150 200 250 300 European & Israeliventure financing by vertical market (number of investments, top 10 verticals) Adtech Health Logistics Electronics Lifestyle Employment Security Infrastructure Marketing Financial
  32. 32. • Finance was the most funded consumer category • Lifestyle, which is admittedly a bit of a catch-all consumer category, continues to show tremendous strength in terms of VC volume • Gaming, logistics, electronics, and food continued to show strength • Health and fashion declined slightly 32 @gdibner blog: yankeesabralimey Consumer VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 0 20 40 60 80 100 120 140 160 European & Israeliventure financing by consumer verticals (number of investments, top 10 verticals) Social Travel Health Fashion Food Electronics Logistics Gaming Lifestyle Financial
  33. 33. • Enterprise marketing seems to have levelled off as an area for VC investment • Security also remains stable but significant • Enterprise infrastructure investments continue to increase as an area of focus • Industrial-oriented startups seem to be consistently increasing as an area of focus 33 @gdibner blog: yankeesabralimey Enterprise VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 0 20 40 60 80 100 120 140 160 180 European & Israeliventure financing by enterprise verticals (number of investments, top 10 verticals) Financial Development Industrial Employment CRM Data Adtech Infrastructure Security Marketing
  34. 34. • Security retained the top spot in Israel, with 14 investments • Israel also saw 10 investments in IT infrastructure • Fintech was the third most popular vertical in Israel, with 8 investments, only 3 of which were consumer-oriented 34 @gdibner blog: yankeesabralimey A closer look at Israeli venture in 1Q16 Syndicate for European & Israeli Enterprise Companies Employment Agtech Development Data Communications Adtech Marketing Industrial Electronics Financial Infrastructure Security 0 2 4 6 8 10 12 14 16 Israeli venture financing by target market 1Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom
  35. 35. • For the fifth quarter running, Fintech was the dominant category of investment in the UK, and this quarter the differential was greater than in 4Q15 • Adtech rebounded to third place in UK investments • Development tooling and employment-related companies were the fourth and fifth most popular categories 35 @gdibner blog: yankeesabralimey Closer look at UK VC Syndicate for European & Israeli Enterprise Companies Food Communications Health Education Industrial CRM Logistics Gaming Real Estate Employment Development Adtech Marketing Financial 0 2 4 6 8 10 12 14 UK venture financing by target market 1Q, 2016 (number of investments, top verticals) Consumer Enterprise SMB OEM Government
  36. 36. • Fintech was by far the most popular category in German VC investment in 1Q16, with 7 investments • Enterprise marketing was the second most popular vertical, with 3 investments 36 @gdibner blog: yankeesabralimey The German VC market in 1Q16 Syndicate for European & Israeli Enterprise Companies Food Communications Retail Logistics Durables Real Estate Energy Payments Adtech SCM Electronics Entertainment Development CRM Fashion Dating Health Data Travel Employment Marketing Financial 0 1 2 3 4 5 6 7 8 German venture financing by target market 1Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM
  37. 37. • Enterprise marketing was the most commonly funded vertical in France in 1Q16 • Consumer logistics, consumer lifestyle, consumer electronics, and consumer food startups were very important categories in French VC investing in 1Q16 37 @gdibner blog: yankeesabralimey As usual, Nordic VC was unconventional Syndicate for European & Israeli Enterprise Companies HMI Industrial Development Infrastructure Data Education Energy Productivity Social Real Estate Payments Security Fashion Health Financial Food Electronics Lifestyle Logistics Marketing 0 1 2 3 4 5 6 7 8 9 10 French venture financing by target market 1Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom
  38. 38. • As software eats the world, services are becoming an increasingly important business model for venture- backed startups • This continued into 2016, with services taking 30% of the venture dollars invested in Europe & Israel in 1Q16 • SaaS emerged as the second most funded business model in 1Q16 • Commerce dropped to 6% of the dollars • Marketplaces – businesses that serve a price discovery function – were just 7% 38 @gdibner blog: yankeesabralimey Services & SaaS dominated 2015 Syndicate for European & Israeli Enterprise Companies Services,973, 30% SaaS,735, 23% Software, 656, 21% Systems, 319,10% Marketplace, 211,7% Commerce, 191, 6% Semiconductors, 37, 1% Media, 36, 1% Components, 19, 1% Meda, 3, 0% European & Israeliventurefinancing by target market 1Q16 (in US $M) (excluding mega-rounds)
  39. 39. • Services businesses overtook SaaS to set a new record of nearly $1B in funding in 1Q16 • SaaS investments, however, continued to increase and also set a record of $735M • Commerce investments continued to slide, reaching just $200M in investment in 1Q16 • Marketplace investment stayed flat at around $200M in the quarter 39 @gdibner blog: yankeesabralimey In 1Q, services overtook SaaS to set a record Syndicate for European & Israeli Enterprise Companies 0 200 400 600 800 1000 1200 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2014 2015 2016 European & Israeliventure financing by business model (top five, in US $M, excluding mega-rounds) Services SaaS Software Commerce Marketplace
  40. 40. • The top three segments were unchanged in 1Q16 • Enterprise marketing SaaS was again the most popular segment for VC investment in 1Q16 with 26 investments across the region • Consumer financial services were next, with 23 investments • Enterprise security software was third, with 14 investments 40 @gdibner blog: yankeesabralimey Enterprise marketing & consumer fintech Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 Consumer Gaming Services SMB Financial Services Consumer Food Commerce Consumer Social Media Enterprise Infrastructure Software Consumer Lifestyle Commerce Consumer Electronics Systems Enterprise Development SaaS Enterprise CRM SaaS Enterprise Security Software Consumer Financial Services Enterprise Marketing SaaS Number of VC investments Investmentin Europe& Israelby segmentby country 1Q16 (top 10 segments) France UK & Ireland Israel Nordic DACH Benelux Iberia South. Eur. East. Eur.
  41. 41. • Across Europe & Israel, US VC firms invested in 27 enterprise companies, 10 consumer companies, 3 SMB companies, and 2 OEM- oriented companies • Enterprise SaaS & Software attracted by far more US VC interest than any other space • Consumer services were the third-most often backed sector by US VC firms 41 @gdibner blog: yankeesabralimey What business models attract US VC investments? Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 14 Services Systems Services Marketplace Systems Commerce Services Marketplace Services Systems Software SaaS OEMSMBConsumerEnterprise US VC Investments in Europe and Israelby end market, business model, & country, 1Q16 (excludes seed & mega-rounds) Israel UK & Ireland DACH Nordic Iberia France East. Eur.
  42. 42. Show me the SaaS • The most popular category by far for SaaS investments across the geography was marketing • CRM SaaS was the second- most popular category • Development tools were the third most popular SaaS category 42 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 35 Health Productivity Infrastructure Employment Adtech Data Financial Development CRM Marketing SaaS VC investment in Europe and Israel by vertical and target market, 1Q16 (top 10 verticals) Consumer Enterprise SMB Telecom
  43. 43. Services investing in 1Q16 • This graph shows the top ten verticals within the services category in 1Q16 across Europe & Israel • Financial services were far and away the most frequently funded vertical – mostly for consumers and SMBs • Gaming services were the second-most funded vertical in the category • Interesting, health was third 43 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 35 40 Adtech Productivity Communications Education Infrastructure Payments Entertainment Logistics Health Gaming Financial Services VC investment in Europe and Israel by vertical and target market, 1Q16 (top 10 verticals) Consumer Enterprise Government SMB
  44. 44. Systems investing in 1Q16 • This graph shows the top ten verticals within the systems category in 1Q16 across Europe & Israel • Consumer electronics systems and enterprise industrial systems were the most popular segments within the category 44 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 14 Food Adtech Financial Logistics Communications Education Lifestyle Agtech Security Infrastructure Energy Health Payments Industrial Electronics Systems VC investment in Europe and Israel by vertical and target market, 1Q16 (top 10 verticals) Consumer Enterprise SMB Telecom
  45. 45. Based in , I was previously a partner at . Before that, I helped run the European seed program for . I moved to London after seven years in during which I worked as a VC with and . I’m originally from . My VC investments include and . Angel investments include and many more. If you found this useful, I hope you’ll subscribe to my blog. 45 Gil Dibner To invest in the best European & Israeli enterprise startups, consider backing me on here. Lots of exciting stuff in the pipeline – and you’ll be in pretty good company.
  46. 46. Thank you blogPrepared by Gil Dibner

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