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Europe & Israel 1Q15 VC Trends Review

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Venture Capital in Europe & Israel; 1Q 2015

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Europe & Israel 1Q15 VC Trends Review

  1. 1. Venture Capital in Europe & Israel Venture Investment Data: First Quarter, 2015 Prepared by Gil Dibner @gdibner blog: yankeesabralimeyMarsaxlokk Harbor, Malta, population 4,000
  2. 2. The data • Around the middle of last year, I decided I wasn’t happy with available data sources on VC rounds in Europe & Israel, and that I’d need to build my own • 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 EUR and GBP into USD using monthly average exchange rates 2@gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
  3. 3. Monthly pace of venture investment • During the nine months ended March, 2015, there were 596 reported venture investments across Europe & Israel • A total of $6.487B was invested in Europe & Israel during this period, an average of $721M per month • During these nine months, January, February, and March were each – in turn – record- breaking months • March saw $998M invested across 103 rounds @gdibner blog: yankeesabralimey 3 493 565 644 625 562 725 903 971 998 42 30 50 79 73 52 92 75 103 0 200 400 600 800 1,000 1,200 Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 2014 2015 Numberofinvestments VC Investments in Europe & Israel, July 2014 - March 2015 Invested amount (US $M) Number of investments Syndicate for European & Israeli Enterprise Companies
  4. 4. Quarterly pace of venture investment • The first quarter of 2015 saw a significant uptick in activity over the third and fourth quarters of 2014 • In 1Q15, over $2.8B was invested across 270 companies in Europe & Israel 4 @gdibner blog: yankeesabralimey 1,703 1,912 2,872 122 204 270 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 Qtr3 Qtr4 Qtr1 2014 2015 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel Invested amount (US $M) Number of investments Syndicate for European & Israeli Enterprise Companies
  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+) • Five mega-rounds took place in Europe in the first quarter: • Taboola, an Israeli content- recommendation company, raised $117M in February • Sigfox, a French wireless network for IoT, raised $115M in February • WorldRemit, a British money transfer company raised $100M in February • Simplivity, an Israeli enterprise systems company, raised $175M in March • Financial Force, a British ERP SaaS provider, raised $110M in March • Even adjusting for mega-rounds, 1Q is still significantly above the previous two quarters 5 @gdibner blog: yankeesabralimey 98 57 92 121 120 102 85 82 118 118 60 168 109 76 127 169 226 161 171 342 26 366 340 229 613 153 387 0 200 400 600 800 1,000 1,200 Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 2014 2015 AmountInvested(US$M) Pace of VC Investment in Europe and Israel Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2) Syndicate for European & Israeli Enterprise Companies
  6. 6. Number of investments, by bracket • In terms of deal volume, Europe & Israel have completely rebounded from the Christmas-induced lull. • March was the busiest month since I started tracking the data • 45 seed deals • 33 early venture deals • 13 venture deals • 10 growth deals • 2 mega rounds 6 @gdibner blog: yankeesabralimey 6 3 7 28 26 15 37 30 45 21 14 25 31 29 22 24 20 33 9 5 16 10 6 10 13 16 13 5 7 1 10 12 4 18 5 10 0 20 40 60 80 100 120 Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 2014 2015 NumberofVCinvestments Number of investments in Europe and Israel by bracket June 2014 to March 2015 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2) Syndicate for European & Israeli Enterprise Companies
  7. 7. Average round size, by bracket • 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 • It’s still hard to see a trend, but I think its safe to say rounds are averaging around $11-12M and trending upwards 7 @gdibner blog: yankeesabralimey 11.1 17.6 6.8 11.7 11.4 12.7 15.8 11.2 11.9 4 6 8 10 12 14 16 18 20 Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 2014 2015 AmountInvested(US$M) Average investment size in Europe and Israel (Round sizes of 2-100M) Syndicate for European & Israeli Enterprise Companies
  8. 8. Total venture investment by country, 2H 2014 • The UK overtook Israel to regain its position as the country with the largest amount of VC activity in 1Q15 • Germany, France, and Sweden rounded out the rest of the top five 8 @gdibner blog: yankeesabralimey 930.1 834.6 537.6 233.0 88.9 52.7 50.6 38.9 34.3 23.4 17.2 7.8 5.4 3.8 3.4 2.7 2.5 1.3 1.0 0.9 0.9 0.6 0.3 UK Israel Germany France Sweden Spain Denmark Netherlands Switzerland Estonia Finland Belgium Italy Norway Latvia Ireland Poland Austria Portugal Iceland Serbia Lithuania Greece 0 100 200 300 400 500 600 700 800 900 1,000 Total VC investment volume by country, 1Q15 (US $M) Syndicate for European & Israeli Enterprise Companies
  9. 9. Total venture investment by country, 3Q & 4Q 2014 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • UK venture activity skyrocketed in 1Q15, doubling that of 3Q14 • Investment volume in Israel stayed roughly flat from a record-breaking 4Q • Investment volume in Germany continued to show strong increases • France & Sweden both declined slightly, but France held on to its fourth place slot 9 @gdibner blog: yankeesabralimey Israel, 315.2 Israel, 567.5 Israel, 542.6 UK, 369.0 UK, 262.9 UK, 720.1 Germany, 180.2 Germany, 284.4 Germany, 388.6 France, 29.3 France, 163.3 France, 118.0 Sweden, 74.4 Sweden, 123.2 Sweden, 88.9 Qtr3 Qtr4 Qtr1 0 100 200 300 400 500 600 700 800 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 1Q15 (top 5 countries, excluding mega-rounds) Syndicate for European & Israeli Enterprise Companies
  10. 10. Average venture round sizes, by country • Looking across all VC deals in the second half of 2014, it’s possible to draw some conclusions about the funding environments in various countries • This analysis excludes mega- rounds and rounds less than $2M • UK & Ireland companies raised the largest round sizes on average in 1Q, a significant jump from 4Q • DACH startups seem to raise consistently large rounds on average 10 @gdibner blog: yankeesabralimey Benelux, 10.6 Benelux, 4.7 Benelux, 7.2 DACH, 18.0 DACH, 14.9 DACH, 14.4 France, 3.7 France, 5.6 Iberia, 10.4 Iberia, 7.2 Iberia, 14.1 Israel, 11.6 Israel, 15.9 Israel, 12.1 Nordic, 7.7 Nordic, 11.5 Nordic, 11.4 UK & Ireland, 11.9 UK & Ireland, 18.9 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Qtr3 Qtr4 Qtr1 2014 2015 Averageroundsize(US$M) Average investment size in Europe and Israel (rounds of $2-20M) Syndicate for European & Israeli Enterprise Companies
  11. 11. Total venture investment by region, 3Q14 to 1Q15 • When VC investments across Europe are aggregated into regions, Israel, DACH, UK & Ireland, the Nordics, and France are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments (Adyen, Prezi, and many others), but the volumes are still low 11 @gdibner blog: yankeesabralimey Israel, 315.2 Israel, 567.5 Israel, 834.6 UK & Ireland, 399.0 UK & Ireland, 262.9 UK & Ireland, 932.8 DACH, 532.2 DACH, 290.2 DACH, 573.2 Nordic, 124.0 Nordic, 219.3 Nordic, 188.6 France, 129.3 France, 163.3 France, 233.0 Benelux, 284.9Iberia, 168.1 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 2014 2015 TotalVCinvestment(US$M) Total VC investment by region Israel UK & Ireland DACH Nordic France Benelux Iberia East. Eur. South. Eur. Syndicate for European & Israeli Enterprise Companies
  12. 12. Rounds by bracket & country • To get a better sense of deal volume, this analysis excludes seed deals which are often poorly reported • Excluding seed deals, Israel led the region in the number of VC deals reported • The UK and France followed • Interestingly, France and the UK saw an equal number of early venture and growth deals, but the UK saw 13 “venture deals” compared to only 5 in France 12 @gdibner blog: yankeesabralimey 17 15 15 15 8 4 18 13 5 2 3 9 9 9 3 2 2 0 5 10 15 20 25 30 35 40 45 50 Israel UK & Ireland DACH France Nordic Benelux Iberia East. Eur. South. Eur. Numberofinvestments Number of investments in Europe and Israel by bracket, 1Q 2015 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Syndicate for European & Israeli Enterprise Companies
  13. 13. Investment by region, by bracket • In 1Q, UK & Ireland led in terms of total VC dollars invested, even with mega- rounds included • Israeli was in second place, DACH was third • Excluding Sigfox’s $115M, France came in fifth; including it would catapult France ahead of the Nordics 13 @gdibner blog: yankeesabralimey 74 70 46 28 45 165 235 63 49 460 226 308 82 210 292 149 115 0 100 200 300 400 500 600 700 800 900 1,000 UK & Ireland Israel DACH Nordic France Iberia Benelux South. Eur. East. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by bracket by region, 1Q 2015 (ranked excluding mega-rounds) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2) Syndicate for European & Israeli Enterprise Companies
  14. 14. Participation rate of US VC firms, by bracket • US VC firms are increasingly active in the European and Israeli VC markets • Over the past nine months, US VC firms participated in 16% of the venture rounds in Europe • US VCs participated in only 5% of seed rounds, 11% of early venture rounds, and 24% of venture rounds • As a company moves from bracket to bracket, the chance of US VC participation doubles with each bracket change 14 @gdibner blog: yankeesabralimey 5% 11% 24% 44% 80% 95% 89% 76% 56% 20% 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) Totalamountinvested(US$M) Did US VC firms participate in European VC rounds? (3Q14-1Q15) No Yes Syndicate for European & Israeli Enterprise Companies
  15. 15. Rate of participation by US firms is declining • As the pace of European and Israeli VC investment increased, the rate of participation by US firms did not keep pace • Within rounds of between $2M and $20M, US VC participation dropped from 24% of rounds in October to just 11% of rounds in March 15 @gdibner blog: yankeesabralimey 10% 5% 17% 24% 17% 16% 19% 8% 11% 90% 95% 83% 76% 83% 84% 81% 92% 89% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 2014 2015 Totalamountinvested(US$M) Did US VC firms participate in European VC rounds? (3Q14-1Q15) No Yes Syndicate for European & Israeli Enterprise Companies
  16. 16. Participation of US VC firms by country • In 1Q, US VCs firms were active in 10 different European countries, down from 12 in 4Q • US VC firms were most active in Israel, where they participated in 15 investment rounds • The UK saw 10 investments with US VC participation, double the number in 4Q 16 @gdibner blog: yankeesabralimey 15 10 4 43 49 28 13 11 11 10 0 10 20 30 40 50 60 70 Israel UK Germany Spain Denmark Switzerland Netherlands Sweden Ireland Austria NumberofVCinvestments In which countries are US VCs most active? 1Q, 2015 No US VC involved US VC involved Syndicate for European & Israeli Enterprise Companies
  17. 17. 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? Combined segment descriptor Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers 17 Three-dimensional approach to sector mapping
  18. 18. • The increase in venture investment activity was seen across both consumer and enterprise • Consumer deal volume increased 65% from 4Q14 to 1Q15 • Enterprise deal volume increased only 20% during the same period • SMB-oriented and OEM- oriented investment volume declined 18 @gdibner blog: yankeesabralimey 475 595 980 494 794 951 78 133 122 78 114 47 0 500 1,000 1,500 2,000 2,500 Qtr3 Qtr4 Qtr1 2014 2015 TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q14 to 1Q15 (in US $M) Government Telecom OEM SMB Enterprise Consumer What target markets are attracting the most VC investment in Europe & Israel? Syndicate for European & Israeli Enterprise Companies
  19. 19. • Last quarter’s trend reversed itself, with consumer-oriented companies accounting for 43% of all VC investment in Europe & Israel, up from 31% • Enterprise dropped from 55% to 47% • Other categories declined, with SEM, OEM, and Government-oriented companies nearly disappearing from the deal volumes 19 @gdibner blog: yankeesabralimey The return of consumer investment 54% 31% 43% 29% 55% 47% 5% 7%5% 6%7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 2014 2015 TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q14 to 1Q15 (in US $M) Government Telecom OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  20. 20. Breakdown by region & target market • The Israeli VC landscape continued to be dominated by non-consumer companies • The DACH region saw a return to the dominance of consumer-oriented companies in VC financing • Sigfox’s massive round meant that the majority of VC dollars flowing into France went into the telecom space – clearly an anomaly • The Nordics seemed to echo Israel’s emphasis on enterprise • UK dealflow was split almost evenly 20 @gdibner blog: yankeesabralimey 464 80 504 55 50 407 670 64 80 122 60 46 115 0 100 200 300 400 500 600 700 800 900 1,000 UK & Ireland Israel DACH France Nordic Iberia Benelux Totalamountinvested(US$M) Investment in Europe and Israel by target market by country 1Q, 2015 (US $M) Government Telecom OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  21. 21. Distribution of investment rounds by country • Across Europe & Israel, 47% of VC investment rounds were in consumer companies in 1Q, up from 41% in 4Q • Israel and Nordics were the only geographies to see a majority of investment rounds happen into non-consumer companies – for Israel that’s normal, for the Nordic’s it’s a reversal • Most other European markets saw 50-60% of rounds go into consumer companies 21 @gdibner blog: yankeesabralimey 26% 37% 52% 53% 56% 57% 67% 76% 100% 60% 47% 36% 29% 39% 41% 33% 18% 7% 9% 12% 3% 3% 6% 5% 7% 6% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Israel Nordic France Benelux UK & Ireland DACH South. Eur. Iberia East. Eur. Investment in Europe and Israel by target market by country 1Q 2015 (Number of investments) Consumer Enterprise SMB OEM Telecom Government Syndicate for European & Israeli Enterprise Companies
  22. 22. Seed and growth swing back to consumer • Unlike last quarter, a clear majority of both growth deals and seed deals were in consumer-oriented companies 22 @gdibner blog: yankeesabralimey 59% 44% 43% 66% 31% 47% 57% 28% 5% 5% 6% 4% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Seed (<2) Early Venture (2-8) Venture (8-20) Growth (20-100) Investment in Europe (excluding Israel) by target market by stage bracket 1Q 2015 (Number of investments) Consumer Enterprise SMB OEM Government Syndicate for European & Israeli Enterprise Companies
  23. 23. DACH investors shift back to consumer • DACH is clearly a region with a record of strong consumer- oriented investment • In 4Q14 this began to change, but this trend may not be long-lived • 1Q15 saw a majority of investments in DACH go into consumer companies 23 @gdibner blog: yankeesabralimey 100% 67% 60% 40% 13% 57% 60% 33% 73% 17% 20% 40% 88% 43% 40% 67% 20% 20% 10% 7% 17% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul Aug Sep Oct Nov Dec Jan Feb Mar 2014 2015 Investment in DACH by target market by stage bracket July 2014 to March 2015 (Number of investments) OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  24. 24. The Nordics shift towards the enterprise… • The Nordic region saw pretty diverse investment patterns in 3Q14 and 4Q14, but in 1Q15 there was a clear shift towards the enterprise • Interestingly, but not surprisingly, OEM-oriented deals seemed to disappear from the landscape almost entirely 24 @gdibner blog: yankeesabralimey 40% 25% 67% 83% 50% 64% 20% 50% 38% 60% 50% 17% 42% 27% 60% 50% 38% 8% 10% 14% 25% 17% 17% 9% 10% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul Aug Sep Oct Nov Dec Jan Feb Mar 2014 2015 Investment in the Nordics by target market July 2014 to March 2015 (Number of investments) OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  25. 25. …especially in terms of dollars invested • When we look at dollars investment as opposed to the number of investments, the trend in the Nordics is even clearer • Interestingly, but not surprisingly, OEM-oriented deals seemed to disappear from the landscape almost entirely (from 40% in August to just 4% in March) 25 @gdibner blog: yankeesabralimey 32% 11% 72% 75% 44% 52% 44% 20% 12% 68% 49% 6% 55% 24% 54% 80% 72% 12% 40% 21% 25% 24% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul Aug Sep Oct Nov Dec Jan Feb Mar 2014 2015 Investment in the Nordics by target market July 2014 to March 2015 (Total US $M invested) OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  26. 26. About 40% of French VC deals were enterprise… • In France, the ratio of enterprise deals to consumer deals seems roughly constant from September 2014 to March 2015 26 @gdibner blog: yankeesabralimey 100% 100% 50% 46% 58% 50% 62% 60% 46% 38% 38% 33% 50% 31% 40% 46% 15% 8%13% 8% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul Aug Sep Oct Nov Dec Jan Feb Mar Qtr3 Qtr4 Qtr1 2014 2015 VC Investment in France by target market July 2014 to March 2015 (Number of investments) OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  27. 27. …but money increasingly flows to enterprise • When the data is presented by the amount of dollars, it becomes clear that more and more of French VC dollars are flowing towards enterprise- oriented companies 27 @gdibner blog: yankeesabralimey 100% 100% 59% 44% 65% 77% 33% 31% 19% 23% 46% 10% 23% 64% 69% 74% 10% 25% 18% 3% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul Aug Sep Oct Nov Dec Jan Feb Mar 2014 2015 VC Investment in France by target market July 2014 to March 2015 (Number of investments) OEM SMB Enterprise Consumer Syndicate for European & Israeli Enterprise Companies
  28. 28. • 4Q saw a reshuffling of popular verticals • Market, lifestyle, adtech and infrastructure were the most often funded verticals across Europe & Israel • Finance dropped to the fifth slot 28 @gdibner blog: yankeesabralimey Marketing displaced finance as the top vertical Marketing, 20 Lifestyle, 18 Adtech, 17 Infrastructure, 17 Financial, 15 Electronics, 14 Employment, 13 Security, 11 Travel, 11 Communications, 10 Productivity, 10 Development, 10 Health, 10 Logistics, 10 Data, 9 Education, 9Fashion, 9Payments, 6 Gaming, 5 ERP, 5 European & Israeli venture financing by target market 1Q 2015 (number of investments) Syndicate for European & Israeli Enterprise Companies
  29. 29. • Enterprise and SMB marketing companies were the most popular category of investment across Europe & Israel • Various consumer lifestyle companies were the second- most popular category • Adtech, despite falling dramatically out of favor in the US, took the third slot • Infrastructure companies (mostly for the enterprise) took the fourth slot • Fintech was dominated by consumer companies 29 @gdibner blog: yankeesabralimey Health Development Productivity Logistics Communicati… Security Travel Employment Electronics Financial Infrastructure Adtech Lifestyle Marketing 0 5 10 15 20 25 European & Israeli venture financing by target market 1Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Government Which verticals for which segments? Syndicate for European & Israeli Enterprise Companies
  30. 30. • Not surprisingly, enterprise infrastructure and security were the most popular categories for investment in Israel • Adtech took the third spot • Consumer communications companies and enterprise marketing companies were two other popular categories 30 @gdibner blog: yankeesabralimey A closer look at Israeli venture in 1Q15 Health Education ERP Lifestyle Payments Financial Development Marketing Productivity Communications Adtech Security Infrastructure 0 1 2 3 4 5 6 7 8 9 Israeli venture financing by target market 1Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Syndicate for European & Israeli Enterprise Companies
  31. 31. • In 1Q15, the most popular vertical in the UK was consumer fintech • Adtech was the second most popular vertical • Consumer fashion and consumer durables were also popular categories for UK VCs in 1Q 31 @gdibner blog: yankeesabralimey Consumer fintech led the UK Infrastructure Lifestyle Logistics Music Marketing Security Real Estate Communications Durables Travel Fashion Employment Health Adtech Financial 0 1 2 3 4 5 6 7 UK venture financing by target market 1Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Syndicate for European & Israeli Enterprise Companies
  32. 32. • In terms of dollars invested during 1Q15, services (31%) and commerce (18%) were the leaders • Software and SaaS came in third and fourth, respectively • Marketplace business models took fourth place, with 10% of invested capital • Physical products (systems, components, and semiconductors) accounted for only 4% of total investment combined, down from 14% in 4Q14 32 @gdibner blog: yankeesabralimey Services, 666, 31% Commerce, 389, 18% Software, 374, 18% SaaS, 332, 16% Marketplace, 206, 10% Media, 57, 3% Systems, 49, 2% Components, 18, 1% Semiconductors, 15, 1% European & Israeli venture financing by target market 1Q, 2015 (in US $M) (excluding mega-rounds) Service models led the pack in 1Q Syndicate for European & Israeli Enterprise Companies
  33. 33. • Service-style business models have been exploding in popularity across Europe & Israel • Part of this may be due to how the community is starting to characterize companies – things that might have been described previously as software (i.e. apps) are increasingly being characterized by the underlying service delivered (education, logistics, etc.) • E-commerce has also seen a resurgence in 1Q15 33 @gdibner blog: yankeesabralimey Services are exploding 0 100 200 300 400 500 600 700 Qtr3 Qtr4 Qtr1 2014 2015 European & Israeli venture financing by business model 3Q14 to 1Q15 (in US $M, excluding mega-rounds) Software SaaS Services Marketplace Commerce Syndicate for European & Israeli Enterprise Companies
  34. 34. US VCs focused on SaaS, software, and services • US VC firms investing in Europe & Israel continued to focus mainly on SaaS, software, and services • Last quarter, no commerce- oriented companies in Europe or Israel attracted US VC interest – this quarter US VCs backed five companies in that category • Components, and semiconductors attracted almost no interest from local VCs, and no interest at all from US VCs • Marketplaces attracted US VCs in only two cases 34 @gdibner blog: yankeesabralimey 12 11 7 5 2 2 46 47 54 17 25 21 18 0 10 20 30 40 50 60 70 Services Software SaaS Commerce Marketplace Systems Media Components Semiconductors VC Investments in Europe & Israel 1Q, 2015 (number of investments) No US VC involved US VC involved Syndicate for European & Israeli Enterprise Companies
  35. 35. • Enterprise marketing SaaS was the most popular segment for VC investment in 1Q15 with 17 investments across the region • Consumer electronics systems was the second most popular segment, with 11 investments • The UK was the clear leader in consumer financial services. • Israel completely dominated the enterprise security software segment 35 @gdibner blog: yankeesabralimey 0 2 4 6 8 10 12 14 16 18 Consumer Employment Marketplace Enterprise Development SaaS Enterprise Infrastructure Software Enterprise Development Software Enterprise Adtech Services Enterprise Data Software Consumer Lifestyle Commerce Consumer Lifestyle Media Enterprise Employment SaaS Consumer Fashion Commerce Consumer Education Services Enterprise Security Software Consumer Financial Services Consumer Electronics Systems Enterprise Marketing SaaS Number of VC investments Investment in Europe & Israel by segment by country 1Q15 (segments with 5 or more investments) UK & Ireland Israel Nordic DACH France Benelux Iberia South. Eur. East. Eur. Enterprise marketing & consumer electronics Syndicate for European & Israeli Enterprise Companies
  36. 36. • Across Europe & Israel, US VC firms invested in 21 enterprise companies, 11 consumer companies, and 1 SMB company • In the consumer space, US VC interest was concentrated on UK services companies and DACH commerce companies 36 @gdibner blog: yankeesabralimey 0 1 2 3 4 5 6 7 8 9 10 SaaS Media Commerce Services Marketplace Systems SaaS Services Software SMBConsumerEnterprise US VC Investments in Europe and Israel by end market, business model, & country, 1Q 2014 Israel UK & Ireland DACH Iberia Nordic What business models attract US VC investments? Syndicate for European & Israeli Enterprise Companies
  37. 37. Focus on dev tools: everywhere you look • Over the past nine months, 22 dev tooling companies raised VC money across Europe & Israel • These companies were distributed across ten countries • Israel led the pack with 6; UK and the Netherlands each saw 3, Germany and Estonia each saw 2 37 @gdibner blog: yankeesabralimey 0 1 2 3 4 5 6 7 Jul Sep Oct Nov Dec Jan Feb Mar 2014 2015 Numnberofinvestment Development tools VC investment in Europe and Israel 3Q14 to 1Q15, Number of investments Ireland France Latvia Norway Sweden Estonia Germany Netherlands UK Israel Syndicate for European & Israeli Enterprise Companies
  38. 38. Focus on services: what’s behind the boom • 49 services-oriented companies raised VC financing across Europe & Israel in 1Q15 • Finance, education, and communications were the most popular verticals for consumer-oriented services companies • Adtech was the only services vertical with significant enterprise investment 38 @gdibner blog: yankeesabralimey 0 2 4 6 8 10 12 14 Entertainment Lifestyle Social Music Infrastructure Logistics Payments Communications Adtech Education Financial Services-oriented VC investment in Europe and Israel by vertical and target market, 1Q 2015 (top 10 verticals) Consumer Enterprise SMB Telecom Syndicate for European & Israeli Enterprise Companies
  39. 39. Focus on enterprise SaaS: verticals by country • Marketing remained in the top spot within enterprise SaaS, but data dropped from second place to fifth • Employment and HR-related SaaS offerings were the second-most popular category within enterprise SaaS • Development tooling SaaS offerings were the third most popular category • Enterprise infrastructure, the fourth most popular category, saw only Israeli companies get funded 39 @gdibner blog: yankeesabralimey 0 5 10 15 20 Logistics Productivity Travel CRM Communications Security Health Data ERP Adtech Infrastructure Development Employment Marketing Enterprise SaaS VC investment in Europe and Israel by vertical by country, 1Q 2015 (number of investments) Israel France UK Germany Denmark Estonia Sweden Netherlands Lithuania Norway Austria Ireland Syndicate for European & Israeli Enterprise Companies
  40. 40. 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 three more that haven’t been announced yet. If you found this useful, I hope you’ll subscribe to my blog. 40 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.

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