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Europe & Israel 3Q15 Deals Done Review

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A comprehensive look at venture capital investment data into European & Israeli startups.

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Europe & Israel 3Q15 Deals Done Review

  1. Venture Capital in Europe & Israel Venture Investment Data: Third Quarter, 2015 Prepared by Gil Dibner @gdibner blog: yankeesabralimey Steinerne Brücke, Regensburg, Germany Oldest vaulted stone bridge in Germany (built 1135-1146)
  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. Monthly pace of venture investment • During the third quarter of 2015, there were 286 venture investments in Europe & Israel totaling $3.2B • July’s investment volume was just under June’s in terms of total dollars invested, but it was a record-breaking month in terms of deals reported • August saw a massive slowdown in activity due most likely to summer vacations. Note, however, that while August 2015 was one third of the July 2015 volume, it was roughly even with August 2014. @gdibner blog: yankeesabralimey 3Syndicate for European & Israeli Enterprise Companies 493 565 644 625 562 725 905 971 997 791 787 1,555 1,517 567 1,157 42 30 50 79 73 52 92 75 103 78 95 98 119 65 102 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Numberofinvestments VC Investments in Europe & Israel, July 2014 - September 2015 Invested amount (US $M) Number of investments
  4. Quarterly pace of venture investment • Europe & Israel saw another record-breaking quarter in 3Q, with $3.252 billion flowing into 286 venture transactions • Since I started collecting this data in 3Q14, every quarter has set a new high 4 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1,703 1,912 2,873 3,133 3,241 122 204 270 271 286 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 350 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel Invested amount (US $M) Number of investments
  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: • Kreditech, a German-based lending platform, raised $110M in July • Fanduel, a Scottish-based fantasy sports gaming provider, raised $275M in July • Letgo, a Spanish mobile classifieds application, raised $100M in September • Blablacar, a French ride-sharing platform, raised $200M in September (following a $100M raise in 2014) • Adjusting for mega-rounds, 3Q15 was a record-breaking quarter, especially for growth rounds. 5 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 248 343 285 354 369 345 312 556 731 565 539 935 1,154 792 1,509 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 AmountInvested(US$M) Pace of VC Investment in Europe and Israel Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
  6. Strong year-over-year growth • 3Q15 total investment volume in Europe & Israel was up 85% over 3Q14 (excluding seed deals, where data is more spotty) • Early venture volume grew by 49% • Venture volume grew by 64% • Growth volume grew by 180%, nearly tripling from 3Q14 levels 6 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 248 369 345 565 539 1,509 554 685 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr3 2014 2015 TotalVCinvestment(US$M) VC investment volume in Europe and Israel by bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  7. Number of investments, by bracket • Excluding seed deals, the total number of VC investments per quarter was 180 in 3Q15, roughly the same as last quarter (179) but nearly double that of one quarter ago (106) • Despite the typical summer slowdown in August, the quarter showed no sign of a slowdown from the previous quarter 7 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 60 82 77 85 94 30 26 42 63 44 13 26 33 25 38 3 1 6 6 4 0 20 40 60 80 100 120 140 160 180 200 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 NumberofVCinvestments VC investment volume in Europe and Israel by bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  8. Corporate VC activity, by bracket • Excluding seed deals, the total number of corporate VC investments was 21 in 3Q15, down significantly from a peak of 36 in 2Q15 8 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 6 4 5 16 7 4 3 9 12 7 4 4 7 8 7 3 0 5 10 15 20 25 30 35 40 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 NumberofVCinvestments Corporate VC investment volume in Europe and Israel by bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  9. Corporate VC activity, by country • During the first three quarters of 2015, Israel saw the highest number of corporate VC investments, with 33 • The UK saw 21 corporate VC investments during that period • Nine other countries saw corporate VC activity across Europe, but at much lower levels 9 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 10 7 4 1 2 1 1 1 1 14 5 4 1 2 1 1 8 8 1 3 2 1 1 1 0 5 10 15 20 25 30 35 Israel UK Germany France Sweden Spain Ireland Norway Switzerland Estonia Belgium Numberofinvestments Number of corporate VC investments in Europe and Israel by bracket (1Q15-3Q15) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  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 • Since February, 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 $14.5M on average 10 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 11.1 17.6 6.8 11.7 11.4 12.7 15.8 11.2 11.9 11.1 10.1 11.4 13.9 13.2 14.3 4 6 8 10 12 14 16 18 20 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 AmountInvested(US$M) Average investment size in Europe and Israel (Round sizes of 2-100M)
  11. Total venture investment by country, 3H 2015 • The UK took the top spot in 3Q15 with nearly $900M in total capital invested • Israel took second place with $628M in venture capital investment • France (boosted by Blablacar) nearly eclipsed Germany (which was helped by Kreditech) – both countries saw just under $500M of capital invested in the quarter 11 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 896.8 627.8 484.7 477.9 181.0 139.9 109.5 87.1 81.0 46.6 33.5 15.2 13.3 12.0 9.9 9.1 7.5 6.8 1.4 0.6 UK Israel Germany France Spain Sweden Netherlands Ireland Finland Belgium Greece Norway Italy Slovenia Poland Switzerland Denmark Czech Latvia Estonia 0 100 200 300 400 500 600 700 800 900 1,000 Total VC investment volume by country, 3Q15 (US $M)
  12. Total venture investment by country, 3H 2015 (excluding mega rounds) • Once again, when mega- rounds ($100M+) are excluded, Israel takes the top slot, with the UK coming in just behind it • Excluding mega-round, Germany is a solid third place at $375M, with France at $278M 12 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 627.8 621.8 374.7 277.9 139.9 109.5 87.1 81.0 81.0 46.6 33.5 15.2 13.3 12.0 9.9 9.1 7.5 6.8 1.4 0.6 Israel UK Germany France Sweden Netherlands Ireland Spain Finland Belgium Greece Norway Italy Slovenia Poland Switzerland Denmark Czech Latvia Estonia 0 100 200 300 400 500 600 700 Total VC investment volume by country, 3Q15 (Excludes mega-rounds, US $M)
  13. Total venture investment by country, 3Q14 to 3Q15 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • Investment volumes increase in all of the top five markets • Israel retained it’s top spot, but just barely • Germany bounced back up to third place 13 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 315 567 543 475 628 369 263 719 437 622 180 284 389 209 375 29 163 118 232 278 74 123 89 112 140 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 0 100 200 300 400 500 600 700 800 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 3Q15 (top 5 countries, excluding mega-rounds) Israel UK Germany France Sweden
  14. Average venture round sizes, by country • This analysis excludes mega- rounds and rounds less than $2M • UK & Ireland companies raised the largest round sizes on average in 3Q, just as they did in 2Q • When we compare 3Q15 to 3Q14, all regions saw increased round sizes, except DACH and Iberia • DACH round sizes contracted to bring them in line with the rest of the leading markets • Round sizes in France increased, bringing France in line with other leading markets. 14 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Benelux, 10.6 Benelux, 13.1 DACH, 18.0 DACH, 14.8 France, 3.7 France, 13.5 Iberia, 10.4 Iberia, 8.6 Israel, 11.6 Israel, 15.2 Nordic, 7.7 Nordic, 10.4 UK & Ireland, 11.9 UK & Ireland, 16.3 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Qtr3 Qtr3 2014 2015 Averageroundsize(US$M) Average investment size in Europe and Israel (rounds of $2-20M)
  15. Total venture investment by region, 3Q14 to 3Q15 • When VC investments across Europe are aggregated into regions, Israel, DACH, UK & Ireland, the Nordics, and France are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments (Adyen, Prezi, and many others), but the volumes are still low 15 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies UK & Ireland, 399.0 UK & Ireland, 262.9 UK & Ireland, 932.2 UK & Ireland, 680.7 UK & Ireland, 983.9 Israel, 315.2 Israel, 567.5 Israel, 834.6 Israel, 625.2 Israel, 627.8 DACH, 532.2 DACH, 290.2 DACH, 573.3 DACH, 565.8 DACH, 493.8 Nordic, 124.0 Nordic, 219.3 Nordic, 190.1 Nordic, 775.7 Nordic, 245.5 France, 129.3 France, 163.3 France, 233.0 France, 231.6 France, 477.9 Benelux, 31.9 Benelux, 284.9 Benelux, 46.7 Benelux, 98.3 Benelux, 156.1 Iberia, 168.1 Iberia, 56.5 Iberia, 53.7 Iberia, 137.2 Iberia, 181.0 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 TotalVCinvestment(US$M) Total VC investment by region UK & Ireland Israel DACH Nordic France Benelux Iberia East. Eur. South. Eur.
  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, UK & Ireland led in the number of announced deals, with 43 investments announced • Israel took second place with 40 • DACH took third place with 26 16 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 23 18 14 13 9 7 5 2 3 8 11 7 5 7 2 2 2 11 11 4 4 4 2 1 1 1 1 1 1 0 5 10 15 20 25 30 35 40 45 50 UK & Ireland Israel DACH Nordic France Benelux Iberia South. Eur. East. Eur. Numberofinvestments Number of investments in Europe and Israel by bracket, 3Q 2015 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  17. Investment by region, by bracket • In 3Q, UK & Ireland led in terms of total VC dollars invested, even with Fanduel mega-round excluded • Israel was in second place 17 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 98 62 61 41 49 96 146 92 92 69 490 400 217 136 111 105 275 110 200 100 0 200 400 600 800 1,000 1,200 UK & Ireland Israel DACH France Nordic Benelux Iberia South. Eur. East. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by bracket by region, 3Q 2015 (ranked excluding mega-rounds) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
  18. Participation rate of US VC firms, by bracket • US VC firms are increasingly active in the European and Israeli VC markets • Year to date, US VC firms participated in 15% of the venture rounds in Europe • US VCs participated in only 5% of seed rounds, 11% of early venture rounds, and 21% of venture rounds • As a company moves from bracket to bracket, the chance of US VC participation doubles with each bracket change 18 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 5% 11% 21% 36% 75% 95% 89% 79% 64% 25% 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? (1Q15-3Q15) No Yes
  19. Rate of participation by US firms has recovered • US VC firm participation in European & Israeli venture rounds held steady at just over 20% 19 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 16% 24% 20% 22% 21% 84% 76% 80% 78% 79% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 PercentageofRounds Did US VC firms participate in European VC rounds? (Excludes seed rounds, 3Q14-3Q15) No Yes
  20. Participation of US VC firms by country • In 3Q, US VCs firms were active in 15 different European countries, up from 10 in 2Q • US VC firms were most active in Israel, where they participated in 14 investment rounds out of 57 (26%) • The UK saw 7 investments with US VC participation, down from 11 in 2Q • In the Netherlands, 4 of a total of 15 investments saw US VC participation (27%) 20 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 14 7 4 30 10 20 30 40 50 60 70 Israel UK Netherlands Germany France Sweden Finland Ireland Greece Spain Belgium Switzerland Poland Norway Czech NumberofVCinvestments In which countries are US VCs most active? 3Q, 2015 No US VC involved US VC involved
  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. • Excluding mega-rounds, investment activity decreased in both consumer and enterprise over 2Q • Consumer-oriented investments hit a new high of $1.1B in 3Q • SMB-oriented and OEM- oriented investment volume both increased 22 @gdibner blog: yankeesabralimey What target markets are attracting the most VC investment in Europe & Israel? Syndicate for European & Israeli Enterprise Companies 475 595 980 850 1,172 494 794 953 808 905 133 121 153 275 114 106 182 0 500 1,000 1,500 2,000 2,500 3,000 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q14 to 3Q15 (excluding mega-rounds, US $M) Government Telecom OEM SMB Enterprise Consumer
  23. • When Israel is excluded from the sample, 62% of all VC dollars in Europe went to consumer-oriented companies • Enterprise dropped from 48% in 4Q14 to 24% in 3Q15 23 @gdibner blog: yankeesabralimey Consumer investment leads Europe Syndicate for European & Israeli Enterprise Companies 62% 36% 56% 63% 62% 18% 48% 34% 22% 24% 6% 10% 4% 12% 8%5% 4% 2% 4%6%8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 European venture financing by target market 3Q14 to 3Q15 (excluding Israel, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  24. • When the sample set is limited to rounds under $20M, the ratio of consumer to enterprise investments looks a bit more balanced – and steadier over time 24 @gdibner blog: yankeesabralimey Consumer accounts for half of early rounds Syndicate for European & Israeli Enterprise Companies 39% 51% 46% 41% 46% 41% 36% 50% 48% 39% 3% 10% 2% 7% 9%11% 2% 2% 3% 0%2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 European venture financing by target market 3Q14 to 3Q15 (excluding Israel, rounds up to $20M, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  25. Breakdown by region & target market • All regions except Israel saw more consumer investment than enterprise/SMB investment • Investments across DACH were dominated by consumer-oriented companies • UK & Ireland, France, and the Nordics showed a healthy balance 25 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 546 225 435 276 135 119 104 218 275 150 66 57 133 87 71 0 200 400 600 800 1,000 1,200 UK & Ireland Israel DACH France Nordic Iberia Benelux Totalamountinvested(US$M) Investment in Europe and Israel by target market by region 3Q, 2015 (US $M) Government Telecom OEM SMB Enterprise Consumer
  26. Distribution of investment rounds by country • Across Europe & Israel, 44% of VC investment rounds were in consumer companies in 3Q • In DACH, 62% of rounds were into consumer companies, the highest proportion of any region • In UK, the number of consumer rounds was equal to the number of enterprise rounds 26 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 29% 30% 36% 41% 43% 53% 55% 62% 71% 51% 54% 41% 30% 28% 30% 22% 5% 7% 14% 17% 12% 15% 11% 14% 4% 5% 9% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% South. Eur. Israel France UK & Ireland Benelux Nordic Iberia DACH Investment in Europe and Israel by target market by country 3Q 2015 (Number of investments) Consumer Enterprise SMB OEM Telecom Government
  27. Early rounds trending away from consumer • This graph shows the percentage of seed ($0-$2M) and early venture ($2M-$8M) rounds by target market • These early rounds provide a leading indicator of things to come • The percentage of rounds into consumer companies peaked in 1Q15 at 50% and has been trending downward since 27 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 39% 44% 50% 48% 44% 47% 44% 39% 38% 40% 9% 8% 12% 8% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Investment in Europe and Israel by target market (Rounds of up to $8M, number of investments) Government Telecom OEM SMB Enterprise Consumer
  28. Growth rounds by target market • Looking at rounds over $20M, it’s hard to draw a clear trend • From 4Q14 to 2Q15, there was an upward trend towards consumer-oriented companies in growth investing, but this trend reversed itself in 3Q15 28 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 56% 37% 46% 58% 43% 25% 41% 46% 23% 38% 7% 10% 12% 6% 11% 6% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Investment in Europe and Israel by target market (Rounds over $20M, number of investments) Government Telecom OEM SMB Enterprise Consumer
  29. 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 it wasn’t clear if the trend would be long- lived. • In 3Q15, consumer-oriented investments accounted for 64% of rounds in DACH 29 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 71% 36% 57% 57% 64% 14% 56% 41% 31% 22% 7% 9% 11% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Investment in DACH by target market (Number of investments) OEM SMB Enterprise Consumer
  30. The Nordics shift back to the consumer • Investment patterns in the Nordics seem to be shifting away from enterprise and towards the consumer 30 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 47% 62% 37% 43% 56% 40% 28% 47% 43% 29% 9% 12%13% 7% 7% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Investment in the Nordics by target market (Number of investments) OEM SMB Enterprise Consumer
  31. …especially in terms of dollars invested • When we look at dollars investment as opposed to the number of investments, 3Q15 saw a sharp rise in consumer- oriented investing • Spotify’s massive round in 2Q has been removed from this graph 31 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 42% 59% 29% 29% 59% 37% 25% 65% 64% 29% 4% 12% 22% 16% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Investment in the Nordics by target market (Percentage of total US $M invested) OEM SMB Enterprise Consumer
  32. France shifts even further towards enterprise • In France, only 33% of investments in 3Q15 were consumer-oriented • Enterprise investments accounted for 56% of rounds in France 32 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 60% 52% 55% 44% 33% 30% 38% 39% 44% 56% 10% 12% 7% 10% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 VC Investment in France by target market (Number of investments) OEM SMB Enterprise Consumer
  33. …with enterprise taking share from SMB • 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 • 3Q15 saw a shift from SMB towards enterprise 33 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 69% 61% 28% 27% 27% 17% 20% 68% 43% 54% 18% 30% 14% 13% 4% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 VC Investment in France by target market (Percentage of total US $M) OEM SMB Enterprise Consumer
  34. • Once again, Finance and Marketing were the first and second most commonly funded verticals • Lifestyle (which is a catch-all consumer category) took the third slot • IT Infrastructure and security took the fourth and fifth slots 34 @gdibner blog: yankeesabralimey Finance returned to being the top vertical Syndicate for European & Israeli Enterprise Companies Financial, 36 Marketing, 31 Lifestyle, 15 Infrastructure, 14 Security, 13 Social, 12 Productivity, 11 Employment, 11 Fashion, 11 Data, 10 Electronics, 10 Development, 9 Health, 8 Logistics, 8 Payments, 7 Entertainment, 7Gaming, 6Adtech, 6CRM, 6 Education, 6 Durables, 5 Industrial, 5 Real Estate, 5 Travel, 5 European & Israeli venture financing by target market 3Q 2015 (number of investments)
  35. • This graph shows number of investments in the top 12 verticals across 3Q14 and 3Q15 • All verticals increased in frequency except Adtech, which declined from 8 investments in 3Q14 to 6 in 3Q15 • The number of finance- related investments more than tripled from 11 in 3Q14 to 36 in 3Q15 • Marketing-related investments increased from 6 in 3Q14 to 31 in 3Q15. 35 @gdibner blog: yankeesabralimey How have the most popular verticals grown? Syndicate for European & Israeli Enterprise Companies Financial, 11 Financial, 36 Marketing, 6 Marketing, 31 Infrastructure, 10 Infrastructure, 14 Lifestyle, 5 Lifestyle, 15 Electronics, 10 Electronics, 10 Security, 6 Security, 13 Data, 7 Data, 10 Employment, 5 Employment, 11 Productivity, 4 Productivity, 11 Development, 5 Development, 9 Adtech, 8 Adtech, 6 Fashion, 3 Fashion, 11 0 20 40 60 80 100 120 140 160 180 200 Qtr3 Qtr3 2014 2015 European & Israeli venture financing by vertical market (top 12 verticals, number of investments)
  36. • Once again, financial startups were the most commonly funded category in 3Q, including consumer, enterprise, and SMB-oriented companies • The single most common category was enterprise marketing, also unchanged from last quarter • Consumer lifestyle, social, and fashion startups were particularly active as well • In contrast with last quarter, gaming and health startups didn’t crack the top ten segments 36 @gdibner blog: yankeesabralimey Which verticals for which segments? Syndicate for European & Israeli Enterprise Companies Data Electronics Fashion Employment Productivity Social Security Infrastructure Lifestyle Marketing Financial 0 5 10 15 20 25 30 35 40 European & Israeli venture financing by target market 3Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Government
  37. • This chart shows the ten most commonly funded verticals across Europe & Israel by quarter • Financial, marketing, and security show increasing strength over time • Adtech and health are declining 37 @gdibner blog: yankeesabralimey The most popular verticals in the past 12 months Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 0 20 40 60 80 100 120 140 160 180 European & Israeli venture financing by vertical market (number of investments, top 10 verticals) Financial Marketing Lifestyle Infrastructure Adtech Electronics Health Security Employment Data
  38. • Lifestyle, which is admittedly a bit of a catch-all consumer category, continues to show tremendous strength in terms of VC volume • Finance took the second place overall, and first place in 3Q15 • Electronics (which typically means consumer electronics systems companies) has shown increasing strength through 1Q, but little investment in 2Q & 3Q • Gaming, travel, and food- related categories seem to be declining • Consumer-oriented logistics plays seem to be emerging as an important category for VC investment 38 @gdibner blog: yankeesabralimey Consumer VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 0 10 20 30 40 50 60 70 80 90 100 European & Israeli venture financing by consumer verticals (number of investments, top 10 verticals) Lifestyle Financial Fashion Travel Gaming Social Health Logistics Electronics Education Food
  39. • Enterprise marketing continues to show strength as an area for VC investment • Adtech, while it has been the second most popular category for investment over the past 15 months, faded significantly over the past two quarters • Investment in developer tools has picked up • Health industry-related enterprise investment disappeared in 3Q15 39 @gdibner blog: yankeesabralimey Enterprise VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 0 10 20 30 40 50 60 70 80 90 100 European & Israeli venture financing by enterprise verticals (number of investments, top 10 verticals) Marketing Adtech Infrastructure Security Data Development Financial Employment Health CRM
  40. • After a diverse 2Q, investment trends in Israel returned to form in 3Q with enterprise, SMB, and OEM investments dominating • Security jumped to the top spot, including one consumer-oriented company • Enterprise marketing tech was a very strong category for Israeli VC investment • Financial companies took the third place slot • Enterprise infrastructure was back in the top ten • Developer tooling was nowhere to be seen 40 @gdibner blog: yankeesabralimey A closer look at Israeli venture in 1Q15 Syndicate for European & Israeli Enterprise Companies Industrial Information Entertainment Logistics Productivity Infrastructure Communications Electronics Financial Marketing Security 0 1 2 3 4 5 6 7 8 9 10 Israeli venture financing by target market 3Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM
  41. • For the third quarter running, Fintech was the dominant category of investment in the UK • Enterprise marketing, security, and infrastructure were important categories • Consumer-oriented companies dominated most categories of VC funding across the UK • UK investors still seem willing to bet on Adtech 41 @gdibner blog: yankeesabralimey UK VCs continue to bet heavily on fintech Syndicate for European & Israeli Enterprise Companies Energy Fashion Data Social Logistics Food Adtech Education Employment Payments Security Marketing Infrastructure Financial 0 2 4 6 8 10 12 14 16 UK venture financing by target market 3Q, 2015 (number of investments, top verticals) Consumer Enterprise SMB OEM
  42. • The top three categories in German VC investment in 3Q15 were consumer lifestyle, consumer finance, and consumer social applications • Enterprise marketing and enterprise data companies emerged as important categories as wel • In total, the top 10 categories in Germany generated 32 investments, 22 of which were in consumer companies 42 @gdibner blog: yankeesabralimey The German consumer party continues Syndicate for European & Israeli Enterprise Companies Health Infrastructure Adtech CRM Education Travel Logistics Food Real Estate Durables Fashion Data Marketing Social Financial Lifestyle 0 1 2 3 4 5 6 German venture financing by target market 3Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom
  43. • While Nordic investment swung back towards consumer, the mix was interesting • Electronics were the most frequently funded vertical – mostly consumer but also one OEM play and one government-oriented investment • Productivity software took second place 43 @gdibner blog: yankeesabralimey As usual, Nordic VC was unconventional Syndicate for European & Israeli Enterprise Companies Infrastructure ERP Marketing Entertainment Gaming Lifestyle Financial Social Employment Productivity Electronics 0 1 2 3 4 5 6 Nordic venture financing by target market 3Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Government
  44. • As software eats the world, services will become an increasingly important business model for venture- backed startups • This was certainly the case in 3Q15, with services taking 29% of the venture dollars invested in Europe & Israel • Commerce continues to be important, with 20% • SaaS and software were neck- and-neck at 17% and 15% • Marketplaces – business that serve a price discovery function – declined to just 7% 44 @gdibner blog: yankeesabralimey Services & commerce dominated 3Q15 Syndicate for European & Israeli Enterprise Companies Services, 748, 29% Commerce, 516, 20% SaaS, 439, 17% Software, 394, 15% Marketplace, 170, 7% Media, 123, 5% Systems, 96, 4% Components, 68, 3% European & Israeli venture financing by target market 3Q, 2015 (in US $M) (excluding mega-rounds)
  45. • Services jumped to first place with $748M invested • Commerce leaped over SaaS to take second place with $516M invested • Marketplaces seem to be slowly declining 45 @gdibner blog: yankeesabralimey In 3Q, services recovered their lead Syndicate for European & Israeli Enterprise Companies 0 100 200 300 400 500 600 700 800 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 European & Israeli venture financing by business model (top five, in US $M, excluding mega-rounds) Services SaaS Software Commerce Marketplace
  46. US VCs focused on SaaS & services • US VC interest was skewed heavily towards SaaS, Software & Services models • Markets, commerce, and media investments also attracted US VC interest, but at much lower levels 46 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 12 11 9 4 3 3 64 29 63 18 33 18 12 0 10 20 30 40 50 60 70 80 SaaS Software Services Marketplace Commerce Media Components Systems VC Investments in Europe & Israel 3Q, 2015 (number of investments) No US VC involved US VC involved
  47. • Enterprise marketing SaaS was again the most popular segment for VC investment in 3Q15 with 20 investments across the region • Consumer social media again took the second slot, with 12 investments • Consumer financial services were tied for second place, with 12 investments • SMB financial services were a close third, with 11 investments 47 @gdibner blog: yankeesabralimey Enterprise marketing & consumer social media Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 SMB Marketing SaaS Enterprise Data Software Enterprise Development SaaS Enterprise Security Software Consumer Lifestyle Commerce Consumer Fashion Commerce SMB Financial Services Consumer Financial Services Consumer Social Media Enterprise Marketing SaaS Number of VC investments Investment in Europe & Israel by segment by country 3Q15 (segments with 5 or more investments) UK & Ireland Israel DACH France Nordic Iberia Benelux South. Eur. East. Eur.
  48. • Across Europe & Israel, US VC firms invested in 18 enterprise companies, 14 consumer companies, 2 SMB companies, and 1 OEM- oriented companies • Enterprise SaaS & Software attracted by far more US VC interest than any other space 48 @gdibner blog: yankeesabralimey What business models attract US VC investments? Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 Systems SaaS Services Software Media Services Commerce Marketplace Services Software SaaS OEMSMBConsumerEnterprise US VC Investments in Europe and Israel by end market, business model, & country, 3Q 2015 (excludes seed & mega-rounds) Israel UK & Ireland Nordic DACH South. Eur. East. Eur. Benelux France
  49. SMB fintech is a UK-dominated segment • Over the past 15 months, 26 SMB fintech companies raised VC financing • 14 of these companies were based in the UK • 12 of these investments took place in 3Q15, up from 5 in 2Q15 • France and Israel saw 3 companies each in the space 49 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 14 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Numnberofinvestments SMB Fintech VC investment in Europe and Israel Number of investments Germany Belgium Finland Estonia Spain France Israel UK
  50. Consumer electronics systems – farewell? • Over the past 15 months, 23 consumer electronics systems companies (consumer IoT devices) raised venture finance in Europe & Israel • Only 6 raised in the past six months, down from a record breaking 11 in 1Q15 alone 50 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Numnberofinvestments Consumer electronics systems - VC investment in Europe and Israel Number of investments Germany Norway Poland Belgium Latvia Israel Netherlands Finland Denmark Spain UK France Sweden
  51. Security, strong as ever • 3Q15 saw a record-setting number of security investments • Within the security space, Israel and UK are the biggest sources of companies, with Sweden and Spain close behind 51 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 14 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 Numnberofinvestments Consumer gaming - VC investment in Europe and Israel Number of investments Netherlands Finland Germany Spain Sweden UK Israel
  52. Show me the SaaS • The most popular category by far for SaaS investments across the geography was marketing • Productivity SaaS applications came in second, with a focus on consumer and SMB offerings • SaaS-based development tools and CRM SaaS products are also important categories 52 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 Financial Infrastructure Security Data Employment Collaboration CRM Development Productivity Marketing SaaS VC investment in Europe and Israel by vertical and target market, 3Q 2015 (top 10 verticals) Consumer Enterprise SMB
  53. Services, diverse & dominated • This graph shows the top ten verticals within the services category • Not surprisingly, the category is dominated by financial services and payments – two services types that are relatively easy to deliver digitally • But the there is a huge diversity of the types of services being delivered by venture-backed startups, including educations, marketing, communications, and logistics 53 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 Communications Education Logistics Lifestyle Adtech Employment Marketing Infrastructure Payments Financial Services VC investment in Europe and Israel by vertical and target market, 3Q 2015 (top 10 verticals) Consumer Enterprise SMB
  54. 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. 54 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.
  55. Thank you Prepared by Gil Dibner @gdibner blog: yankeesabralimey Steinerne Brücke, Regensburg, Germany Oldest vaulted stone bridge in Germany (built 1135-1146)

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