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Europe & Israel 3Q16 Deals Done Review

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A review of Venture Capital investing across Europe & Israel 3Q16

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Europe & Israel 3Q16 Deals Done Review

  1. 1. Venture Capital in Europe & Israel Venture Investment Data: Third Quarter, 2016 Prepared by Gil Dibner Hammerfest, Norway – Northernmost city in the world 70°39′45″N 23°41′00″E 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 Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 2
  3. 3. Top 10 deals by region YTD (US $M) DACH NordicFrance Israel UK & Ireland Iberia 50 50 50 50 50 50 50 50 70 70 72 76 96 300 Phinergy Elastifile SiSense jFrog Roboteam WalkMe Kaltura Vroom Via Zerto Sirin ForeScout Skybox Security Gett 0 50 100 150 200 250 300 350 50 50 50 54 60 65 70 110 170 192 275 MUBI HighQ Intercom Blippar Student.com Darktrace Starling FarFetch FutureFinance Skyscanner Deliveroo 0 50 100 150 200 250 300 6 7 7 7 12 22 38 42 55 120 Glovo Sherpa iContainers TravelPerk ABA English Veniam CornerJob Jobandtalent OutSystems Cabify 0 20 40 60 80 100 120 140 17 17 19 20 25 33 35 37 49 88 Sol Voltaics Widespace Skeleton Technologies Polight Vivino AlphaSense Klarna M-Files StarBreeze Apptus 0 20 40 60 80 100 22 23 23 24 30 35 35 35 47 109 MisterFly Dashlane Cedexis BlaBla Car Nuxeo Acco Drivy Zenly Teads Deezer 0 20 40 60 80 100 120 34 34 40 45 45 55 70 90 100 374 Smava Spotcap Number26 Egym Home24 Brillen.de SoundCloud Heliatek MindMaze Global Fashion Group 0 100 200 300 400 Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 3
  4. 4. Quarterly pace of venture investment • In 3Q16, Europe & Israel saw $3.1 billion flowing into 393 venture transactions • This represents a 24% decrease in activity from 2Q • These numbers, and the rest of this deck, do not reflect the $1B in debt raised by Spotify in March Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 4 2,873 3,139 3,248 2,856 3,752 4,112 3,124 0 100 200 300 400 500 600 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2015 2016 Amountinvested(US$M) VC Investmentsin Europe& Israel (January 2015 - September 2016) Invested amount (US $M) Number of investments
  5. 5. Monthly pace of venture investment • Looked at on a monthly basis, the 3Q slowdown was mostly attributable to a very slow July • August and September saw a return to normal levels of investment • It’s difficult to attribute this to seasonality, as July 2015 was a very strong month Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 5 905 971 997 791 787 1,561 1,517 568 1,164 1,083 1,059 714 1,661 1,052 1,039 1,401 1,450 1,262 737 1,100 1,286 0 20 40 60 80 100 120 140 160 180 200 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2015 2016 InvestedAmount(US$M) VC Investmentsin Europe& Israel (January 2015 - September 2016) Invested amount (US $M) Number of investments
  6. 6. 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+) • Only one mega-rounds took place in Europe this quarter: Deliveroo’s $275M round • Adjusting for mega-rounds, 3Q16 was $300M less than 2Q16 354 368 507 603 635 586 716 567 559 731 695 762 813 1,513 1,187 1,669 1,678 1,337 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2015 2016 AmountInvested(US$M) Pace of VC Investment in Europe and Israel Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 6
  7. 7. Strong year-over-year growth • The first three quarters of 2016 saw 17% more venture investment than the first three quarters of 2015 • Early venture deal volume increase 81% for the first three quarters, venture volume increase 19%, growth volume increased 35%. Mega-deal volume decreased, however, by 33% • These increases mask a year- on-year decline of 5.5% for the third quarter when it’s looked at in isolation 1,007 1,824 1,839 2,188 3,481 4,684 2,622 1,751 0 2,000 4,000 6,000 8,000 10,000 12,000 2015 2016 TotalVCinvestment(US$M) VC investment volume in Europe and Israel by bracket (1Q-3Q 2015 vs 1Q-3Q 2016) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 7
  8. 8. Number of investments, by bracket • Excluding seed deals, the total number of VC investments per quarter was 248 in 3Q16, down a bit from 270 in 2Q16 – but still the third highest number of deals per quota since I started tracking this 60 83 77 85 93 139 153 157 14230 26 42 62 44 46 61 57 65 13 26 33 26 38 35 45 52 40 3 1 6 6 4 3 4 4 1 0 50 100 150 200 250 300 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 NumberofVCinvestments VC investment volume in Europe and Israel by bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 8
  9. 9. Brexit? Nothing to see here. Carry on. • Looking just at UK VC deal volume, there’s so far no evidence that Brexit caused any slowdown whatsoever in VC activity • UK has been running at around 15 VC deals per month for the past year • July 2016 peak of 25 deals is exactly the number of deals that were done in July 2015 9 3 7 7 9 8 5 5 5 4 8 6 14 2 6 5 9 9 9 11 11 10 7 11 13 11 10 1 1 4 2 3 7 3 1 5 8 4 3 1 4 4 3 8 4 2 1 7 4 10 4 4 2 2 1 2 1 1 4 1 4 1 1 3 6 3 1 3 1 6 3 5 4 4 1 2 2 2 1 1 1 1 1 2 1 1 1 0 5 10 15 20 25 30 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 NumberofVCinvestments VC investment volume in the UK by bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 9
  10. 10. Corporate VC activity, by bracket • Excluding seed deals, the total number of corporate VC investments dropped by 28% to 43 in 3Q16 • This is the first quarterly drop in over a year, but still represents more than double the 3Q15 level 6 4 5 16 7 22 19 23 184 3 9 12 7 12 6 16 19 4 4 7 8 7 7 20 18 6 3 1 3 3 0 10 20 30 40 50 60 70 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 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) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 10
  11. 11. Corporate VC activity, by country • During the third quarter of 2016, Israel yet again saw the highest number of corporate VC investments, with 17, down from 25 last quarter • The UK saw 9 corporate VC investments during that period, down from 10 • Nine other countries saw corporate VC activity across Europe, but at much lower levels 4 4 2 2 1 2 1 1 1 9 3 2 1 2 1 1 4 2 0 2 4 6 8 10 12 14 16 18 Israel UK Germany France Sweden Finland Italy Norway Switzerland Spain Denmark Numberofinvestments Number of corporate VC investments in Europe and Israel by bracket (3Q16) Growth (20-100) Venture (8-20) Early Venture (2-8) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 11
  12. 12. 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 • With very few exceptions, most months saw average round sizes of $10-12M and there is seems to be little pattern other than mean reversion • 3Q15 is the only systematic outlier to this trend, with average round sizes of $12- 15M throughout the quarter • I’ll continue to monitor this, but see no reason to expect a major shift here 4 6 8 10 12 14 16 18 20 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 AmountInvested(US$M) Average investment size in Europe and Israel (Round sizes of 2-100M) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 12
  13. 13. Total venture investment by country, 3Q 2016 • Israel maintained it’s lead with $877M raised • The UK was just behind Israel, with $830M raised • Germany dropped behind the UK with $461M raised 877 830 461 339 194 102 74 48 31 28 28 26 24 16 15 14 6 4 2 1 1 1 1 1 Israel UK Germany France Sweden Netherlands Spain Switzerland Norway Denmark Finland Ireland Belgium Estonia Italy Iceland Czech Portugal Austria Greece Croatia Latvia Slovenia Poland 0 100 200 300 400 500 600 700 800 900 1,000 Total VC investment volume by country, 3Q16 (US $M) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 13
  14. 14. Total venture investment by country, 3Q14 to 2Q16 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • With this filter, volumes and rankings are more consistent • Israel still led with volume, but 3Q dropped below both 1Q and 2Q • Once Deliveroo is backed out of the analysis, UK levels were basically flat in 3Q against 2Q • What is most notable important about this chart is the consistent gradual growth in Germany, France, and Sweden 315 567 543 475 628 699 963 1,064 877 369 267 719 437 621 444 892 552 555 180 284 389 209 379 339 333 392 461 29 163 118 232 279 225 281 367 339 74 123 89 112 140 84 140 150 194 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 0 200 400 600 800 1000 1200 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 3Q16 (top 5 countries, excluding mega-rounds) Israel UK Germany France Sweden Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 14
  15. 15. Total venture investment by country, 3Q14 to 3Q16 • 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 • One trend that can be spotted here is persistent strength in the Netherlands Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 0 20 40 60 80 100 120 140 160 180 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 3Q16 (countries ranked 6-10, excluding mega-rounds) Spain Netherlands Finland Ireland Denmark Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 15
  16. 16. Average venture round sizes, by region • For a while, I had been seeing a trend towards convergence in the sizes of rounds across the geography • I think that is still true, but round sizes do seem to be diverging a bit • I suspect that the decreases in round size across France, Portugal, and Spain are likely due to increased (and better) reporting around small rounds Benelux, 4.7 Benelux, 14.1 DACH, 14.9 DACH, 12.7 France, 8.2 France, 8.7 Iberia, 7.2 Iberia, 5.9 Israel, 15.9 Israel, 14.1 Nordic, 11.5 Nordic, 10.1 UK & Ireland, 8.5 UK & Ireland, 9.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Qtr4 Qtr4 Qtr3 2014 2015 2016 Averageroundsize(US$M) Average investment size in Europe and Israel (rounds of $2-100M) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 16
  17. 17. Total venture investment by region, 3Q16 • 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 Israel, 877 UK & Ireland, 856 DACH, 511 France, 339 Nordic, 312Benelux, 126 Iberia, 78 South. Eur., 18 East. Eur., 6 Total VC investment by region, 3Q16 Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 17
  18. 18. 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 and Israel were tied for the number of venture deals, with 62 each 26 36 22 25 16 9 3 4 1 21 19 10 4 10 1 15 6 7 6 1 1 4 1 0 10 20 30 40 50 60 70 Israel UK & Ireland DACH France Nordic Iberia Benelux South. Eur. East. Eur. Numberofinvestments Number of investments in Europe and Israel by bracket, 3Q 2016 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 18
  19. 19. Participation rate of US VC firms, by bracket • In the third quarter, US VCs participated in 14% of the VC financing rounds in EU and Israel • As usual, US VCs are much more likely to participate in later rounds 1% 15% 25% 38% 100%99% 85% 75% 63% 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? (3Q16) No Yes Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 19
  20. 20. US VC firm participation rate are consistent • In 3Q, US VCs participated in about 21% of the rounds that took place in Europe • This rate is flat with 2Q and at the top end of the historical range 15% 23% 17% 20% 20% 16% 16% 21% 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 PercentageofRounds Did US VC firms participate in European VC rounds? (Rounds of $2M-$100M, 3Q14-3Q16) No US VC in the round US VC in the round Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 20
  21. 21. US VC firm participation rate are consistent • Rates of US VC participation vary wide across different countries • I’ve tried to limit the analysis to countries with venture scenes active enough that the statistics would be meaningful • On this metric, in 2016, Israel and Ireland leap to the top of the list, with 40% and 35% respectively • Spain and France bring up the rear, with only 5% and 7% 40% 35% 26% 21% 17% 16% 8% 7% 5%0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Ireland Israel Netherlands Germany UK Finland Sweden France Spain PercentageofDollarsInvested Did US VC firms participate in European VC rounds? (Nine months ended September 2016) No US VC in the round US VC in the round Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 21
  22. 22. Participation of US VC firms by country • In 3Q16, US VCs firms were active in only 9 different European countries (down from 12 in 2Q) • US VC firms were most active in Israel, where they participated in 25 investment rounds • The UK saw 11 investments • US VCs invested in 6 German companies and 3 French ones 25 11 6 3 3 3 2 1 10 5 10 15 20 25 30 Israel UK Germany France Sweden Netherlands Switzerland Ireland Finland NumberofVCinvestments Rounds with a US VC involved (3Q, 2016) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 22
  23. 23. Participation of US VC firms by country • This chart shows US VC activity within Europe throughout 2015 and 2016 • The overwhelming bulk of US VC activity is in Israel, the UK & Ireland, DACH Israel, 12 Israel, 14 Israel, 14 Israel, 14 Israel, 16 Israel, 27 Israel, 25 UK & Ireland, 10 UK & Ireland, 13 UK & Ireland, 9 UK & Ireland, 8 UK & Ireland, 12 UK & Ireland, 11 UK & Ireland, 12 DACH, 8 DACH, 6 DACH, 4 DACH, 9 DACH, 6 DACH, 8 DACH, 8 Nordic, 2 Nordic, 3 Nordic, 5 Nordic, 5 Nordic, 5 Nordic, 4 Benelux, 5 Benelux, 3 Benelux, 3 France, 3 France, 2 France, 2 France, 3 France, 3 Iberia, 3 Iberia, 4 Iberia, 3 0 10 20 30 40 50 60 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2015 2016 NumberofVCinvestments Investments with US VC participation Israel UK & Ireland DACH Nordic Benelux France Iberia East. Eur. South. Eur. Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 23
  24. 24. 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? How is value delivered to customers? What are customers paying for? For example: Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers Three-dimensional approach to sector mapping Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 24
  25. 25. • Excluding mega-rounds, investment activity decreased in both consumer and enterprise • Investment activity has been trending up in OEM-oriented companies What target markets are attracting the most VC investment in Europe & Israel? 475 595 980 850 1,177 930 1,078 1,243 1,092 494 798 953 814 907 1,112 1,679 1,644 1,288 78 133 121 153 275 135 224 91 177 78 114 47 106 182 150 166 186 219 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q14 to 3Q16 (excluding mega-rounds, US $M) Government Telecom OEM SMB Enterprise Consumer Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 25
  26. 26. • When Israel is excluded from the sample, 52% of all VC dollars in Europe went to consumer-oriented companies • OEM-oriented companies continued their rise, accounting for 8% of all VC dollars in Europe Consumer investment leads Europe 62% 36% 56% 63% 62% 57% 53% 58% 52% 18% 49% 34% 22% 24% 31% 35% 33% 32% 6% 10% 4% 12% 8% 6% 5% 3% 7%5% 4% 2% 4% 5% 6% 5% 8%6%8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 European venture financing by target market 3Q14 to 3Q16 (excluding Israel, percent of US $M) Government Telecom OEM SMB Enterprise Consumer Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 26
  27. 27. • When the sample set is limited to rounds under $20M, the ratio of consumer to enterprise investments shifted back to where it has been in the past • Consumer investments as a percentage of rounds accounted for 45% of early rounds • Interestingly, OEM & SMB investments doubled as a percentage of the total from 2Q to 3Q – and entirely at the expense of enterprise deals Early-stage consumer deals come back 39% 50% 46% 41% 46% 50% 38% 46% 45% 41% 37% 50% 47% 39% 36% 47% 41% 33% 3% 9% 2% 7% 9% 6% 9% 5% 11% 11% 2% 2% 2% 3% 7% 5% 5% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 European venture financing by target market 3Q14 to 3Q16 (excluding Israel, rounds up to $20M, percent of US $M) Government Telecom OEM SMB Enterprise Consumer Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 27
  28. 28. Breakdown by region & target market • In 3Q, enterprise companies represented the plurality of investments in Israel, the Nordics, and Benelux • DACH and the Nordics show relatively high concentrations of OEM investments 196 521 282 170 84 46 55 568 246 75 161 147 69 110 59 0 100 200 300 400 500 600 700 800 900 1,000 Israel UK & Ireland DACH France Nordic Benelux Iberia Totalamountinvested(US$M) Investment in Europe and Israel by target market by region 3Q, 2016 (US $M) Government Telecom OEM SMB Enterprise Consumer Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 28
  29. 29. Distribution of investment rounds by country • Across Europe & Israel, 43% of VC investment rounds were in consumer companies in 3Q16 63% 60% 56% 48% 41% 41% 17% 16% 31% 20% 26% 35% 33% 31% 73% 68% 6% 10% 11% 10% 16% 11% 16% 7% 6% 10% 15% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% France South. Eur. Iberia UK & Ireland DACH Nordic Israel Benelux Investment in Europe and Israel by target market by country 3Q16 (Number of investments) Consumer Enterprise SMB OEM Telecom Government Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 29
  30. 30. 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 • In 2Q, this trend reserved itself for the first time in four quarters and persisted into 3Q 56% 37% 46% 56% 43% 39% 37% 43% 44% 25% 41% 46% 25% 38% 50% 51% 50% 44% 6% 7% 5% 9% 12% 3% 6% 5%6% 11% 6% 7% 5% 6% 5% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 Investment in Europe and Israel by target market (Rounds over $20M, number of investments) Government Telecom OEM SMB Enterprise Consumer Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 30
  31. 31. • Fintech was yet again the most popular vertical across Europe & Israel, with 33 investments in the category • Lifestyle (a catchall category for consumer commerce) was the second most popular vertical, with 28 Finance returned to being the top vertical Financial, 33 Lifestyle, 28 Marketing, 27 Security, 23 Electronics, 20 Infrastructure, 17 Industrial, 16 Travel, 16 Logistics, 15 Adtech, 14 Data, 14 Communications, 13 Fashion, 13 Education, 11 Gaming, 11 Food, 10 Productivity, 10Automotive, 9Health, 9Employment, 9Payments, 8 HMI, 7 Energy, 7 Social, 7 Entertainment, 6 CRM, 6 European & Israeli venture financing by target market 3Q 2016 (number of investments) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 31
  32. 32. • This graph shows number of investments in the top 10 verticals across 3Q15 and 3Q16 • The two most popular verticals, finance and marketing, both declined slightly in frequency • Most of the other categories registered strong increases • Travel and industrials, for example, tripled; and electronics doubled How have the most popular verticals grown? Financial, 36 Financial, 33 Marketing, 31 Marketing, 27 Lifestyle, 15 Lifestyle, 28 Security, 13 Security, 23Infrastructure, 14 Infrastructure, 17 Electronics, 10 Electronics, 20 Fashion, 11 Fashion, 13 Data, 10 Data, 14 Logistics, 8 Logistics, 15 Industrial, 5 Industrial, 16 Travel, 5 Travel, 16 Productivity, 11 Productivity, 10 0 50 100 150 200 250 Qtr3 Qtr3 2015 2016 European & Israeli venturefinancing by vertical market (top 10 verticals, number of investments) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 32
  33. 33. • Finance was once again the most frequently funded vertical • Consumer lifestyle companies took second place • Marketing was the third most frequently funded vertical, with enterprise-oriented marketing taking the lion’s share within that category • Enterprise security took fourth place • Electronics (both consumer systems and OEM components) was the fourth most funded category in the quarter Which verticals for which segments? Data Adtech Logistics Industrial Travel Infrastructure Electronics Security Marketing Lifestyle Financial 0 5 10 15 20 25 30 35 European & Israeli venture financing by target market 3Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Government Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 33
  34. 34. • This chart shows the ten most commonly funded verticals across Europe & Israel by quarter • 3Q was fairly consistent with 2Q, with decreased volume across most categories The most popular verticals in the past 2 years Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 0 50 100 150 200 250 300 European & Israeli venture financing by vertical market (number of investments, top 10 verticals) Adtech Health Logistics Electronics Lifestyle Employment Security Infrastructure Marketing Financial Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 34
  35. 35. • Lifestyle, which is admittedly a bit of a catch-all general consumer category, continues to show tremendous strength in terms of VC volume • Finance was the second-most funded consumer category • Health and logistics (transportation, parking, etc.) show continued decreases Consumer VC investment trends Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 0 20 40 60 80 100 120 140 160 180 European & Israeli venture financing by consumer verticals (number of investments, top 10 verticals) Social Travel Health Fashion Food Electronics Logistics Gaming Lifestyle Financial Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 35
  36. 36. • Enterprise marketing seems to have levelled off as an area for VC investment • Security and infrastructure also remain stable but significant • Adtech decreased slightly • CRM and employment decreased significantly • Data-oriented startups and industrial startups trended higher • Enterprise employment (HR) related startups attracted very little investment Enterprise VC investment trends Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 0 20 40 60 80 100 120 140 160 180 European & Israeli venture financing by enterprise verticals (number of investments, top 10 verticals) CRM Financial Industrial Employment Development Data Infrastructure Adtech Security Marketing Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 36
  37. 37. • Security retained the top spot in Israel, with 11 investments • Marketing, data, infrastructure, and electronics were next • Adtech was nowhere to be seen A closer look at Israeli venture in 3Q16 Industrial Financial Agtech Development Productivity Communications Electronics Infrastructure Data Marketing Security 0 2 4 6 8 10 12 14 Israeli venture financing by target market 3Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Government Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 37
  38. 38. • Fintech reclaimed its top spot in the UK VC landscape The UK VC market in 2Q16 Adtech Fashion Communications Payments Productivity Automotive Real Estate Infrastructure Data Security Marketing Lifestyle Financial 0 2 4 6 8 10 12 UK venture financing by target market 3Q, 2016 (number of investments, top verticals) Consumer Enterprise SMB OEM Telecom Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 38
  39. 39. • Fintech led the German VC eco-system in 3Q16, with 7 investments • Logistics was next • Fashion and travel tied for third place, with 4 investments each The German VC market in 3Q16 Health Industrial Data Infrastructure Energy CRM Marketing Durables Payments Adtech Social Employment Lifestyle ERP Travel Fashion Logistics Financial 0 1 2 3 4 5 6 7 8 German venture financing by target market 3Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 39
  40. 40. • Fintech was the most commonly funded vertical in the Nordics, with 9 investments, mostly into SMB-oriented companies • Gaming was next, followed by marketing The Nordic VC market in 3Q16 Infrastructure Legal Logistics Education Productivity Health Communications Industrial Electronics HMI Energy Marketing Gaming Financial 0 1 2 3 4 5 6 7 8 9 10 Nordic venture financing by target market 3Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 40
  41. 41. • Uniquely, consumer electronics dominated the French VC landscape in 3Q16 • Travel and adtech were particularly strong in France in 3Q16 The French VC market in 3Q16 Logistics Infrastructure Industrial Education Entertainment Food Adtech Travel Lifestyle Electronics 0 1 2 3 4 5 6 7 8 9 10 French venture financing by target market 3Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB Government Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 41
  42. 42. • SaaS was the again most funded business model in 3Q16 • As software eats the world, services are becoming an increasingly important business model for venture- backed startups • This continued into 2016, with services taking 23% of the venture dollars invested in Europe & Israel in 3Q16 • Commerce rebounded, accounting for 13% of the dollars invested • Marketplaces – businesses that serve a price discovery function – were just 5% SaaS above all SaaS, 729, 26% Services, 658, 23% Software, 425, 15% Commerce, 375, 13% Systems, 197,7% Marketplace, 148,5% Components, 144, 5% Media, 99, 3% Semiconductor, 73, 3% Meda, 2, 0% European & Israeli venturefinancing by target market 3Q16 (in US $M) (excluding mega-rounds) Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 42
  43. 43. • Trends about business models remained fairly consistent • SaaS reverted to mean a bit • Commerce recovered a lot of lost ground • Marketplaces hit a new low In 2Q, SaaS set a record 0 200 400 600 800 1000 1200 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 2014 2015 2016 European & Israeli venture financing by business model (top five, in US $M, excluding mega-rounds) Services SaaS Software Commerce Marketplace Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 43
  44. 44. • Enterprise marketing SaaS was again the most popular segment for VC investment in 3Q16 with 20 investments across the region • Consumer lifestyle commerce took second place, driven by 8 UK and 3 Spanish investments • Enterprise security software took third place, with 16 investments. • Consumer financial services dropped to fourth place, with 14 investments (down from 21 in 2Q) The 10 most popular investment segments 0 5 10 15 20 25 Consumer Gaming Services Consumer Education Services Consumer Travel Marketplace Enterprise Data SaaS Enterprise Infrastructure Software Consumer Fashion Commerce Consumer Electronics Systems SMB Financial Services Consumer Financial Services Enterprise Security Software Consumer Lifestyle Commerce Enterprise Marketing SaaS Number of VC investments Investmentin Europe& Israel by segment by country 3Q16 (top 10 segments) UK & Ireland Israel France Nordic DACH Iberia Benelux South. Eur. East. Eur. Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 44
  45. 45. • Across Europe & Israel, US VC firms invested in 37 enterprise companies, 14 consumer companies, and 1 OEM company • Enterprise SaaS & Software attracted by far more US VC interest than any other space What business models attract US VC investments? 0 5 10 15 20 25 Semiconductor SaaS Marketplace Software Media Commerce Services Systems Systems Marketplace Services Software SaaS OE MConsumerEnterprise US VC Investments in Europe and Israel by end market, business model, & country, 3Q16 (excludes seed & mega-rounds) Israel UK & Ireland DACH Nordic Benelux France Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 45
  46. 46. Show me the SaaS • As usual, the most popular vertical by far for SaaS investments across the geography was marketing • Data-related SaaS (databases, analytics, BI) was tied with productivity SaaS for second place • Infrastructure SaaS was third • Consumer SaaS opportunities emerged across productivity, energy, and legal 0 5 10 15 20 25 Employment CRM Agtech Legal Industrial Energy Adtech Development Infrastructure Productivity Data Marketing SaaS VC investment in Europe and Israel by vertical and target market, 3Q16 (top 10 verticals) Consumer Enterprise Government SMB Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 46
  47. 47. Services investing in 3Q16 • This graph shows the top ten verticals within the services category in 3Q16 across Europe & Israel • Financial services were (yet again) far and away the most frequently funded vertical – mostly for consumers and SMBs • Education services (edtech) tied with gaming as the second most funded services categories 0 5 10 15 20 25 30 Health Industrial Entertainment Real Estate Communications Marketing Security Payments Adtech Logistics Education Gaming Financial Services VC investment in Europe and Israel by vertical and target market, 3Q16 (top 10 verticals) Consumer Enterprise SMB Telecom Prepared by Gil Dibner follow me on (@gdibner), connect with me on , subscribe to my , or invest with me onblog 47
  48. 48. 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. 48 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.
  49. 49. Thank you blog

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