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Venture Capital in Europe & Israel; 4Q 2014

Venture capital investment in Europe and Israel increased in the fourth quarter of 2014 compared to the third quarter. The number of deals rose from 122 to 204 and the total investment amount grew from $1.7 billion to $1.9 billion. Israel saw the largest total investment volume while Germany surpassed the UK to become the second largest destination. Four mega-rounds skewed the totals, with companies like BlaBlaCar and DeliveryHero raising large funds. Seed and early stage investment remained strong across the region.

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Venture Capital in Europe & Israel Venture Investment Data: Fourth Quarter, 2014 Prepared by Gil Dibner @gdibner blog: yankeesabralimeyCabo da Roca, Westernmost point in mainland Europe
The data • Back in June, 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 excluded from this analysis • The analysis is limited to ICT categories and excludes life sciences • The analysis excludes Turkey and FSU countries @gdibner blog: yankeesabralimey 2
Monthly pace of venture investment • During the seven months ended December, 2014, there were 371 reported venture investments across Europe & Israel • A total of $4.138B was invested in Europe & Israel during this period, an average of $591M per month • Average pace seems to be just over 50 investments per month • There was a summer slowdown in August in the number of transactions, but a significant rebound in 4Q @gdibner blog: yankeesabralimey 3 519 491 565 644 626 567 727 45 42 30 50 79 73 52 0 100 200 300 400 500 600 700 800 900 1,000 0 10 20 30 40 50 60 70 80 90 Jun Jul Aug Sep Oct Nov Dec Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel, June-December 2014 Invested amount (US $M) Number of investments
Quarterly pace of venture investment • The fourth quarter saw more VC activity in Europe and Israel than the third quarter • The number of VC rounds rose from 122 to 204 • The amount of VC investment rose from $1.7B to $1.9 billion @gdibner blog: yankeesabralimey 4 1,700 1,919 122 204 0 500 1,000 1,500 2,000 2,500 0 50 100 150 200 250 Qtr3 Qtr4 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel, 2nd half of 2014 Invested amount (US $M) Number of investments
Four 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 in the past four months: • French ride-sharing marketplace BlaBlaCar raised $100M • Spanish voting software company Scytl raised $104M • German food delivery company DeliveryHero raised $350M • Dutch payments processor Adyen raised $250M • Adjusting for mega-rounds, September was the lowest volume month in 3Q and December was the lowest volume month in 4Q @gdibner blog: yankeesabralimey 5 70 97 57 92 121 121 103 108 117 60 168 109 76 108 332 171 342 26 366 343 249 0 100 200 300 400 500 600 700 800 Jun Jul Aug Sep Oct Nov Dec Qtr2 Qtr3 Qtr4 AmountInvested(US$M) Pace of VC Investment in Europe and Israel, Jun-Dec 2014 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
Number of investments, by bracket • On this slide, Europe’s summer & Christmas holiday effect comes into sharpest relief • Angel and venture investments, which take the least time to close, were at their lowest in August & December • Deal volume peaked in October, with 79 investments • Fourth quarter activity consistently surpassed third quarter activity @gdibner blog: yankeesabralimey 6 9 6 3 7 28 26 15 17 21 14 25 31 29 22 10 9 5 16 10 6 99 5 7 1 10 12 5 0 10 20 30 40 50 60 70 80 90 Jun Jul Aug Sep Oct Nov Dec NumberofVCinvestments Number of investments in Europe and Israel by bracket, Jun-Dec 2014 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
Average round size, by bracket • Within each bracket, round sizes have remained relatively stable @gdibner blog: yankeesabralimey 7 4.1 4.6 4.1 3.7 3.9 4.2 4.7 10.8 13.0 11.9 10.5 10.9 12.7 12.0 36.9 34.2 48.9 26.0 36.6 28.5 49.9 0 10 20 30 40 50 60 Jun Jul Aug Sep Oct Nov Dec AmountInvested(US$M) Average investment size in Europe and Israel by bracket, Jun-Dec 2014 Seed (<2) Early Venture (2-8) Venture (8-20) Growth (20-100)
Total venture investment by country, 2H 2014 • Israel led Europe with the total amount of venture dollars invested in the second half of 2014 US $M @gdibner blog: yankeesabralimey 8 882.6 816.2 631.5 306.4 294.8 217.4 198.7 82.0 57.0 35.0 30.0 20.3 12.0 10.4 6.6 6.4 6.0 1.8 1.7 1.3 0.6 0.5 Israel Germany UK Netherlands France Spain Sweden Finland Hungary Norway Ireland Denmark Poland Belgium Switzerland Portugal Iceland Estonia Greece Austria Latvia Italy 0 100 200 300 400 500 600 700 800 900 1,000 Total VC investment volume by country, 2H 2014 (US $M)
Total venture investment by country, 3Q & 4Q 2014 • Investment volume in Israel nearly doubled in 4Q catapulting Israel to first place • Investment volume in Germany increased by almost 50%, vaulting Germany over the UK to second place • France & Sweden also saw meaningful increases • Prezi’s $57M growth round put Hungary on the map in sixth place @gdibner blog: yankeesabralimey 9 Israel, 315.2 Israel, 567.5 UK, 368.2 UK, 263.4 Germany, 180.2 Germany, 286.0 Sweden, 74.4 Sweden, 124.3 France, 29.1 France, 165.7 Spain, 61.7 Spain, 51.7Finland, 35.7 Finland, 46.3 Hungary, 57.0 Netherlands, 31.6 Netherlands, 24.8 Norway, 35.0Ireland, 30.0 Qtr3 Qtr4 0 100 200 300 400 500 600 TotalVCinvestment(US$M) Total VC investment, 3Q & 4Q (excluding mega-rounds)
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 • Across all stages, French companies seem to raise rounds of the smallest size in each bracket • In the UK & Ireland venture rounds tend to be smaller, but growth rounds are, on average, the largest in Europe @gdibner blog: yankeesabralimey 10 Benelux, 4.0 Benelux, 11.9 DACH, 4.1 DACH, 11.9 DACH, 37.3 France, 3.7 France, 9.2 France, 24.2 Iberia, 4.5 Iberia, 13.8 Iberia, 30.0 Israel, 4.4 Israel, 12.8 Israel, 38.9 Nordic, 4.4 Nordic, 11.2 Nordic, 33.1 UK & Ireland, 4.1 UK & Ireland, 10.2 UK & Ireland, 40.4 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 Early Venture (2-8) Venture (8-20) Growth (20-100) Averageroundsize(US$M) Average investment size in Europe and Israel by bracket, 2H 2014
Total venture investment by region, June-September 2014 • When VC investments across Europe are aggregated into regions, Israel, DACH, UK & Ireland, the Nordics, and France are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments (Adyen, Prezi, and many others), but the volumes are still low • Taken as a group, the Nordics (which includes the Baltics) saw a significant increase in 4Q over 3Q @gdibner blog: yankeesabralimey 11 Israel, 315.2 Israel, 567.5 DACH, 532.2 DACH, 291.9 UK & Ireland, 398.2 UK & Ireland, 263.4 Nordic, 123.4 Nordic, 221.1 Benelux, 285.2France, 129.1 France, 165.7 Iberia, 167.2 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Qtr3 Qtr4 TotalVCinvestment(US$M) Total VC investment by region, Q3 & Q4 2014 Israel DACH UK & Ireland Nordic Benelux France Iberia East. Eur. South. Eur.
Rounds by bracket & country • Israel led in the total number of VC deals, including an impressive 10 growth rounds • Excluding growth and mega- rounds, the UK & Ireland saw the highest number of seed, early venture and venture investments • DACH slipped from fourth place in 3Q to fifth place in 4Q @gdibner blog: yankeesabralimey 12 9 14 12 12 6 8 6 2 16 23 12 11 10 5 5 9 2 2 4 4 2 10 4 4 3 5 0 5 10 15 20 25 30 35 40 45 50 Israel UK & Ireland Nordic France DACH Iberia Benelux East. Eur. South. Eur. Numberofinvestments Number of investments in Europe and Israel by bracket, 4Q 2014 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<.5-2)
Investment by region, by bracket • In 4Q, Israel led in terms of total VC dollars invested, even with mega-rounds included • DACH was in second place • When growth and mega- rounds are excluded, UK & Ireland would come in second • Note the impact of Adyen on Benelux and the impact of Prezi on Eastern Europe @gdibner blog: yankeesabralimey 13 2 70 40 99 51 42 23 20 121 45 20 25 37 28 366 199 132 132 72 57 250 0 100 200 300 400 500 600 Israel DACH UK & Ireland Nordic France East. Eur. Iberia Benelux South. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by bracket by region, 4Q 2014 (ranked excluding mega-rounds) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
Participation rate of US VC firms, by bracket • US VC firms are increasingly active in the European and Israeli VC markets • US VC firms participated in 17.4% of the rounds that took place in the fourth quarter • US VCs participated in only 3% of seed rounds, and 20% of early venture and venture rounds • US VCs get far more active in the later stages: almost half of growth rounds had US investors, as did Adyen’s mega-round @gdibner blog: yankeesabralimey 14 94% 97% 92% 80% 80% 80% 54% 52% 33% 6% 3% 8% 20% 20% 20% 46% 48% 67% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr3 Qtr4 Qtr3 Qtr4 Qtr3 Qtr4 Qtr3 Qtr4 Seed (.5-2) Early Venture (2-8) Venture (8-20) Growth (20-100) Mega (>100) Totalamountinvested(US$M) Did US VC firms participate in European & Israeli VC rounds? Yes No
Participation of US VC firms by country • In 4Q, US VCs firms were active in 12 different European countries, up from 10 in 3Q • US VC firms were most active in Israel, where they participated in 14 investment rounds @gdibner blog: yankeesabralimey 15 14 5 3 3 3 2 2 30 38 19 7 5 28 11 13 4 2 3 2 20 5 10 15 20 25 30 35 40 45 50 Israel UK Germany Netherlands Sweden France Finland Spain Denmark Portugal Poland Hungary Norway Belgium Switzerland Greece Austria Latvia Estonia NumberofVCinvestments In which countries are US VCs most active? 4Q, 2014 No US VC involved US VC involved
Participation of US VC firms by country • Relative to the number of VC rounds, the UK, Spain, and France remain surprisingly under- penetrated by US VC firms • Hungary, Portugal, and Poland saw one VC investment each during 4Q, with US VC firms participating in each of them @gdibner blog: yankeesabralimey 16 38% 32% 30% 20% 15% 14% 12% 7% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hungary Portugal Poland Sweden Israel Netherlands Denmark Finland Germany UK Spain France PercentofinvestmentroundswithUSVCparticiation Which countries are the most penetrated by US VCs? No Yes
As a reminder, I am using a three-dimensional approach to sector mapping 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
What target markets are attracting the most VC investment in Europe & Israel? • All target markets saw an increase in investment activity across Europe & Israel in 4Q compared to 3Q @gdibner blog: yankeesabralimey 18 474 599 493 79678 133 77 114 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Qtr3 Qtr4 TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q & 4Q, 2014 (in US $M) Government Telecom OEM SMB Enterprise Consumer
What target markets are attracting the most VC investment in Europe & Israel? • In terms of dollars invested, consumer-oriented companies accounted for just over a third of VC investment in the 4Q, down slightly from previous months • In December, over 57% of VC dollars invested went to enterprise-oriented companies @gdibner blog: yankeesabralimey 19 45% 28% 53% 42% 34% 39% 34% 46% 45% 40% 45% 47% 40% 57% 7% 18% 6% 17% 9% 5% 6% 12% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jun Jul Aug Sep Oct Nov Dec TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q & 4Q, 2014 (in US $M) Government Telecom OEM SMB Enterprise Consumer
Breakdown by region & target market • Interesting (and as suggested by last quarter’s report), the DACH region saw a shift in investment focus in 4Q from consumer to enterprise • The Israeli VC landscape continued to be dominated by non-consumer companies • Other European markets such as the UK, the Nordics, and France were heavily weighted towards consumer investments in 4Q @gdibner blog: yankeesabralimey 20 116 88 136 129 89 17 393 171 270 110 54 30 17 18 27 57 18 56 23 35 20 0 100 200 300 400 500 600 Israel DACH Benelux UK & Ireland Nordic France East. Eur. Iberia South. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by target market by country 4Q, 2014 (US $M) Government Telecom OEM SMB Enterprise Consumer
Distribution of investment rounds by country • Across Europe & Israel, 41% of VC investment rounds were in consumer companies in 4Q, roughly the same as 3Q • In the DACH region, consumer companies took a back seat in 4Q, in a marked difference from 3Q • The Nordic region saw the most emphasis on consumer investments • Israel was heavily weighted towards enterprise investments, even more so than in 3Q @gdibner blog: yankeesabralimey 21 60% 50% 50% 50% 44% 40% 38% 36% 23% 27% 37% 50% 40% 33% 62% 56% 66% 3% 50% 10% 16% 20% 4% 5% 7% 0% 4% 7% 3% 3% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nordic East. Eur. France South. Eur. UK & Ireland Iberia Benelux DACH Israel Investment in Europe and Israel by target market by country 4Q 2014 (Number of investments) Consumer Enterprise SMB OEM Telecom Government
Is Europe’s “consumer exuberance” over? • The majority of rounds across all stages were in non-consumer oriented companies, a contrast from the 3rd quarter • Interestingly, this was true for seed investments as well, which seem to be roughly balanced with later stages in terms • Over half of early venture rounds in Europe were in enterprise-oriented companies • These findings are made more significant by the exclusion of Israel, which has long had an enterprise focus. @gdibner blog: yankeesabralimey 22 47% 55% 39% 40% 44% 36% 39% 36% 9% 6% 15% 14% 7% 8% 3% 3% 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 4Q 2014 (Number of investments) Consumer Enterprise SMB
DACH moves toward the enterprise • DACH is clearly a region with a record of strong consumer-oriented investment • In 4Q this began to change • It’s too early to tell if this will turn into a long-term trend, but I expect that Berlin will – like London – emerge as a key hub for a wide variety of startups @gdibner blog: yankeesabralimey 23 100% 100% 94% 56% 13% 64% 34% 2% 35% 57% 36% 66% 9% 9% 5% 20% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jun Jul Aug Sep Oct Nov Dec Investment in DACH by target market by stage bracket 4Q 2014 (Number of investments) OEM SMB Enterprise Consumer
Investment rounds by vertical • Financial (“fintech”) startups drove the highest number of VC rounds, followed by marketing, and infrastructure • Deep diversity across Europe @gdibner blog: yankeesabralimey 24 Financial, 17 Marketing, 15 Infrastructure, 15 Lifestyle, 13 Adtech, 11 Data, 10 Health, 9 Productivity, 8 Education, 8 Employment, 8 Payments, 8 Travel, 7 Logistics, 7 Communications, 7 Gaming, 7Electronics, 7Development, 7 Fashion, 6 Media, 6 European & Israeli venture financing by target market 4Q 2014 (number of investments)
Which verticals for which markets? • Financial companies saw the most investment activity in 4Q, split between enterprise, SMB, and consumer companies • In 4Q, SMB-focused companies were funded across many verticals, compared to only two verticals in 3Q • Many verticals saw investment into both consumer- and enterprise- oriented businesses @gdibner blog: yankeesabralimey 25 Industrial SCM Informatics Sports Storage Agtech Real Estate Food Social Durables ERP Security Energy Fashion Media Development Electronics Logistics Communications Gaming Travel Employment Payments Education Productivity Health Data Adtech Lifestyle Infrastructure Marketing Financial 0 2 4 6 8 10 12 14 16 18 European & Israeli venture financing by target market 4Q, 2014 (number of investments) Consumer Enterprise SMB OEM Telecom Government
Software & SaaS models led the pack in 4Q • In terms of dollars invested during 4Q, software (26%) and SaaS (23%) were the leaders • Services came in third, with 16% (this excludes Adyen, a services company) • Marketplace business models took fourth place, with 10% of invested capital • Physical products (systems, components, and semiconductors) accounted for only 14% of total investment combined @gdibner blog: yankeesabralimey 26 Software, 443, 26% SaaS, 389, 23% Services, 264, 16% Marketplace, 169, 10% Commerce, 149, 9% Systems, 149, 9% Components, 46, 3% Semiconductors, 34, 2% Media, 26, 2% European & Israeli venture financing by target market 4Q, 2014 (in US $M) (excluding mega-rounds)
More software, SaaS, & services in 4Q • As a percentage of VC investment, software, SaaS, and services all increased in 4Q relative to 3Q • Marketplaces and commerce models declined in terms of relative share, from 38% of VC investment to only 19% in 4Q @gdibner blog: yankeesabralimey 27 19% 27% 19% 23% 11% 16%23% 10% 15% 9% 9% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 European & Israeli venture financing by business model 3Q vs 4Q, 2014 (in US $M) Media Systems Components Semiconductors Commerce Marketplace Services SaaS Software
US VC interest is concentrated in specific business models • US VC firms investing in Europe & Israel continued to focus mainly on SaaS, software, and services • While commerce companies continued to attract attention from local investors, no US VC firms participated in a commerce investment during 4Q • Components, and semiconductors attracted little interest from local VCs, and no interest at all from US VCs @gdibner blog: yankeesabralimey 28 14 10 7 3 2 44 33 30 27 11 2 15 3 20 10 20 30 40 50 60 70 SaaS Software Services Marketplace Systems Media Commerce Semiconductors Components VC Investments in Europe & Israel 4Q, 2014 No US VC involved US VC involved
The most popular segments in Europe • During 4Q the 204 investments in Europe & Israel fell into 110 distinct segments • Of these, 98 fell into 23 segments of 3 or more companies • The Nordics dominated gaming software and consumer communications services • The UK was particularly strong in consumer financial services, consumer financial marketplaces, and enterprise adtech software • Israel was particularly strong in enterprise marketing SaaS, enterprise infrastructure software, enterprise payments services, and enterprise security software @gdibner blog: yankeesabralimey 29 0 1 2 3 4 5 6 7 8 9 10 Enterprise Data Software Consumer Media SaaS Enterprise Development SaaS Enterprise Adtech Services Enterprise Development Software Consumer Financial Marketplace SMB Financial Marketplace Consumer Communications Services SMB Marketing SaaS Enterprise Adtech Software Enterprise Productivity SaaS Consumer Education Services Enterprise Security Software Consumer Financial Services Consumer Lifestyle Commerce Enterprise Payments Services Consumer Electronics Systems Consumer Fashion Commerce Consumer Gaming Software Enterprise Data SaaS Enterprise Infrastructure Software Consumer Lifestyle Marketplace Enterprise Marketing SaaS Investment in Europe & Israel by segment by country 4Q 2014 (segments with 3 or more investments) UK & Ireland Nordic Israel France DACH Iberia Benelux South. Eur. East. Eur.
The most popular segments in Europe & Israel for US VC firms • Across Europe & Israel, US VC firms invested in 21 enterprise companies, 12 consumer companies, 2 SMB companies, 1 OEM, and 1 government-oriented company @gdibner blog: yankeesabralimey 30 0 2 4 6 8 10 12 Systems Services SaaS Media SaaS Marketplace Services Software Systems Marketplace Services Software SaaS OEMGovtSMBConsumerEnterprise US VC Investments in Europe and Israel by end market, business model, country, 4Q 2014 Israel Nordic UK & Ireland DACH Benelux Iberia East. Eur. France
Average investment size by target market • Growth rounds involving US firms are significantly larger than rounds that do not • This effect was especially pronounced for enterprise companies • Enterprise companies seem to raise larger growth rounds than consumer comapnies • At the early venture and venture stages, the involvement of US firms does not imply a larger round @gdibner blog: yankeesabralimey 31 8 12 37 53 57 11 12 8 14 13 15 29 29 26 44 20 0 10 20 30 40 50 60 Consumer Enterprise Government OEM SMB Telecom Consumer Enterprise OEM SMB Telecom Venture (8-20) Growth (20-100) Average round size by target market during 2H 2014, (US $M) US VC involved No US VC involved
Average investment size by business model • Growth rounds involving US VC firms were larger across the board • This was especially true for services, software, and systems companies • Commerce companies were the exception: commerce companies with US backers tended to raise slightly smaller growth rounds • US participation didn’t impact round size for venture investments @gdibner blog: yankeesabralimey 32 8 12 9 12 8 26 46 20 46 53 53 53 12 12 12 15 9 10 13 32 23 37 31 26 26 27 32 0 10 20 30 40 50 60 Commerce Marketplace SaaS Semiconductors Services Software Systems Commerce Components Marketplace Media SaaS Semiconductors Services Software Systems Venture (8-20) Growth (20-100) Average round size during 2H 2014, (US $M) US VC involved No US VC involved
Focus on fintech: investment volume • $135M was invested across Europe & Israel into 17 fintech companies • The UK was far and away the leader in terms of dollars invested in fintech startups • Other regions, however, are attracting similar levels of investment in early venture and venture stages @gdibner blog: yankeesabralimey 33 27 3 5 3 9 15 17 31 23 0 10 20 30 40 50 60 70 UK France Israel Spain Germany Sweden Totalamountinvested(US$M) Fintech VC investment in Europe and Israel by bracket by country, 4Q 2014 Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
Focus on fintech: target markets • The UK lead in terms of the number of fintech companies raising finance • Overall fintech investment activity was down in 4Q compared to 3Q, with handful of investments scattered across France, Israel, Spain, Germany and Sweden @gdibner blog: yankeesabralimey 34 5 1 1 1 2 1 2 1 2 1 0 1 2 3 4 5 6 7 8 9 UK France Israel Spain Germany Sweden Numberofinvestments Fintech VC investment in Europe and Israel by bracket by country, 4Q 2014 SMB Enterprise Consumer
Focus on enterprise SaaS: investment volume • 39 enterprise SaaS companies raised $264M during 4Q • The biggest investment volume was in Israel, followed by the UK • Growth investments were limited to the UK and Israel @gdibner blog: yankeesabralimey 35 13 6 10 9 8 7 73 8 8 11 9 35 51 0 20 40 60 80 100 120 140 Israel UK France Germany Spain Belgium Netherlands Finland Austria Switzerland Greece Totalamountinvested(US$M) Enterprise SaaS VC investment in Europe and Israel by bracket by country 4Q 2014 Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
Focus on enterprise SaaS: verticals by country • Little change from 3Q, with Marketing and Data remaining the two most popular vertical segments within enterprise SaaS • Developer tooling saw three investments, two of which was based in the Netherlands • Nine verticals saw one investment each, demonstrating the broad applicability of enterprise SaaS @gdibner blog: yankeesabralimey 36 0 2 4 6 8 10 Financial Health Infrastructure Energy Logistics SCM Payments Communications Agtech Adtech Employment ERP Education Development Productivity Data Marketing Enterprise SaaS VC investment in Europe and Israel by vertical by country, 4Q 2014 (number of investments) Israel Germany France Netherlands UK Belgium Greece Switzerland Finland Spain Austria
Focus on enterprise SaaS: verticals 3Q vs 4Q • The volume of enterprise SaaS VC investment increased in 4Q compared to 3Q • Marketing and productivity, the two most active verticals, saw an increase in 4Q @gdibner blog: yankeesabralimey 37 0 50 100 150 200 250 300 Qtr3 Qtr4 Amountinvested(US$M) Enterprise SaaS VC investment volume by vertical 3Q & 4Q (US $M) Health Logistics Communications Energy SCM Agtech Media ERP Education Payments Financial Development Adtech Employment Infrastructure Data Marketing Productivity
About the author Partner at based in Previously helped run European seed program for Worked seven years as a VC in Investments include If you found this useful, I hope you’ll subscribe to my blog. 38

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Venture Capital in Europe & Israel; 4Q 2014

  • 1.
    Venture Capital inEurope & Israel Venture Investment Data: Fourth Quarter, 2014 Prepared by Gil Dibner @gdibner blog: yankeesabralimeyCabo da Roca, Westernmost point in mainland Europe
  • 2.
    The data • Backin June, 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 excluded from this analysis • The analysis is limited to ICT categories and excludes life sciences • The analysis excludes Turkey and FSU countries @gdibner blog: yankeesabralimey 2
  • 3.
    Monthly pace ofventure investment • During the seven months ended December, 2014, there were 371 reported venture investments across Europe & Israel • A total of $4.138B was invested in Europe & Israel during this period, an average of $591M per month • Average pace seems to be just over 50 investments per month • There was a summer slowdown in August in the number of transactions, but a significant rebound in 4Q @gdibner blog: yankeesabralimey 3 519 491 565 644 626 567 727 45 42 30 50 79 73 52 0 100 200 300 400 500 600 700 800 900 1,000 0 10 20 30 40 50 60 70 80 90 Jun Jul Aug Sep Oct Nov Dec Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel, June-December 2014 Invested amount (US $M) Number of investments
  • 4.
    Quarterly pace ofventure investment • The fourth quarter saw more VC activity in Europe and Israel than the third quarter • The number of VC rounds rose from 122 to 204 • The amount of VC investment rose from $1.7B to $1.9 billion @gdibner blog: yankeesabralimey 4 1,700 1,919 122 204 0 500 1,000 1,500 2,000 2,500 0 50 100 150 200 250 Qtr3 Qtr4 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel, 2nd half of 2014 Invested amount (US $M) Number of investments
  • 5.
    Four mega-rounds skewthe 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 in the past four months: • French ride-sharing marketplace BlaBlaCar raised $100M • Spanish voting software company Scytl raised $104M • German food delivery company DeliveryHero raised $350M • Dutch payments processor Adyen raised $250M • Adjusting for mega-rounds, September was the lowest volume month in 3Q and December was the lowest volume month in 4Q @gdibner blog: yankeesabralimey 5 70 97 57 92 121 121 103 108 117 60 168 109 76 108 332 171 342 26 366 343 249 0 100 200 300 400 500 600 700 800 Jun Jul Aug Sep Oct Nov Dec Qtr2 Qtr3 Qtr4 AmountInvested(US$M) Pace of VC Investment in Europe and Israel, Jun-Dec 2014 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
  • 6.
    Number of investments,by bracket • On this slide, Europe’s summer & Christmas holiday effect comes into sharpest relief • Angel and venture investments, which take the least time to close, were at their lowest in August & December • Deal volume peaked in October, with 79 investments • Fourth quarter activity consistently surpassed third quarter activity @gdibner blog: yankeesabralimey 6 9 6 3 7 28 26 15 17 21 14 25 31 29 22 10 9 5 16 10 6 99 5 7 1 10 12 5 0 10 20 30 40 50 60 70 80 90 Jun Jul Aug Sep Oct Nov Dec NumberofVCinvestments Number of investments in Europe and Israel by bracket, Jun-Dec 2014 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
  • 7.
    Average round size,by bracket • Within each bracket, round sizes have remained relatively stable @gdibner blog: yankeesabralimey 7 4.1 4.6 4.1 3.7 3.9 4.2 4.7 10.8 13.0 11.9 10.5 10.9 12.7 12.0 36.9 34.2 48.9 26.0 36.6 28.5 49.9 0 10 20 30 40 50 60 Jun Jul Aug Sep Oct Nov Dec AmountInvested(US$M) Average investment size in Europe and Israel by bracket, Jun-Dec 2014 Seed (<2) Early Venture (2-8) Venture (8-20) Growth (20-100)
  • 8.
    Total venture investmentby country, 2H 2014 • Israel led Europe with the total amount of venture dollars invested in the second half of 2014 US $M @gdibner blog: yankeesabralimey 8 882.6 816.2 631.5 306.4 294.8 217.4 198.7 82.0 57.0 35.0 30.0 20.3 12.0 10.4 6.6 6.4 6.0 1.8 1.7 1.3 0.6 0.5 Israel Germany UK Netherlands France Spain Sweden Finland Hungary Norway Ireland Denmark Poland Belgium Switzerland Portugal Iceland Estonia Greece Austria Latvia Italy 0 100 200 300 400 500 600 700 800 900 1,000 Total VC investment volume by country, 2H 2014 (US $M)
  • 9.
    Total venture investmentby country, 3Q & 4Q 2014 • Investment volume in Israel nearly doubled in 4Q catapulting Israel to first place • Investment volume in Germany increased by almost 50%, vaulting Germany over the UK to second place • France & Sweden also saw meaningful increases • Prezi’s $57M growth round put Hungary on the map in sixth place @gdibner blog: yankeesabralimey 9 Israel, 315.2 Israel, 567.5 UK, 368.2 UK, 263.4 Germany, 180.2 Germany, 286.0 Sweden, 74.4 Sweden, 124.3 France, 29.1 France, 165.7 Spain, 61.7 Spain, 51.7Finland, 35.7 Finland, 46.3 Hungary, 57.0 Netherlands, 31.6 Netherlands, 24.8 Norway, 35.0Ireland, 30.0 Qtr3 Qtr4 0 100 200 300 400 500 600 TotalVCinvestment(US$M) Total VC investment, 3Q & 4Q (excluding mega-rounds)
  • 10.
    Average venture roundsizes, 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 • Across all stages, French companies seem to raise rounds of the smallest size in each bracket • In the UK & Ireland venture rounds tend to be smaller, but growth rounds are, on average, the largest in Europe @gdibner blog: yankeesabralimey 10 Benelux, 4.0 Benelux, 11.9 DACH, 4.1 DACH, 11.9 DACH, 37.3 France, 3.7 France, 9.2 France, 24.2 Iberia, 4.5 Iberia, 13.8 Iberia, 30.0 Israel, 4.4 Israel, 12.8 Israel, 38.9 Nordic, 4.4 Nordic, 11.2 Nordic, 33.1 UK & Ireland, 4.1 UK & Ireland, 10.2 UK & Ireland, 40.4 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 Early Venture (2-8) Venture (8-20) Growth (20-100) Averageroundsize(US$M) Average investment size in Europe and Israel by bracket, 2H 2014
  • 11.
    Total venture investmentby region, June-September 2014 • When VC investments across Europe are aggregated into regions, Israel, DACH, UK & Ireland, the Nordics, and France are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments (Adyen, Prezi, and many others), but the volumes are still low • Taken as a group, the Nordics (which includes the Baltics) saw a significant increase in 4Q over 3Q @gdibner blog: yankeesabralimey 11 Israel, 315.2 Israel, 567.5 DACH, 532.2 DACH, 291.9 UK & Ireland, 398.2 UK & Ireland, 263.4 Nordic, 123.4 Nordic, 221.1 Benelux, 285.2France, 129.1 France, 165.7 Iberia, 167.2 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Qtr3 Qtr4 TotalVCinvestment(US$M) Total VC investment by region, Q3 & Q4 2014 Israel DACH UK & Ireland Nordic Benelux France Iberia East. Eur. South. Eur.
  • 12.
    Rounds by bracket& country • Israel led in the total number of VC deals, including an impressive 10 growth rounds • Excluding growth and mega- rounds, the UK & Ireland saw the highest number of seed, early venture and venture investments • DACH slipped from fourth place in 3Q to fifth place in 4Q @gdibner blog: yankeesabralimey 12 9 14 12 12 6 8 6 2 16 23 12 11 10 5 5 9 2 2 4 4 2 10 4 4 3 5 0 5 10 15 20 25 30 35 40 45 50 Israel UK & Ireland Nordic France DACH Iberia Benelux East. Eur. South. Eur. Numberofinvestments Number of investments in Europe and Israel by bracket, 4Q 2014 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<.5-2)
  • 13.
    Investment by region,by bracket • In 4Q, Israel led in terms of total VC dollars invested, even with mega-rounds included • DACH was in second place • When growth and mega- rounds are excluded, UK & Ireland would come in second • Note the impact of Adyen on Benelux and the impact of Prezi on Eastern Europe @gdibner blog: yankeesabralimey 13 2 70 40 99 51 42 23 20 121 45 20 25 37 28 366 199 132 132 72 57 250 0 100 200 300 400 500 600 Israel DACH UK & Ireland Nordic France East. Eur. Iberia Benelux South. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by bracket by region, 4Q 2014 (ranked excluding mega-rounds) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
  • 14.
    Participation rate ofUS VC firms, by bracket • US VC firms are increasingly active in the European and Israeli VC markets • US VC firms participated in 17.4% of the rounds that took place in the fourth quarter • US VCs participated in only 3% of seed rounds, and 20% of early venture and venture rounds • US VCs get far more active in the later stages: almost half of growth rounds had US investors, as did Adyen’s mega-round @gdibner blog: yankeesabralimey 14 94% 97% 92% 80% 80% 80% 54% 52% 33% 6% 3% 8% 20% 20% 20% 46% 48% 67% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr3 Qtr4 Qtr3 Qtr4 Qtr3 Qtr4 Qtr3 Qtr4 Seed (.5-2) Early Venture (2-8) Venture (8-20) Growth (20-100) Mega (>100) Totalamountinvested(US$M) Did US VC firms participate in European & Israeli VC rounds? Yes No
  • 15.
    Participation of USVC firms by country • In 4Q, US VCs firms were active in 12 different European countries, up from 10 in 3Q • US VC firms were most active in Israel, where they participated in 14 investment rounds @gdibner blog: yankeesabralimey 15 14 5 3 3 3 2 2 30 38 19 7 5 28 11 13 4 2 3 2 20 5 10 15 20 25 30 35 40 45 50 Israel UK Germany Netherlands Sweden France Finland Spain Denmark Portugal Poland Hungary Norway Belgium Switzerland Greece Austria Latvia Estonia NumberofVCinvestments In which countries are US VCs most active? 4Q, 2014 No US VC involved US VC involved
  • 16.
    Participation of USVC firms by country • Relative to the number of VC rounds, the UK, Spain, and France remain surprisingly under- penetrated by US VC firms • Hungary, Portugal, and Poland saw one VC investment each during 4Q, with US VC firms participating in each of them @gdibner blog: yankeesabralimey 16 38% 32% 30% 20% 15% 14% 12% 7% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hungary Portugal Poland Sweden Israel Netherlands Denmark Finland Germany UK Spain France PercentofinvestmentroundswithUSVCparticiation Which countries are the most penetrated by US VCs? No Yes
  • 17.
    As a reminder,I am using a three-dimensional approach to sector mapping 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
  • 18.
    What target marketsare attracting the most VC investment in Europe & Israel? • All target markets saw an increase in investment activity across Europe & Israel in 4Q compared to 3Q @gdibner blog: yankeesabralimey 18 474 599 493 79678 133 77 114 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Qtr3 Qtr4 TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q & 4Q, 2014 (in US $M) Government Telecom OEM SMB Enterprise Consumer
  • 19.
    What target marketsare attracting the most VC investment in Europe & Israel? • In terms of dollars invested, consumer-oriented companies accounted for just over a third of VC investment in the 4Q, down slightly from previous months • In December, over 57% of VC dollars invested went to enterprise-oriented companies @gdibner blog: yankeesabralimey 19 45% 28% 53% 42% 34% 39% 34% 46% 45% 40% 45% 47% 40% 57% 7% 18% 6% 17% 9% 5% 6% 12% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jun Jul Aug Sep Oct Nov Dec TotalVCinvestments(US$M) European & Israeli venture financing by target market 3Q & 4Q, 2014 (in US $M) Government Telecom OEM SMB Enterprise Consumer
  • 20.
    Breakdown by region& target market • Interesting (and as suggested by last quarter’s report), the DACH region saw a shift in investment focus in 4Q from consumer to enterprise • The Israeli VC landscape continued to be dominated by non-consumer companies • Other European markets such as the UK, the Nordics, and France were heavily weighted towards consumer investments in 4Q @gdibner blog: yankeesabralimey 20 116 88 136 129 89 17 393 171 270 110 54 30 17 18 27 57 18 56 23 35 20 0 100 200 300 400 500 600 Israel DACH Benelux UK & Ireland Nordic France East. Eur. Iberia South. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by target market by country 4Q, 2014 (US $M) Government Telecom OEM SMB Enterprise Consumer
  • 21.
    Distribution of investmentrounds by country • Across Europe & Israel, 41% of VC investment rounds were in consumer companies in 4Q, roughly the same as 3Q • In the DACH region, consumer companies took a back seat in 4Q, in a marked difference from 3Q • The Nordic region saw the most emphasis on consumer investments • Israel was heavily weighted towards enterprise investments, even more so than in 3Q @gdibner blog: yankeesabralimey 21 60% 50% 50% 50% 44% 40% 38% 36% 23% 27% 37% 50% 40% 33% 62% 56% 66% 3% 50% 10% 16% 20% 4% 5% 7% 0% 4% 7% 3% 3% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nordic East. Eur. France South. Eur. UK & Ireland Iberia Benelux DACH Israel Investment in Europe and Israel by target market by country 4Q 2014 (Number of investments) Consumer Enterprise SMB OEM Telecom Government
  • 22.
    Is Europe’s “consumerexuberance” over? • The majority of rounds across all stages were in non-consumer oriented companies, a contrast from the 3rd quarter • Interestingly, this was true for seed investments as well, which seem to be roughly balanced with later stages in terms • Over half of early venture rounds in Europe were in enterprise-oriented companies • These findings are made more significant by the exclusion of Israel, which has long had an enterprise focus. @gdibner blog: yankeesabralimey 22 47% 55% 39% 40% 44% 36% 39% 36% 9% 6% 15% 14% 7% 8% 3% 3% 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 4Q 2014 (Number of investments) Consumer Enterprise SMB
  • 23.
    DACH moves towardthe enterprise • DACH is clearly a region with a record of strong consumer-oriented investment • In 4Q this began to change • It’s too early to tell if this will turn into a long-term trend, but I expect that Berlin will – like London – emerge as a key hub for a wide variety of startups @gdibner blog: yankeesabralimey 23 100% 100% 94% 56% 13% 64% 34% 2% 35% 57% 36% 66% 9% 9% 5% 20% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jun Jul Aug Sep Oct Nov Dec Investment in DACH by target market by stage bracket 4Q 2014 (Number of investments) OEM SMB Enterprise Consumer
  • 24.
    Investment rounds byvertical • Financial (“fintech”) startups drove the highest number of VC rounds, followed by marketing, and infrastructure • Deep diversity across Europe @gdibner blog: yankeesabralimey 24 Financial, 17 Marketing, 15 Infrastructure, 15 Lifestyle, 13 Adtech, 11 Data, 10 Health, 9 Productivity, 8 Education, 8 Employment, 8 Payments, 8 Travel, 7 Logistics, 7 Communications, 7 Gaming, 7Electronics, 7Development, 7 Fashion, 6 Media, 6 European & Israeli venture financing by target market 4Q 2014 (number of investments)
  • 25.
    Which verticals forwhich markets? • Financial companies saw the most investment activity in 4Q, split between enterprise, SMB, and consumer companies • In 4Q, SMB-focused companies were funded across many verticals, compared to only two verticals in 3Q • Many verticals saw investment into both consumer- and enterprise- oriented businesses @gdibner blog: yankeesabralimey 25 Industrial SCM Informatics Sports Storage Agtech Real Estate Food Social Durables ERP Security Energy Fashion Media Development Electronics Logistics Communications Gaming Travel Employment Payments Education Productivity Health Data Adtech Lifestyle Infrastructure Marketing Financial 0 2 4 6 8 10 12 14 16 18 European & Israeli venture financing by target market 4Q, 2014 (number of investments) Consumer Enterprise SMB OEM Telecom Government
  • 26.
    Software & SaaSmodels led the pack in 4Q • In terms of dollars invested during 4Q, software (26%) and SaaS (23%) were the leaders • Services came in third, with 16% (this excludes Adyen, a services company) • Marketplace business models took fourth place, with 10% of invested capital • Physical products (systems, components, and semiconductors) accounted for only 14% of total investment combined @gdibner blog: yankeesabralimey 26 Software, 443, 26% SaaS, 389, 23% Services, 264, 16% Marketplace, 169, 10% Commerce, 149, 9% Systems, 149, 9% Components, 46, 3% Semiconductors, 34, 2% Media, 26, 2% European & Israeli venture financing by target market 4Q, 2014 (in US $M) (excluding mega-rounds)
  • 27.
    More software, SaaS,& services in 4Q • As a percentage of VC investment, software, SaaS, and services all increased in 4Q relative to 3Q • Marketplaces and commerce models declined in terms of relative share, from 38% of VC investment to only 19% in 4Q @gdibner blog: yankeesabralimey 27 19% 27% 19% 23% 11% 16%23% 10% 15% 9% 9% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 European & Israeli venture financing by business model 3Q vs 4Q, 2014 (in US $M) Media Systems Components Semiconductors Commerce Marketplace Services SaaS Software
  • 28.
    US VC interestis concentrated in specific business models • US VC firms investing in Europe & Israel continued to focus mainly on SaaS, software, and services • While commerce companies continued to attract attention from local investors, no US VC firms participated in a commerce investment during 4Q • Components, and semiconductors attracted little interest from local VCs, and no interest at all from US VCs @gdibner blog: yankeesabralimey 28 14 10 7 3 2 44 33 30 27 11 2 15 3 20 10 20 30 40 50 60 70 SaaS Software Services Marketplace Systems Media Commerce Semiconductors Components VC Investments in Europe & Israel 4Q, 2014 No US VC involved US VC involved
  • 29.
    The most popularsegments in Europe • During 4Q the 204 investments in Europe & Israel fell into 110 distinct segments • Of these, 98 fell into 23 segments of 3 or more companies • The Nordics dominated gaming software and consumer communications services • The UK was particularly strong in consumer financial services, consumer financial marketplaces, and enterprise adtech software • Israel was particularly strong in enterprise marketing SaaS, enterprise infrastructure software, enterprise payments services, and enterprise security software @gdibner blog: yankeesabralimey 29 0 1 2 3 4 5 6 7 8 9 10 Enterprise Data Software Consumer Media SaaS Enterprise Development SaaS Enterprise Adtech Services Enterprise Development Software Consumer Financial Marketplace SMB Financial Marketplace Consumer Communications Services SMB Marketing SaaS Enterprise Adtech Software Enterprise Productivity SaaS Consumer Education Services Enterprise Security Software Consumer Financial Services Consumer Lifestyle Commerce Enterprise Payments Services Consumer Electronics Systems Consumer Fashion Commerce Consumer Gaming Software Enterprise Data SaaS Enterprise Infrastructure Software Consumer Lifestyle Marketplace Enterprise Marketing SaaS Investment in Europe & Israel by segment by country 4Q 2014 (segments with 3 or more investments) UK & Ireland Nordic Israel France DACH Iberia Benelux South. Eur. East. Eur.
  • 30.
    The most popularsegments in Europe & Israel for US VC firms • Across Europe & Israel, US VC firms invested in 21 enterprise companies, 12 consumer companies, 2 SMB companies, 1 OEM, and 1 government-oriented company @gdibner blog: yankeesabralimey 30 0 2 4 6 8 10 12 Systems Services SaaS Media SaaS Marketplace Services Software Systems Marketplace Services Software SaaS OEMGovtSMBConsumerEnterprise US VC Investments in Europe and Israel by end market, business model, country, 4Q 2014 Israel Nordic UK & Ireland DACH Benelux Iberia East. Eur. France
  • 31.
    Average investment sizeby target market • Growth rounds involving US firms are significantly larger than rounds that do not • This effect was especially pronounced for enterprise companies • Enterprise companies seem to raise larger growth rounds than consumer comapnies • At the early venture and venture stages, the involvement of US firms does not imply a larger round @gdibner blog: yankeesabralimey 31 8 12 37 53 57 11 12 8 14 13 15 29 29 26 44 20 0 10 20 30 40 50 60 Consumer Enterprise Government OEM SMB Telecom Consumer Enterprise OEM SMB Telecom Venture (8-20) Growth (20-100) Average round size by target market during 2H 2014, (US $M) US VC involved No US VC involved
  • 32.
    Average investment sizeby business model • Growth rounds involving US VC firms were larger across the board • This was especially true for services, software, and systems companies • Commerce companies were the exception: commerce companies with US backers tended to raise slightly smaller growth rounds • US participation didn’t impact round size for venture investments @gdibner blog: yankeesabralimey 32 8 12 9 12 8 26 46 20 46 53 53 53 12 12 12 15 9 10 13 32 23 37 31 26 26 27 32 0 10 20 30 40 50 60 Commerce Marketplace SaaS Semiconductors Services Software Systems Commerce Components Marketplace Media SaaS Semiconductors Services Software Systems Venture (8-20) Growth (20-100) Average round size during 2H 2014, (US $M) US VC involved No US VC involved
  • 33.
    Focus on fintech:investment volume • $135M was invested across Europe & Israel into 17 fintech companies • The UK was far and away the leader in terms of dollars invested in fintech startups • Other regions, however, are attracting similar levels of investment in early venture and venture stages @gdibner blog: yankeesabralimey 33 27 3 5 3 9 15 17 31 23 0 10 20 30 40 50 60 70 UK France Israel Spain Germany Sweden Totalamountinvested(US$M) Fintech VC investment in Europe and Israel by bracket by country, 4Q 2014 Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
  • 34.
    Focus on fintech:target markets • The UK lead in terms of the number of fintech companies raising finance • Overall fintech investment activity was down in 4Q compared to 3Q, with handful of investments scattered across France, Israel, Spain, Germany and Sweden @gdibner blog: yankeesabralimey 34 5 1 1 1 2 1 2 1 2 1 0 1 2 3 4 5 6 7 8 9 UK France Israel Spain Germany Sweden Numberofinvestments Fintech VC investment in Europe and Israel by bracket by country, 4Q 2014 SMB Enterprise Consumer
  • 35.
    Focus on enterpriseSaaS: investment volume • 39 enterprise SaaS companies raised $264M during 4Q • The biggest investment volume was in Israel, followed by the UK • Growth investments were limited to the UK and Israel @gdibner blog: yankeesabralimey 35 13 6 10 9 8 7 73 8 8 11 9 35 51 0 20 40 60 80 100 120 140 Israel UK France Germany Spain Belgium Netherlands Finland Austria Switzerland Greece Totalamountinvested(US$M) Enterprise SaaS VC investment in Europe and Israel by bracket by country 4Q 2014 Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
  • 36.
    Focus on enterpriseSaaS: verticals by country • Little change from 3Q, with Marketing and Data remaining the two most popular vertical segments within enterprise SaaS • Developer tooling saw three investments, two of which was based in the Netherlands • Nine verticals saw one investment each, demonstrating the broad applicability of enterprise SaaS @gdibner blog: yankeesabralimey 36 0 2 4 6 8 10 Financial Health Infrastructure Energy Logistics SCM Payments Communications Agtech Adtech Employment ERP Education Development Productivity Data Marketing Enterprise SaaS VC investment in Europe and Israel by vertical by country, 4Q 2014 (number of investments) Israel Germany France Netherlands UK Belgium Greece Switzerland Finland Spain Austria
  • 37.
    Focus on enterpriseSaaS: verticals 3Q vs 4Q • The volume of enterprise SaaS VC investment increased in 4Q compared to 3Q • Marketing and productivity, the two most active verticals, saw an increase in 4Q @gdibner blog: yankeesabralimey 37 0 50 100 150 200 250 300 Qtr3 Qtr4 Amountinvested(US$M) Enterprise SaaS VC investment volume by vertical 3Q & 4Q (US $M) Health Logistics Communications Energy SCM Agtech Media ERP Education Payments Financial Development Adtech Employment Infrastructure Data Marketing Productivity
  • 38.
    About the author Partnerat based in Previously helped run European seed program for Worked seven years as a VC in Investments include If you found this useful, I hope you’ll subscribe to my blog. 38