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Europe & Israel 4Q15 Deals Done Review

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A comprehensive look at venture capital investment data into European & Israeli startups in 2015.

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Europe & Israel 4Q15 Deals Done Review

  1. 1. Venture Capital in Europe & Israel Venture Investment Data: Fourth Quarter, 2015 Prepared by Gil Dibner Passo dello Stelvio, Italian-Swiss Border Second highest pass in Europe, at 2,757 m (9,045 ft) above sea level blog
  2. 2. The data • Around the middle of last year, I decided I wasn’t happy with available data sources on VC rounds in Europe & Israel, and that I’d need to build my own • The data in this report consists entirely of data I’ve gathered manually based on publically available, free sources • No paid data sources or API calls were harmed in the making of this dataset, every investment was manually classified • This allows analysis of some aspects of the data I consider important – aspects that don’t appear in other data sources • Seed investment is still under-reported, but I got a bit better at capturing it in the fourth quarter. Rounds smaller than $500K are generally excluded from this analysis • The analysis is limited to ICT categories and excludes life sciences • The analysis excludes Turkey and FSU countries • I’m converting EUR and GBP into USD using monthly average exchange rates 2@gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
  3. 3. Quarterly pace of venture investment • For the first time since I started collecting data, the total investment amounts in Europe & Israel decreased • In 4Q15, Europe & Israel saw $2.856 billion flowing into 357 venture transactions • While the number of accounted and recorded deals continued to rise, the total amount of investment dollars decreased to the lowest quarterly level in 2015, 12% below 3Q15 and just under 1% below 1Q15 3 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1,703 1,916 2,873 3,139 3,248 2,856 122 204 270 271 286 357 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 350 400 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel Invested amount (US $M) Number of investments
  4. 4. Monthly pace of venture investment • During the fourth quarter of 2015, there were 357 venture investments in Europe & Israel totaling $2.9B • Total investment volume showed a decrease in every month since September, though December’s especially low total likely reflects the seasonal slowdown • Deal pace remained at 110- 125 per month, higher than in any previous quarter @gdibner blog: yankeesabralimey 4Syndicate for European & Israeli Enterprise Companies 493 565 644 625 566 725 905 971 997 791 787 1,561 1,517 568 1,164 1,083 1,059 714 42 30 50 79 73 52 92 75 103 78 95 98 119 65 102 111 124 122 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 Oct Nov Dec Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 Numberofinvestments VC Investments in Europe & Israel, July 2014 - December 2015 Invested amount (US $M) Number of investments
  5. 5. Mega-rounds skew the investment totals • This analysis breaks down VC investments into brackets by size: • Seed (less than $2M) • Early venture ($2-8M) • Venture ($8-20M) • Growth ($20-100M) • Mega ($100M+) • Three mega-rounds took place in Europe this quarter – all of them consumer-oriented businesses in the UK: • Karhoo, a UK-based on-demand taxi app, raised $250M in October • Deliveroo, a UK-based on-demand food delivery service, raised $100M in November • Atom Bank, a UK-based challenger consumer bank, raised $128M in November • Adjusting for mega-rounds, 4Q15 shows a decline compared to 3Q, but is the second highest quarter since 3Q14 5 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 248 349 285 354 368 507345 312 556 716 567 559539 935 1,154 813 1,513 1,187 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 AmountInvested(US$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. 6. Strong year-over-year growth • 4Q15 total investment volume in Europe & Israel was up 48% over 4Q14 (excluding seed deals, where data is more spotty) • Early venture volume grew by 45% • Venture volume grew by 79% • Growth volume grew by 27% • Mega round volume nearly doubled, growing 91% 6 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 349 507 312 559 935 1,187250 478 0 500 1,000 1,500 2,000 2,500 3,000 Qtr4 Qtr4 2014 2015 TotalVCinvestment(US$M) VC investment volume in Europe and Israelby bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  7. 7. Number of investments, by bracket • Excluding seed deals, the total number of VC investments per quarter was 223 in 4Q15, 24% higher than 3Q15 • All of this growth was in the early venture bracket of rounds under $8M, which grew 49% from 93 in 3Q15 to 139 in 4Q15 • All other categories were roughly flat in 4Q15 compared to 3Q15 7 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 60 83 77 85 93 13930 26 42 62 44 46 13 26 33 26 38 35 3 1 6 6 4 3 0 50 100 150 200 250 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 NumberofVCinvestments VC investment volume in Europe and Israelby bracket Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  8. 8. Corporate VC activity, by bracket • Excluding seed deals, the total number of corporate VC investments was 42 in 4Q15, double the number of corporate VC investments in 3Q15 • Corporate VC activity in Europe & Israel hit the highest level since this data set was started 8 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 6 4 5 16 7 22 4 3 9 12 7 12 4 4 7 8 7 7 3 1 0 5 10 15 20 25 30 35 40 45 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 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. 9. Corporate VC activity, by country • During the fourth quarter of 2015, Israel saw the highest number of corporate VC investments, with 15 • The UK saw 7 corporate VC investments during that period • Twelve other countries saw corporate VC activity across Europe, but at much lower levels 9 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 10 3 1 1 1 1 1 1 1 1 1 3 3 1 1 2 1 1 2 2 1 1 1 1 0 2 4 6 8 10 12 14 16 Israel UK France Spain Germany Sweden Norway Estonia Finland Switzerland Belgium Lituania Austria Netherlands Numberofinvestments Number of corporate VC investments in Europe and Israelby bracket (4Q15) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  10. 10. Average round size • Previously, I presented this broken down by bracket, but I think the data is more meaningful when taken in aggregate. • This average excludes seed rounds and mega rounds, so it reflects all rounds done in Europe & Israel between $2M and $100M • From February to June, average round sizes across all venture rounds were hovering between $10M and $12M • The third quarter saw consistently higher average round sizes – between $13M and $14.5M on average • In the fourth quarter, however, the trend reversed itself, with average round sizes dropping to $11M in October, $10.5M in November, and $9.2M in December 10 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 11.1 17.6 6.8 11.7 11.3 12.7 15.8 11.2 11.9 11.1 10.1 11.4 13.9 13.2 14.6 11.1 10.5 9.2 4 6 8 10 12 14 16 18 20 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 AmountInvested(US$M) Average investment size in Europe and Israel (Round sizes of 2-100M)
  11. 11. Total venture investment by country, 4Q 2015 • The UK again took the top spot in 4Q15 with over $900M in total capital invested • Israel took second place with just under $700M in venture capital investment • Germany captured third place, with $341M, and France was a strong fourth place at $225M 11 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 922.0 699.0 341.1 224.7 112.0 103.1 90.4 83.6 53.7 53.5 41.0 34.0 29.5 22.6 17.5 8.0 5.0 5.0 5.0 2.7 2.3 0.4 UK Israel Germany France Spain Denmark Switzerland Sweden Ireland Finland Belgium Iceland Lituania Netherlands Norway Estonia Bucharest Austria Italy Portugal Poland Czech 0 100 200 300 400 500 600 700 800 900 1,000 Total VC investmentvolume by country, 4Q15 (US $M)
  12. 12. Total venture investment by country, 2015 • When 2015 is looked at as a whole, the UK took the top spot, at $3.3B • Israel came in second with $2.8B • Germany, France, and Sweden rounded out the top five • Spain, Denmark, the Netherlands, and Ireland each saw over $200M in VC investment during 2015 12 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 3,335.3 2,786.6 1,921.6 1,167.9 950.8 450.4 264.2 242.3 236.8 161.9 146.0 122.9 55.1 42.5 38.2 35.6 35.4 29.5 29.3 24.6 12.6 UK Israel Germany France Sweden Spain Denmark Netherlands Ireland Finland Switzerland Belgium Estonia Portugal Norway Greece Iceland Lituania Italy Poland Slovenia 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Total VC investmentvolume by country, 2015 (US $M) (countries with over $10Min VC investment)
  13. 13. Total venture investment by country, 2015 (excluding mega rounds) • When mega-rounds ($100M+) are excluded, Israel saw more VC investment than the UK in 2015 • Excluding mega-rounds, Germany was a solid third place with $1.3B raised in 2015, roughly half of Israel’s figure, but nearly twice France, which saw $853M 13 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 2,344.6 2,222.3 1,318.0 852.9 424.8 350.4 264.2 242.3 236.8 161.9 146.0 122.9 55.1 42.5 38.2 35.6 35.4 29.5 29.3 24.6 12.6 Israel UK Germany France Sweden Spain Denmark Netherlands Ireland Finland Switzerland Belgium Estonia Portugal Norway Greece Iceland Lituania Italy Poland Slovenia 0 500 1,000 1,500 2,000 2,500 Total VC investmentvolume by country, 2015 (Excludes mega-rounds, US $M, countries with over $10Min VC investment)
  14. 14. Total venture investment by country, 3Q14 to 3Q15 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • Investment volumes increase in all of the top five markets • Of the top five markets, only Israel showed an increase in 4Q compared to 3Q 14 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 315 567 543 475 628 699 369 267 719 437 621 444 180 284 389 209 379 341 29 163 118 232 279 225 74 123 89 112 140 84 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 0 100 200 300 400 500 600 700 800 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 4Q15 (top 5 countries, excluding mega-rounds) Israel UK Germany France Sweden
  15. 15. Average venture round sizes, by region • This analysis excludes mega- rounds and rounds less than $2M • In 4Q, DACH companies raised the largest rounds on overage • When we compare 4Q15 to 4Q14, the trend is mixed – round sizes in Israel, DACH, and the Nordics decreased, while other regions saw larger round sizes • Overall, the trend towards round size convergence seems to be continuing 15 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Benelux, 4.7 Benelux, 4.5 DACH, 14.9 DACH, 12.5 France, 8.2 France, 9.2 Iberia, 7.2 Iberia, 9.4 Israel, 15.9 Israel, 11.5 Nordic, 11.5 Nordic, 8.0 UK & Ireland, 8.5 UK & Ireland, 11.2 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Qtr4 Qtr4 2014 2015 Averageroundsize(US$M) Average investment size in Europe and Israel(rounds of $2-100M)
  16. 16. Total venture investment by region, 2015 • When VC investments across Europe are aggregated into regions, UK & Ireland, Israel, DACH, the Nordics, and France are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments, but the volumes are still low 16 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies UK & Ireland, 3,572.1, 29% Israel, 2,786.6, 23% DACH, 2,073.9, 17% Nordic, 1,541.5, 13% France, 1,167.9, 10% Iberia, 493.0, 4% Benelux, 365.2, 3% South. Eur., 78.3, 1% East. Eur., 37.7, 0% Total VC investment by region, 2015
  17. 17. Rounds by bracket & region • To get a better sense of deal volume, this analysis excludes seed deals which are often poorly reported • Excluding seed deals, Israel led in the number of announced deals, with 60 investments announced • The UK & Ireland took second place with 45 • The Nordics took third place with 38, overtaking DACH with 34 17 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 32 24 29 19 16 10 7 1 1 17 11 3 10 2 1 2 11 7 6 5 4 2 3 0 10 20 30 40 50 60 70 Israel UK & Ireland Nordic DACH France Benelux Iberia East. Eur. South. Eur. Numberofinvestments Number of investments in Europe and Israelby bracket, 4Q 2015 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  18. 18. Investment by region, by bracket • When the three massive UK- based mega-rounds are excluded, Israel takes first place in 4Q investment volume • Excluding mega-rounds, the difference between UK & Ireland and DACH is not that great 18 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 120 83 85 85 64 226 128 117 343 259 224 191 113 58 478 0 200 400 600 800 1,000 1,200 Israel UK & Ireland DACH Nordic France Iberia Benelux East. Eur. South. Eur. Totalamountinvested(US$M) Investment in Europe and Israel by bracket by region, 4Q 2015 (ranked excluding mega-rounds) Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
  19. 19. 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 14% of the venture rounds in Europe • US VCs participated in only 5% of seed rounds, 9% of early venture rounds, and 22% of venture rounds • As a company moves from bracket to bracket, the chance of US VC participation doubles with each bracket change 19 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 5% 9% 22% 39% 68% 95% 91% 78% 61% 32% 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? (2015) No Yes
  20. 20. Rate of participation by US firms has recovered • US VC firm participation in European & Israeli venture rounds dropped in 4Q15 to 17%, down from 21% in 3Q • In fact, 4Q15 saw the lowest US VC participation rate since I started tracking the data in 3Q14 20 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 16% 24% 20% 22% 21% 17% 84% 76% 80% 78% 79% 83% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 PercentageofRounds Did US VC firms participate in European VC rounds? (Excludes seed rounds, 3Q14-4Q15) No Yes
  21. 21. Participation of US VC firms by country • In 4Q, US VCs firms were active in 11 different European countries, down from 14 in 3Q • US VC firms were most active in Israel, where they participated in 14 investment rounds out of 71 (20%) • Germany saw 7 investments with US VC participation • The UK saw 6 investments with US VC participation, down from 7 in 3Q • In Ireland, 2 of 3 VC investments involved a US VC 21 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 14 7 6 3 2 2 2 2 1 1 10 10 20 30 40 50 60 70 80 Israel Germany UK Spain Ireland Iceland Switzerland Finland Lituania Belgium France NumberofVCinvestments In which countries are US VCs most active? 4Q, 2015 No US VC involved US VC involved
  22. 22. Participation of US VC firms by country • This chart shows US VC activity within Europe throughout 2015 • The bulk of US VC activity is in Israel, the UK & Ireland, DACH, and the Nordics 22 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Israel, 12 Israel, 14 Israel, 14 Israel, 14 UK & Ireland, 10 UK & Ireland, 13 UK & Ireland, 9 UK & Ireland, 8 DACH, 8 DACH, 6 DACH, 4 DACH, 9 Nordic, 2 Nordic, 3 Nordic, 5 Nordic, 5Iberia, 3 Iberia, 4 Iberia, 3 Benelux, 5 France, 3 France, 2 East. Eur., 2 South. Eur., 2 0 5 10 15 20 25 30 35 40 45 50 Qtr1 Qtr2 Qtr3 Qtr4 2015 NumberofVCinvestments Investments with US VC participation, 2015 South. Eur. East. Eur. France Benelux Iberia Nordic DACH UK & Ireland Israel
  23. 23. 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
  24. 24. • Excluding mega-rounds, investment activity decreased in consumer and increased in enterprise in 4Q compared with 3Q • Enterprise-oriented investments hit a new high of $1.1B in 3Q • SMB-oriented and OEM- oriented investment volume both decreased compared to 3Q, but remained at elevated levels compared to previous quarters 24 @gdibner blog: yankeesabralimey What target markets are attracting the most VC investment in Europe & Israel? Syndicate for European & Israeli Enterprise Companies 475 595 980 850 1,177 906 494 798 953 814 907 1,112 78 133 121 153 275 135 78 114 47 106 182 150 0 500 1,000 1,500 2,000 2,500 3,000 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 TotalVCinvestments(US$M) European & Israeliventure financing by target market 3Q14 to 4Q15 (excluding mega-rounds, US $M) Series A Government Telecom OEM SMB Enterprise Consumer
  25. 25. • When Israel is excluded from the sample, 56% of all VC dollars in Europe went to consumer-oriented companies • OEM-oriented companies continued to rise slightly in importance, accounting for 5% of all VC dollars in Europe 25 @gdibner blog: yankeesabralimey Consumer investment leads Europe Syndicate for European & Israeli Enterprise Companies 62% 36% 56% 63% 62% 56% 18% 49% 34% 22% 24% 32% 6% 10% 4% 12% 8% 6% 5% 4% 2% 4% 5%6%8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 European venture financing by target market 3Q14 to 4Q15 (excluding Israel, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  26. 26. • 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 – but there does seem to be a rising trend in consumer- oriented early-stage investment 26 @gdibner blog: yankeesabralimey Consumer accounts for half of early rounds Syndicate for European & Israeli Enterprise Companies 39% 50% 46% 41% 46% 50% 41% 37% 50% 47% 39% 36% 9% 7% 9% 6%11% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 European venture financing by target market 3Q14 to 4Q15 (excluding Israel, rounds up to $20M, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  27. 27. Breakdown by region & target market • Once again, all regions except Israel saw more consumer investment than enterprise/SMB investment • Investments across France and DACH were dominated by consumer-oriented companies • The Nordics showed a healthy balance, with a 50/50 split between enterprise and consumer 27 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 648 180 208 149 143 66 237 437 148 149 59 45 88 71 0 200 400 600 800 1,000 1,200 UK & Ireland Israel DACH Nordic France Iberia Benelux Totalamountinvested(US$M) Investment in Europe and Israel by target market by region 4Q, 2015 (US $M) Government Telecom OEM SMB Enterprise Consumer
  28. 28. Distribution of investment rounds by country • Across Europe & Israel, 46% of VC investment rounds were in consumer companies in 2015 • In DACH, 56% of rounds were into consumer companies, the highest proportion of any region except Iberia, where the number was 59% • In UK, the number of consumer rounds was around 50% of the total 28 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 29% 41% 42% 47% 48% 50% 56% 59% 56% 47% 36% 39% 40% 39% 32% 27% 4% 14% 7% 8% 9% 7% 13% 8% 5% 3% 3% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Israel South. Eur. Benelux Nordic France UK & Ireland DACH Iberia Investment in Europe and Israel by target market by country 2015 (Number of investments) Consumer Enterprise SMB OEM Telecom Government
  29. 29. 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 4Q15 • For the first time, enterprise companies accounted for 50% of all growth rounds in Europe & Israel 29 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 56% 37% 46% 56% 43% 39% 25% 41% 46% 25% 38% 50% 6% 7% 5% 9% 12% 6% 11% 6% 7% 5%6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 Investment in Europe and Israel by target market (Rounds over $20M, number of investments) Government Telecom OEM SMB Enterprise Consumer
  30. 30. • Marketing was the most popular vertical across Europe & Israel, with 33 investments in the category • Security was second, with 25 • Finance dropped to third place, from first last quarter • Lifestyle (which is a catch-all consumer category) took the fourth slot • IT Infrastructure and health took the fourth and fifth slots 30 @gdibner blog: yankeesabralimey Finance returned to being the top vertical Syndicate for European & Israeli Enterprise Companies Marketing, 33 Security, 25 Financial, 22 Lifestyle, 20 Infrastructure, 17 Health, 17 Development, 16 Logistics, 16 Electronics, 16 Fashion, 14 Adtech, 13 Data, 13 Food, 12 Employment, 12 Education, 10Productivity, 10Social, 9Gaming, 9 Communications, 9 Entertainment, 8 Real Estate, 8 Payments, 7 Industrial, 7 Travel, 6 SCM, 5 Energy, 5 European & Israeliventure financing by target market 4Q 2015 (number of investments)
  31. 31. • This graph shows number of investments in the top 10 verticals across 4Q14 and 4Q15 • All of the top ten verticals increased in frequency • Marketing-related investments more than doubled from 15 in 4Q14 to 33 in 4Q15 • Security investments exploded in frequency from 4 in 4Q14 to 25 in 4Q15 • Health-related investments nearly than doubled from 9 in 4Q14 to 17 in 4Q15 31 @gdibner blog: yankeesabralimey How have the most popular verticals grown? Syndicate for European & Israeli Enterprise Companies Marketing, 15 Marketing, 33 Financial, 17 Financial, 22 Lifestyle, 13 Lifestyle, 20 Infrastructure, 15 Infrastructure, 17 Security, 4 Security, 25 Health, 9 Health, 17 Data, 11 Data, 13 Adtech, 11 Adtech, 13 Development, 7 Development, 16 Electronics, 7 Electronics, 16 Logistics, 7 Logistics, 16 0 50 100 150 200 250 Qtr4 Qtr4 2014 2015 European & Israeliventurefinancing by vertical market (top 10 verticals, number of investments)
  32. 32. • Marketing was the most frequently funded vertical, with enterprise-oriented marketing taking the lion’s share within that category • Security took second place with a heavy emphasis on enterprise security • Finance dropped to third place, with most of the activity in the consumer finance space, followed by SMB finance • IT infrastructure and health tech made strong showings • Consumer lifestyle, electronics, and fashion also made the top ten verticals 32 @gdibner blog: yankeesabralimey Which verticals for which segments? Syndicate for European & Israeli Enterprise Companies Fashion Electronics Logistics Development Health Infrastructure Lifestyle Financial Security Marketing 0 5 10 15 20 25 30 35 European & Israeliventure financing by target market 4Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Government
  33. 33. • This chart shows the ten most commonly funded verticals across Europe & Israel by quarter • Marketing, security, and logistics, developer tooling show continued strength • Health and adtech seem to have rebounded as areas of investor interest 33 @gdibner blog: yankeesabralimey The most popular verticals in the past 12 months Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 0 50 100 150 200 250 European & Israeliventure financing by vertical market (number of investments, top 10 verticals) Marketing Financial Lifestyle Infrastructure Security Adtech Electronics Health Logistics Development
  34. 34. • 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 • Health showed significant strength in 4Q • Electronics (which typically means consumer electronics systems companies) seems to have rebounded • Gaming, travel, and food- related categories whiched seem to be declining in 3Q, seemed to recover in 4Q • Consumer-oriented logistics plays seem to be emerging as an important category for VC investment 34 @gdibner blog: yankeesabralimey Consumer VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 0 20 40 60 80 100 120 140 European & Israeliventure financing by consumer verticals (number of investments, top 10 verticals) Lifestyle Financial Fashion Gaming Health Travel Social Food Logistics Electronics
  35. 35. • Enterprise marketing continues to show strength as an area for VC investment • Most of the top enterprise categories showed renewed strength in 4Q • Financial was a notable exception, with little activity within the enterprise segment in 4Q • Enterprise employment, adtech, and security all showed particular strength in 4Q investment frequency 35 @gdibner blog: yankeesabralimey Enterprise VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 0 20 40 60 80 100 120 140 European & Israeliventure financing by enterprise verticals (number of investments, top 10 verticals) Marketing Adtech Security Infrastructure Data Development Employment Financial Health Logistics
  36. 36. • Security retained the top spot in Israel, with 16 investments including 2 consumer- oriented investments • Israel also saw 8 investments in IT infrastructure and 8 investments in the marketing vertical • Communications and big data were the fourth and fifth most frequently funded categories • Development tooling finally cracked the top ten, with 3 investments in 4Q 36 @gdibner blog: yankeesabralimey A closer look at Israeli venture in 4Q15 Syndicate for European & Israeli Enterprise Companies Fashion Financial Electronics Logistics Development Data Communications Marketing Infrastructure Security 0 2 4 6 8 10 12 14 16 18 Israeli venture financing by target market 4Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Government
  37. 37. • Throughout 2015, security, marketing, and infrastructure were the most frequently funded categories in Israel • Communications, fintech, and adtech also made good showings • Interestingly, enterprise development tools and consumer electronics are now strong emerging categories in Israel 37 @gdibner blog: yankeesabralimey A closer look at Israeli venture in 2015 Syndicate for European & Israeli Enterprise Companies Electronics Development Logistics Productivity Adtech Financial Communications Infrastructure Marketing Security 0 5 10 15 20 25 30 35 40 45 Israeli venture financing by target market 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom Government
  38. 38. • For the fourth quarter running, Fintech was the dominant category of investment in the UK, but this quarter the differential was much less than in 3Q • Enterprise employment and enterprise marketing were also important categories • As usual, consumer-oriented companies dominated most categories of VC funding across the UK • Adtech and gaming did not crack the top ten 38 @gdibner blog: yankeesabralimey UK VCs dialed back on fintech in 4Q…a bit Syndicate for European & Israeli Enterprise Companies Food Lifestyle Fashion Development Payments Real Estate Education Security Marketing Employment Social Financial 0 1 2 3 4 5 6 UK venture financing by target market 4Q, 2015 (number of investments, top verticals) Consumer Enterprise SMB OEM
  39. 39. • When 2015 is looked at as a whole, fintech was the standout category in the UK, with more than twice the investment numbers as the second most popular category • Enterprise marketing was the second most frequently funded category by UK VCs • Consumer fashion was the third most popular category 39 @gdibner blog: yankeesabralimey UK VCs focused on fintech in 2015 Syndicate for European & Israeli Enterprise Companies Adtech Lifestyle Security Infrastructure Payments Education Employment Fashion Marketing Financial 0 5 10 15 20 25 30 35 40 UK venture financing by target market 2015 (number of investments, top verticals) Consumer Enterprise SMB OEM
  40. 40. • The top three categories in German VC investment in 3Q15 were consumer lifestyle, consumer travel, and enterprise development tools • In total, the top 10 categories in Germany generated 31 investments, 15 of which were in consumer companies 40 @gdibner blog: yankeesabralimey The German VC market in 4Q15 Syndicate for European & Israeli Enterprise Companies HMI Adtech Food Communications Energy Logistics SCM Marketing Fashion Payments Industrial Health Real Estate Infrastructure Financial Electronics Lifestyle Travel Development 0 1 2 3 4 German venture financing by target market 4Q, 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM
  41. 41. • Throughout 2015, the most frequently funded categories in Germany were consumer lifestyle, consumer fashion, consumer fintech, enterprise marketing, and consumer food • In total, the top 10 categories in Germany generated 83 investments, 57 of which were in consumer companies 41 @gdibner blog: yankeesabralimey German VCs focused on consumer in 2015 Syndicate for European & Israeli Enterprise Companies Education Durables Infrastructure Health Data Travel Food Fashion Marketing Financial Lifestyle 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 German venture financing by target market 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom
  42. 42. • Consumer lifestyle companies and consumer gaming companies were the two most frequently funded categories in the Nordics • Electronics were the third most frequently funded vertical – split evenly between consumer companies and OEM companies • In line with the rest of Europe, fintech, employment, and marketing were strong categories • The Nordic emphasis on electronics and gaming sets it apart from the rest of Europe in an interesting way 42 @gdibner blog: yankeesabralimey As usual, Nordic VC was unconventional Syndicate for European & Israeli Enterprise Companies Social Productivity Adtech Entertainment Marketing Employment Financial Electronics Gaming Lifestyle 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Nordic venture financing by target market 2015 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Government
  43. 43. • As software eats the world, services are becoming an increasingly important business model for venture- backed startups • This was certainly the case in 2015, with services taking 26% of the venture dollars invested in Europe & Israel • SaaS emerged as the second most funded business model in 2015 • Commerce continues to be important, with 17% of the financing in 2015 • Marketplaces – business that serve a price discovery function – were 9% 43 @gdibner blog: yankeesabralimey Services & SaaS dominated 2015 Syndicate for European & Israeli Enterprise Companies Services,2,331, 26% SaaS,1,969, 22% Commerce, 1,497, 17% Software, 1,343, 15% Marketplace, 768,9% Systems, 472,5% Media, 406,4% Components, 125, 1% Semiconductors, 106, 1% European & Israeliventurefinancing by target market 2015 (in US $M) (excluding mega-rounds)
  44. 44. • SaaS jumped to a record- setting first place, at $655M in funding in 4Q15 • Services dropped to second with $480M • Commerce took a major hit, dropping nearly 50% from 3Q • Marketplaces recovered a bit in terms of investment volume 44 @gdibner blog: yankeesabralimey In 4Q, SaaS set a record Syndicate for European & Israeli Enterprise Companies 0 100 200 300 400 500 600 700 800 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2014 2015 European & Israeliventure financing by business model (top five, in US $M, excluding mega-rounds) Services SaaS Software Commerce Marketplace
  45. 45. US VCs focused on SaaS & services • Throughout 2015, 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 45 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 47 43 32 15 12 259 232 147 119 95 72 80 0 50 100 150 200 250 300 350 SaaS Services Software Commerce Marketplace Media Systems Components Semiconductors VC Investments in Europe & Israel 2015 (number of investments) No US VC involved US VC involved
  46. 46. • Enterprise marketing SaaS was by far the most popular segment for VC investment in 2015 with 72 investments across the region • Consumer financial services were next, with 42 investments • Enterprise security software was third, with 36 investments 46 @gdibner blog: yankeesabralimey Enterprise marketing & consumer fintech Syndicate for European & Israeli Enterprise Companies 0 10 20 30 40 50 60 70 80 Enterprise CRM SaaS Consumer Travel Commerce Enterprise Infrastructure SaaS Enterprise Data Software Consumer Education Services Consumer Food Commerce Consumer Gaming Software Enterprise Employment SaaS Enterprise Development SaaS SMB Financial Services Consumer Electronics Systems Enterprise Adtech Services Consumer Social Media Consumer Lifestyle Commerce Consumer Fashion Commerce Enterprise Security Software Consumer Financial Services Enterprise Marketing SaaS Number of VC investments Investmentin Europe& Israelby segmentby country 2015 (segments with 15 or more investments) UK & Ireland Israel Nordic DACH France Benelux Iberia South. Eur. East. Eur.
  47. 47. • Across Europe & Israel, US VC firms invested in 74 enterprise companies, 49 consumer companies, 4 SMB companies, and 4 OEM- oriented companies • Enterprise SaaS & Software attracted by far more US VC interest than any other space 47 @gdibner blog: yankeesabralimey What business models attract US VC investments? Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 35 Systems Components Semiconductors Services SaaS SaaS Systems Software Media Marketplace Commerce Services Services Software SaaS OEMSMBConsumerEnterprise US VC Investments in Europe and Israelby end market, business model, & country, 2015 (excludes seed & mega-rounds) Israel UK & Ireland DACH Nordic France Iberia Benelux East. Eur. South. Eur.
  48. 48. Show me the SaaS • The most popular category by far for SaaS investments across the geography was marketing • Development tools were the second most popular SaaS category • Productivity SaaS applications came in third, with a focus on consumer and SMB offerings • Employment SaaS was the fourth most frequently- funded category 48 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 10 20 30 40 50 60 70 80 90 100 ERP Adtech Health Data CRM Infrastructure Employment Productivity Development Marketing SaaS VC investment in Europe and Israel by vertical and target market, 2015 (top 10 verticals) Consumer Enterprise Government SMB
  49. 49. Services investing in 2015 • This graph shows the top ten verticals within the services category in 2015 across Europe & Israel • Financial services were far and away the most frequently funded category for VC investment in 2015 – mostly for consumers and SMBs • Adtech was the second most funded services category in 2015 • Logistics and Education were the third and fourth place verticals 49 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 10 20 30 40 50 60 70 80 Gaming Employment Health Marketing Infrastructure Communications Payments Education Logistics Adtech Financial Services VC investment in Europe and Israel by vertical and target market, 2015 (top 10 verticals) Consumer Enterprise SMB Telecom
  50. 50. 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. 50 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.
  51. 51. Thank you blogPrepared by Gil Dibner

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