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Looking at European SaaS Exits

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A talk I gave at the Point Nine Capital CEO Summit on European SaaS exits

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Looking at European SaaS Exits

  1. 1. D E S I G N I N G Y O U R E X I T S T R AT E G Y : A D ATA - D R I V E N L O O K AT R E C E N T S A A S E X I T S
  2. 2. Private & Confidential | 2 A g e n d a Introduction European SaaS Exit Trends Case Studies How to achieve your exit? Introducing ‘Real Exits’ 01 02 03 04 05
  3. 3. Private & Confidential | 3 I n t r o d u c t i o n M A R K M A C L E O D F O U N D E R & P R E S I D E N T S U R E PAT H C A P I TA L PA R T N E R S Mark has over 14 years experience as a CFO for leading companies such as FreshBooks, Shopify, Tungle and many others. He also spent 3 years as a General Partner at Real Ventures, Canada’s largest and most active seed stage venture fund. He has raised hundreds of millions in capital from investors in Canada, the US and Asia. In addition, Mark has sold companies to Airbnb, Blackberry, Rackable Systems, Return Path and others.
  4. 4. Private & Confidential | 4 S u r e P a t h : O u r P u r p o s e Helping you fund, grow and exit your startup The process of raising growth capital is very different from raising early stage capital It is cheaper than ever to start companies, but more expensive than ever to build market leaders. If that’s your aspiration, you need growth capital We help startups prepare for growth stage and help them raise the capital needed to become market leaders We have sat on both sides of the table. We have funded, grown and exited many companies We offer up that experience through ongoing coaching and mentoring. A low touch, high impact way to help you grow There are few credible choices for advisors to facilitate sub $100M exits. We fill that gap We work with you to facilitate the BD and Corp Dev intros that pave the way to an eventual exit If you decide to exit, we manage the process for you from start to finish SurePath maximizes your optionality: We make sure you know what it takes to build a market leader and capitalize you towards that goal. We ensure you are always in the minds of strategic buyers so that if they decide to make a move in your space, you are in the conversation. You can then decide; Keep going or exit? Growth Funding Strategic Guidance Exits
  5. 5. Private & Confidential | 5 S u r e P a t h & S M B •We have been part of some the most successful SMB SaaS companies •We have deep relationships with SMB investors and buyers •SurePath is committed to becoming the leading strategic financial advisor to the global SMB software market
  6. 6. European SaaS Acquisition Activity
  7. 7. Private & Confidential | 7 E x i t s b y T y p e Source: pitchbook.com 19 30 24 24 35 22 28 27 15 20 24 1 1 1 2 1 1 3 0 5 10 15 20 25 30 35 40 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 Number of Deals European SaaS Exits by Type Merger/Acquisi=on IPO
  8. 8. Private & Confidential | Private Buyers 67% Public Buyers 33% Buyer by Type 8 B u y e r L o c a t i o n & T y p e Source: pitchbook.com North America 41% Asia & Others 6% Europe 53% Buyer By Geography
  9. 9. Private & Confidential | 9 B u y e r s Who’s buying European SaaS companies Source: pitchbook.com
  10. 10. Private & Confidential | 10 E x i t s b y A g e Note: 12 companies does not have a disclosed age Source: pitchbook.com 14% 40% 17% 18% 11% Exit By Age of Company 0 to 5 years 6 to 10 years 11 to 15 years 16 to 20 years > 20 years
  11. 11. Private & Confidential | 11 E x i t s b y S i z e Source: pitchbook.com 71% 21% 5% 2%1% Exit Values Not Disclosed $0m - $50 $50M - $100M $100M - $200M > $200M
  12. 12. Private & Confidential | 12 F u n d i n g S t a t u s Source: pitchbook.com 6% 40%53% Funding Status of Exited Companies PE VC Non-funded $46.7m $30.0m $13.1m $0.0m $5.0m $10.0m $15.0m $20.0m $25.0m $30.0m $35.0m $40.0m $45.0m $50.0m PE VC Non-funded Median Valuation 4.2x 3.8x 2.0x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x PE VC Non-funded Valuation /Rev Multiple
  13. 13. Private & Confidential | 13 C O U N T R Y E X I T S U N I T E D K I N G D O M 9 2 G E R M A N Y 3 7 F R A N C E 3 5 N E T H E R L A N D S 1 5 I R E L A N D 1 4 S PA I N 1 2 S W I T Z E R L A N D 9 F I N L A N D 8 S W E D E N 8 I TA LY 7 B E L G I U M 6 D E N M A R K 6 N O R WAY 6 R U S S I A 5 C Z E C H R E P U B L I C , P O R T U G A L , C R O AT I A , P O L A N D , A U S T R I A , C Y P R U S , H U N G A RY, L AT V I A , M A LTA , S E R B I A , S L O VA K I A , U K R A I N E < 5 E x i t s b y L o c a t i o n 9 2 3 7 1 5 3 5 1 4 1 2 9 8 8 7 6 6 6 5
  14. 14. Case Studies
  15. 15. Private & Confidential | Endomondo Year Founded 2007 Time To Exit 8 Years Rounds Raised 3 Total Funding $6.2M Investor(s) SEED Capital Denmark Headquarters Copenhagen, Denmark Employees 33 15 C a s e S t u d y : E n d o m o n d o Source: pitchbook.com, Endomondo, inc.com, Bloomberg Acquired By Valuation Date Of Acquisition $85 Million USD January 2015 • Under Armour bought Endomondo around the same time it acquired MyFitnessPal for $475M USD • Endomondo was profitable at the time of acquisition • Under Armour acquired Endomondo to understand European consumers better - with only 8% of revenue outside of America
  16. 16. Private & Confidential | TextLocal Year Founded 2005 Time To Exit 9 Years Rounds Raised N/A Total Funding N/A Investor(s) N/A Headquarters Chester, England Employees 36 16 C a s e S t u d y : Te x t L o c a l Source: pitchbook.com, Venturebeat, tech.eu Acquired By Valuation Date Of Acquisition $16.6 Million USD Oct 2014 • TextLocal’s messaging platform was very complementary to IMImobile’s solutions which utilizes network and mobile data to create streamlined customer journeys • TextLocal was immediately integrated with IMImobile’s core infrastructure post acquisition - and the platform helped cross-sell IMImobile’s other products • With IMImobile’s global footprint, it also opened up more markets for TextLocal • TextLocal also allowed IMImobile to start serving the SMB market, which it did not previous cater to
  17. 17. Private & Confidential | Wunderlist Year Founded 2010 Time To Exit 5 Years Rounds Raised 4 Total Funding $24M Investor(s) Sequoia Capital, Deutsche Telekom, Atomico Headquarters Berlin, Germany Employees 61 17 C a s e S t u d y : Wu n d e r l i s t Source: pitchbook.com, SeattleTimes, Wunderlist, MIcrosoft, ZDNet Acquired By Valuation Date Of Acquisition $150 Million USD June 2015 • While Microsoft has historically focused on building their own major applications, it has shown a preference to buy mobile-first apps that are single feature (i.e. Sunrise, SwiftKey, Acompli, etc.) • With over 13 million users at the time of acquisition, this was a good channel for Microsoft to be even further embedded into people’s productivity solutions • Since the acquisition, Microsoft has rolled out integrations between Wunderlist and Microsoft Outlook • Wunderlist has also introduced more premium, business oriented solutions since the acquisition
  18. 18. How to Achieve Your Exit
  19. 19. Private & Confidential | 19 Exit Rule #1: Be proactive stop wishing. start doing.
  20. 20. Private & Confidential | 20 Exit Rule #2: Strangers don’t (often) marry
  21. 21. Private & Confidential | 21 Exit Rule #3: Timing matters Source: SaaStr
  22. 22. Private & Confidential | 22 Exit rule #4: (Almost) anything is possible Possibilities
  23. 23. Private & Confidential | 23 Buyer Types Founder ✓ Product-driven ✓ Based on desire ✓ Top down ✓ No prior relationship needed Manager ✓ Fact-driven ✓ Based on clear business case ✓ Pushed up to CEO ✓ Need evidence (joint customers)
  24. 24. Private & Confidential | 24 Drivers of Deal Value ✓ Alternatives (runway, competition) ✓ Scarcity ✓ Mortal enemies ✓ Growth (fear) ✓ Market leadership (2 way) ✓ Does the buyer’s CEO Want this? ✓ On strategy ✓ Currency ✓ Time and timing (including markets)
  25. 25. Private & Confidential | T h e R o l e o f A d v i s o r s 25 ✓ Should you hire one? Yes ✓ What to look for: Relevant relationships, completed deals and expertise. Senior people involved ✓ Role: ✓ Prepare you ✓ Quarterback ✓ Create / manage demand ✓ Good cop/ bad cop ✓ Objectivity ✓ Create urgency
  26. 26. Private & Confidential | 26 I n t r o d u c i n g R e a l E x i t s
  27. 27. Shubham Datta Associate shubham@surepathcapital.com 647.972.6834 Rena Wang Analyst rena@surepathcapital.com 416.897.8922 Mark MacLeod Founder & President mark@surepathcapital.com 416.843.6004

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