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Late Stage AdTech Market Update (Thomvest Ventures)

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A look at public market performance, venture capital activity and M&A volume among late stage advertising technology companies.

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Late Stage AdTech Market Update (Thomvest Ventures)

  1. 1. Late Stage AdTech Market Update Thomvest Ventures Research Report June 2017 A look at public market performance, venture capital activity and M&A volume among late stage advertising technology companies
  2. 2. About Thomvest Ventures 2 Thomvest is a cross-stage venture capital firm with $250M under management. We primarily focus on opportunities in Silicon Valley with startups in the fields of advertising & marketing technology, financial technology, and cybersecurity. The capital we invest is our own, enabling us to be more creative, flexible and patient with our entrepreneurial partners. More than two-thirds of the companies we have funded in the last decade have either gone public, been acquired, or continue to grow as independent businesses. Don Butler don@thomvest.com Nima Wedlake nima@thomvest.com For questions or comments, please contact:
  3. 3. Agenda 1 Public Markets Stock performance and valuation multiples are up in 2017, but down relative to prior years; public market investors remain skeptical of the sector 3 2 Late Stage Venture Capital 3 Mergers & Acquisitions
  4. 4. Public Company Performance in 2017 4 Relative Stock Performance, 2017 YTD 
 (% Change) 1/4 2/1 StockPerformance(%Change) -10% 0% 10% 20% 30% 40% Facebook Google AdTech Index 3/1 4/1 5/1 +31% +24% +30%AdTech Index Google Facebook Advertising technology stocks are performing in-line with Facebook and Google in 2017. Rocket Fuel (FUEL) & YuMe (YUME) have rebounded from their 2016 lows, and Criteo (CRTO) & The Trade Desk (TTD) continue to show impressive growth. The AdTech Index includes Criteo, Rocket Fuel, Rubicon Project, The Trade Desk, 
 Tremor Video & YuMe Source: Thomson EIkon; as of 6/6/2017 6/1
  5. 5. 3x 6x 9x 12x Q 3'13 Q 4'13 Q 1'14 Q 2'14 Q 3'14 Q 4'14 Q 1'15 Q 2'15 Q 3'15 Q 4'15 Q 1'16 Q 2'16 Q 3'16 Q 4 '16 Q 1 '17 9.6x 7.8x 5.7x 4.2x 2.9x 3.3x 2.9x 3.0x 2.0x 2.1x 2.0x 1.8x 2.3x 2.1x 2.7x Public AdTech Valuation Trend, 2013-2017 5 Average Enterprise Value / TTM Gross Profit Ratio, by Quarter
 (Among companies in the public adtech index) Valuation multiples of public advertising technology companies have risen slightly over the last quarter, driven upward by The Trade Desk (TTD) which is trading at a SaaS-like multiple. The AdTech Index includes Criteo, Rocket Fuel, Rubicon Project, The Trade Desk, 
 Tremor Video & YuMe Source: Thomson EIkon
  6. 6. Public Company Metrics 6 Criteo
 (CRTO) Rocket Fuel (FUEL) Rubicon Project
 (RUBI) Trade Desk (TTD) Tremor Video (TRMR) YuMe (YUME) Enterprise Value
 (as of 6/6/17) $2.87B $165M $59M $2.14B $97M $106M 2016 Net Revenue1 (Actual) $730M $252M $256M $203M $95M4 $100M4 2017 Net Revenue1 (Estimated) $939M $202M $197M $294M $115M4 $105M4 Y/Y Revenue Growth (Estimated) +29% -20% -23% +45% +19% +5% 2017 EBITDA2 (Estimated) $292M $1M $20M $80M $4M $2M EV / 2017 
 Revenue 3.1x 0.8x 0.3x 7.3x 0.8x 1.0x YTD Stock Performance +13% +59% -34% +107% -2% +33% 1. Revenue is net of media costs 2. Reported as Adjusted EBITDA 3. Revenue includes non-advertising business lines 4. Company does not provide revenue net of media costs; Thomvest estimate Facebook3 (FB) Google3 (GOOG) $410.6B $593.9B $27.6B $90.3B $38.5B $107.8B +39% +19% $23.6B $42.9B 10.7x 5.6x +31% +24% Source: Company Filings & Thomson Eikon; Note: 2017 Revenue & EBITDA figures are average estimates provided by equity analysts
  7. 7. U.S. Digital Advertising Spend Across Platforms 7 U.S. Digital Advertising Revenue, 2015-2016 (Billions, USD)
 (Based on IAB Internet Advertising Report) $20B $40B $60B $80B 2015 2016 $23.5B $21.6B $13.6B $8.4B $35.4B $29.6B Google Facebook Other 1. Google U.S. advertising revenue is an estimate provided by Morgan Stanley Research 2. Facebook includes U.S. and Canada advertising revenue +9% Y/Y +62% Y/Y +20% Y/Y Google and Facebook capture two-thirds of digital advertising spend in the United States; ad spend outside of these two platforms grew to $23.5 in 2016, up 9% year-over-year. 1 2
  8. 8. Agenda 1 Public Markets Both deal volume and average deal size over the last 18 months are down relative to 2014 and 2015 8 2 Late Stage Venture Capital 3 Mergers & Acquisitions
  9. 9. U.S. Late Stage AdTech Financings, 2009-2017 9 30 60 90 120 $250M $500M $750M $1,000M 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD Total Deal Size # of Late Stage Deals 14 34 41 64 57 50 59 54 42 $165M $444M $753M $859M $633M $751M$753M $606M $520M 42 54 59 50 57 64 41 34 14 $12.7M $11.9M $12.8M $16.0M $11.7M $14.8M $19.3M $13.0M $12.5M Average Deal Size Source: Pitchbook; As of 6/6/2017; “Late Stage” is defined by Pitchbook as “usually Series B to Series Z+ rounds”
  10. 10. Notable Late Stage AdTech Financings in 2017 YTD 10 Source: Pitchbook; As of 6/6/2017 Company Deal Type Deal Size Valuation (Post) Deal Date Investors AdRise Series C $21M $70M May 12 Jump Capital, DHVC, Foundation Capital, Cota Capital SimpleReach Series B $9M - May 8 Spring Mountain Capital Placester Series D $50M $202M Mar 24 New Enterprise Associates Whistle Sports Series C $27.5M $120M Jan 23 NBC Sports Ventures, Sky Ventures and Emil Capital Partners Magnetic Series D $7.5M - Mar 29 Edison Partners, Charles River Ventures, ORIX Ventures NinthDecimal Series E $5M - Jan 4 Norwest Venture Partners, North Atlantic Capital, DFJ SocialFlow Series C1 $1.9M $54M Apr 4 Undisclosed
  11. 11. Notable Late Stage AdTech Financings in 2016 11 Source: Pitchbook Company Deal Type Deal Size Valuation (Post) Deal Date Investors Moat Series C $50M 433M Mar 21 Insight Venture Partners xAd Series E $42.5M $387.5M Oct 31 Eminence Capital, W Capital, IVP, Emergence Capital Yieldbot Series C $35M $96M Aug 3 RRE Venture, Converge Venture, SJF Venture, New Atlantic Ventures Collective Series D $34M - Apr 8 Columbia Partners, iNovia Capital, Greycroft Partners, Accel Partners AppNexus Series F1 $31M $1.6B Sep 28 News Corp, Yahoo Japan PlaceIQ Series D $25M - Jan 14 Harmony Partners, IA Ventures, Iris Capital Management, US Venture Partners JW Player Series D $20M $154M Jan 5 Cue Ball, e.ventures, Greenspring Associates, Greycroft Partners Turn Series E (Bridge) $15M - Mar 15 Norwest Venture Partners Signal Series E $13M $291M Mar 8 Undisclosed Swrve Series D $9.4M - Nov 16 Atlantic Bridge Capital, Allied Irish Bank, Acero Capital DataXu Series F $10M - Jan 25 Sky UK Apsalar Series B1 $8M - Apr 1 Thomvest Ventures, DCM Ventures, YJ Capital Qualia Series B $5.5M - Feb 16 S3 Ventures, Verizon Ventures
  12. 12. Notable Late Stage AdTech Financings in 2015 12 Company Deal Type Deal Size Valuation (Post) Deal Date Investors AppNexus Series F $62.7M $1.56B Apr 15 Undisclosed RadiumOne Series C $54M $208M Jun 30 Adams Street Partners, Crosslink Capital, Draper Esprit, Harmony Partners, Industry Ventures, Trinity Ventures SteelHouse Series C $49M $189M Dec 11 Mercato Partners, Silicon Valley Bank, Staley Capital Management LiveIntent Series D $32.5M $307M Jun 17 Battery Ventures, First Round Capital, FTV Capital, Shasta Ventures Tealium Series D $30.7M $168M Feb 17 Bain Capital Ventures, Battery Ventures, Georgian Partners, Presidio Ventures, Tenaya Capital Swrve New Media Series C $30M - Nov 11 Acero Capital, Atlantic Bridge Capital, Delta Partners, Evolution Media Capital, Ireland Strategic Investment Fund, Participant Media, TPG Growth Centro Series B $30M - May 20 NB Private Equity Partners Mode Media Series G $29.1M $233M May 21 Hubert Burda Media Innovid Series E $27.5M - Dec 23 Cisco Investments, Genesis Partners, NewSpring Capital, Sequoia Capital, T- Venture Holding, Vintage Ventures Management Placester Series C $27M $150M Nov 24 New Enterprise Associates, Romulus Capital Integral Ad Science Series E $27M $365M Jul 17 Atlas Venture, August Capital, Cross Creek Advisors, Pelion Venture Partners, Sapphire Ventures GumGum Series C $26M $167M May 28 First Round Capital, Morgan Stanley Expansion Capital, New Enterprise Associates, Upfront Ventures Magnetic Media Online Series C $25M May 20 Edison Partners, Charles River Ventures, ORIX Ventures Netsertive Series C $24M $158M Dec 2 Babson Capital Management, Greycroft Partners, Harbert Venture Partners, River Cities Capital Funds, RRE Ventures RockYou Series F $23M $271M Mar 2 Columbia Capital, Finaventures Source: Pitchbook
  13. 13. Agenda 1 Public Markets Deal volume is trending down slightly, although several transactions north of $100M have occurred in the last 12 months 13 2 Late Stage Venture Capital 3 Mergers & Acquisitions
  14. 14. AdTech Mergers & Acquisitions, 2009-2017 14 40 80 120 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 22 7982 104 56 30 47 28 7 $874M $1.50B $3.88B $1.73B $4.86B $8.30B $5.79B $10.01B $1.70B Aggregate Deal Volume Source: Pitchbook & AdOpsInsider M&A Tracker; Note: Agencies, Publishers and Marketing Tech firms were excluded from this analysis Note: Deals where terms were not disclosed are not included in the “Aggregate Deal Volume” figures Count of AdTech Acquisitions by Year (as of 6/6/2017)
  15. 15. Recent AdTech Exits Exceeding $100M 15 2017 YTD 2016 Company Buyer Deal Size $850M Moat $310M $305M $125M Company Buyer Deal Size $2.9B $1.4B $900M $700M $540M $360M $300M $300M Company Buyer Deal Size HookLogic Criteo $250M $200M $175M Gannett $156M $148M $122M $100M $100M Source: Pitchbook & AdOpsInsider M&A Tracker; Note: Agencies, Publishers and Marketing Tech firms were excluded from this analysis
  16. 16. Most Active Acquirers of AdTech, 2014-2017 16 4 8 Twitter Google Yahoo! Nielsen Oracle MediaMath AppNexus Adobe AOL Comcast Criteo Time Inc. GroupM 333333 44 5 66 77 $847M - $913M $740M $2.45B - $100M $540M $288M $320M $250M $87M - Total Deal Size* Gnip Adometry Brightroll Brandbank AddThis RareCrowds Alenty Ensemble Kanvas Labs Freewheel AdQuantic Adelphic Aerodeon Namo Media Agawi Cooliris Gracenote BlueKai Spree7 MediaGlu Tumri Millennial Med. Visible World Datapop Collective UK Exchange Lab SecondSync Anvato Flurry Exelate Datalogix Tactads Real Media LA TubeMogul Vidible Watchwith HookLogic Viant plista SnappyTV Famebit Luminate Informate Mob. Front Porch Upcast Yieldex TapCommerce mDialog Media Group Pointlogic Moat TellApart Spider.io SPARQ VisualDNA ZipDial Toro Source: Pitchbook & AdOpsInsider M&A Tracker; * Note: Total Deal Size includes deals where acquisition price was disclosed Count of AdTech Acquisitions by Company (as of 6/6/2017)
  17. 17. Notable AdTech Acquisitions in 2017 17 Company Buyer Deal Size Total Raised Deal Date Placed Snap $125M $13M Jun 6 Moat Oracle $850M $68M Apr 27 Turn Amobee $310M $157M Apr 10 Teads Altice $305M $94M Mar 20 Crisp Mobile Quotient Technology $58M $17M May 2 Visible Measures AcuityAds $10M $72M Mar 31 Adelphic Time Inc. - $23M Jan 23 Watchwith Comcast - $13M Jan 3 AdEspresso Hootsuite - $3.2M Feb 7 Source: AdOpsInsider M&A Tracker
  18. 18. Notable AdTech Acquisitions in 2016 18 Company Buyer Deal Size Total Raised Deal Date Neustar Golden Gate Capital $2.9B - Dec 14 AppLovin Orient Hontai Capital $1.4B $4M Sep 29 Media.net Miteno Communications $900M - Aug 22 Krux Salesforce $700M $50M Oct 3 TubeMogul Adobe $540M - Nov 10 Tapad Telenor $360M $34M Feb 1 HookLogic Criteo $250M $39M Oct 4 Operative Sintec Media $200M $15M Nov 29 AddThis Oracle $175M $73M Jan 5 ReachLocal Gannett $156M - Aug 9 Viant Time Inc. $155M $110M Feb 12 Smaato Spearhead Integrated Marketing $148M $47M Jun 8 Sizmek Vector Capital $122M - Aug 1 ConvertMedia Taboola $100M - Jul 26 Crosswise Oracle $50M $5M Apr 14 Source: AdOpsInsider M&A Tracker
  19. 19. Notable AdTech Acquisitions in 2015 19 Company Buyer Deal Size Total Raised Deal Date Rentrak comScore $732M - Sep 30 TellApart Twitter $533M $18M Apr 28 1010data Inc Advance / Newhouse $500M $35M Aug 4 Marketshare Neustar $450M $96M Nov 5 Millennial Media AOL $238M $240M Sep 3 Exelate Nielsen $200M $30M Mar 4 Undertone Perion $180M $40M Dec 1 Supersonic IronSource $150M $23M Sep 10 Yieldex AppNexus $100M $18M Mar 18 Visible World Comcast Undisclosed $33M Jun 4 Martini Media Evolve Media Undisclosed $41M Jun 16 AdChina Alibaba Undisclosed $40M Jan 14 Medialets WPP Undisclosed $33M Apr 15 Source: AdOpsInsider M&A Tracker
  20. 20. Thank You! 20 Native Advertising Overview ↗ Mobile Advertising Overview ↗China Mobile AdTech Overview ↗ Additional advertising technology research from Thomvest Ventures Header Bidding Overview ↗

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