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Venture transaction multiples france 2016

Venture transaction multiples france 2016

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Venture transaction multiples france 2016

  1. 1. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com Venture Transaction Multiples France 2016 Edition How Much Is Your Startup Worth ?
  2. 2. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 2 Edito Startup valuation: the secret sauce is the median EV/Sales multiple observed in France in 2015, based on all the fundraising transactions in Venture Capital. How much value is your startup worth? Every entrepreneur will be asking himself this question at least once in his lifetime. Obviously, the answer is far from being simple. In Venture Capital there is no « transparency » about startups valuation. Neither from startups nor funds. It's like being constantly in the haze. Only a few rumours and indiscretions sometimes feed the FrenchTech fantasies. Under such conditions, it is not easy for an entrepreneur to calmly consider one of the most complex stages of his adventure: fundraising. Venture Capital is facing a total asymmetry concerning the available market information. On one hand, funds hold a substantial amount of information, inherited from their past experiences and their precise knowledge of the fundraising market; on the other hand startups have none. In practice, the method ruling Venture Capital is the famous "2/3 1/3" method. 2/3 Pre-Money - 1/3 New Money. In other words, if you want to raise €1m, your fundraising valuation basis will be close to €2m, and your dilution for this round will represent 33% of your capital. This theory is correlated to what we have observed in our study where we found a 27.9% median dilution in France in 2015.This method can be explained by the will of the Venture Capital funds to make minority but substantial enough investments to hold a controlling stake in startups they are investing in: that’s why we call it the "2/3 1/3" method. Having this in mind and thanks to a data driven experience, Avolta Partners decided to reflect a little bit further upon the metrics that are underlying startups valuation. This is what we endeavoured to do in this study which aims to allow each startup to get a better (and fair) idea of its own valuation, to know how much it may claim as part of its fundraising adventure and to « fluidity » the relationship between Venture Capitalists and entrepreneurs. 6.38x
  3. 3. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 3 Companies belonging to the eCommerce, Hardware and Retail sections have a business based on stock management and margin between supplier prices and selling prices. Each of these 3 categories has its own key metrics, that’s the reason why we differentiated them. Performance model is built around the constitution of a recurring user community while Audience one is based on traffic. Service business incomes come from margin between labor cost and service invoice price. Focusing on Transaction Multiples. Methodology Data. Data. Data. 1000 startups. 650investors. 497deals in 2015. We are continuously tracking over 1000 startups, 650 investors and we’ve monitored around 500 deals in 2015. We’ve built a method to categorise startups according to their sector and business model and to estimate their transaction multiple. Here’s some insightsabout our approach. The French startup landscape mapped into 11 main sectors. We segmented the French startup landscape into 11 categories depending on fields of application. The 9 first are directly related to the disruptive tech environment while the 2 last gather non-tech companies. The AdTech and FinTech segments include respectively advertising and financial technology companies. The Digital Media section clusters media, social media and gaming-related companies. We put into the IoT segment companies positioned on combined software/hardware solutions. Online sellers go into eCommerce. Business Services and Consumer Services sections cover respectively B2B and C2C service technology startups. Companies focused on energy & environment on the one hand, and on medical, pharmaceutical & biological on the other hand go respectively into CleanTech and MedTech / BioTech groups. Eventually, we classified non-tech startups into Retail and Consulting according to their distribution or service-provider specialty. 9 business models to approach startup valuation. To focus on companies’ core business, we mapped the French startup environment through 9 business models (BM). The subscription model is based on recurring revenue (SaaS) or more traditional licensing. The commission model basically relies on a debit from the Gross Merchandise Volume (GMV) flowing through the platform according to a defined commission rate (such as a marketplace). 497 startup fundraisings monitored 286 fundraisings > to €1m 217 startups with legal information disclosed 171 Transaction Multiples We tracked over 286 fundraising rounds superior to €1m by extracting information from several sources We tracked legal information from BODACC to calculate 217 Equity Values We mapped the ecosystem and consolidated datato calculate171 Transaction Multiples
  4. 4. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com Global Trends
  5. 5. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 5 Global Trends €1.8bn deals value. 497 startups. French tech startups booming activity. With more than €1.8bn raised in 497 transactions in 2015, investments have more than doubled compared to 2014 and reached a new milestone in France. €810m were raised during the first semester and €1.02bn during the second one. France remains at the 3rd place in Europe in terms of total amounts raised behind the United Kingdom and Germany. 0 10 20 30 40 50 60 70 80 0 100 200 300 400 500 600 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 No. of dealsAmount (€m)
  6. 6. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 6 Global Trends FrenchTech mapping 2622 1179286 57 286 169 4310 35 1617 14115 7414 3116 5613 9321 6424 No. of deals Total amount raised Paris. Toulouse. Grenoble. Montpellier. Lyon. The FrenchTech initiative has promoted the creation of regional startup ecosystems. There are 14 different FrenchTech metropolis (Paris included). In 2015, almost 93.6% startups which raised funds (and 96.5% of total volume raised) were located within the French Tech metropolis network (Paris included). Paris hegemony is tremendous: 58.2% of startups funded in 2015 (64.3% of volume raised) have their headquarter located in Paris area. PACA, Auvergne Rhône- Alpes and Occitanie are the next 3 main startup home places, weighting for 22.2% in total.
  7. 7. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 7 Global Trends Inside the VCs’ mind Will the rich always get richer ? VCs’ investment activity has more than doubled this year. But what about money allocation through the different funding stages ? Is there a real move towards a bigger place for Seed Series ? Well yes, but there’s still room for improvement. Series A and B have seen their median ticket and global volume doubled but Seed tours - which concern almost half of the total 2015 deals - are still craving for more institutional financings. For now, alternative financing actors such as crowd equity platforms,crowd lendingplatformsand businessangels remain the main source of fund inflows to Seed stages. The « 2/3 pre-money, 1/3 new money » law, a reality ? One of the VCs’ rules acting as a law when entering in startup’s capital is: 1/3 of the valuation is injected in new money. Even if the global dilution median is 28%, we observed that almost 50% of Series A and 45% of Series B this year have been structured with a dilution below 25%. One constant metric is that VCs hardly ever invest with a dilution above 35%. < 15% 15-25% 25-35% > 35% C Seed €157m Series B €539m Series D €262m Series C €327m Series A €548m Injected money 0-50 +200 +50 +100 +150 No. of deals Startup distribution by Series 19.1% 13.2% 26.2% 31.6% 28.6% 33.3% 28.9% 57.1% 21.4% 26.3% 14.3% 0% 25% 50% 75% 100% A Series B Series C Series Startup dilution by Series Dilution Series A Series B Series C
  8. 8. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 8 Global Trends The long journey of an entrepreneur Startup lifetime and average waiting period at each stage of funding story. 53 months is the average waiting period between creation date and the Series A. Once you’ve reached this point, the typical delay until Series B is about 26 months. At this point, you can start thinking about quicker development and easier access to funds. But as you can see on the red curve, only few startups survive to this obstacle course. 0 50 100 150 200 250 0 5 10 15 20 25 30 0 20 40 60 80 100 No. of months 53-months « no man’s land» before finding your first institutional VC Just 26 more to see the light at the end of the tunnel Med. amount raised (€m) No. of startup Median time to reach Series A Median time to reach Series B
  9. 9. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 9 Global Trends The French startup cosmos 11 Sectors. 9 Business Models. Our vision of the French startup landscape is a dual one. On one side, we focus on fields of application – what we called sector – and on the other side, we think in terms of core earning model of the business – or business model. We spaced the 497 transactions over 11 sectors (11 verticals from AdTech to Consulting) and 9 business models (9 horizontalsfrom Subscription to Research). Deal size (€m) Logarithmic scale AdTech FinTech Digital Media IoT eCommerce Business Services Consumer Services CleanTech MedTech / BioTech Retail Consulting Subscription Commission Performance eCommerce Hardware Retail Audience Research Service Business Model
  10. 10. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 10 Global Trends Fundraising opportunities split by sector Are there sector investment patterns ? Depending on average revenue and average deal size positioning, 4 main sector trends have been spotted. The first one covers startups generating low revenue and getting high deal size such as FinTech – highly VC attractive but mainly based on low commission revenue. VCs also strongly believe in disruptive hardware companies. Demanding time and fund to validate their proof of concept and set up the production line, the IoT sector is consolidating and once revenues are generated, access to financing is significantly facilitated. eCommerce position in the matrix is rather indicative: based on non-recurring revenue and high marketing expenses, the break-even point is rarely reached below €8m revenue. Reaching a critical size is compulsory to pretend to a VC-backed fundraising. We will analyse the impact on valuation further in the study. AdTech FinTech Digital Media IoT eCommerce Business Services Consumer Services CleanTech MedTech / BioTech Retail Consulting 0,00 2,00 4,00 6,00 8,00 10,00 12,00 0 1 2 3 4 5 6 7 8 9 10 Avg. Revenues (€m) Avg. deal size (€m) €4.9m €4.8m Spray & Pray Hedge the risk All-In Consolidate the monopoly < 10 10 - 25 >25 No. deals Based on 171 investments with available2015 revenues and newmoney between €0.5m and €40m
  11. 11. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com Transaction Multiples
  12. 12. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 12 Transaction Multiples The secret sauce unveiled Valuation(startup) = a{sector ; business_model} + b{team ; product ; competition ; equity_story} with “a” based on revenue & ecosystem analysis (Transaction Multiple approach) with “b” based on other driver analysis (qualitative approach) How do Venture Capitalists (VCs) valuate Tech companies? That’s what we want to explain with the formula above. The ultimate way to drive startups valuation on a more rational way than existing VC methods. “Pre-Money = 2x New Money” as VC partners say for early stage startups is no longer a viable valuation method. a = 80%. b = 20%. Our main postulate. We assume 80% of the value is driven by revenues, i.e. that we can obtain a consistent range of transaction multiples by {Sector;BM} subgroup and then, when it comes to value a new venture, to leverage the startup revenue by the median multiple of its {Sector;BM} subgroup. Other more qualitative considerations such as team expertise, product, competition, equity story or market opportunities could be used to improve the value and explain why startups outperform their {Sector;BM} median multiple. Understand startup earnings. Map startup ecosystem. Modelise Transaction Multiples. Valuate.
  13. 13. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 13 Transaction Multiples Tech valuation snapshot A splash ofrational in the worldofstartupvaluation. At first sight, startup valuation seems to depend on both quantified and unquantified variables. Global momentum, market reaction, VCs’ predictions and policies or management team profiles are all influencing startup perceived value. Getting a fair and objective view on the valuation of a business might be a tricky task. But we did try to bring some rational into it and we strongly believe that each sector and revenue generating model reveals its own trend. Here’s a snapshot of our study. Subscription Commission Performance eCommerce Hardware Audience Research 7.95x 19.26x 26.58x 4.20x 12.20x 27.10x 8.72x 5.45 4.16x 6.39x 1.24x 4.44x 3.38x 2.32x 0,00x 10,00x 20,00x 30,00x 2015 EV/SALES by BusinessModels 1st quartile 3rd quartile 19.65x 10.06x 52.31x 8.54x 4.09x 23.08x 13.18x 28.68x 5.06x 3.93x 2.09x 6.56x 2.99x 1.26x 5.82x 3.29x 9.83x 2.16x 0,00x 10,00x 20,00x 30,00x 40,00x 50,00x 2015 EV/SALES by Sectors AdTech FinTech Digital Media IoT eCommerce Business Services Consumer Services CleanTech MedTech / BioTech
  14. 14. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 14 Transaction Multiples The {Sector;BM} matrix convergence points Subscription Commission Performance eCommerce Hardware Retail Audience Research Service Deal size (€m) Logarithmic scale AdTech FinTech Digital Media IoT eCommerce Business Services Consumer Services CleanTech MedTech / BioTech Retail Consulting AdTech X Subscription Business Services X Subscription 95 startups €280m total funding FinTech X Commission eCommerce X Commission Consumer Services X Commission 77 startups €360m total funding IoT X Hardware CleanTech X Hardware MedTech / BioTech X Hardware 76 startups €300m total funding MedTech / BioTech X Research 30 startups €175m total funding
  15. 15. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 15 Transaction Multiples AdTech 0.0x 5.0x 10.0x 5.06x2.16x AdTech Subscription Performance 6.55x2.55x 4.15x2.32x Global Sector Global BM Sector x BM No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution 23 €1.09m 33% €4.97m 24.8% €2.5m Med. gap1 Sector median All in all median Reaching the critical mass. Mainly structured around subscription and performance models (CPC/CPM/CPA/etc.) linked to the advertising ecosystem, AdTech ventures are valued on relatively discounted multiples. VCs focus on mature startups (€5m median revenue) with a proven business model and an established network of publishers. Reaching a critical mass is crucial in view of AdTech ecosystem complexity and offers/technologies fragmentation. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  16. 16. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 16 Transaction Multiples FinTech 20 €3.1m 14% 30.3% No. deals Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 €0.55m€1.32m Sector median All in all median Global Sector Global BM Sector x BM FinTech Commission 25.63x10.02x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 28.68x9.83x 30.0x A huge seductive power. VCs’ craze for FinTech startups is real. While still fragmented and immature, potential booming and disruptive FinTech technology market is currently attracting financing from almost any kind of VC. Commission business model is prevailing and the average debit percentage is pretty low: close to 5%. Therefore, although the median revenue of FinTech startup is the lowest one, all bets are off and this trend pushes up EV/Sales multiples. Med. Amount raised 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  17. 17. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 17 Transaction Multiples Digital Media Digital Media Audience 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 5.90x2.42x 13.18x3.29x Global Sector Global BM Sector x BM 15 €3.1m €2m 11% €4.47m 28.1% No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 Sector median All in all median Concentration trend. Few deals, but high ones. Digital Media sector is consolidating around big actors. Cross media, cross canal and cross audience: the perspectives are promising and VCs are valuing that on consistent transaction multiples basis. Mainly based on audience model, expectations in terms of revenue and media exposure are high. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  18. 18. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 18 Transaction Multiples IoT IoT Hardware 4.12x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 21.65x 23.08x5.82x Global Sector Global BM Sector x BM 29 €2.1m €1m 17 % €1.79m 32.3% No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 Sector median All in all median Take time to develop yourproduct,VCs are patient. When investing in IoT, VCs generally expect startups to generate revenue (only 17% of pre revenue deals). Most of the time, average €2m ticket size is to go for market distribution. Yet, as any CAPEX incentive models, prototyping and industrialisation are crucial financing steps and some VCs size opportunities while hedging theirrisk with relatively high dilution. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  19. 19. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 19 Transaction Multiples eCommerce eCommerce Commission eCommerce 0.0x 2.0x 4.0x 6.0x 8.0x 3.59x1.29x 6.09x3.51x 10.0x 1.26x 4.09x Global Sector Global BM Sector x BM 19 €2.5m €0.51m 13% €3.6m 27% No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 Sector median All in all median Critical size reachingis… highly critical. eCommerce actors experience fierce competition from global players and suffer from low technological barrieres and a high level of OPEX expenses. It explains that VCs’ expectations in terms of revenue and profitability are higher than in other sectors. Reaching a critical mass to prove the viability of the model is a must-have to access to Series A. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  20. 20. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 20 Transaction Multiples Business Services 0.0x 4.0x 6.0x 8.0x 10.0x 12.0x 8.54x2.99xBusiness Services Performance 2.0x Subscription 8.03x2.93x 7.93x6x Global Sector Global BM Sector x BM 70 €2m €0.95m13% €2.5m 24.8% No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 Sector median All in all median B2B reduces hazards and explainslowmultiplesdispersion. Business services represent the biggest sector when considering the number and the volume of deals in French venture capital: fundraisings of startup ventures from this subgroup are a benchmark to all others sectors since they give consistent medians to compare with. It is all the more interesting to notice differences between the sector’s medians and general trends, such as outstandingly low percentage of pre-revenue deals. In the whole, the group is a dispersed investment market with relatively small deals for low-revenues startups and 25% market-practice dilution. Subscription is the classic business model, yet performance promises better valuation, which explains the rush to revenue-indexed SaaS plans. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  21. 21. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 21 Transaction Multiples Consumer Services 24 €1.7m €0.47m 19% €1.25m 21.9% No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 Sector median All in all median Global Sector Global BM Sector x BM Consumer Services Commission 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x 52.31x6.56x 185.94x2.93x Money does not make « Winner-Takes-All» markets. The observed median deal size in consumer services is relatively low. It appears conterintuitive in regards to the journalistic “Winner-Takes-All” speech but investors’ reality is that B2C venture capital is a dispersed market formed by startups with outstanding small revenues of which 19% are considered pre-revenue. Investments are hazardous with high dispersion in valuation multiple: venture capitalists commit small amounts of money and wait for product-market fit and growth before massively injecting cash in later rounds. It is worth noticing that consumerservices outperform global commission business model multiples thanks to high margins (around 20%). 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  22. 22. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 22 Transaction Multiples CleanTech CleanTech Hardware Subscription 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 12.23x2.99x 21.87x6.61x 2.14x1.93x Global Sector Global BM Sector x BM 25 €2.5m €1.5m 36% €3.31m 27% No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 Sector median All in all median Investors in cleantech focus on revenue growth. The median deal size in cleantech is relatively high and the median operation rather dilutive. It is not surprising when considering that hardware is the most common business model of the subgroup. Cleantech ventures need high investments to develop their products and investors hedge technology uncertainties, industrial risks and operational delays by heavily acquiring preferred equity stocks. Yet, the median revenue of VC-backed ventures is +€3.3m and this tells an other counterintuitive story: venture capitalists expect cleantech startups to commercialise and earn money quickly aftertheirseries A otherwise they won’t participate in the next round. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  23. 23. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 23 Transaction Multiples MedTech / BioTech MedTech / BioTech Research Hardware 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 7.95x5.45x 19.65x3.93x 8.38x 24.2x Global Sector Global BM Sector x BM No. deals Med. Amount raised Share of pre revenue deals Med. Revenue Med. dillution Med. gap1 37 €2.5m €1m 59% €1.01m 30% Sector median All in all median 7 years before commercialisation. Medtech/biotech startups have €1m median revenue and 59% are considered pre-revenue. Ventures in this sector are financially hazardous since the main business model is research. Yet, investors cannot hedge their risks by committing small tickets and diversifying because Medtech/Biotech may need +3 rounds of financing before generating revenues. So venture capitalists ask for high dilutions and value intangible assets such as patents for guarantee. Nonetheless, when a startup starts earning revenues, its market monopolistic position explain x7 median revenue multiple with low range dispersion. 1Gap between amount disclose and amount effectively raised 1st quartile 3rd quartile
  24. 24. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com Bonus
  25. 25. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 25 Bonus SaaS model insights R² = 0,45993 R² = 0,66017 2,00x 3,00x 4,00x 5,00x 6,00x 7,00x 8,00x 9,00x 10,00x -20% 30% 80% 130% 180% 230% EV/Sales EV/ARR Sales 2015 EV/Sales and EV/ARR vs. growth rate EV/ARR, the true multiple for SaaS model valuation. SaaS models from Subscription sub model are based on same financial characteristics: Recurringrevenues. In most of time, annual Sales are not relevant to appreciate the recurrence of the flows and an other indicator EV/ARR* has to be determined toimprove the fairness of the valuation. As we say below on the Transaction Multiples part, subscription modelsare not linked to pre-revenue models and SaaS Transaction Multiples are substantially linkedto growth rate. In our statistical analysis, we note that linear regression on EV/ARR vs. Growth Rate is higher than on Sales basis to prove the better correlation with recurring valuation approach. VCs are in mind some critical MRR (Monthly RecurringRevenues) size determiningthe ability ofthe startup to access type of Series. €80k to be comfortable at A Series level. €400k to goat B+ Series level. ARR (Annual Recurring Revenue) = MRR(Monthly Recurring Revenue) x12 -1,00 4,00 9,00 14,00 19,00 0,00 100,00 200,00 300,00 400,00 500,00 600,00 700,00 800,00 -1,00 1,00 3,00 5,00 7,00 9,00 11,00 0,00 50,00 100,00 150,00 Critical size: €50k-€100k MRR Seed & Series A Series B Sales 2015 General trend Median Monthly Recurring Revenue (MRR) vs. amount raised
  26. 26. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 26 Bonus What about pre-revenue Tech companies valuation? 40% 9%13% 13% 9% 9% 6% 1% Research 30% Hardwar e 32% Critical Mass 38% MedTech / BioTech IoT Clean Tech Consumer Services Business Services FinTech Digital Media AdTech 0 10 20 30 40 50 60 70 80 Research Hardware Critical size Seed A Series B+ Series Amount raised by pre revenue startups (€m) VCs’ appetite for pre-revenue Tech companies is substantially linked to sector combining with business model. There are 3 reasons VCs invest in startups who have not yet generated revenue. Either it is research-focus, in its hardware proof of concept period, or on its way to reach a critical size. Research category gathers exclusively MedTech / BioTech sector companies. VCs have no specific commercial considerations and are present at each funding stage from seed to B+ series. Hardware companies (in MedTech, IoT and CleanTech) have to make viable prototype to test the market before consolidate a structured revenue, that is the reason why they are VC backed mainly until the A Series round. After that stage, commercial VC’s expectations are getting serious. Same logic with a even higher expectation level for startups who have to make investment to build a first viable audience to access a market on a profitable way.
  27. 27. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 27 Bonus New Money Bullshit Gap 21% 17% 18% 23% 5% 20% 15% 17% 32% 0% 5% 10% 15% 20% 25% 30% 35% AdTech FinTech Digital Media IoT eCommerce Business Services Consumer Services CleanTech MedTech / BioTech New money amount announced / Equity really raised Median 20% Bullshit gap between the amounts announced in the press and real equity raised. This gap can be partly explained by the leverage some startups use on top of the equity they raise: Convertible bonds, BPI loans, etc. Moreover, the amounts announced in the press sometimes includes cash in + cash out witch is not disclosed into BODACC Legal information. Nevertheless, we note that even if we take leverage and cash out apart amounts announced are still inflated due to the positive impact it has on the market. Everyone wants to invest on the biggest.
  28. 28. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com 28 Bonus Top Tech companies valuation by sector AdTech FinTech Digital  Media IoT eCommerce Business  Services Consumer  Services CleanTech MedTech  /  BioTech #1 Holimetrix 6.55x Lendix 109.24x Happn 21.21x Sigfox 47.97x La  ruche  qui  dit  oui 17.88x Videodesk 72.30x GuestToGuest 247.94x SunPartner   Technologies 54.06x Theraclion 42.79x #2 AdotMob 5.00x Finsquare 25.63x Amplement 13.26x Actility 47.18x Sculpteo 6.32x Hopwork 56.87x Zenpark 114.40x Enertime 21.87x Poietis 34.50x #3 Netwave 4.57x Compte-­‐Nickel 21.03x Kudoz 12.94x Multix 29.88x 1001pharmacies.com 6.09x Doctolib 24.37x Blablacar 62.67x APR2 10.26x Defymed 24.22x Med. 3.36x 18.18x 9.42x 8.56x 3.28x 6.03x 22.74x 4.25x 8.38x
  29. 29. Venture Transaction Multiples – France 2016 Edition© 2016 Avolta Partners // www.avoltapartners.com Disclaimer The information contained in this report has been produced by Avolta Partners, based on Diane+ data, BODACC legal data and third party information. While Avolta Partners has made every effort to ensure the reliability of the data included in this report, Avolta Partners cannot guarantee the accuracy of the information collected and presented. Therefore, the Avolta Partners cannot accept responsibility for any decision made or action taken based upon this report or the information provided herein. This presentation is for the exclusive use of the people to whom it is addressed and is intended for general information purposes only. It is not intended to constitute legal or other professional advice and should not be treated as such. Appropriate legal advice must be sought before making any decision, taking any action or refraining from taking any action in reliance on the information contained in this presentation. does not assume any responsibility for any person’s reliance upon the information contained herein. © Copyright Avolta Partners September 2016 Avolta Partners With more than 30 deals closed in 3 years, Avolta Partners has proven to be one of the most active M&A boutique in Europe in the Tech Industry. As a result, our team of 11 people has learned how to maximise the value of a deal – both valuation and legal conditions – thanks to a proven methodology and hard-nosed negotiations. Dedicated team to Valuation Transaction Multiples – France 2016 Edition FOR MORE INFORMATION EMAIL US AT CORPORATE@AVOLTAPARTNERS.COM VISIT US AT WWW.AVOLTAPARTNERS.COM Arthur Porré Managing Partner arthur.porre@avoltapartners.com Pascal Farrugia Associate pascal.farrugia@avoltapartners.com Claire Coste Analyst claire.coste@avoltapartners.com Thomas Reygagne Analyst thomas.reygagne@avoltapartners.com

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