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Venture Capital in Europe & Israel
Venture Investment Data: Second Quarter, 2016
Prepared by Gil Dibner
Skyline of Rome, h...
The data
• The data in this report consists entirely of data I’ve gathered manually based on
publically available, free so...
Quarterly pace of venture investment
• In 1Q16, Europe & Israel saw
$4.0 billion flowing into 470
venture transactions
• T...
Monthly pace of venture investment
• All three months of the
second quarter were strong,
with particular strength in
April...
Mega-rounds skew the investment totals
• This analysis breaks down VC
investments into brackets by size:
• Seed (less than...
Strong year-over-year growth
• 1H16 total investment volume
in Europe & Israel was up
27% over 1H16 (excluding
seed deals,...
Number of investments, by bracket
• Excluding seed deals, the
total number of VC
investments per quarter was
260 in 2Q16, ...
Corporate VC activity, by bracket
• Excluding seed deals, the
total number of corporate VC
investments jumped to 57 in
2Q1...
Corporate VC activity, by country
• During the second quarter of
2016, Israel again saw the
highest number of corporate
VC...
Average round size
• Previously, I presented this broken
down by bracket, but I think the data
is more meaningful when tak...
Total venture investment by country, 2Q 2016
• Israel leapt ahead of the UK
and Germany to take the top
spot in 2Q16 fundr...
Total venture investment by country, 3Q14 to 2Q16
• To get a better sense of VC
volumes in various countries,
this analysi...
Total venture investment by country, 3Q14 to 2Q16
• To get a better sense of VC
volumes in various countries,
this analysi...
Average venture round sizes, by region
• Until this quarter, the data
had been generally
supporting the idea that
average ...
Total venture investment by region, 2Q16
• When VC investments across
Europe are aggregated into
regions, UK & Ireland, Is...
Rounds by bracket & region
• To get a better sense of deal
volume, this analysis excludes
seed deals which are often
poorl...
Participation rate of US VC firms, by bracket
• Year to date, US VC firms
participated in 11% of the
venture rounds in Eur...
US VC firm participation hits a new low
• Excluding seed rounds, US VC
firm participation in European
& Israeli venture ro...
Participation of US VC firms by country
• In 2Q16, US VCs firms were
active in 12 different
European countries
• US VC fir...
Participation of US VC firms by country
• This chart shows US VC
activity within Europe
throughout 2015 and 1H16
• The ove...
Dimension Categories Explanation/Example
1. Target market
Consumer, SMB, Enterprise, Government,
Telecom, OEM
What sort of...
• Excluding mega-rounds,
investment activity increased
in consumer and decreased
in enterprise enterprise in 2Q
compared w...
• When Israel is excluded from
the sample, 59% of all VC
dollars in Europe went to
consumer-oriented
companies
• OEM-orien...
• When the sample set is
limited to rounds under
$20M, the ratio of consumer
to enterprise investments
shifted back to whe...
Breakdown by region & target market
• Once again, almost all
regions except Israel saw
more consumer investment
than enter...
Distribution of investment rounds by country
• Across Europe & Israel, 46%
of VC investment rounds
were in consumer compan...
Growth rounds by target market
• From 4Q14 to 2Q15, there
was an upward trend towards
consumer-oriented
companies in growt...
• Fintech was yet again the
most popular vertical across
Europe & Israel, with 40
investments in the category
• Electronic...
• This graph shows number of
investments in the top 10
verticals across 2Q15 and
2Q16
• All of the top ten verticals
incre...
• Finance was the most
frequently funded vertical,
with over half of the
investments aimed at
consumer finance
• Electroni...
• This chart shows the ten most
commonly funded verticals
across Europe & Israel by
quarter
• Electronics has shown
consis...
• Lifestyle, which is admittedly a
bit of a catch-all general
consumer category,
continues to show
tremendous strength in ...
• Enterprise marketing seems
to have levelled off as an area
for VC investment
• Security and adtech also
remain stable bu...
• Security retained the top spot
in Israel, with 11 investments
• Marketing, infrastructure, and
adtech were next
34
@gdib...
• For the first time in six
quarters, fintech not the
number one category in the
UK
• Enterprise employment (HR)
startups ...
• Fintech and industrial tied for
the most popular categories
in Germany, with five
investments each
• Real estate and edt...
• Fintech was the most
commonly funded vertical in
the Nordics, with 11
investments
• Electronics was next, with 8
investm...
• SaaS was the most funded
business model in 2Q16
• As software eats the world,
services are becoming an
increasingly impo...
• Reversing last quarter’s trend,
SaaS jump ahead of services,
but both categories show
continued strength
• Commerce seem...
• Enterprise marketing SaaS
was again the most popular
segment for VC investment in
2Q16 with 22 investments
across the re...
• Across Europe & Israel, US
VC firms invested in 37
enterprise companies, 15
consumer companies, 1 OEM
company, and 1 tel...
Show me the SaaS
• As usual, the most popular
vertical by far for SaaS
investments across the
geography was marketing
• Em...
Services investing in 2Q16
• This graph shows the top ten
verticals within the services
category in 2Q16 across
Europe & I...
Based in , I was previously a partner at . Before that, I helped run the
European seed program for . I moved to London aft...
Thank you
blogPrepared by Gil Dibner
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Europe & Israel 2Q16 - VC Deal Done

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A detailed look at VC investment trends across Europe & Israel

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Europe & Israel 2Q16 - VC Deal Done

  1. 1. Venture Capital in Europe & Israel Venture Investment Data: Second Quarter, 2016 Prepared by Gil Dibner Skyline of Rome, home of over 900 churches blog
  2. 2. The data • 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 all currencies into USD using monthly average exchange rates 2@gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
  3. 3. Quarterly pace of venture investment • In 1Q16, Europe & Israel saw $4.0 billion flowing into 470 venture transactions • This set a new quarterly record for both numbers • These numbers, and the rest of this deck, do not reflect the $1B in debt raised by Spotify in March 3 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1,703 1,916 2,873 3,139 3,248 2,856 3,751 4,001 122 204 270 271 286 357 463 470 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 0 50 100 150 200 250 300 350 400 450 500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 Amountinvested(US$M) Numberofinvestments VC Investments in Europe & Israel Invested amount (US $M) Number of investments
  4. 4. Monthly pace of venture investment • All three months of the second quarter were strong, with particular strength in April and May @gdibner blog: yankeesabralimey 4Syndicate for European & Israeli Enterprise Companies 905 971 997 791 787 1,561 1,517 568 1,164 1,083 1,059 714 1,661 1,052 1,038 1,367 1,450 1,185 92 75 103 78 95 98 119 65 102 111 124 122 164 149 150 149 159 162 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2015 2016 Numberofinvestments VC Investments in Europe & Israel, January 2015 - June 2016 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+) • Four mega-rounds took place in Europe this quarter – all of them consumer-oriented businesses: • Cabify, Spanish on-demand taxi app,, raised $120M in April • Global Fashion Group, a German online fashion retailer, raised $340M in April • Farfetch, a British online fashion retailer, raised $110M in May • Gett, an Israeli on-demand taxi app, raised $300M in May • Adjusting for mega-rounds, 2Q16 was slightly below 1Q16 5 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 285 354 368 507 602 609 556 716 567 559 731 686 1,154 813 1,513 1,187 1,669 1,643 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2015 2016 AmountInvested(US$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 • 1H16 total investment volume in Europe & Israel was up 27% over 1H16 (excluding seed deals, where data is more spotty) • Early venture volume grew by 90% - almost doubling • Venture volume grew by 11% • Growth volume grew by 68% • Mega round volume dropped by 26% 6 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 639 1,211 1,272 1,417 1,968 3,311 1,937 1,442 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2015 2016 TotalVCinvestment(US$M) VC investment volume in Europe and Israelby bracket (1H16 vs 1H15) 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 260 in 2Q16, just about the same as the 263 in 1Q16 7 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 60 83 77 85 93 139 153 14930 26 42 62 44 46 61 56 13 26 33 26 38 35 45 51 3 1 6 6 4 3 4 4 0 50 100 150 200 250 300 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 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 jumped to 57 in 2Q16 • Once again, 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 19 21 4 3 9 12 7 12 6 15 4 4 7 8 7 7 20 18 3 1 3 3 0 10 20 30 40 50 60 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 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 second quarter of 2016, Israel again saw the highest number of corporate VC investments, with 25 • The UK saw 10 corporate VC investments during that period • Nine other countries saw corporate VC activity across Europe, but at much lower levels • Corporate VCs participated in three mega rounds 9 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 7 6 3 2 1 2 8 3 1 1 1 1 9 1 3 3 1 1 1 1 10 5 10 15 20 25 30 Israel UK Germany France Sweden Switzerland Italy Spain Poland Belgium Netherlands Numberofinvestments Number of corporate VC investments in Europe and Israelby bracket (2Q16) 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 2015, 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 • 1Q16 was mixed: January saw a return to the large average round sizes of 3Q15, but February & March saw a return to the recent trend • In 2Q16, round sizes started to creep up towards the $12M level 10 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 11.1 17.6 6.8 11.7 11.3 12.7 15.8 11.2 11.9 11.1 10.1 11.4 13.9 13.2 14.6 11.1 10.5 9.2 13.4 11.1 9.9 11.1 11.611.7 4 6 8 10 12 14 16 18 20 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 AmountInvested(US$M) Average investment size in Europe and Israel (Round sizes of 2-100M)
  11. 11. Total venture investment by country, 2Q 2016 • Israel leapt ahead of the UK and Germany to take the top spot in 2Q16 fundraising, with over $1.3B raised • Germany was second, with $728M, ahead of the UK 11 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 1,364 728 653 355 211 153 113 108 62 56 42 40 38 27 18 9 8 7 2 2 1 1 1 Israel Germany UK France Spain Netherlands Sweden Belgium Finland Ireland Switzerland Italy Poland Norway Austria Portugal Denmark Estonia Serbia Czech Luxembourg Greece Slovakia 0 200 400 600 800 1,000 1,200 1,400 1,600 Total VCinvestmentvolume by country, 2Q16 (US $M)
  12. 12. Total venture investment by country, 3Q14 to 2Q16 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • With this filter, volumes and rankings are more consistent • Israel has shown continued growth for the past four quarters • The UK saw a distinct downturn in investment volume, but only compared to 1Q • Germany has been consistently third, followed by France and Sweden 12 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 315 567 543 475 628 699 963 1,064 369 267 719 437 621 444 892 543 180 284 389 209 379 339 333 388 29 163 118 232 279 225 281 355 74 123 89 112 140 84 140 113 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 0 200 400 600 800 1000 1200 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 2Q16 (top 5 countries, excluding mega-rounds) Israel UK Germany France Sweden
  13. 13. Total venture investment by country, 3Q14 to 2Q16 • To get a better sense of VC volumes in various countries, this analysis excludes mega- rounds • The “second five” countries for VC investment were Finland, Denmark, Spain, Ireland, and the Netherlands • Note that in recent quarters, investment trends across these countries have been whipsawing intensely • In 2Q16, the Netherlands and Spain saw strong increases in volume 13 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 0 20 40 60 80 100 120 140 160 180 TotalVCinvestment(US$M) Total VC investment, 3Q14 - 2Q16 (countries ranked 6-10, excluding mega-rounds) Spain Netherlands Finland Ireland Denmark
  14. 14. Average venture round sizes, by region • Until this quarter, the data had been generally supporting the idea that average round sizes across Europe were converging • Data from 2Q (like data from 1Q) does not support this conclusion 14 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Benelux, 4.5 Benelux, 18.9 DACH, 12.5 DACH, 11.1 France, 9.2 France, 8.9 Iberia, 9.4 Iberia, 12.0 Israel, 11.5 Israel, 14.6 Nordic, 8.0 Nordic, 5.5 UK & Ireland, 11.2 UK & Ireland, 11.6 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Qtr4 Qtr2 2015 2016 Averageroundsize(US$M) Average investment size in Europe and Israel(rounds of $2-100M)
  15. 15. Total venture investment by region, 2Q16 • When VC investments across Europe are aggregated into regions, UK & Ireland, Israel, DACH, France, and the Nordics are the clear and consistent leaders • Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments, but the volumes are still low 15 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Israel, 1,363.8, 34% DACH, 787.5, 20% UK & Ireland, 709.6, 18% France, 355.1, 9% Benelux, 262.9, 7% Iberia, 220.8, 5% Nordic, 217.5, 5% South. Eur., 43.2, 1% East. Eur., 40.5, 1% Total VC investment by region, 2Q16
  16. 16. 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 73 investments announced • The UK came in second with 50, and DACH came in third with 40 16 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 31 28 24 23 26 7 5 5 20 11 7 6 7 2 1 1 21 10 8 6 4 1 1 1 1 1 0 10 20 30 40 50 60 70 80 Israel UK & Ireland DACH France Nordic Benelux Iberia South. Eur. East. Eur. Numberofinvestments Number of investments in Europe and Israelby bracket, 2Q 2016 Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
  17. 17. Participation rate of US VC firms, by bracket • Year to date, US VC firms participated in 11% of the venture rounds in Europe • US VCs participated in none of the European rounds, 10% of early venture rounds, 33% of venture rounds, and 39% of growth rounds • As in the first quarter, US VCs did not participate in any of Europe’s four mega-rounds in 2Q16 17 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0% 10% 34% 39% 100% 90% 66% 61% 100% 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? (2Q16) No Yes
  18. 18. US VC firm participation hits a new low • Excluding seed rounds, US VC firm participation in European & Israeli venture rounds rose in 2Q16 to 21% 18 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 16% 24% 20% 22% 21% 17% 16% 21% 84% 76% 80% 78% 79% 83% 84% 79% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 PercentageofRounds Did US VC firms participate in European VC rounds? (3Q14-2Q16) No Yes
  19. 19. Participation of US VC firms by country • In 2Q16, US VCs firms were active in 12 different European countries • US VC firms were most active in Israel, where they participated in 27 investment rounds out of 83 (33%) • The UK saw 9 investments with US VC participation out of 74 total rounds (12%) 19 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 27 9 7 2 2 1 1 1 1 1 1 10 10 20 30 40 50 60 70 80 90 100 Israel UK Germany France Netherlands Spain Italy Belgium Switzerland Ireland Poland Estonia NumberofVCinvestments In which countries are US VCs most active? 2Q, 2016 No US VC involved US VC involved
  20. 20. Participation of US VC firms by country • This chart shows US VC activity within Europe throughout 2015 and 1H16 • The overwhelming bulk of US VC activity is in Israel, the UK & Ireland, DACH, and the Nordics 20 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies Israel, 12 Israel, 14 Israel, 14 Israel, 14 Israel, 16 Israel, 27 UK & Ireland,10 UK & Ireland,13 UK & Ireland,9 UK & Ireland,8 UK & Ireland,12 UK & Ireland,10 DACH, 8 DACH, 6 DACH, 4 DACH, 9 DACH, 6 DACH, 8 Nordic, 2 Nordic, 3 Nordic, 5 Nordic, 5 Nordic, 5 Nordic, 1 Benelux Benelux Benelux Benelux Benelux 0 10 20 30 40 50 60 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2015 2016 NumberofVCinvestments Investments with US VC participation Israel UK & Ireland DACH Nordic Iberia Benelux France East. Eur. South. Eur.
  21. 21. 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
  22. 22. • Excluding mega-rounds, investment activity increased in consumer and decreased in enterprise enterprise in 2Q compared with 1Q 22 @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 1,177 930 1,078 1,229 494 798 953 814 907 1,112 1,678 1,580 78 133 121 153 275 135 224 91 78 114 47 106 182 150 166 186 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 TotalVCinvestments(US$M) European & Israeliventure financing by target market 3Q14 to 2Q16 (excluding mega-rounds, US $M) Government Telecom OEM SMB Enterprise Consumer
  23. 23. • When Israel is excluded from the sample, 59% of all VC dollars in Europe went to consumer-oriented companies • OEM-oriented companies continued to show surprising strength, accounting for 5% of all VC dollars in Europe 23 @gdibner blog: yankeesabralimey Consumer investment leads Europe Syndicate for European & Israeli Enterprise Companies 62% 36% 56% 63% 62% 57% 53% 59% 18% 49% 34% 22% 24% 31% 35% 32% 6% 10% 4% 12% 8% 6% 5% 3% 5% 4% 2% 4% 5% 6% 5%6%8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 European venture financing by target market 3Q14 to 2Q16 (excluding Israel, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  24. 24. • When the sample set is limited to rounds under $20M, the ratio of consumer to enterprise investments shifted back to where it has been in the past • Consumer investments as a percentage of rounds accounted for 47% of early rounds 24 @gdibner blog: yankeesabralimey Early-stage consumer deals come back Syndicate for European & Israeli Enterprise Companies 39% 50% 46% 41% 46% 50% 38% 47% 41% 37% 50% 47% 39% 36% 47% 40% 3% 9% 2% 7% 9% 6% 9% 6%11% 2% 2% 2% 3% 7% 5% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 European venture financing by target market 3Q14 to 2Q16 (excluding Israel, rounds up to $20M, percent of US $M) Government Telecom OEM SMB Enterprise Consumer
  25. 25. Breakdown by region & target market • Once again, almost all regions except Israel saw more consumer investment than enterprise/SMB investment • Benelux also saw more enterprise investments than consumer 25 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 553 645 337 204 48 153 104 734 111 299 94 188 66 61 0 200 400 600 800 1,000 1,200 1,400 1,600 Israel DACH UK & Ireland France Benelux Iberia Nordic Totalamountinvested(US$M) Investment in Europe and Israel by target market by region 2Q, 2016 (US $M) Government Telecom OEM SMB Enterprise Consumer
  26. 26. Distribution of investment rounds by country • Across Europe & Israel, 46% of VC investment rounds were in consumer companies in 2Q16 26 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 62% 57% 55% 56% 51% 46% 34% 23% 38% 26% 36% 37% 28% 40% 41% 65% 0% 13% 7% 7% 13% 6% 19% 4% 0% 3% 0% 7% 6% 6% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% South. Eur. France DACH Iberia Nordic UK & Ireland Benelux Israel Investment in Europe and Israel by target market by country 2Q16 (Number of investments) Consumer Enterprise SMB OEM Telecom Government
  27. 27. 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 1Q16 • In 2Q, this trend reserved itself for the first time in four quarters 27 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 56% 37% 46% 56% 43% 39% 37% 44% 25% 41% 46% 25% 38% 50% 51% 49% 6% 7% 5% 9% 12% 3% 6% 2% 6% 11% 6% 7% 5% 6% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 Investment in Europe and Israel by target market (Rounds over $20M, number of investments) Government Telecom OEM SMB Enterprise Consumer
  28. 28. • Fintech was yet again the most popular vertical across Europe & Israel, with 40 investments in the category • Electronics (which includes consumer devices) was second, with 28 • Marketing dropped to third, with 26 • Security was fourth, with 23 28 @gdibner blog: yankeesabralimey Finance returned to being the top vertical Syndicate for European & Israeli Enterprise Companies Financial,40 Electronics,28 Marketing, 26 Security, 23 Lifestyle, 22 Employment, 22 Travel, 22 Adtech, 20 Infrastructure,20 Communications,17 Real Estate, 16 Productivity,16 Health, 16 Education,15 Industrial,15 Entertainment, 14 Fashion,14 Logistics,14 Food, 13 Energy, 12 Data, 11 CRM, 9 Development, 8 Social,8 Gaming, 8 Payments, 7 ERP, 6 European & Israeliventure financing by target market 2Q 2016 (number of investments)
  29. 29. • This graph shows number of investments in the top 10 verticals across 2Q15 and 2Q16 • All of the top ten verticals increased in frequency 29 @gdibner blog: yankeesabralimey How have the most popular verticals grown? Syndicate for European & Israeli Enterprise Companies Financial, 24 Financial, 40 Marketing, 22 Marketing, 26Electronics, 8 Electronics, 28 Lifestyle, 12 Lifestyle, 22 Security, 10 Security, 23 Travel, 11 Travel, 22 Adtech, 12 Adtech, 20 Health, 16 Health, 16 Employment, 6 Employment, 22 Infrastructure, 6 Infrastructure, 20 0 50 100 150 200 250 300 Qtr2 Qtr2 2015 2016 European & Israeliventurefinancing by vertical market (top 10 verticals, number of investments)
  30. 30. • Finance was the most frequently funded vertical, with over half of the investments aimed at consumer finance • Electronics leapt to second place, with an emphasis on consumer electronics (connected devices) • Marketing was the third most frequently funded vertical, with enterprise-oriented marketing taking the lion’s share within that category • Security took fourth place with a heavy emphasis on enterprise security 30 @gdibner blog: yankeesabralimey Which verticals for which segments? Syndicate for European & Israeli Enterprise Companies Communications Adtech Infrastructure Employment Lifestyle Travel Security Marketing Electronics Financial 0 5 10 15 20 25 30 35 40 45 European & Israeliventure financing by target market 2Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom
  31. 31. • This chart shows the ten most commonly funded verticals across Europe & Israel by quarter • Electronics has shown consistent growth 31 @gdibner blog: yankeesabralimey The most popular verticals in the past 2 years Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 0 50 100 150 200 250 300 European & Israeliventure financing by vertical market (number of investments, top 10 verticals) Adtech Health Logistics Electronics Lifestyle Employment Security Infrastructure Marketing Financial
  32. 32. • Lifestyle, which is admittedly a bit of a catch-all general consumer category, continues to show tremendous strength in terms of VC volume • Finance was the second-most funded consumer category • Travel and electronics are showing recent strength • Gaming declined in 2Q 32 @gdibner blog: yankeesabralimey Consumer VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 0 20 40 60 80 100 120 140 160 European & Israeliventure financing by consumer verticals (number of investments, top 10 verticals) Social Travel Health Fashion Food Electronics Logistics Gaming Lifestyle Financial
  33. 33. • Enterprise marketing seems to have levelled off as an area for VC investment • Security and adtech also remain stable but significant • Enterprise infrastructure investments declined in 2Q • Industrial-oriented startups and employment related (HR) startups seem to be consistently increasing as an area of focus 33 @gdibner blog: yankeesabralimey Enterprise VC investment trends Syndicate for European & Israeli Enterprise Companies Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 0 20 40 60 80 100 120 140 160 180 European & Israeliventure financing by enterprise verticals (number of investments, top 10 verticals) CRM Financial Industrial Employment Development Data Infrastructure Adtech Security Marketing
  34. 34. • Security retained the top spot in Israel, with 11 investments • Marketing, infrastructure, and adtech were next 34 @gdibner blog: yankeesabralimey A closer look at Israeli venture in 2Q16: CyberNation Syndicate for European & Israeli Enterprise Companies Logistics CRM Productivity Health Financial Employment Electronics Communications Adtech Infrastructure Marketing Security 0 2 4 6 8 10 12 Israeli venture financing by target market 2Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Telecom
  35. 35. • For the first time in six quarters, fintech not the number one category in the UK • Enterprise employment (HR) startups took the top spot • Adtech, which was third in 1Q, disappeared from the top ten in 2Q 35 @gdibner blog: yankeesabralimey Closer look at UK VC: Fintech fatigue? Syndicate for European & Israeli Enterprise Companies Food Fashion Marketing Travel Real Estate Education Energy Electronics Productivity Infrastructure Lifestyle Financial Employment 0 2 4 6 8 10 12 UK venture financing by target market 2Q, 2016 (number of investments, top verticals) Consumer Enterprise SMB OEM Government
  36. 36. • Fintech and industrial tied for the most popular categories in Germany, with five investments each • Real estate and edtech took the third and fourth spots 36 @gdibner blog: yankeesabralimey The German VC market in 2Q16 Syndicate for European & Israeli Enterprise Companies Adtech Infrastructure Communications Gaming CRM Electronics Data Fashion Logistics Employment Sports Social Payments Lifestyle Travel Security Entertainment Development Education Real Estate Industrial Financial 0 1 2 3 4 5 6 German venture financing by target market 2Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB
  37. 37. • Fintech was the most commonly funded vertical in the Nordics, with 11 investments • Electronics was next, with 8 investments split between consumer and OEM companies 37 @gdibner blog: yankeesabralimey As usual, Nordic VC was unconventional Syndicate for European & Israeli Enterprise Companies Food Infrastructure Entertainment Marketing Gaming Industrial Education Productivity Adtech Energy Health Electronics Financial 0 1 2 3 4 5 6 7 8 9 10 11 12 Nordic venture financing by target market 2Q, 2016 (number of investments, top 10 verticals) Consumer Enterprise SMB OEM Government
  38. 38. • SaaS was the most funded business model in 2Q16 • As software eats the world, services are becoming an increasingly important business model for venture- backed startups • This continued into 2016, with services taking 22% of the venture dollars invested in Europe & Israel in 1Q16 • Marketplaces – businesses that serve a price discovery function – were just 9% • Commerce accounted for just 8% of the dollars invested 38 @gdibner blog: yankeesabralimey SaaS above all Syndicate for European & Israeli Enterprise Companies SaaS,992, 32% Services,691, 22% Software, 420, 13% Systems, 294,9%Marketplace, 281,9% Commerce, 239, 8% Components, 117, 4% Media, 60, 2% Semiconductor, 35, 1% Materials,1,0% European & Israeliventurefinancing by target market 2Q16 (in US $M) (excluding mega-rounds)
  39. 39. • Reversing last quarter’s trend, SaaS jump ahead of services, but both categories show continued strength • Commerce seems to have bottomed out and showed a bit of renewed strength in 2Q • Marketplace investment continued to show gradual gains 39 @gdibner blog: yankeesabralimey In 2Q, SaaS set a record Syndicate for European & Israeli Enterprise Companies 0 200 400 600 800 1000 1200 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 2014 2015 2016 European & Israeliventure financing by business model (top five, in US $M, excluding mega-rounds) Services SaaS Software Commerce Marketplace
  40. 40. • Enterprise marketing SaaS was again the most popular segment for VC investment in 2Q16 with 22 investments across the region • Consumer financial services were next, with 21 investments • In a first, consumer electronics systems were the third most popular category with 18 investments 40 @gdibner blog: yankeesabralimey Enterprise marketing & consumer fintech Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 Consumer Lifestyle Commerce Consumer Education Services Enterprise Employment SaaS SMB Financial Services Enterprise Security Software Consumer Travel Commerce Consumer Fashion Commerce Consumer Electronics Systems Consumer Financial Services Enterprise Marketing SaaS Number of VC investments Investmentin Europe& Israelby segmentby country 2Q16 (top 10 segments) UK & Ireland France Nordic Israel DACH South. Eur. Benelux Iberia East. Eur.
  41. 41. • Across Europe & Israel, US VC firms invested in 37 enterprise companies, 15 consumer companies, 1 OEM company, and 1 telecom- oriented company • Enterprise SaaS & Software attracted by far more US VC interest than any other space • Consumer services were, again, the third-most often backed sector by US VC firms 41 @gdibner blog: yankeesabralimey What business models attract US VC investments? Syndicate for European & Israeli Enterprise Companies 0 2 4 6 8 10 12 14 16 18 20 Components Media Marketplace SaaS Systems Commerce Services Marketplace Systems Services Software SaaS OE M Tele comConsumerEnterprise US VC Investments in Europe and Israelby end market, business model, & country, 2Q16 (excludes seed & mega-rounds) Israel UK & Ireland DACH Benelux France East. Eur. South. Eur. Nordic Iberia
  42. 42. Show me the SaaS • As usual, the most popular vertical by far for SaaS investments across the geography was marketing • Employment (HR) SaaS was in second place • Productivity SaaS applications, data analytics, and infrastructure SaaS were tied for third place • CRM SaaS dropped to eighth place • Development tools dropped to tenth place 42 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 Development Communications CRM Security Adtech Infrastructure Data Productivity Employment Marketing SaaS VC investment in Europe and Israel by vertical and target market, 2Q16 (top 10 verticals) Consumer Enterprise Government SMB Telecom
  43. 43. Services investing in 2Q16 • This graph shows the top ten verticals within the services category in 2Q16 across Europe & Israel • Financial services were far and away the most frequently funded vertical – mostly for consumers and SMBs • Education services (edtech) was the second most funded services category • Gaming services dropped from second to sixth 43 @gdibner blog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies 0 5 10 15 20 25 30 35 40 Food Lifestyle Real Estate Entertainment Health Gaming Communications Payments Logistics Adtech Education Financial Services VC investment in Europe and Israel by vertical and target market, 2Q16 (top 10 verticals) Consumer Enterprise SMB
  44. 44. 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. 44 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.
  45. 45. Thank you blogPrepared by Gil Dibner

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