europe & israel 3q16 deals done review
TRANSCRIPT
Venture Capital in Europe & IsraelVenture Investment Data: Third Quarter, 2016
Prepared by Gil Dibner
Hammerfest, Norway – Northernmost city in the world70°39′45″N 23°41′00″E blog
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
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Top 10 deals by region YTD (US $M)
DACH NordicFrance
Israel UK & Ireland Iberia
5050505050505050
70707276
96300
PhinergyElastifileSiSense
jFrogRoboteam
WalkMeKalturaVroom
ViaZertoSirin
ForeScoutSkybox Security
Gett
0 50 100 150 200 250 300 350
50
50
50
54
60
65
70
110
170
192
275
MUBI
HighQ
Intercom
Blippar
Student.com
Darktrace
Starling
FarFetch
FutureFinance
Skyscanner
Deliveroo
0 50 100 150 200 250 300
6
7
7
7
12
22
38
42
55
120
Glovo
Sherpa
iContainers
TravelPerk
ABA English
Veniam
CornerJob
Jobandtalent
OutSystems
Cabify
0 20 40 60 80 100 120 140
17
17
19
20
25
33
35
37
49
88
Sol Voltaics
Widespace
Skeleton Technologies
Polight
Vivino
AlphaSense
Klarna
M-Files
StarBreeze
Apptus
0 20 40 60 80 100
22
23
23
24
30
35
35
35
47
109
MisterFly
Dashlane
Cedexis
BlaBla Car
Nuxeo
Acco
Drivy
Zenly
Teads
Deezer
0 20 40 60 80 100 120
34
34
40
45
45
55
70
90
100
374
Smava
Spotcap
Number26
Egym
Home24
Brillen.de
SoundCloud
Heliatek
MindMaze
Global Fashion Group
0 100 200 300 400
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Quarterly pace of venture investment
• In 3Q16, Europe & Israel saw $3.1 billion flowing into 393 venture transactions
• This represents a 24% decrease in activity from 2Q
• These numbers, and the rest of this deck, do not reflect the $1B in debt raised by Spotify in March
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3,139
3,248
2,856
3,752
4,112
3,124
0
100
200
300
400
500
600
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
Amou
nt in
vest
ed (
US $
M)
VC Investments in Europe & Israel(January 2015 - September 2016)
Invested amount (US $M) Number of investments
Monthly pace of venture investment
• Looked at on a monthly basis, the 3Q slowdown was mostly attributable to a very slow July
• August and September saw a return to normal levels of investment
• It’s difficult to attribute this to seasonality, as July 2015 was a very strong month
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905
971
997
791
787
1,561
1,517
568
1,164
1,083
1,059
714
1,661
1,052
1,039
1,401
1,450
1,262
737
1,100
1,286
0
20
40
60
80
100
120
140
160
180
200
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 Jul Aug Sep
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
Inve
sted
Am
ount
(US
$M)
VC Investments in Europe & Israel(January 2015 - September 2016)
Invested amount (US $M) Number of investments
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+)
• Only one mega-rounds took place in Europe this quarter: Deliveroo’s $275M round
• Adjusting for mega-rounds, 3Q16 was $300M less than 2Q16
354 368 507 603 635 586
716 567559
731 695 762
8131,513 1,187
1,669 1,6781,337
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
Amou
nt In
vest
ed (U
S $M
)
Pace of VC Investment in Europe and Israel
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
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Strong year-over-year growth
• The first three quarters of 2016 saw 17% more venture investment than the first three quarters of 2015
• Early venture deal volume increase 81% for the first three quarters, venture volume increase 19%, growth volume increased 35%. Mega-deal volume decreased, however, by 33%
• These increases mask a year-on-year decline of 5.5% for the third quarter when it’s looked at in isolation
1,0071,824
1,839
2,188
3,481
4,684
2,622
1,751
0
2,000
4,000
6,000
8,000
10,000
12,000
2015 2016
Tota
l VC
inve
stm
ent (
US $
M)
VC investment volume in Europe and Israel by bracket(1Q-3Q 2015 vs 1Q-3Q 2016)
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
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Number of investments, by bracket
• Excluding seed deals, the total number of VC investments per quarter was 248 in 3Q16, down a bit from 270 in 2Q16 – but still the third highest number of deals per quota since I started tracking this 60
83 77 85 93
139 153 157 1423026 42
62 44
4661 57
65
13
2633
26 38
35
45 5240
3
16
6 4
3
4 41
0
50
100
150
200
250
300
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Num
ber o
f VC
inve
stm
ents
VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100)Venture (8-20) Early Venture (2-8)
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Brexit? Nothing to see here. Carry on.
• Looking just at UK VC deal volume, there’s so far no evidence that Brexit caused any slowdown whatsoever in VC activity
• UK has been running at around 15 VC deals per month for the past year
• July 2016 peak of 25 deals is exactly the number of deals that were done in July 2015
9
37 7 9 8
5 5 5 48 6
14
26 5
9 9 9 11 11 107
11 13 11 10
1
1
4 23
73
1
5 8
4
3
1 4
4 38 4 2
1 74
10
4 42
2
12 1 1
41
4
1
13
6
3
1
31
6
3 54
4 1
2
2 21 1
1
1
1
2
1
1 1
0
5
10
15
20
25
30
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May Jun Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May Jun Jul
Aug
Sep
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Num
ber o
f VC
inve
stm
ents
VC investment volume in the UK by bracket
Mega (>100) Growth (20-100)Venture (8-20) Early Venture (2-8)
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Corporate VC activity, by bracket
• Excluding seed deals, the total number of corporate VC investments dropped by 28% to 43 in 3Q16
• This is the first quarterly drop in over a year, but still represents more than double the 3Q15 level 6 4 5
167
22 19 23184
39
12
7
12
6
1619
44
7
8
7
720
18
6
3
13
3
0
10
20
30
40
50
60
70
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Num
ber o
f VC
inve
stm
ents
Corporate VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
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Corporate VC activity, by country
• During the third quarter of 2016, Israel yet again saw the highest number of corporate VC investments, with 17, down from 25 last quarter
• The UK saw 9 corporate VC investments during that period, down from 10
• Nine other countries saw corporate VC activity across Europe, but at much lower levels
4 42 2 1 2 1 1 1
9
3
2 1
2 11
4
2
0
2
4
6
8
10
12
14
16
18
Israe
l
UK
Germ
any
Fran
ce
Swed
en
Finl
and
Italy
Norw
ay
Switz
erla
nd
Spai
n
Denm
ark
Num
ber o
f inv
estm
ents
Number of corporate VC investments in Europe and Israel by bracket(3Q16)
Growth (20-100) Venture (8-20) Early Venture (2-8)
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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
• With very few exceptions, most months saw average round sizes of $10-12M and there is seems to be little pattern other than mean reversion
• 3Q15 is the only systematic outlier to this trend, with average round sizes of $12-15M throughout the quarter
• I’ll continue to monitor this, but see no reason to expect a major shift here
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 Jul Aug Sep
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Amou
nt In
vest
ed (U
S $M
)
Average investment size in Europe and Israel(Round sizes of 2-100M)
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Total venture investment by country, 3Q 2016
• Israel maintained it’s lead with $877M raised
• The UK was just behind Israel, with $830M raised
• Germany dropped behind the UK with $461M raised
877830
461339
194102
7448
3128282624
161514
64211111
IsraelUK
GermanyFrance
SwedenNetherlands
SpainSwitzerland
NorwayDenmark
FinlandIreland
BelgiumEstonia
ItalyIceland
CzechPortugal
AustriaGreeceCroatia
LatviaSlovenia
Poland
0 100 200 300 400 500 600 700 800 900 1,000
Total VC investment volume by country, 3Q16 (US $M)
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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 still led with volume, but 3Q dropped below both 1Q and 2Q
• Once Deliveroo is backed out of the analysis, UK levels were basically flat in 3Q against 2Q
• What is most notable important about this chart is the consistent gradual growth in Germany, France, and Sweden
315
567 543475
628
699
963
1,064
877
369
267
719
437
621444
892
552 555
180
284
389
209
379339 333
392461
29
163118
232 279225 281
367339
74123 89 112
14084
140 150194
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr30
200
400
600
800
1000
1200
Tota
l VC
inve
stm
ent (
US $
M)
Total VC investment, 3Q14 - 3Q16 (top 5 countries, excluding mega-rounds)
IsraelUKGermanyFranceSweden
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Total venture investment by country, 3Q14 to 3Q16
• 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
• One trend that can be spotted here is persistent strength in the Netherlands
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
Tota
l VC
inve
stm
ent (
US $
M)
Total VC investment, 3Q14 - 3Q16(countries ranked 6-10, excluding mega-rounds)
Spain
Netherlands
Finland
Ireland
Denmark
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Average venture round sizes, by region
• For a while, I had been seeing a trend towards convergence in the sizes of rounds across the geography
• I think that is still true, but round sizes do seem to be diverging a bit
• I suspect that the decreases in round size across France, Portugal, and Spain are likely due to increased (and better) reporting around small rounds
Benelux, 4.7
Benelux, 14.1DACH, 14.9
DACH, 12.7
France, 8.2 France, 8.7Iberia, 7.2
Iberia, 5.9
Israel, 15.9Israel, 14.1
Nordic, 11.5
Nordic, 10.1UK & Ireland, 8.5 UK & Ireland, 9.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Qtr4 Qtr4 Qtr3
2014 2015 2016
Aver
age
roun
d siz
e (U
S $M
)
Average investment size in Europe and Israel (rounds of $2-100M)
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Total venture investment by region, 3Q16
• 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
Israel, 877
UK & Ireland, 856
DACH, 511
France, 339
Nordic, 312Benelux, 126
Iberia, 78
South. Eur., 18
East. Eur., 6
Total VC investment by region, 3Q16
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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, the UK and Israel were tied for the number of venture deals, with 62 each 26
36
22 2516
93 4 1
21
19
10 4
10
1
156
76
1
14
1
0
10
20
30
40
50
60
70
Israel UK & Ireland DACH France Nordic Iberia Benelux South. Eur. East. Eur.
Num
ber o
f inv
estm
ents
Number of investments in Europe and Israel by bracket, 3Q 2016
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
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Participation rate of US VC firms, by bracket
• In the third quarter, US VCs participated in 14% of the VC financing rounds in EU and Israel
• As usual, US VCs are much more likely to participate in later rounds
1% 15%25%
38%
100%99%85%
75%63%
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)
Perc
enta
ge o
f rou
nds
Did US VC firms participate in European VC rounds? (3Q16)
No Yes
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US VC firm participation rate are consistent
• In 3Q, US VCs participated in about 21% of the rounds that took place in Europe
• This rate is flat with 2Q and at the top end of the historical range
15%23% 17% 20% 20% 16% 16% 21% 21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Perc
enta
ge o
f Rou
nds
Did US VC firms participate in European VC rounds?(Rounds of $2M-$100M, 3Q14-3Q16)
No US VC in the round US VC in the round
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US VC firm participation rate are consistent
• Rates of US VC participation vary wide across different countries
• I’ve tried to limit the analysis to countries with venture scenes active enough that the statistics would be meaningful
• On this metric, in 2016, Israel and Ireland leap to the top of the list, with 40% and 35% respectively
• Spain and France bring up the rear, with only 5% and 7%
40% 35%26%
21% 17% 16%8% 7% 5%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Ireland Israel Netherlands Germany UK Finland Sweden France Spain
Perc
enta
ge o
f Dol
lars
Inve
sted
Did US VC firms participate in European VC rounds?(Nine months ended September 2016)
No US VC in the round US VC in the round
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Participation of US VC firms by country
• In 3Q16, US VCs firms were active in only 9 different European countries (down from 12 in 2Q)
• US VC firms were most active in Israel, where they participated in 25 investment rounds
• The UK saw 11 investments• US VCs invested in 6 German
companies and 3 French ones
25
11
63 3 3 2 1 10
5
10
15
20
25
30
Israe
l
UK
Germ
any
Fran
ce
Swed
en
Neth
erla
nds
Switz
erla
nd
Irela
nd
Finl
and
Num
ber o
f VC
inve
stm
ents
Rounds with a US VC involved(3Q, 2016)
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Participation of US VC firms by country
• This chart shows US VC activity within Europe throughout 2015 and 2016
• The overwhelming bulk of US VC activity is in Israel, the UK & Ireland, DACH
Israel, 12 Israel, 14 Israel, 14 Israel, 14 Israel, 16
Israel, 27 Israel, 25
UK & Ireland, 10
UK & Ireland, 13UK & Ireland, 9 UK & Ireland, 8
UK & Ireland, 12
UK & Ireland, 11UK & Ireland, 12
DACH, 8
DACH, 6
DACH, 4DACH, 9
DACH, 6
DACH, 8 DACH, 8
Nordic, 2Nordic, 3
Nordic, 5
Nordic, 5Nordic, 5
Nordic, 4
Benelux, 5
Benelux, 3Benelux, 3
France, 3 France, 2France, 2
France, 3France, 3
Iberia, 3
Iberia, 4Iberia, 3
0
10
20
30
40
50
60
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
Num
ber o
f VC
inve
stm
ents
Investments with US VC participation
Israel UK & Ireland DACH Nordic Benelux France Iberia East. Eur. South. Eur.
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Dimension Categories Explanation/Example
1. Target market Consumer, SMB, Enterprise, Government, Telecom, OEM
What sort of customer does the company target?
2. Vertical marketAdtech, 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 modelCommerce, Components, Content, Marketplace, SaaS, Semiconductors, Services, Software, Systems,
How does the company makemoney? How is value delivered to customers? What are customers paying for?
For example: Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers
Three-dimensional approach to sector mapping
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• Excluding mega-rounds, investment activity decreased in both consumer and enterprise
• Investment activity has been trending up in OEM-oriented companies
What target markets are attracting the most VC investment in Europe & Israel?
475 595980 850
1,177930 1,078 1,243 1,092
494
798
953814
9071,112
1,6791,644
1,288
78
133
121
153
275135
224 91
177
78
114
47106
182150
166 186
219
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Tota
l VC
inve
stm
ents
(US
$M)
European & Israeli venture financing by target market3Q14 to 3Q16 (excluding mega-rounds, US $M)
Government
Telecom
OEM
SMB
Enterprise
Consumer
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• When Israel is excluded from the sample, 52% of all VC dollars in Europe went to consumer-oriented companies
• OEM-oriented companies continued their rise, accounting for 8% of all VC dollars in Europe
Consumer investment leads Europe
62%
36%
56%63% 62% 57% 53% 58% 52%
18%
49%
34% 22% 24% 31% 35%33%
32%
6%10% 4% 12% 8% 6% 5% 3%
7%5%4% 2% 4% 5% 6% 5% 8%6%8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
European venture financing by target market3Q14 to 3Q16 (excluding Israel, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
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• 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 45% of early rounds
• Interestingly, OEM & SMB investments doubled as a percentage of the total from 2Q to 3Q – and entirely at the expense of enterprise deals
Early-stage consumer deals come back
39%50% 46% 41% 46% 50%
38%46% 45%
41%37% 50%
47% 39% 36%47%
41%33%
3%
9%2%
7% 9% 6% 9% 5%11%
11%2% 2% 2% 3% 7% 5% 5% 9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
European venture financing by target market3Q14 to 3Q16 (excluding Israel, rounds up to $20M, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
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Breakdown by region & target market
• In 3Q, enterprise companies represented the plurality of investments in Israel, the Nordics, and Benelux
• DACH and the Nordics show relatively high concentrations of OEM investments
196
521
282170
84 46 55
568
246
75161
147
69
110
59
0
100
200
300
400
500
600
700
800
900
1,000
Israel UK & Ireland DACH France Nordic Benelux Iberia
Tota
l am
ount
inve
sted
(US
$M)
Investment in Europe and Israel by target market by region3Q, 2016 (US $M)
Government Telecom OEM SMB Enterprise Consumer
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Distribution of investment rounds by country
• Across Europe & Israel, 43% of VC investment rounds were in consumer companies in 3Q16
63%
60%
56%
48%
41%
41%
17%
16%
31%
20%
26%
35%
33%
31%
73%
68%
6%
10%
11%
10%
16%
11%
16%
7%
6%
10%
15%
10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
France
South. Eur.
Iberia
UK & Ireland
DACH
Nordic
Israel
Benelux
Investment in Europe and Israel by target market by country3Q16 (Number of investments)
Consumer Enterprise SMB OEM Telecom Government
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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 and persisted into 3Q
56%
37%46%
56%43% 39% 37% 43% 44%
25%
41%
46% 25%38% 50% 51%
50% 44%
6% 7%
5%
9% 12%3% 6% 5%6% 11% 6% 7% 5% 6% 5% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Investment in Europe and Israel by target market(Rounds over $20M, number of investments)
Government Telecom OEM SMB Enterprise Consumer
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• Fintech was yet again the most popular vertical across Europe & Israel, with 33 investments in the category
• Lifestyle (a catchall category for consumer commerce) was the second most popular vertical, with 28
Finance returned to being the top vertical
Financial, 33
Lifestyle, 28
Marketing, 27
Security, 23
Electronics, 20
Infrastructure, 17
Industrial, 16
Travel, 16
Logistics, 15
Adtech, 14
Data, 14
Communications, 13
Fashion, 13
Education, 11
Gaming, 11
Food, 10Productivity, 10Automotive, 9Health, 9Employment, 9Payments, 8
HMI, 7Energy, 7
Social, 7
Entertainment, 6CRM, 6
European & Israeli venture financing by target market3Q 2016 (number of investments)
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• This graph shows number of investments in the top 10 verticals across 3Q15 and 3Q16
• The two most popular verticals, finance and marketing, both declined slightly in frequency
• Most of the other categories registered strong increases
• Travel and industrials, for example, tripled; and electronics doubled
How have the most popular verticals grown?
Financial, 36 Financial, 33
Marketing, 31 Marketing, 27
Lifestyle, 15 Lifestyle, 28
Security, 13Security, 23Infrastructure, 14
Infrastructure, 17Electronics, 10
Electronics, 20
Fashion, 11
Fashion, 13
Data, 10
Data, 14
Logistics, 8
Logistics, 15
Industrial, 5
Industrial, 16
Travel, 5
Travel, 16
Productivity, 11
Productivity, 10
0
50
100
150
200
250
Qtr3 Qtr3
2015 2016
European & Israeli venture financing by vertical market(top 10 verticals, number of investments)
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• Finance was once again the most frequently funded vertical
• Consumer lifestyle companies took second place
• Marketing was the third most frequently funded vertical, with enterprise-oriented marketing taking the lion’s share within that category
• Enterprise security took fourth place
• Electronics (both consumer systems and OEM components) was the fourth most funded category in the quarter
Which verticals for which segments?
Data
Adtech
Logistics
Industrial
Travel
Infrastructure
Electronics
Security
Marketing
Lifestyle
Financial
0 5 10 15 20 25 30 35
European & Israeli venture financing by target market3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Government
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• This chart shows the ten most commonly funded verticals across Europe & Israel by quarter
• 3Q was fairly consistent with 2Q, with decreased volume across most categories
The most popular verticals in the past 2 years
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
50
100
150
200
250
300
European & Israeli venture financing by vertical market(number of investments, top 10 verticals)
Adtech
Health
Logistics
Electronics
Lifestyle
Employment
Security
Infrastructure
Marketing
Financial
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• 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
• Health and logistics (transportation, parking, etc.) show continued decreases
Consumer VC investment trends
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
European & Israeli venture financing by consumer verticals(number of investments, top 10 verticals)
Social
Travel
Health
Fashion
Food
Electronics
Logistics
Gaming
Lifestyle
Financial
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• Enterprise marketing seems to have levelled off as an area for VC investment
• Security and infrastructure also remain stable but significant
• Adtech decreased slightly• CRM and employment
decreased significantly• Data-oriented startups and
industrial startups trended higher
• Enterprise employment (HR) related startups attracted very little investment
Enterprise VC investment trends
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
European & Israeli venture financing by enterprise verticals(number of investments, top 10 verticals)
CRM
Financial
Industrial
Employment
Development
Data
Infrastructure
Adtech
Security
Marketing
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• Security retained the top spot in Israel, with 11 investments
• Marketing, data, infrastructure, and electronics were next
• Adtech was nowhere to be seen
A closer look at Israeli venture in 3Q16
Industrial
Financial
Agtech
Development
Productivity
Communications
Electronics
Infrastructure
Data
Marketing
Security
0 2 4 6 8 10 12 14
Israeli venture financing by target market3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Telecom
Government
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• Fintech reclaimed its top spot in the UK VC landscape
The UK VC market in 2Q16
Adtech
Fashion
Communications
Payments
Productivity
Automotive
Real Estate
Infrastructure
Data
Security
Marketing
Lifestyle
Financial
0 2 4 6 8 10 12
UK venture financing by target market3Q, 2016 (number of investments, top verticals)
Consumer
Enterprise
SMB
OEM
Telecom
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• Fintech led the German VC eco-system in 3Q16, with 7 investments
• Logistics was next• Fashion and travel tied for
third place, with 4 investments each
The German VC market in 3Q16
Health
Industrial
Data
Infrastructure
Energy
CRM
Marketing
Durables
Payments
Adtech
Social
Employment
Lifestyle
ERP
Travel
Fashion
Logistics
Financial
0 1 2 3 4 5 6 7 8
German venture financing by target market3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
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• Fintech was the most commonly funded vertical in the Nordics, with 9 investments, mostly into SMB-oriented companies
• Gaming was next, followed by marketing
The Nordic VC market in 3Q16
Infrastructure
Legal
Logistics
Education
Productivity
Health
Communications
Industrial
Electronics
HMI
Energy
Marketing
Gaming
Financial
0 1 2 3 4 5 6 7 8 9 10
Nordic venture financing by target market3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Telecom
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• Uniquely, consumer electronics dominated the French VC landscape in 3Q16
• Travel and adtech were particularly strong in France in 3Q16
The French VC market in 3Q16
Logistics
Infrastructure
Industrial
Education
Entertainment
Food
Adtech
Travel
Lifestyle
Electronics
0 1 2 3 4 5 6 7 8 9 10
French venture financing by target market3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
Government
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• SaaS was the again most funded business model in 3Q16
• As software eats the world, services are becoming an increasingly important business model for venture-backed startups
• This continued into 2016, with services taking 23% of the venture dollars invested in Europe & Israel in 3Q16
• Commerce rebounded, accounting for 13% of the dollars invested
• Marketplaces – businesses that serve a price discovery function – were just 5%
SaaS above all
SaaS, 729, 26% Services, 658, 23%
Software, 425, 15%
Commerce, 375, 13%Systems, 197, 7%
Marketplace, 148, 5%
Components, 144, 5%
Media, 99, 3%
Semiconductor, 73, 3%
Meda, 2, 0%
European & Israeli venture financing by target market3Q16 (in US $M) (excluding mega-rounds)
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• Trends about business models remained fairly consistent
• SaaS reverted to mean a bit• Commerce recovered a lot of
lost ground• Marketplaces hit a new low
In 2Q, SaaS set a record
0
200
400
600
800
1000
1200
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
European & Israeli venture financing by business model(top five, in US $M, excluding mega-rounds)
Services
SaaS
Software
Commerce
Marketplace
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• Enterprise marketing SaaS was again the most popular segment for VC investment in 3Q16 with 20 investments across the region
• Consumer lifestyle commerce took second place, driven by 8 UK and 3 Spanish investments
• Enterprise security software took third place, with 16 investments.
• Consumer financial services dropped to fourth place, with 14 investments (down from 21 in 2Q)
The 10 most popular investment segments
0 5 10 15 20 25
Consumer Gaming Services
Consumer Education Services
Consumer Travel Marketplace
Enterprise Data SaaS
Enterprise Infrastructure Software
Consumer Fashion Commerce
Consumer Electronics Systems
SMB Financial Services
Consumer Financial Services
Enterprise Security Software
Consumer Lifestyle Commerce
Enterprise Marketing SaaS
Number of VC investments
Investment in Europe & Israel by segment by country3Q16 (top 10 segments)
UK & Ireland IsraelFrance NordicDACH IberiaBenelux South. Eur.East. Eur.
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• Across Europe & Israel, US VC firms invested in 37 enterprise companies, 14 consumer companies, and 1 OEM company
• Enterprise SaaS & Software attracted by far more US VC interest than any other space
What business models attract US VC investments?
0 5 10 15 20 25
Semiconductor
SaaS
Marketplace
Software
Media
Commerce
Services
Systems
Systems
Marketplace
Services
Software
SaaS
OE M
Cons
umer
Ente
rpris
e
US VC Investments in Europe and Israel by end market, business model, & country, 3Q16 (excludes seed & mega-rounds)
Israel
UK & Ireland
DACH
Nordic
Benelux
France
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Show me the SaaS
• As usual, the most popular vertical by far for SaaS investments across the geography was marketing
• Data-related SaaS (databases, analytics, BI) was tied with productivity SaaS for second place
• Infrastructure SaaS was third• Consumer SaaS opportunities
emerged across productivity, energy, and legal
0 5 10 15 20 25
Employment
CRM
Agtech
Legal
Industrial
Energy
Adtech
Development
Infrastructure
Productivity
Data
Marketing
SaaS VC investment in Europe and Israelby vertical and target market, 3Q16 (top 10 verticals)
Consumer Enterprise Government SMB
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Services investing in 3Q16
• This graph shows the top ten verticals within the services category in 3Q16 across Europe & Israel
• Financial services were (yet again) far and away the most frequently funded vertical –mostly for consumers and SMBs
• Education services (edtech) tied with gaming as the second most funded services categories
0 5 10 15 20 25 30
Health
Industrial
Entertainment
Real Estate
Communications
Marketing
Security
Payments
Adtech
Logistics
Education
Gaming
Financial
Services VC investment in Europe and Israelby vertical and target market, 3Q16 (top 10 verticals)
Consumer
Enterprise
SMB
Telecom
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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.48
Gil Dibner
To invest in the best European & Israeli enterprise startups,
consider backing me on here. Lots of exciting stuff in thepipeline – and you’ll be in pretty good company.