global capital markets & industry outlook
TRANSCRIPT
CONFIDENTIAL
Global Capital Markets & Industry Outlook
December 15, 2015
CONFIDENTIAL
Rick Dalton, Partner (Silicon Valley) Co‐founder of Mooreland’s Silicon Valley operations; focused
on Industrial Technologies sectors Co‐Head Mooreland’s Robotics Coverage 20+ years in technology M&A with over 100 completed
transactions Prior to Mooreland, Co‐Head of SVB Alliant’s Enterprise
Systems Group and Head of Broadview’s Computer Infrastructure Group
Bryan Dow, Executive Director (Silicon Valley) Focused on Industrial Technologies sectors Lead Mooreland’s Drone Coverage 11+ years in technology M&A with over 50 completed
transactions Prior to Mooreland, Head of the ThinkEquity’s Clean Energy
and Industrial Technology Group and member of Needham & Company’s Tech Group
Mooreland Presenters
2
CONFIDENTIAL
Mooreland Overview
Technology FocusedIndustrial Technology | Digital Media and Internet
| Communications Technology | Enterprise Software
100% Partner OwnedFounded 2002One Global P&L
Global ReachServing North American, European and Asian
markets from offices in Silicon Valley, New York and London
Team of 4813 Nationalities
10 Languages Spoken
Ranked #1in Mid‐Market
Technology M&A28 deals completed in 2015
UnrivalledExperience1,000+
Deals Closed in Combined Careers
3
CONFIDENTIAL
Focus on Key Technology Sectors
Energy EfficiencyEnergy Storage & Alternative
Energy
Emerging Technologies
Semiconductors & Components
Advanced Manufacturing
Supply Chain Services
Monitoring, Analytics & Controls
Energy AnalyticsPower & Energy Devices and Systems
Electronics& Materials Recycling
Optics &Photonics
Additive Manufacturing / 3D Printing
DesignServices Smart Sensors
Energy Management & Security
Solar & Wind Fuel Cells PCB & FlexAutomation Systems and Software
Advanced Manufacturing
Services
Control Systems & Software
Advanced Lighting
Distributed Generation Services
Energy Harvesting
MEMS &Semiconductors
Process Equipment & Analytical
InstrumentationEMS Industrial
Internet of ThingsTechno
logies, Solutions & Services
Growth
Markets
SmartMobility Drones
Advanced Robotics and Automation
Connected Factories & Offices
INDUSTRIAL TECHNOLOGIES& ELECTRONICS
ENTERPRISE SOFTWARE & SERVICES
COMMUNICATIONS TECHNOLOGIES DIGITAL MEDIA
Industrial Technologies & Electronics
4
CONFIDENTIAL
Extensive Experience in Industrial Technology M&A
Deals led by senior bankers at previous firm
December 2009
has acquired
has been acquired by
July 2011
has been acquired by
May 2010
a subsidiary of
has acquired
June 2010
has divested its consumer xenon flash business to
June 2010
a portfolio company of GGV Capital
has been acquired by
January 2011
has secured $15.0 millionin Series E Funding
December 2010
has acquired
January 2011
has been acquired by
April 2011
has been acquired by
June 2011
has been acquired by
February 2011
has been acquired by
May 2009
has secured €12.5 millionin equity financing
July 2009 November 2008
has sold LFCC Technology to
October 2008
has acquired has been acquired by
January 2008
has been acquired by
August 2008
has sold its Circuit Protection Business to
October 2008
has been acquired by
January 2008 November 2007
has acquired
has been acquired by
May 2012
has been acquired by
March 2012June 2012
has been acquired by has been acquired by
September 2011
has divested its Spire Semiconductor Business
March 2012June 2012
has been acquired by
June 2012
has been acquired by
July 2012
has secured an undisclosed round of funding
December 2012
has acquired
March 2013
has been acquired by
has divested its Semiconductor Systems
Business to
May 2013May 2013
has been acquired by
August 2013
has been acquired by
June 2013
has been acquired by
July 2013
has been acquired by
October 2013
Acquisition of majority interest and investment by
has been acquired by
February 2014
has been acquired by
April 2014
has been acquired by
April 2014
and portfolio company
July 2014
has divested its Disc Publishing business to
May 2015
has merged with has secured growth equity investment from
October 2014
has been acquired by
October 2014January 2015
has been acquired by
February 2015
has been acquired by
WIOT Technologies Oya holding company
backed by has acquired
March 2015
has been acquired by
April 2015
a portfolio company of
June 2015
has been acquired by
October 2015
has been acquired by
has acquired
September 2015
5
Advanced Robotics and Automation
CONFIDENTIAL
The industrial segment will continue to represent the majority of near‐term revenue, however…
Technological advances are enabling new markets and applications
Increased start‐up activity with funding from VCs, strategic investors and government
Emergence of “out of segment buyers” (i.e. Teradyne, Google, Amazon) targeting very large new market opportunities
Robot is becoming a symbiotic partner to humans with the accelerating adoption of “Cobots” into integrated work environments
Emerging “Blue Ocean” market applications likely to be larger than legacy industrial market
The Robotics Industry Has Been Experiencing a “Renaissance” Enabling Technologies
Advanced Sensors and Detectors
Advanced Precision and Motion Control
Intelligent Navigation
Mapping SystemsConnectivity and Smart Device
Enabled
Data AnalyticsVision Technologies
Cooperative Ability with Humans
Advanced Processors and Microcontrollers
Predictive Motion Planning
Force Sensing
Speech Recognition
12
CONFIDENTIAL
Robotics Markets are Evolving ‐ Emerging “Blue Ocean” OpportunitiesMarket Example Applications Example End Customers Major Players
• Industrial • Machine Tending • Pick‐and‐place • Packaging
• Process Application • Assembly • Assembly/Machine Tending• Product Testing
• Large enterprises: lighter payload apps that require precision and safety
• Small to medium size enterprises –mainly mfg. and material handling Collaborative /
/
• Cleaning• Smart Home Technology• Outdoor Maintenance • Video Collaboration
• Robotic Kiosks• Mapping / Navigation • Security / Safety
• Consumers• Schools• Retail
Consumer
• Precision Agriculture• Film / Photo / Video• Inspection / Monitoring
• Mapping / Surveying• Public Safety • First Response
• Consumers and Prosumers• Government / Defence / Safety• Surveillance organizations• Agriculture Drones
• Self‐Driving Cars• Underwater Vehicles
• Consumers and prosumers• Oil and gas companies•Mapping and navigation companies• Defence organizations
Other Autonomous
• Material transport• Logistics Management• Mfg line replenishment
• Security / Defense• Asset tracking
•Manufacturing operations•Warehouse and logistic operations• Defence & Public security
Mobile
/
• Surgical Procedures• Surgical Training• Telemedicine
• Caregiver Support• Bionics
• Hospital • Healthcare facilities
Med / Surg.
Auris Surgical Robotics
8
CONFIDENTIAL
1017 17
30 29
44
7073*
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013 2014 2015
(# of fun
ding
s)
Movement of Private Capital into the Sector has Accelerated
Sources: CapitalIQ, 451 Research, Press Releases, Internal Estimates2015 Funding volume and $amount estimated based on annualized data as of December 1, 2015
Private Placement in Robotics Since 2008 ‐ Present
2008 2009 2010 2011 2012 2013 2014 2015
Total Funding $42 $76 $85 $224 $198 $269 $447 $1,104*
# of Investments 10 17 17 30 29 44 70 73*
Robotics and Automation private placement fundings have risen significantly since 2014, in both volume and $ amount
The market has also witnessed an influx of strategic investors (i.e. Bosch, KUKA, Mitsui, GE, Flextronics, iRobot, ABB, Nike, Foxconn, Alibaba, QUALCOMM, SanDisk, Shanghai Electric, etc…)
9
CONFIDENTIAL
Select Robotics Private Placements – Focus on New ApplicationsCompany Investors Category Date Amount Raised Total Raised
Summit Partners Oct‐2015 $46M $46M
BlueTree Capital; Eagle Ventures; Hercules; Pittsburgh Life Sciences Greenhouse; Slater Technology Sep‐2015 $25M $134M
SoftBank Capital, Shasta Ventures, O'Reilly AlphaTech Ventures Jun‐2015 $20M $23M
Andreessen Horowitz, First Round, GE Ventures, Kleiner Perkins Caufield & Byers Jun‐2015 Undisclosed $40M
ABB, Formation8, NIKE Jun‐2015 $15M ~$20M
Intel Capital Apr‐2015 $75M $135M
J.F. Shea, Mayfield, QUALCOMM, Atlantic Bridge, O'Reilly AlphaTech, True Ventures, Foundry Group; WestSummit, SanDisk Feb‐2015 $64M ~$100M
Accel Partners Feb‐2015 $65M $105M
Undisclosed Jan‐2015 Undisclosed ~$25M
CRV, RRE, Osage; Samsung Venture, Acer, KDDI, LG Uplus, Flybridge, Fairhaven, NetPosa, Formation8, Two Sigma, Field Management
Jan‐2015 $43M ~$50M
CRV, DFJ, Goldman Sachs, Highland Capital, Sigma Partners, Wellington, Bezos Expeditions, Two Sigma Ventures, GE Ventures Dec‐2014 $40M >$100M
iNovia Capital; RRE Ventures, GE Ventures Nov‐2014 $11M $12M
UAV
Gripper
UAV
UAV
Mobile
Consumer
Collaborative
Mobile
UAV
Mobile
Healthcare
UAV
10
CONFIDENTIAL
8
14
12
21
19
22
2010 2011 2012 2013 2014 2015Annualized
Num
ber o
f Transactio
ns
Robotics M&A activity is growing but still relatively small
Historically acquisitions had focused on consolidation
However, buyers are starting to focus on emerging tech and next gen apps
“Out‐of‐segment” buyers increasing
Notable M&A Transactions
* Mooreland Estimate
Acquirer Target Category Date Transaction Size (EV)
EV/Rev.
Oct’15 $201m 3.6x
Jul’15 Conf. Conf.
May’15 $350m 9.2x
Apr’15 Conf. Conf.
Feb’15 Conf. Conf.
Sep’14 $390m 0.5x
Jul’14 $347m 1.5x
Mar’14 $20m Conf.
Apr’14 Conf. Conf.
Dec’13 Conf. Conf.
Sept’13 $1,142m 12.9x
Collaborative
Collaborative
Consolidation
Services
UAV
UAV
Consolidation
Healthcare/Surgical
UAV
Motion Control
Robotics and Automation M&A Activity (2010‐2015)
(1)
(2)
Notes:1. 2013 total transactions include 8 successive acquisitions by Google2. 2015 M&A activity annualized based on data as of December 1, 2015, of which 20 transactions have completed
Industrial and MobileIndustrial and Mobile
11
CONFIDENTIAL
China is the world’s largest consumer of robotics
Market will continue to be a growth market as robotics penetration is still very low vs. more advanced markets
Government support and subsidies driving growth
Number of Chinese Robotics growing rapidly
Increasing M&A and funding interest
China is Now the World’s Largest Market for RobotsChina Robotics Market Dynamics Global Robot Stock – Significant Growth in China Expected
182
311
237
428
343292
0
100
200
300
400
500
China EU North America
2014 2017
Units in
‘000
s
Select Chinese Robotics and Automation Players
Public Private
Market Cap: $8.2BEV/LTM Rev.: 31.9EV/LTM EBITDA.: NM
Market Cap: $1.4BEV/LTM Rev.: 18.3xEV/LTM EBITDA.: NM
Market Cap: $1.2BEV/LTM Rev.: 2.0xEV/LTM EBITDA.: 7.4x
Market Cap: $1.2BEV/LTM Rev.: 4.8xEV/LTM EBITDA.: 80.2x (Drones)
(Drones)(Consumer)
(Consumer)(Industrial)
(Industrial and Consumer)
Source: International Federation of Robotics
12
CONFIDENTIAL
‐20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Specialty Robotics and Automation Robotics MajorsHealthcare/Surgical Robotics NASDAQ
• Public valuation have retracted from last year’s high and is now trading below the Nasdaq
• Current public players will need to organically and/or inorganically develop solutions for new emerging markets and find growth
Robotics and Automation ‐ Equity Market Performance
Robotics (Last 3 Years) China Robotics (Last 3 Years)Google acq. 8 robotics cos
• Chinese public valuations have experienced significant correction following unprecedented run‐up in 2015
• Still very highly valued vs. all other markets
• Significant disparity with Western stock markets → arbitrage opportunity
‐200%
0%
200%
400%
600%
800%
1000%
13
CONFIDENTIAL
Chinese Cross‐Border M&A – Steadily Rising in Recent Years
M&A Transactions (Chinese Buyers Acquiring N. American and Western European Targets)
103 9680 87
119
149
$0
$10,000
$20,000
$30,000
$40,000
$50,000
0
40
80
120
160
2010 2011 2012 2013 2014 2015
$, Millions
Select M&A Transactions
M&A Value, $ millionsNumber of M&A Transactions
WIOT Technologies
Shenzhen Bauzer
Digital, analog, and mixed‐signal integrated circuits (ICs)
Provides outpatient diagnostic and radiation therapy services
Contactless ticketing and RFID tag and label solutions
Performance‐based mobile advertising
Tunable radio frequency (“RF”) semiconductor products
Robotics, Automation, Mechatronics
Fabless semiconductor company
RF Power business
Number of transactions
Automotive sealing and anti‐vibration solutions
Aviation support, training, and management servicesRF Power
Source: S&P Capital IQ
14
CONFIDENTIAL
Mooreland Taxonomy for Robotics and AutomationVe
rtical Platforms
Semicon
ductor
Defen
ce &
Security
Automotive
Consum
er
Specialty
Robo
t Platforms
Fixed Robotics Mobile Robotics Medical and
Surgical Robotics
Parts,
Compo
nents
& Accessorie
s
Modules & Parts (Grippers, Vacuum Pumps, Hands, Rotary Units, etc.)Components (Sensors, Actuators, etc.)
Controllers
System Integrators
Manufacturing Execution Systems
Supply Chain Management Software
ERP Software
Surgical
Wareh
ouse &
Inve
ntory Mgm
t.
Collaborative RoboticsDrone / UAV(1)
Solar
Electron
ics M
fg.
& Factory
Automation
Food
& Bev
erage
Mining &
Agric
ulture
Hea
lthcare & Life
Sciences
Logistics
Other Autonomous (Underwater,
Satellite, Self‐Driving Vehicles)
(1) UAV = Unmanned Aerial Vehicle
15
CONFIDENTIAL
Robotics Market Landscape – Robots, Parts, Accessories & Components
Robo
t Platforms
Fixed Robotics Mobile Robotics UAV Collaborative
RoboticsMedical and
Surgical RoboticsOther
Autonomous
Parts, Com
pone
nts
& Accessorie
s
Controllers ComponentsModules and Parts
16
CONFIDENTIAL
Robotics and Automation Landscape ‐ Vertical PlatformsAutomotive Consumer Defense and Security Electronics Mfg. / Factory Automation
Food and Beverage LogisticsHealthcare / Life Sciences Mining & Agriculture
Solar SurgicalSpecialty Warehouse / Inventory Mgmt.
Auris Surgical Robotics
17
CONFIDENTIAL
Commercial Drone Market Dynamics
CONFIDENTIAL
Commercial Drones ‐ New Opportunity Taking Flight
19
Multifaceted and complex connected vehicles built with sensors
that collect data and carry payloads for specific commercial
purposes
Basically another IoT node
FAA expects the number of drones flying in U.S. domestic
airspace to hit 30,000 by 2020
FAA also brings regulation, which is still shaping up
Enormous potential in key industries and applications
Key Applications
Precision Agriculture
Film / Photo / Video
Inspection / Monitoring
Mapping / Surveying
Public Safety / First Responders
Drones, Unmanned Aerial Vehicles (UAVs), & Unmanned Aircraft Systems (UASs)
CONFIDENTIAL
UAV – The Big Picture
20
UAVs continue as the most dynamic growth sector of the world aerospace industry
Development of UAVs for different applications, by different industries has led to a wide variety of airframes and capabilities
Key external drivers– Gov’t funding for military– ↑ sophis ca on and ↓ price of components
M&A trends– Expansion within verticals– Node in IoT– Internet to remote geographies
Financing trends– Inspection– Delivery/logistics– Cloud services
Source: Teal Group, 2014
UAV Classification
0 – 200 ft.Low‐speed, low altitude missions,
film and inspection
500 – Above ft.Manned aircraft; military grade
drones
200 – 400 ft.High‐speed transit
zone for sophisticated drones (e.g. delivery drones)
400 – 500 ft.No‐fly zone
CONFIDENTIAL
Commercial Drone Landscape
21
Software Only ServicesSystems & Software
CONFIDENTIAL
Drone Market Size
22
Over $6 billion /year spent on
military and commercial drones
Estimated to grow to $8.6 billion by
2019, representing a 6% CAGR
$0.7
$5.1
2014 2015 2016 2017 2018 2019
Commercial Drone Spending$, Billions
$6.4
$8.6
2014 2015 2016 2017 2018 2019
Total Military & Commercial Drone Spending$, Billions
Key Observations
Commercial estimated to grow to
$5.1 billion by 2019, representing a
51% CAGR
Commercial to grow from ~10% of
the market today to ~60% by 2019
CONFIDENTIAL
Drones Face Hurdles to Growth
23
‐ FAA Regulation ‐Speed of expansion relies heavily on federal rules
‐ Air Safety ‐Growing number of drones seen flying
dangerously close to commercial aircraft
‐ Civilian Privacy Concerns ‐17 states passed drone‐related privacy legislation
‐ New Legal & Insurance Implications ‐Heightened risk of property damage and liability
Challenges facing commercial drone industry
‐ Unproven Business Models ‐How will companies actually use drones to make
money?
Source: CBS Money Watch, August 2015
CONFIDENTIAL
M&A Trends & Financing Activity
CONFIDENTIAL
Drone M&A Deal Volume
25
Source: CapIQ data as of December 2015
M&A activity growing but still relatively small
Historically focused on military
Notable “out‐of‐segment” buyers such as Google and Facebook
Recent activity around flight control software and autopilot systems
Acquirer Target Category
CommercialCommercial
CommercialCommercial
Military
Military
Number of Transactions
Drone M&A Activity
3 25 6
4
9
14
2009 2010 2011 2012 2013 2014 2015 YTD
CONFIDENTIAL
Venture Community Heavily Engaged
26
Venture funding for UAV‐related startups rose to $192M in 2014; a 134% YoY increase from 2013
VCs have jumped into the commercial drone market in a big way in 2015
Many VCs more focused on software, not hardware
Main categories includes:
Inspection (e.g. mapping, precision agriculture, infrastructure, energy, mining), delivery/logistics, insurance and cloud services
Selected Venture‐Backed Companies2011‐ 2015 YTD
Companies $ Raised
DJI Technology $105M
3D Robotics $99M
Yuneec $60M
EHang (Ghost Drone) $52M
Skycatch $46M
Aeryon Labs $46M
Airware $45M
CyPhy Works $36M
Pulse Aerospace $21M
Precision Hawk $21M
Source: CapIQ, PrivCo, TechCrunch November 2014, CB Insights 2015
6 1326
38
72
$12 $36
$83
$192
$471
2011 2012 2013 2014 2015 YTDNumber of Investments Total Annual Investment in $M
Drone Funding Activity
CONFIDENTIAL
Concentrated Investments from Select VCs
27
While there have been a significant number of investments made by venture capital firms, only a select group of firms have made multiple investments in drones.
Venture Investors Investments
CONFIDENTIAL
FAA regulations to continue to roll out, but will take longer than expected– This brings uncertainty are can stifle innovation–Needed in order for commercial drones to be ubiquitous and safe
Strategic and VC private investments to continue to ramp– Significant uptick in strategic interest as strategies get worked out at the BU level–VCs are more cautious in hardware investments in this environment; into capital light models
At least one major IPO in 2016 as there are already “public ready” companies– Eventually will provide more choices for public investors– Increases buyer universe driving further M&A
Near‐term M&A to be driven by large technology conglomerates, niche consumer electronics players and mil/aero companies moving down market– They have been on the sidelines for too long; starting to enter–Outsiders, especially large cap players, bring further validation and clout to the industry
What We Expect From the Drone Market…
28
CONFIDENTIAL 29
Rick Dalton Managing Director
950 Tower Lane, Suite 1950 Foster City, CA 94404 tel: +1 (650) 330‐3799 [email protected]
Mooreland Partners LLC is a member of FINRA / SIPC
Bryan G. Dow Executive Director
950 Tower Lane, Suite 1950 Foster City, CA 94404 tel: +1 (650) 330‐3788 [email protected]
Mooreland Partners LLC is a member of FINRA / SIPC
SILICON VALLEY950 Tower Lane, Suite 1950
Foster City, CA 94404Tel: +1 (650) 330‐3790
GREENWICH537 Steamboat Road, Suite 200
Greenwich, CT 06830Tel: +1 (203) 629‐4400
LONDON2‐4 King Street,
London SW1Y 6QLTel: +44 (0) 20 7484 1350
www.moorelandpartners.com