vc's quit early stage financing

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December 2012 Page 1 © Go4Venture Advisers LLP, 2013 Providing innovative, fast-growing companies and their investors with independent corporate finance advice to help them evaluate, develop and execute growth strategies Equity Capital Markets (ECM) Equity private placements Growth equity financings and secondaries Pre-IPO advisory Mergers & Acquisitions (M&A) Sellside Buyside / Buy and build Valuation services Go4Venture Advisers LLP is authorised and regulated by the Financial Services Authority (FSA). About Go4Venture Advisers Technology / Medtech / Internet / Digital Media / Telecoms / Cleantech Monthly European TMT Private Investments and M&A Transactions Bulletin – December 2012 Published by Go4Venture Research, the Equity Research unit of Go4Venture Advisers LLP.

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Traditionally, and in the layman’s view of the word, venture is defined as high risk/high reward, early-stage investment. The model comes from Silicon Valley where the maturity of the eco-system makes early-stage a reasonably predictable activity. In Europe however, this part of the market is now left to business angels, government-subsidised funds, and a handful of the larger VCs which can afford to subsidise this largely money-losing activity to feed their larger later-stage funds. VCs have largely deserted early-stage and are now focusing their attention on expansion capital.

TRANSCRIPT

Page 1: Vc's quit early stage financing

December 2012

Page 1 © Go4Venture Advisers LLP, 2013

Providing innovative, fast-growing companies and their investors with independent corporate finance advice

to help them evaluate, develop and execute growth strategies Equity Capital Markets (ECM)

Equity private placements

Growth equity financings and secondaries

Pre-IPO advisory Mergers & Acquisitions (M&A)

Sellside

Buyside / Buy and build

Valuation services

Go4Venture Advisers LLP is authorised and regulated by the Financial Services Authority (FSA).

About Go4Venture Advisers

Technology / Medtech / Internet / Digital Media / Telecoms / Cleantech

Monthly European TMT Private Investments and M&A Transactions Bulletin – December 2012

Published by Go4Venture Research, the Equity Research unit of Go4Venture Advisers LLP.

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Contents

This Month in Brief 3

Private Investments

1.1 - Headline Investment Index (HTI) 6

1.2 - Large Headline Investment Summary 7

1.3 - Large Headline Investment Profiles 8

M&A Transactions

2.1 - M&A Activity Index 18

2.2 - Top 5 Global TMT M&A Transactions Summary 19

Headline European VC & PE-Backed M&A Transactions:

2.3 - Summary 21

2.4 - Profiles 22

List of Acronyms 24

About this Bulletin

The Go4Venture Monthly European TMT Private Investments and M&A Transactions Bulletin provides a summary of corporate finance activity among emerging European TMT companies:

Private Investments, i.e. Venture Capital (VC) and Private Equity (PE) financings, including growth equity, financing rounds with single secondaries components (recapitalisations); and

M&A Transactions where the sellers are VC and PE-backed European companies, including all majority transactions with no new investment going into the business (e.g. acquisitions, MBOs and other buyouts).

Investment activity is measured using Go4Venture’s European Tech Headline Transactions Index (HTI), which is based on the number and value of transactions reported in professional publications.

M&A activity is measured using data from a combination of external sources, primarily Capital IQ, with complementary reporting from 451 Group and VentureSource.

Europe is defined as Western, Central and Eastern Europe, excluding Israel.

For more details, please refer to the Methodology Note available at www.go4venture.com/research/hti.htm.

Please note that no part of the Bulletin can be reproduced unless content is duly attributed to Go4Venture and the details of republishing are notified to [email protected].

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This Month in Brief

Dear Clients and Friends,

Welcome to the latest edition of the Go4Venture Monthly European TMT Bulletin, featuring our proprietary

Headline Transaction Index (HTI) of investment activity, as well as a quick summary of VC & PE-backed

TMT M&A exits of $50 million or more.

2013: Thinking Ahead

As expected, 2012 finished on a high, with total investment up 26% compared to 2011, both in value and

by number of transactions. December, typically a quieter month, was well ahead of December 2011 by

something like 50%. This suggests an acceleration of the pace of investment in European technology

venture as noted since August 2012. By contrast, the M&A market continued to slide down.

Investment

As we have been banging on about for some time, this increasing investment in technology reflects

tectonic shifts in European venture. Not only can venture financing and venture capital (VC) fund activity

not be seen as one and the same any longer (as VCs would lead you to believe) but we are also facing a

fundamental re-evaluation of what venture investing means.

Traditionally, and in the layman’s view of the word, venture is defined as high risk/high reward, early-stage

investment. The model comes from Silicon Valley where the maturity of the eco-system makes early-stage a

reasonably predictable activity. In Europe however, this part of the market is now left to business angels,

government-subsidised funds, and a handful of the larger VCs which can afford to subsidise this largely

money-losing activity to feed their larger later-stage funds. VCs have largely deserted early-stage and are

now focusing their attention on expansion capital.

We elaborated on the theme during a seminar on Growth Capital hosted earlier this month at lawyers Taylor

Wessing. As pointed out then, the move to growth equity has been accentuated by the poor IPO and M&A

exit market which has resulted in a large pool of VC-backed companies seeking further investment. As a

result approximately half of the “venture” activity (as tracked for instance by our own Headline

Transactions Index) is essentially late-stage companies, either profitable or not far from break-even. In

short the venture market now firmly incorporates what, for the lack of a better word, could be described as

“mini private equity”. The term is actually quite apt, as private equity (PE) firms, in the absence of debt

leverage, are themselves moving to growth equity where growth rather than financial engineering is the

actual driver of value creation.

December is fully representative of this trend with 5 late-stage and 5 Series B transactions – no real

Series A in the early-stage sense of the term. Even for the Series B companies, two of them have been

around since 1993 (BRAIN) and 1990 (Objectway) respectively. The other 3 are internet companies able to

demonstrate strong growth despite operating in an ex-growth macro environment.

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In short the venture market has been turned on its head - or perhaps the model is returning to its pre-internet

bubble roots. To make it simple, except for outstanding internet plays which have their own out-of-the-

ordinary economics, it takes a much longer time to get VCs involved. From now on the first steps of any

company will have to be bootstrapped, funded by family, friends and fools (the FF&F of good old times) or

simply by the founders themselves. And even internet companies (despite – or perhaps because – of their

low initial investment, high velocity and potentially huge rewards) need to produce real metrics before VCs

are prepared to commit.

At the other end, VCs find that they themselves may need to wait much longer before being able to exit.

Increasingly liquidity and exit have become two distinct events. One could say that for the VC model to

survive, the whole food chain needs to be reorganised, with VCs agreeing to take out business angels (and

sometimes employees), and PE and other later stage investors buying out smaller VCs. As usual, the US is

showing the way, with for instance Evernote’s investor merry-go-round in its December 2012 $85mn

financing (75% secondary) or Twitter’s latest round at $9bn valuation (50% secondary). In the new venture

model, VC-backed companies will need to go through various recapitalisations before getting to a

substantial exit outcome. In such a market, larger VCs who can speed up execution through increased

investment, and/or have sufficient dry powder to surf over several rounds will be the winners. Successful

VCs will have to become more like Sequoia Capital which raised $2.5bn in 2012 alone over 5 funds covering

early-stage in US, China and Israel as well as growth capital in the US and globally.

The corollary is that we can expect considerable suffering at the early-stage end of the market. The

wave of capital light internet plays has created a vast pool of seeded companies which will find it difficult to

get to Series A. Some speak of the upcoming Series A crunch. Even VCs with decent Series A plays are

getting increasingly concerned about the refinancing risk and lament the lack of syndication partners as

they are now increasingly reliant on their companies being refinanced (or not) by fewer, larger VCs cherry

picking at will and increasingly dealing among themselves. Good times ahead for Tier 1 funds and

established advisers such as Go4Venture.

Exits

December was again a poor month for tech M&A overall, and European VC/PE-backed companies in

particular. Part of it is the paucity of exit activity, part of it reflects the challenge of tracking what is, after all,

still a small market and therefore poorly covered by independent researchers. December exemplifies those

challenges.

On the one hand, Trivago was a big European success when it sold for close to €0.5bn to Expedia,

something like 5x historical revenues and assuredly a huge premium to the money invested (which we

estimate at c. 11x). A trade sale over €100mn is not so common in European venture (our threshold for

reporting is $50mn - approximately €35mn): half a billion euros and a “ten bagger” is an exceptional event.

At the other end, we had the news that WHEB, a London-based cleantech investor, had sold its stake in

Friedola Tech to Silverlake Kraftwerk as reported in our November 2012 newsletter. Somehow further

information was released in December and we learnt that WHEB made c. 2x their money on their €10.8mn

investment 2.5 years earlier. A solid return for WHEB, but too small to be reported.

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Somewhere in between was the news of Ireland-based security software specialist Vordel being sold to

publicly-quoted Axway (EPA:AXW) for the dreaded “unreported amount”. Vordel was a client of

Go4Venture Advisers for their late-stage financing in June 2007 so we know that the transaction hit our

reporting threshold and more. But corporates don’t like to mention figures, and neither do VCs sometimes,

because the figure is either too high or too low. Which is a real shame because in this case Vordel investors

did rather well from the investment.

One wishes the venture industry was more proactive in broadcasting it successes.

Enjoy the reading. Please direct any questions or comments to [email protected]. If you do not

wish to receive future HTI updates from us, please send an email with the title “unsubscribe” to

[email protected].

The Go4Venture Team

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1.1 - Headline Investment Index (HTI)

December 2011 2012 Year-to-Date 2011 2012

Landmark Deals # 1 4 Landmark Deals # 24 37

€m 117.6 174.3 €m 1,153.9 1,423.5

Headline Deals # 2 5 Headline Deals # 58 77

€m 25.6 55.1 €m 650.6 896.6

Small Deals # 18 25 Small Deals # 243 300

€m 54.3 65.4 €m 703.5 843.7

All Deals # 21 34 All Deals # 325 414

€m 197.5 294.7 €m 2,508.1 3,163.8

0

500

1,000

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3,500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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(€m

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Go4Venture HTI Index by Cumulative Deal Value

2009 2010

2011 2012

0

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100

150

200

250

300

350

400

450

500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Go4Venture HTI Index by Deal Value

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2011 2012

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1.2 - Large Headline Investment Summary

(>£5mn / €7.5mn / $10mn)

Company Sector Round €mn Description Investors

1 BRAIN (Germany) www.brain-biotech.de

Industrial Biotech

B 60.0 Specialises in the discovery of enzymes and other bioactives.

MIG Fonds, MP Beteiligungs.

2 Beauty Trend (Germany) www.glossybox.de

Internet Services

Late Stage

55.2 Operator of a subscription-based service which delivers selected beauty products to male and female customers on a monthly basis.

Holtzbrinck Ventures, Investment AB Kinnevik, Rocket Internet.

3 Biocartis (Switzerland) www.biocartis.com

Diagnostics Late Stage

34.5 Developer of a molecular and immunodiagnostics platform.

Benaruca, Debiopharm, Individual Investors, Johnson & Johnson Development, Korys, Philips, PMV, RMM (Rudi Mariën), Valiance.

4 feelunique.com (Jersey) www.feelunique.com

Internet Services

Late Stage

24.6 Online beauty products retailer.

Palamon Capital Partners, Sirius Equity.

5 Auctionata (Germany) www.auctionata.com

Internet Services

B 15.3 Operator of an online auction house and sales portal for art, antiques and collectibles.

Bright Capital, e.ventures, Holtzbrinck Ventures, Kite Ventures.

6 CloudPay Solutions (UK) www.cloudpay.net

Software Late Stage

12.2 Provider of payroll software and services.

Pinnacle Ventures, Rho Ventures, Unknown Strategic Investor.

7 Trustpilot (Netherlands) www.trustpilot.com

Internet Services

B 10.0 Operator of a platform for sharing of reviews of e-tailers - effectively a social review service.

Index Ventures, Northzone Ventures, SEED Capital Denmark.

8 Objectway (Italy) www.objectway.it

Software B 10.0 Provider of software and technology services for the financial markets.

Futurimpresa.

9 Mebelrama (Russia) www.mebelrama.ru

Internet Services

B 7.6 Online retailer of furniture and household goods.

Rocket Internet.

10 ECO Plastics (UK) www.ecoplasticsltd.com

Cleantech Late Stage

7.4 Recycler of plastics. Ludgate Investments, SAM Private Equity.

Source: Go4Venture

Key Bold indicates lead investor(s) * Internal round ** Led by existing investors

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Company Sector Round €mn Description Investors

BRAIN (Germany) www.brain-biotech.de

Industrial Biotech

B 60.0 Specialises in the discovery of enzymes and other bioactives.

MIG Fonds, MP Beteiligungs.

Biotechnology Research and Information Network (BRAIN)

(Germany), a company which specialises in enzyme and bioactive

discovery, raised €60.0mn in a Series B round led by MP Beteiligungs with support from MIG Verwaltung.

The money will be used for a combination of acquisitions and organic growth.

BRAIN is a so-called ‘white biotech’ company. In other words, it concentrates on industrial applications of

biotechnology rather than those in the healthcare and pharmaceutical industries. It makes its money from the

discovery and development of enzymes and bioactive compounds for the chemical, food and cosmetics

industries.

BRAIN was founded as an independent research organisation in Darmstadt, Germany in 1993. The firm’s

approach to discovering new enzymes and bioactives has been to develop a BioArchive®. This library

consists of metagenomes – genetic materials recovered from environmental samples – and other biological

material. The firm then uses a proprietary technology platform to screen this library for anything useful.

Since 99% of all microorganisms from habitats such as soil samples cannot be cultivated, these non-

cultivated organisms have yet to be tapped as sources of new enzymes and bioactives. This is of great

commercial importance at a time when amino acid substitutions of existing molecules are rapidly becoming

patented. The other advantage is that rather than adapting chemical processes to use sub-optimal catalysts,

BRAIN’s library can be used to find better ones.

To date BRAIN’s primary modus operandi has been a series of over 80 joint ventures and strategic

partnerships with firms such as BASF, Ciba, Henkel, RWE, Sandoz and Schering.

BRAIN has now taken the strategic decision to become a fully integrated industrial company through a

combination of acquisitions and organic growth – a buy-and-build approach for which this round provides the

war chest. Some of the money will also be used for further development of BRAIN’s technology platforms.

In addition to its commercial expansion, BRAIN is also part of two collaborations funded by the German

Ministry of Education and Research (BMBF) – NatLifE 2020 and ZeroCarb FP. Led by BRAIN, NatLifE is a

collaboration of 22 industrial and academic partners developing healthier food and cosmetics. ZeroCarbFP –

a similar collaboration of 21 partners led by RWE Power – aims to use micro-organisms to recycle carbon-

rich industrial waste into useable raw materials.

This round was led by MP Beteiligungs which also participated in BRAIN’s €12.5mn first round in January

2007. MP is a family office making investments on behalf of the Putsch family which runs an automotive and

aircraft seating company, the RECARO Group.

MIG Verwaltung (€80mn (2013), AUM €800mn) provides management services for the MIG funds which are

public venture capital funds. The MIG funds have a total volume of more than €800mn and provide venture

capital to young, un-listed companies located in Germany, Austria and Switzerland.

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Company Sector Round €mn Description Investors

Beauty Trend (Germany) www.glossybox.de

Internet Services

Late Stage

55.2 Operator of a subscription-based service which delivers selected beauty products to male and female customers on a monthly basis.

Holtzbrinck Ventures, Investment AB Kinnevik, Rocket Internet.

Beauty Trend (trading as Glossy Box) (Germany), operator of a

subscription-based service which delivers selected beauty products

to male and female customers on a monthly basis, raised €55.2mn

in a Late Stage round from Holtzbrinck Ventures, Investment AB Kinnevik and Rocket Internet.

Glossy Box operates a member’s club whereby subscribers receive a selection of beauty products every

month. Beauty Trend buys in bulk and provides the manufacturers of beauty products with a new sales

channel with low customer acquisition costs, whilst minimising Beauty Trends’ own costs. In return Glossy

Box’s customers get an easy way to follow trends and explore new products.

When the service launched in March 2011 it was only available for women. After twelve months, however,

the firm expanded to cover men and teenagers of both sexes, as well as introducing products targeting

mothers. Operating at the same price point – €15 a month in all cases – subscribers get five products in the

ladies’ selection and between six and eight in the selection for gentlemen. Subscriptions can be cancelled at

any time, although fixed term subscriptions of three and six months are also available. Even at this price, one

or two premium brands can be included in each selection by varying the sample sizes.

Beauty Trend has grown rapidly and now has over 300 employees serving some 200,000 subscribers in 16

countries (Austria, Brazil, Canada, China, France, Germany, Israel, Italy, Japan, Korea, Netherlands,

Poland, Spain, Sweden, the UK and the USA), generating revenues of €36mn a year.

This is not the first time that Holtzbrinck Ventures, (€180mn (2011)), Investment AB Kinnevik and the

Samwer Brothers’ Rocket Internet (AUM €850mn) vehicle have worked together. In our June issue we

covered their participation in a €39mn investment in online furniture shopping club Westwing Home & Living

led by Summit Partners with support from Access Industries. Prior to that, the team worked alongside

eVenture Capital Partners (now e.ventures) in a €10mn Series B round for online collective buying portal City

Deal, in March 2010. As is well known, Rocket’s principal investor is Kinnevik so Kinnevik-Rocket

collaborations are effectively Kinnevik following its money to later stages.

Holtzbrinck and Kinnevik have also worked alongside each other on similar e-commerce plays: in 2011

Holtzbrinck and Kinnevik made an undisclosed investment in Russian fashion e-tailer Lamoda (which had

originally been incubated by Rocket Internet); in October 2012, Kinnevik partially bought out Holtzbrinck,

Rocket and Tengelmann Ventures’ from their investment in fashion e-tailer Zalando for €287mn.

Rocket’s presence in this relatively large deal is worthy of interest as there are obvious synergies with the

firm’s newly revamped fashion strategy.

Listed Swedish investor Kinnevik, which we described more fully in our June issue, has just won an appeal

with the Swedish Administrative Court of Appeal in a tax dispute. Kinnevik may now treat the gain on the

sale of its shares in financial services company Invik in 2007 as tax free. With profits from the disposal of

about €29mn, this is material and may be partly responsible for the recent rise in the firm’s share price.

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Company Sector Round €mn Description Investors

Biocartis (Switzerland) www.biocartis.com

Diagonostics

Late Stage

34.5 Developer of a molecular and immunodiagnostics platform.

Benaruca, Debiopharm, Individual Investors, Johnson & Johnson Development, Korys, Philips, PMV, RMM (Rudi Mariën), Valiance.

Biocartis (Switzerland), a developer of molecular diagnostic and biomarker

detection platforms for personalised medicine, raised CHF42.0mn (€34.5mn) in a

Late Stage round led by existing investor PMV with support from existing investors

Benaruca, Debiopharm, Johnson & Johnson, Korys, Royal Philips

Electronics and Valiance, as well as new investor RMM.

This is the third time that Biocartis has appeared in our bulletin. Previous investments we have covered

include €10mn in November 2009, €30mn in April 2010 and €71mn in November 2011. Just like the now

relatively unfashionable semiconductor industry, building diagnostic platforms for personalised medicine

requires significant investment to ramp-up to commercial success. Another company in a very similar space,

Curetis, has also been written up in our bulletin twice. It appeared in December 2009 and October 2011 and

also contributed to our Headline Transaction Index (HTI) with a €6mn round in May 2011, even though the

round was too small to warrant a write-up.

Biocartis launched its Dynamic Multi-Analyte Technology (DMAT) platform for biomarker analysis in early

December. As Biocartis’ press release states, this means Biocartis has moved from being a pure

development company to a commercial organisation. The DMAT platform is, however, initially available for

research use only; not only is the research marketplace smaller than the ultimate clinical marketplace but it

can also be extremely sensitive to price.

Nevertheless, this latest round will be used to launch the firm’s Apollo diagnostics platform (for which the firm

hired a platform development project manager last year), to increase the variety of oncology tests the firm

can supply and to grow the commercial arm of the firm.

Much of the press coverage of this investment focusses on the fact that it brings total investment in Biocartis

to about €150mn. This must be seen in the context of the total market size. According to Business Insight,

the global market for molecular diagnostics in oncology was about $0.4bn in 2010 and one of the fastest

growing segments of the $4bn global molecular diagnostics market.

Also of interest is the fact that this is very nearly an internal round. Indeed, the only new investor, RMM, is a

family office representing the chairman of Belgian biogenetics company Innogenetics Rudi Mariën, who may

well have been one of the individual investors who also participated in the previous round.

Most of this round’s investors – Debiopharm, Johnson & Johnson, Korys (the family office of the Colruys

family which specialises in cleantech, consumer goods, retail and life sciences), Philips Electronics and co-

investment specialist Valiance (€30mn (2010), AUM €230mn) – also participated in the €71mn November

2011 round. The exception is Benaruca, a Luxembourg-incorporated investment vehicle represented by

Dutch lawyer Peter Verhaeghe, which first participated in Biocartis’ €35mn April 2010 round.

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Company Sector Round €mn Description Investors

feelunique.com (Jersey) www.feelunique.com

Internet Services

Late Stage

24.6 Online beauty retailer. Palamon Capital Partners, Sirius Equity.

Feelunique.com (Jersey), an online retailer of beauty products,

raised an estimated £20.0mn (€24.6mn) in a Late Stage round

from Palomon Capital Partners and Sirius Equity.

Feelunique is the second investment in the beauty sector in this issue. Just as we saw a plethora of online

investments in fashion e-tailing from about 2007, the beauty sector seems to be heating up. Growth slowed

for the global beauty industry in the wake of the global recession but, according to research firm Sanford C.

Bernstein, not only is the global market now worth well over €250bn, it is also growing at over 5% a year.

Furthermore, it appears that the consumer beauty dollar – or in our case euro – is finally moving online.

Feelunique was founded in June 2005 as Island Cosmetics with each of its two founders contributing half of

the initial £80k funding. Launching in October of the same year, the firm grew by spending on advertising,

making losses for the first two years, during which time the two founders took no salary. Though it took time

to convince well-known brands that their products should be sold through feelunique, a deal with Clarins

which took four and a half years to secure provided a range of well-known cosmetics that formed the

foundation of feelunique’s online store.

Feelunique now has 125 staff working at its headquarters and logistics centre in the Channel Islands and

stocks over 18,000 products from more than 500 brands. Last year its turnover exceeded €35mn, having

grown at over 57% in the first half, well in excess of the company’s original forecast of c. €30mn. As part of

its quest to become a household name the firm has opened a salon, a spa and a club hotel, as well as

physical outlets in Jersey and Guernsey.

Founder and Jersey-born CEO Aaron Chatterley has had a variety of jobs, building a web development

company which he sold for £5.5mn in 2000 just before the dot com bubble burst. Notoriously, he got the idea

for Feelunique from needing to buy moisturiser while hungover at Dublin airport and realising that men can

find it intimidating to buy cosmetics in department stores.

This round, which is partly a secondary deal, values feelunique at £26mn (€30mn) and gives investors

Palomon Capital Partners (€670mn (2005)) and Sirius Equity a majority stake.

European growth investor and transaction leader Palomon targets services businesses. It strongly

emphasises its pan-European outlook, with a distribution of investments roughly matching that of the

European venture industry as a whole; it makes investments of €15-80mn. Note that as well as service

businesses which depend on technology such as software services, media and communications businesses,

the firm also invests in non-technology companies such as business services, healthcare, financial services,

leisure and retail.

As well as private equity and early stage venture investments, the firm also participates in recapitalisations,

turnarounds, buyouts and deleveraging transactions. In September 2012, Palamon Capital made a 3.4x

return on the sale of Swedish coffee chain Espresso House to Norwegian private equity firm Herkules.

Palomon was supported in this round by specialist luxury goods and branded retail investor Sirius Equity.

Founded in 2008, Sirius’ investments to date include LK Bennett and Italian sportwear brand Jeckerson. This

is their first investment in a pure online retailing play.

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Company Sector Round €mn Description Investors

Auctionata (Germany) www.auctionata.com

Internet Services

B 15.3 Operator of an online auction house and sales portal for art, antiques and collectibles.

Bright Capital, e.ventures, Holtzbrinck Ventures, Kite Ventures.

Auctionata (Germany), operator of an online auction house and

sales portal for art, antiques, collectibles and vintage luxury

goods, raised €15.3mn in a Series B round from new investors

Bright Capital and Kite Ventures, supported by existing investors e.ventures and Holtzbrinck Ventures.

Founded in January 2011, the development of Auctionata’s sales and auction portal was supported by an

undisclosed round from well-known early stage investor Holtzbrinck Ventures and automotive dealer the

Raffay Group in December 2011.

Like a traditional auction house, Auctionata has a team of experts (c. 250) who value any item offered for

auction. Unlike a traditional auction house, this team is both global and virtual. Although its focus is

European, this expert network extends as far as Singapore, South Africa, South America and the USA. The

firm has a physical presence in New York as well as at its home in Berlin.

Low value items are valued on the basis of photographs and information on provenance from the owner,

whereas more valuable items need to be looked at in person. Currently, Auctionata offers free estimates for

the first five items sold. By virtue of its expert opinions, Auctionata is able to offer a twenty-five year

guarantee of authenticity.

Unlike eBay but just like a traditional auction house, the firm operates regular general auctions together with

ad hoc themed sales and a fixed price shop. Launched in September 2012, the site completed its first live

auction in December 2012 with revenues of €350k. Auctionata’s 70 employees currently curate over 3,600

items in the firm’s online store and aim to increase this to over 10,000 items by the end of Q1 2013.

Existing investor Holtzbrinck Ventures (€180mn (2011)), which appears elsewhere in this issue with a €55mn

investment in Beauty Trend, last appeared in our bulletin in June 2012 with a €39mn round for online

furniture shopping club Westwing. Founded in 2000 as the venture arm of the Georg von Holtzbrinck

Publishing Group, early stage internet specialist Holtzbrinck is now on its fourth fund and has made c. 100

investments over its lifetime, some 50 of which are in its current porfolio.

Fellow existing investor e.ventures is also an early stage specialist. The firm started life as BV Capital in

1998 but rebranded as e.ventures in the summer of 2012 to emphasise the firm’s global footprint and the fact

that it operates funds in Europe (e.ventures Europe), the US (BV e.ventures), Russia (e.ventures Russia),

South America (Redpoint e.ventures) and Asia (Infinity e.ventures).

New investor Bright Capital (€270mn (2012)), is another firm with a global perspective. Stage agnostic,

Bright operates five funds and targets cleantech and new materials businesses as well as digital

opportunities. Bright made its debut in our bulletin with an €8mn round for wastewater treatment firm

Epuramat in August 2012.

Kite Ventures confines itself to Russia and Europe. It also appeared in our August 2012 issue when it led an

€80mn round for Delivery Hero.

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Company Sector Round €mn Description Investors

CloudPay Solutions (UK) www.cloudpay.net

Software Late Stage

12.2 Provider of payroll software and services. Individual Investors, Rho Ventures, Unknown Investors.

CloudPay Solutions (UK), a provider of payroll software and services, raised

$16.0mn (€12.2mn) in a Late Stage round from new investor Pinnacle Ventures

and existing investor Rho Ventures, with support from a further undisclosed

strategic investor. The money will be used to augment the firm’s technical, service and sales capabilities.

Originally known as Patersons, CloudPay started developing its payroll outsourcing technology back in 1996,

well before this model was dubbed Software as a Service (SaaS). The firm last featured in our December

2008 bulletin when it received a €23mn round from Rho Ventures. This round was also to be used for the

expansion of sales, operations and customer support.

By this stage in its history, CloudPay had launched in the UK and expanded into the rest of Europe but had

only just begun opening international offices – in China, France, Singapore and the US. Alongside a

partnership with IBM dating from 2006 and winning Siemens as a client in 2008, the Rho investment seems

to have achieved the desired objective of stimulating international growth: in 2009 the firm won a major new

client with over 10,000 employees in over 70 countries. The firm also expanded its offering both organically

with the advent of full US payroll processing capability, as well as through synergistic partnerships with other

SaaS vendors such as HR management services vendor Workday, business execution software specialist

SuccessFactors and ERP firm NetSuite.

In 2012 Patersons changed its name to CloudPay, to match the product name it had adopted in 2011.

Following a mezzanine round in October 2011 (also provided by Rho Ventures) to support a multi-country

expansion, specialist SaaS consulting firm Montclair Advisors named CloudPay as one of its SaaS Top 250

by bookings and revenue growth rate in November 2012.

For new investor Pinnacle Ventures, this investment marks its debut in our bulletin. Pinnacle’s investment is

another example of a trend our readers will be familiar with – US investors backing European companies.

Based in Silicon Valley and investing in healthcare as well as technology, Pinnacle is somewhat unusual in

running both equity and debt funds.

Used in the US since the 1960s, until the late 1990s venture debt was practically unheard of in Europe.

According to a BVCA report in 2010, this is slowly changing. At its peak just before the credit crunch, venture

lending accounted for about 10% of venture funding in the UK and 6% in the rest of Europe. The largest

venture debt (as distinct from factoring) loans are made to internet, biotech and semiconductor companies.

Given the current preponderance of late stage investments and associated lack of mid-stage equity, venture

debt is often used as a way to extend an investee company’s cash runway.

Existing investor, US-based Rho Ventures first backed CloudPay when it was the sole provider of a €25mn

round in December 2008. Having started life as a family office in 1981 the firm has evolved into a private

equity firm running three funds – Rho Ventures, Rho Ventures Canada and fund-of-funds investor Rho Fund

Investors. Stage agnostic, Rho Ventures is currently investing from its $510mn sixth fund which targets new

media, IT, telecoms, energy and healthcare deals where total commitments over the lifetime of an ivestment

can be up to $50mn.

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Company Sector Round €mn Description Investors

Trustpilot (Netherlands) www.trustpilot.com

Internet Services

B 10.0 Operator of a platform which facilitates the sharing of reviews of e-tailers - effectively a social review service.

Index Ventures, Northzone Ventures, SEED Capital Denmark.

Trustpilot (Denmark), operator of a platform which facilitates the

sharing of reviews of e-tailers – effectively a social review service,

raised €10.0mn in a Series B round led by Index Ventures with

support from Northzone Ventures and SEED Capital. The money will be used to enter the US market.

Founded in Denmark in 2007, Trustpilot’s business model is best explained by the company’s stated aim of

creating ‘the best, most trustworthy website for consumers to share their online shopping experiences and

make it the global standard in customer reviews’.

Reviews are obtained in one of two ways: firstly, having registered with Trustpilot using either their e-mail

address or Facebook login, consumers can submit reviews; secondly, e-tailers and other businesses selling

through the web can invite their customers to submit reviews using Trustpilot’s platform. This is how the firm

makes its money. Fees scale with the number of domains, the number of orders per month that can be

reviewed and whether or not the client wishes to use additional features such as technical support or

integration with Facebook.

Since the firm was founded in 2007, the platform has processed 7mn reviews of more than 100,000

merchants, 1.5mn of which have been in the last twelve months. Over 1.3mn people read the reviews on

Trustpilot every month. Well-known customers include Vistapring, Telia, Toys’R’Us and Spartoo. Currently

present in 18 countries with a stronger position in France, Germany, Italy, the Netherlands and the UK,

Trustpilot now intends to enter the US using the funds raised in this round.

It has been a busy year for transaction leader Index Ventures (€350mn (2012), AUM €2.0bn), which has

appeared in our bulletin an average of once a month throughout 2012. In our October issue the firm

appeared no less than three times with investments in Zendesk, HouseTrip and Secret Escapes.

This is perhaps not surprising as the original premise for Index’s US founders was to export the Silicon

Valley mindset to Europe. A decade on, the bet on Europe seems to be paying off and, when Index

announced its €350mn early stage technology fund in June 2012, the firm repeated something that we have

been saying for some time – namely that European start-ups are finally coming of age. At the time, Index’s

portfolio included over 20 European companies of significant size and combined 2011 revenues of €1.3bn.

Almost as prolific is Northzone Ventures (€130mn (2011), AUM €410mn), which led Trustpilot’s €3.3mn

Series A round back in November 2011 and last appeared in our bulletin in June as part of a €25mn round

for iZettle.

Much less well known is SEED Capital (€200mn (2013)), which provided two rounds of seed funding for

Trustpilot in November 2008 and December 2010. SEED Capital is Denmark’s largest seed fund and, as it is

backed by public as well as private money, is able to pursue earlier stage opportunities more aggressively

than many venture firms. The firm invests in IT, cleantech and life sciences companies and will follow its

money in later rounds if a seed investment is successful. From the 400 or so business plans the company

receives every year it aims to back a dozen or so.

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Company Sector Round €mn Description Investors

Objectway (Italy) www.objectway.it

Software B 10.0 Provider of software and technology services for the financial markets.

Futurimpresa.

Objectway (Italy), a provider of software and technology services for the

financial markets, raised €10.0mn in a Series B round from Futurimpresa.

The money will be used for European expansion, particularly in the UK.

ObjectWay was founded in 1990 as ‘Praksis Engineering and Computer Science’ to develop applications for

the institutions of the European Commission. Adopting an object-orientated approach to development, which

was cutting edge in the early 1990s, the firm changed its name to ObjectWay in 1997. Following a brief foray

into technology transfer, which still exists in the form of the ObjectWay University, the firm landed its first

banking clients in 2000. It went on to receive financial backing from Italian Jupiter Venture SA (now known

as JVcapital) in 2002.

Since this time the firm has developed two core lines of business – financial software and technology

solutions. The financial software business provides applications to large tracts of the financial services

industry covering sales of financial and insurance products, advisory services, fee and revenue management

software, as well as supplementary applications such as salesforce management and more market

orientated software for securities processing and asset management. The technology solutions business

offers custom software to support banking processes – examples include enterprise portals, Business

Process Management (BPM) software and Business Intelligence (BI) applications – by piggybacking on the

expertise developed in building the firm’s off-the-shelf software.

ObjectWay has achieved all this though a combination of organic growth and acquisitions. Acquisitions have

included Eurotech in 2004, a business division acquired from MET Sistemi in 2005 which added 40 banks to

the customer base, and a division of Computer Sharing Finance in 2005. The firm now has more than 450

employees in Bari, Brindisi, Milan and Rome and a 2011 turnover of €25mn with an EBITDA margin in

excess of 20%. In addition to a plethora of mid-tier financial services clients, ObjectWay’s customers include

well-known names such as Allianz, Citibank, Credit Suisse, Deutsche Bank and ING Direct.

ObjectWay has already expanded into France, Ireland, Portugal and Spain and this round will be used for

further European expansion, particularly in the UK. It is likely that such expansion will involve ObjectWay’s

technology vendor partners which include Computer Associates, IBM, Microsoft, Oracle and TIBCO.

Futurimpresa, owned by the Chambers of Commerce of Milano, Bergamo, Brescia and Como, is a quasi-

regional fund centred on the Lombardy plains. Together, these Chambers of Commerce represent about

10% of all Italian companies. Futurimpresa takes minority stakes in Lombardian SMEs with a turnover of

€10-50mn with an investment time-horizon of 5-6 years and a preference for capital structures with no debt.

This investment will give ObjectWay a post money valuation of €30mn and comes in the form of staged

payments which could take Futurimpresa’s equity holding up to a maximum of 30%. The first payment stage

has been used to finance the acquisition of the AMS Group, which specialises in outsourcing services for

asset management companies and financial intermediaries, and of Thomson Reuters subsidiary Eximius,

which provides software for private client wealth management. Interestingly for the future of the company,

ObjectWay’s founder Luigi Marciano managed to buy out investor JVcapital in 2006.

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Company Sector Round €mn Description Investors

Mebelrama (Russia) www.mebelrama.ru

Internet Services

B 7.6 Online retailer of furniture and household goods.

Rocket Internet.

Mebelrama (Russia), an e-tailer of furniture and household goods,

raised $10.0mn (€7.6mn) in a Series B round from Rocket

Internet. The money will be used to expand the firm’s product

range, move into a new warehouse and build a distribution network.

Mebelrama was founded in September 2011 by Manuela Stoll and Nino Ulsamer, the Russian co-founders of

another of Rocket’s portfolio companies – Westwing. Mebelrama also received support from Rocket in the

form of a $4-6mn Series A round in December 2011.

Like many furniture and household goods e-tailers, Mebelrama has moved rapidly to offer a range of over

15,000 products. Just as with other companies operating successfully in Russia, however, Mebelrama’s

business model has some features specifically tailored for local market conditions. For example, in a country

where credit card payment over the web is still rare Mebelrama offers a 5% discount for prepayment.

The firm also intends to build its own distribution network to give it independence from the vagaries of the

Russian postal system. This is the same strategy as that adopted by another Russian e-tailer in Rocket’s

portfolio – Lamoda. It will be interesting to see whether the various logistics operations in Rocket’s Russian

portfolio are ultimately consolidated and spun-out.

According to co-founder Stoll, the firm aims to reach a turnover of $100mn within three years and possibly

more depending on expansion into the rest of Eastern Europe.

Regular readers may have been following Rocket Internet’s (AUM €850mn) bid to build a billion dollar e-

commerce company in either furniture or fashion – or possibly both. Previous coverage of this saga has

included a €39mn investment in Westwing Home & Living in June 2012, a €13mn round for fashion e-tailer

Zalando in August 2012 and a €47mn round for Russian fashion e-tailer Lamoda.ru in September 2012.

The online fashion industry is slightly more mature than the furniture e-tailing business – again readers will

be familiar with our coverage of the wave of fashion deals going back to about 2007. For this reason, Rocket

Internet’s strategy is more visible in the online fashion sector and is described in our coverage of Zalando

where we also outline the JP Morgan–Rocket partnership’s fashion investments outside Europe. These

totalled some hundreds of millions of Euros, even excluding the pair’s more recent investment in Asian

fashion e-tailer Zalor which closed in September.

The strategy seems both clear and simple – global domination. This will not, however, be entirely

straightforward, at least not in Russia where the furniture and home e-tailing market is evolving rapidly.

Ironically, there may be significant competition from venture-backed clones of furniture e-tailing businesses.

These include HomeMe.ru, which raised a $5mn first round in May from AddVenture, ABRT and

Luxembourg’s Mangrove Capital Partners, and Apartama which raised $1mn in October from Russian

investor Aurora Venture Capital. There is also a new entrant called The Furnish targeting the premium end of

the market. In addition, clicks-and-mortar firm Enter.ru, which is backed by Russian consumer electronics

giant Svyaznoy, will have furniture as one of its core offerings.

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Company Sector Round €mn Description Investors

ECO Plastics (UK) www.ecoplasticsltd.com

Cleantech Late Stage

7.4 Recycler of plastics. Ludgate Investments, SAM private Equity.

ECO Plastics (UK), a recycler of plastic bottles, raised £6.0mn (€7.4mn) in

a Late Stage round from new investor SAM Private Equity together with

existing investor Ludgate Investments, as well as additional debt facilities

from the Close Brothers Group. The money will be used tactically for

short-term value added expansion opportunities.

When we last saw ECO Plastics in July 2011 it had just raised €27mn (€11mn of equity and €16mn of debt)

from Coca Cola, Ludgate Investments and debt provider the Close Brothers Group. The money was to be

used in a joint venture with Coca Cola Enterprises (CCE) to construct a £15mn facility which would increase

the firm’s production of bottle-grade recycled plastic from 15,000 to 40,000 tonnes a year.

Christened ‘Continuum’ and built on the firm’s existing site in Lincolnshire, this new facility was opened by

the UK Environment Minister in May 2012. More importantly, ECO Plastics was able to say that it had been

completed on time and on budget. The additional capacity allows the firm to produce 150,000 tonnes of

mixed plastics a year (including 40,000 tonnes of bottle-grade rPET) and makes the firm’s Lincolnshire plant

the largest plastics reprocessing facility in the world.

To put this into context the UK recycles roughly 420,000 tonnes a year. Not only is this a huge increase from

the mere 25,000 tonnes that were being recycled when the firm started out, but legislation such as the EU

Waste Framework Directive and governmental policy such as the UK Department for the Environment, Food

and Rural Affairs’ (DEFRA’s) Waste Action Plan is driving further growth.

In the UK, DEFRA’s target of increasing plastics recycling by 5% a year has encouraged local authorities to

increase kerbside collection of recycling. Commercially, this means that ECO Plastics has been able to

expand from three products to eleven and is expected to reach a turnover of £40mn in 2012, more than

double the previous year’s £18.5mn. It is not yet clear how much of this was due to extra recycling for the

Olympics.

The CCE joint venture is not the only project ECO Plastics has been involved with over the last year and a

half; in February 2012 the firm also received a £1.2mn loan from not-for-profit organisation WRAP (Waste &

Resources Action Programme). Supported by Government funding, WRAP was set up in 2000 and has a

mandate to help increase recycling. The money will be used to extend ECO Plastics’ existing bottle sorting

and processing facility, increasing overall capacity by a further 15,000 tonnes and improving the firm’s ability

to process rigid plastic packaging such as tubs, pots and trays.

Ludgate Investments (AIM: LEF.L) is a publicly-listed specialist investor focussing on resource efficiency that

was founded in 2001. Ludgate’s total invesment in ECO Plastics now amounts to just under £6mn. Having

listed on the AIM market in August 2007, Ludgate’s portfolio of 13 companies is currently valued at about

£42mn.

Switzerland-based SAM Private Equity, which is owned by Rabobank, is a cleantech specialist. Founded in

1995, the firm has been owned by Dutch asset management firm Robeco since 2007. The firm does not

make primary investments but invests in funds or co-invests alongside other private equity managers.

Unusually the firm also makes secondary fund investments, buying out portfolios from other firms.

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2.1 - M&A Activity Index

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

100

200

300

400

500

600

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

De

al V

alu

e p

er

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nth

(€m

n)

# o

f De

als

pe

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on

th

Disclosed Global & European TMT M&A Transactions

European Deals 2011 (€mn) European Deals 2012 (€mn)

Global Deals 2011 (€mn) Global Deals 2012 (€mn)

# of Global Deals 2011 # of Global Deals 2012

Source: Capital IQ; Go4Venture AnalysisSource: Capital IQ; Go4Venture AnalysisSource: Capital IQ; Go4Venture AnalysisSource: Capital IQ; Go4Venture Analysis

0

500

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2,000

2,500

3,000

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0

2

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(€m

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Disclosed European VC & PE-Backed TMT M&A Transactions

Value of Deals 2011 (€mn)

Value of Deals 2012 (€mn)

# of Deals 2011

# of Deals 2012

Source: Capital IQ, The 451 Group, VentureSource (including transaction value estimates); Go4Venture Analysis(1) Includes NDS acquisition by Cisco Systems for €3.8bn

(2) Excludes Skype acquisition by Microsoft, but includes Landis+Gyr acquisition by Toshiba for €1.8bn(3) Includes Elster acquisition by Melrose for €2.3bn

(2)

>£30mn / €35mn / $50mn

(1) (3)

Disclosed European VC & PE-Backed TMT M&A Transactions (2012)

> £30mn / €35mn / $50mn

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly Number # 3 2 3 2 4 3 5 6 3 3 4 1

Value €mn 159 1,117 4,459 398 372 2,553 1,412 511 895 319 1,270 479

Median €mn 54 558 623 199 89 210 150 65 322 69 263 479

Cum. Number # 3 5 8 10 14 17 22 28 31 34 38 39

Value €mn 159 1,275 5,734 6,133 6,505 9,058 10,469 10,980 11,875 12,194 13,464 13,943

Median €mn 54 60 205 199 135 153 152 127 121 118 105 104

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2.2 - Top 5 Global TMT M&A Transactions Summary Ranked by Price (€mn) in descending order (includes announced and/or completed deals)

Target & Acquirer Target Sector

Price (€mn)

Rev. (€mn) P/R Noteworthy Sellers

1 Eloqua (US NASDAQ:ELOQ) www.eloqua.com Oracle (US NASDAQ:ORCL) www.oracle.com

Application Software

730 69 10.6x Bessemer, Bay, JMI Equity.

Oracle, a diversified provider of enterprise software and IT hardware, will acquire Eloqua, a provider of business-to-business (B2B) marketing automation Software as a Service (SaaS). Founded in 1999, Eloqua was an early player in marketing automation and a pioneer of delivering cloud software. It has grown organically through its history to become the world's largest marketing automation software provider, with 70,000 users. Eloqua's SaaS product has functionalities that allow marketers to develop and promote brands, improve the discovery of their company, optimise click-through rates on websites and leverage social media for marketing purposes. The acquisition of Eloqua will strengthen Oracle's position in the marketing automation market, expected to grow at 8.2% annually through to 2015. Oracle is already active in this space, having acquired the intellectual property assets of Market2Lead, another early marketing automation software provider, in May 2010. Furthermore, it seeks to integrate several adjacent products into a unified SaaS offering; Eloqua, together with Vitrue, the social marketing SaaS company acquired for €241mn in May 2012, will form the basis of Oracle's Customer Experience Cloud, a serious competitor to Salesforce.com's similar offering. The last marketing software deal covered in the HTI was Teradata's €117mn acquisition of eCircle in the May 2012 issue. The marketing software market is undergoing significant growth and transformation with both major players consolidating their positions (as evidenced by Salesforce.com's acquisition of Radian6 for €241mn in March 2011, Oracle's acquisition of Vitrue and Google's acquisition of Wildfire in July 2012) and new entrants coming to market (as evidenced by startups such as Conversocial, Awerness and Attensity). 2 TNS (US NYSE:TNS)

www.tnsi.com Siris Capital (US) www.siriscapital.com

Communication Services

671 422 1.6x -

Siris Capital, a US private equity firm, will take private TNS, a provider of transaction network services. Launched in 1990, TNS's core business is the provision of transaction, trading and telecoms services based on a global backbone network, an alternative secure network that carries TNS's clients' data. TNS serves customers in over 60 countries. Having raised €67mn in a March 2004 IPO, TNS has increased revenues by over 12% per annum since then. Since going public, TNS has made 11 acquisitions, the two largest of which were the Communications Services group of VeriSign for €183.3mn in March 2009 and Cequint, a value-added technology provider to mobile network operators, for €87.7mn in September 2010, both aimed at building out its telecoms business. TNS had previously been the subject of an attempted management buyout backed by Parthenon Capital in 2006, but the proposed deal was rejected by shareholders. Siris Capital was founded in 2011 by private equity industry veterans Frank Baker, Peter Berger and Jeffrey Hendren when they spun-out of Steve Cohen's SAC Capital Advisors. TNS is the second acquisition Siris has made in the telecommunications space, following the acquisition of a majority stake in communications equipment provider Tekelec. 3 Intermec (US NYSE:IN)

www.intermec.com Honeywell (US NYSE:HON) www.honeywell.com

Supply Chain Optimisation

528 618 0.9x -

Honeywell, an aerospace, automation, logistics, materials and transport conglomerate, will acquire Intermec, a provider of automated data capture and management systems. Intermec provides barcode scanners, printers, Radio Frequency ID (RFID) systems, rugged mobile computers and supply chain optimisation software. Intermec's hardware products are used in logistics and manufacturing for the management of production and transit information; barcode and RFID readers allow customers to centralise information on, and track products and equipment as they progress along the supply chain. Intermec's software allows for efficient analytics of supply chain data. Intermec also provides many technologies as white-label devices for integration by original equipment manufacturers (OEM)'s. Founded in 1966, Intermec, has faced difficult times since the global financial crisis, failing to return revenues to pre-crisis levels and reporting a net loss since 2009. Honeywell, itself expecting reduced profitability in 2013, has stated that the acquisition of Intermec will strengthen its offering in rugged computing and voice recognition technologies, a strategic move reflecting the shift in defence expenditure away from aerospace and armoured systems toward man-portable field technology. The deal also brings Honeywell into the new markets of RFID, voice and data management, part of the consolidating Automatic Identification and Data Capture (AIDC) industry (consider Motorola's acquisition of Intermec competitor Psion for €159.5mn in July 2012).

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Target & Acquirer Target Sector

Price (€mn)

Rev. (€mn) P/R Noteworthy Sellers

4 Trivago (Germany) www.trivago.com Expedia (US NASDAQ:EXPE) www.expedia.com

Internet Content & Commerce

479 100 4.8x Insight Venture Partners, Howzat Media, European Founders Fund, Team Europe Ventures.

Expedia, a diversified online travel company, will acquire 62% of Trivago, a hotel booking search provider. Trivago provides an engine that searches multiple hotel booking sites, aggregates the data and presents the consumer with the lowest price for rooms that meet their requirements. Trivago generates revenue from the partnered hotel booking websites when consumers click through to a booking website. Trivago was founded by two ex-entrepreneurs and an investment banker in Dusseldorf, with its website going live in 2005. Between 2008-2012, Trivago has doubled revenues annually and now operates search engines in 27 countries. The acquisition of Trivago can be seen as strengthening both Expedia's European and metasearch activity, especially in light of competitor Priceline's €1.4bn acquisition of Kayak, which was highlighted in the November 2012 HTI. Trivago will continue to operate out of Dusseldorf and be managed by its founders, who own the remaining stock. 5 Peer 1 Hosting (Canada TSX:PIX)

www.peer1.com Cogeco (Canada TSX:CCA) www.cogeco.ca

IT Infrastructure 462 106 4.4x Clairvest Group, Gibralt Capital, TCIB.

Cogeco, provider of a high-speed fibre optics network, will acquire Peer 1 Hosting, a provider of cloud hosting and colocation services. Peer 1 provides a variety of cloud hosting solutions, including public cloud hosting and hybrid cloud hosting, with its 19 data centres in Europe and North America being connected by a proprietary fibre-optic network. Peer 1 also offers colocation services to its customers, housing their servers in Peer 1's facilities while providing power, connectivity and security. Peer 1 was founded in 1999 with a focus on serving small and medium business customers, most notably hosting YouTube before its acquisition by Google. Between 2001-2012, Peer 1 made five acquisitions, expanding into the US by acquiring Texas-based competitor ServerBeach for €6.1mn in October 2004 and into the UK by acquiring London-based competitor NetBenefit for €30.9mn in June 2012. Peer 1 is Cogeco's second acquisition of 2012, following its July acquisition of Atlantic Broadband for €1.6bn. The acquisition of Peer 1 is expected to strengthen Cogeco's colocation offering, as well as providing several opportunities to cross-sell Peer 1's other offerings. There has been a recent trend of telecoms and cable companies acquiring cloud hosting infrastructure, as telcos seek to expand their traditional service offering, for example CenturyLink's acquisition of Savvis in April 2011 for €2.1bn and Time Warner's acquisition of NaviSite in February 2011 for €240.7mn. We have also seen consolidation of cloud hosting providers, for example the acquisition of Star by Claranet as profiled in the November 2011 HTI.

Source: Capital IQ, The 451 Group; Go4Venture Analysis

Key Bold indicates name of Target Italic indicates name of Acquirer P/R – Price / Last 12 Months Revenues

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2.3 - Headline European VC & PE-Backed M&A Transactions

Where transaction value is available (>£30mn / €35mn / $50mn), includes announced and/or completed deals

# Target & Acquirer Target Sector

Price (€mn)

LTM Rev.

(€mn) P/R Funding

(€mn) P/F Noteworthy Sellers

1 Trivago (Germany) www.trivago.com Expedia (US NASDAQ:EXPE) www.expedia.com

Internet Content & Commerce

479 100 4.8x 45* 10.6x Insight Venture Partners, Howzat Media, European Founders Fund, Team Europe Ventures.

* Estimated funding

Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Analysis

Key Bold indicates name of Target P/R – Price / Last 12 Months Revenues Italic indicates name of Acquirer P/F – Price / Total Funding P/F>1x indicates an investment where all investors have made a positive return on their investment. P/F<1x indicates poor returns for some, but early or late investor entrants may still show a positive return on their investment.

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# Target & Acquirer Target Sector

Price (€mn)

LTM Rev.

(€mn) P/R Funding

(€mn) P/F Noteworthy Sellers

1 Trivago (Germany) www.trivago.com Expedia (US NASDAQ:EXPE) www.expedia.com

Internet Content & Commerce

479 100 4.8x 45* 10.6x Insight Venture Partners, Howzat Media, European Founders Fund, Team Europe Ventures.

* Estimated funding Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Analysis

Trivago (Germany), provider of a hotel booking search engine, will be majority (62%) acquired by Expedia

(US NASDAQ:EXPE) for €479mn in cash and stock. The primary sellers include the venture capital firms

Insight Venture Partners, Howzat Media, European Founders Fund and Team Europe Ventures by

reverse chronological order of known first investment.

Germany-based Trivago offers a search engine that indexes and aggregates

hotel price data from a range of hotel booking sites. The company’s website

allows users to screen for the lowest priced rooms meeting their requirements,

without checking individual hotel booking websites. Trivago partners with the

booking websites it indexes, and generates revenue when users click through

from its search results. Trivago was founded in Dusseldorf by the two ex-

entrepreneurs behind amiro.de (a consumer web portal that merged with Ciao in February 2000) and an

investment banker, its site going live in 2005. Since its inception it has expereienced strong organic growth

and currently has hotel booking search engines operating in 27 countries both within and outside of Europe,

doubling its revenue annualy since 2008, to approximately €100mn in 2012. All four sellers invested directly

in Trivago over several rounds. In April 2011, Insight Venture Partners acquired 25% of the company in a

€40mn Round D. Howzat Media acquired its stake in January 2008, when it invested €0.8mn in Trivago in its

B Round and European Founders Fund acquired 10% of the company in its October 2007 A Round for an

undisclosed sum. Team Europe Ventures became involved through an undisclosed investment.

Founded in 1996 as a division of Microsoft and listing on the NASDAQ in

November 1999, Expedia is an international online travel agency. It owns over

100 brands, the most visible of which is Expedia.com, but also including

Hotels.com, Egencia and eLong. The company operates in two segments:

Egencia / Business Travel and Leisure (9% and 91% of 2011 revenues,

respectively). Expedia.com provides full travel agency services, including hotel,

flight, rental car and tour booking, as well as travel insurance. Expedia has websites in 60 countries across

six continents.

Trivago is expected to strengthen Expedia’s position in European hotel booking markets, where it faces

competition from US competitor Priceline (which had acquired Kayak in the US as featured in our November

2012 HTI and whose booking.com has 55% market share of hotel bookings in Europe), as well as

Tripadvisor which indexes both Expedia’s and Priceline’s sites. Expedia stands to benefit from Trivago’s

strong search technology and established partner network. The Trivago brand will continue to operate out of

its Dusseldorf headquarters, managed by its founders who own the remaining 38% of the company.

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Insight Venture Partners (€1.1bn (2010); AUM €2.4bn), is a global private equity and venture capital firm

covering venture, growth capital and buyout deals and specialising in the technology, media,

telecommunications and medical technology sectors. Investment sizes range between €2-150mn. Founded

in 1995, Insight is headquartered in New York. Insight featured in our September 2012 HTI for leading an

investment in Mimecast, in our June 2012 HTI for co-leading an investment in B2B-Center and in our March

2012 HTI for its attempted acquisition of Quest Software (ultimately acquired by Dell). Prior to that it featured

in our April 2011 and March 2011 issues with investments in collective buying site Groupalia and social

shopping site Privalia, respectively.

Howzat Media (€7.6mn (2007)), is a British venture capital firm founded in 2005 by the former management

of Cheapflights, a travel search website, as well as the founding team of Stellant Partners, a management

consultancy firm. It specialises in seed and venture capital investments, as well as incubating very early-

stage companies. Howzat aims to invest globally in online media, information technology and travel-related

companies.

European Founders Fund (AUM €75mn), is a German venture capital firm founded in 2007 set up by the

Samwer brothers, founders of the incubator Rocket Internet, previously founders of alando (the German

online auction room sold to eBay for €52.0mn in June 1999), and well-known European copycat investors. It

invests in China, Europe and the US, focusing on companies with internet, software and wireless

technologies. Investments for seed stage companies range between €100k-1mn, €1-3mn for venture stage

companies and €3-8mn for companies in the growth stage. The firm featured in our September 2012 HTI for

its €322mn sale of Jobs.ch to Ringier and Tamedia, as well as in our April 2011 and March 2010 issues for

its investments in Borro.

Team Europe Ventures (€6mn (2007)), is the venture capital arm of German incubator Team Europe. It

focuses on seed and venture capital deals. The firm only invests in internet-related companies, with a

geographical focus on German-speaking countries and wider Europe. Investment sizes range between €25-

500k. Founded in 2008, the firm is headquartered in Berlin. Team Europe was featured in our September

2012 HTI for its connection to Brille24, in our August 2012 HTI for its investment in Delivery Hero and in our

October 2011 HTI for its connection to madvertise.

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List of Acronyms

Financial Terms:

AUM: Assets Under Management

FYE: Fiscal Year-End

LTM: Last 12 months

mn: million

P/E: Price to Earnings ratio

P/F: Price to Funding ratio

PIPE: Private Investment in Public Equity

Business Terms:

AIDC: Automatic Identification and Data Capture

B2B: Business-to-Business

BI: Business Intelligence

BPM: Business Process Management

DMAT: Dynamic Multi-Analyte Technology

OEM: Original Equipment Manufacturer

PET: Polyethylene Teraphthalate

RFID: Radio-Frequency Identification

SaaS: Software as a Service

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Disclaimer

This report has been prepared and issued by Go4Venture Advisers LLP who are authorised and regulated by the Financial Services Authority.

All information used in the publication of this report, has been compiled from publicly available sources that are believed to be reliable, however no representation, warranty, or undertaking, express or limited is given as to the accuracy or completeness of the information or opinions contained in this report. Opinions contained in this report represent those of Go4Venture Advisers LLP at the time of publication. This research is non-objective. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment. Furthermore, as the information contained in this document is strictly confidential it may not be reproduced or further distributed.

The value of investments and any income generated may go down as well as up. Past performance is not necessarily a guide to future performance. Investors may not get back the amount invested. This publication is not intended to be relied upon in making any specific investment or other decisions. Appropriate independent advice should be obtained before making any such decision.

This report has been compiled by Jean-Michel Deligny, Managing Director – for and on behalf of Go4Venture.

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