Post on 28-Nov-2014
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Venture Capital in Europe & Israel Venture Investment Data: June to September 2014
Prepared by Gil Dibner @gdibner blog: yankeesabralimey View from Mont Blanc, highest point in Europe
The data
• In June, I decided I wasn’t happy with available data sources on VC rounds in Europe & Israel, and that I’d need to build my own
• 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 probably grossly under-reported in this approach
@gdibner blog: yankeesabralimey
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The pace of venture investment • During the four months
ended September, 2014, there were 157 reported venture investments across Europe & Israel
• A total of $2.106B was invested in Europe & Israel during this period, an average of $526M per month
• Average pace seems to be around 40 investments per month
• There was a summer slowdown in August in the number of transactions
449 478
565 614
44 41
32
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VC Investments in Europe & Israel, June-September 2014
Invested amount (US $M) Number of investments @gdibner
blog: yankeesabralimey 3
70 97 57 65
108 103
60
168
262 171 342
26
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104
350
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Pace of VC Investment in Europe and Israel, Jun-Sep 2014
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)
Three mega-rounds skew the investment totals • This analysis breaks down the
investments into brackets by size:
• Seed (less than $2M) • Early venture ($2-8M) • Venture ($8-20M) • Growth ($20-100M) • Mega ($100M+)
• Three mega-rounds took place in Europe in the past four months:
• French ride-sharing marketplace BlaBlaCar raised $100M
• Spanish voting software company Scytl raised $104M
• German food delivery company DeliveryHero raised $350M
• Adjusting for mega-rounds, investment volume was lowest in September
@gdibner blog: yankeesabralimey 4
Number of investments, by bracket • Based on the way I’m
gathering data, seed deals are likely to be the under-reported
• On this slide, Europe’s summer holiday effect comes into sharpest relief
• Angel and venture investments, which take the least time to close, were at their lowest in August
• Growth investments, which take longer to close, were at their lowest in September – probably reflecting the fact that deal teams were on holiday in August
9 6
3 4
17 21
14 17
10 8
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8 5
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Number of investments in Europe and Israel by bracket, Jun-Sep 2014
Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2) @gdibner blog: yankeesabralimey 5
Average round size, by bracket • Within each bracket, round
sizes have remained relatively stable
4.1 4.6 4.1 3.8
10.8 12.9 11.9 10.5
32.7 34.2
48.9
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Average investment size in Europe and Israel by bracket, Jun-Sep 2014
Seed (<2) Early Venture (2-8) Venture (8-20) Growth (20-100) @gdibner
blog: yankeesabralimey 6
Total venture investment by country, June-September 2014
• Germany led Europe with the total amount of venture dollars invested. This figure includes DeliveryHero
• This analysis does not include Russia, Turkey, Ukraine, or other FSU states
US $M
Germany, 642.4
UK, 461.1
Israel, 443.3
Spain, 160.9 France, 124.8
Sweden, 96.4
Finland, 45.8
Ireland, 42.0
Norway, 30.0
Netherlands, 29.6
Denmark, 9.3
Czech, 7.2
Iceland, 6.0
Poland, 3.0
Switzerland, 2.0
Portugal, 1.5
Italy, 0.5
@gdibner blog: yankeesabralimey 7
Average venture round sizes, by country • French companies seem to
raise the largest early venture rounds, but the smallest venture rounds
• DACH venture rounds are, on average, 50% larger than French venture rounds
Benelux, 2.5
Benelux, 12.0
DACH, 4.2
DACH, 12.7
France, 4.9
France, 8.2 Iberia, 4.7
Iberia, 9.0
Israel, 4.1
Israel, 11.9
Nordic, 4.4
Nordic, 11.0
UK & Ireland, 4.1
UK & Ireland, 10.3
0.0
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Early Venture (2-8) Venture (8-20)
Amou
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Average investment size in Europe and Israel by bracket, Jun-Sep 2014
Benelux DACH France Iberia Israel Nordic UK & Ireland
@gdibner blog: yankeesabralimey 8
Total venture investment by region, June-September 2014
• By region, DACH leads in terms of total venture investment dollars, driven by DeliveryHero
• When the data is grouped by region, the significance of the Nordic region becomes apparent
• Note that Israel and the Nordics rank ahead of Iberia and France, despite the existence of one mega-round in both Iberia and France
DACH, 644.4
UK & Ireland, 503.1 Israel, 443.3
Nordic, 187.5
Iberia, 162.4
France, 124.8
Benelux, 29.6
East. Eur., 10.2 South. Eur., 0.5
@gdibner blog: yankeesabralimey 9
Total venture investment by region, June-September 2014 (excluding mega-rounds) • When the data is presented
excluding the three mega-rounds, UK & Ireland rises to the top of the regional ranking
• Israel is in second place, nearly equaling the UK & Ireland in total venture capital invested
• DACH and the Nordics are in the third and fourth slots
• Even with Scytl’s mega-round removed from the analysis, Iberia is in fifth place, with nearly double the invested capital of both Benelux and France
UK & Ireland, 503.1
Israel, 443.3
DACH, 294.4
Nordic, 187.5
Iberia, 58.4
Benelux, 29.6
France, 24.8
East. Eur., 10.2 South. Eur., 0.5
@gdibner blog: yankeesabralimey 10
Rounds by bracket & country • UK & Ireland was the most
active region in terms of the number of deals
• Impressively, Israel had more venture rounds than the UK, and almost as many growth rounds
• The Nordic region saw more investment rounds than DACH, driven primarily by much higher numbers of early venture and venture rounds
11 9 4 7 5 2 1 1 1
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Israel Nordic DACH France Iberia Benelux East. Eur. South. Eur.
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Number of investments in Europe and Israel by bracket, Jun-Sep 2014
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2) @gdibner
blog: yankeesabralimey 11
Investment by region, by bracket • In terms of dollars invested,
UK & Ireland and Israel were by far the two biggest draws for venture capital, each with around $150M invested per month
• The DACH and Nordic regions formed a clear second tier, each with around $90M invested per month
• It’s interesting to note that Israel skews significantly more early-stage than UK & Ireland
• Similarly, the Nordics skew significantly more early-stage than DACH
127 98 25 71
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124 190
64
99
48
346 283
250 171
30
350
104 100
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UK & Ireland
Israel DACH Nordic Iberia Benelux France East. Eur. South. Eur.
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Investment in Europe and Israel by bracket by country, Jun-Sep 2014 (ranked excluding mega-rounds)
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2) @gdibner
blog: yankeesabralimey 12
Participation rate of US VC firms, by bracket • US VC firms are active in the
European and Israeli VC markets
• US VC firms participated in 20% of the rounds that took place in the four months ended September 2014
• US VCs participated in only 10% of seed and early venture rounds, and in less than one quarter of venture rounds
• US VCs get far more active in the later stages: over half of growth rounds, and two of three mega-rounds during this period had US VC participation
90% 90% 78%
45% 33%
10% 10% 22%
55% 67%
0%
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Seed (<2) Early Venture (2-8) Venture (8-20) Growth (20-100) Mega (>100)
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Did US VC firms participate in European & Israeli VC rounds?
Yes No @gdibner blog: yankeesabralimey 13
Participation of US VC firms by country • US VCs firms were active in
10 different European countries
• US VC firms were most active in Israel, where they participated in 19 investment round, more than twice as many as either Germany or the UK
19
7 6 3 2 2
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In which countries are US VCs most active? June to September, 2014
No US VC involved US VC involved @gdibner blog: yankeesabralimey 14
US VC firms follow Tier 1 firms • US VC firms are three times
more likely to participate in rounds alongside Tier 1 investors
88%
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12%
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No tier 1 fund involved Tier 1 fund involved
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US VC involved No US VC involved @gdibner blog: yankeesabralimey 15
A 3-dimensional approach to sector mapping Dimension Categories Explanation/Example
1. Target market Consumer, SMB, Enterprise, Government, Telecom, OEM
What sort of customer does the company target?
2. Vertical market
Adtech, Communications, Data, Development, Durables, Education, Electronics, Employment, Energy, Fashion, Financial, Food, Gaming, Health, HMI, Industrial, Infrastructure, Lifestyle, Logistics, Marketing, Media, Productivity, Real Estate, Security, Sports, Storage, Transportation, Travel, Water
What type of problem does the company solve?
3. Business model Commerce, Components, Content, Marketplace, SaaS, Semiconductors, Services, Software, Systems,
How does the company make money? What are customers paying for?
Combined segment descriptor Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers 16
What target markets are attracting the most VC investment in Europe & Israel? • Consumer-oriented
companies accounted for more than half of the VC investment in Europe & Israel
• Enterprise-oriented companies accounted for roughly one third of the VC investment in Europe & Israel
Consumer, 1,140, 54%
Enterprise, 641, 31% Government,
113, 5%
OEM, 89, 4%
SMB, 107, 5%
Telecom, 17, 1%
European & Israeli venture financing by target market June to September, 2014 (in US $M)
@gdibner blog: yankeesabralimey 17
Breakdown by region & target market • VC investments in DACH
very dominated by consumer-oriented companies
• The Israeli VC landscape is dominated by non-consumer companies
• UK & Ireland and Nordic region very diversified
650
242
99 148
49 123
26
206 430
106
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DACH UK & Ireland
Israel Nordic Iberia France Benelux East. Eur. South. Eur.
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Investment in Europe and Israel by target market by country June to September 2014 (US $M)
OEM Government Telecom SMB Enterprise Consumer @gdibner
blog: yankeesabralimey 18
Distribution of investment rounds by country • Across Europe & Israel, 43%
of VC investment rounds were in consumer companies
• More than half the financing rounds in DACH & Iberia were in consumer companies
• Enterprise accounted for nearly two thirds of investments in Israel, and over one third of investments across most other regions
31%
39%
47%
50%
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55%
70%
100%
100%
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42%
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33%
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19%
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8%
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
East. Eur.
Israel
UK & Ireland
Nordic
Benelux
France
Iberia
DACH
South. Eur.
Investment in Europe and Israel by target market by country June to September 2014 (Number of investments)
Consumer Enterprise SMB Telecom Government OEM @gdibner
blog: yankeesabralimey 19
Investments by target market by stage • The majority of growth and
venture rounds were in consumer-oriented companies
• While nearly two-thirds of (reported) seed rounds went into consumer-oriented companies, only one third of early venture rounds were in consumer-oriented companies. This portends a disproportionate significant “Series A crunch” in consumer
• Over half of early venture rounds in Europe were in enterprise-oriented companies
• These findings are made more significant by the exclusion of Israel, which has long had an enterprise focus. The point here is that European venture is likely to become more diversified away from consumer
63%
39%
52%
57%
22%
51%
36%
19%
9%
14%
7%
6%
10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Seed (<2)
Early Venture (2-8)
Venture (8-20)
Growth (20-100)
Investment in Europe (excluding Israel) by target market by stage bracket June to September 2014 (Number of investments)
Consumer Enterprise SMB Telecom Government OEM @gdibner
blog: yankeesabralimey 20
Will the DACH region stay focused on the consumer? • DACH is clearly a region with
a record of strong consumer-oriented investment
• Drilling into the data, however, we see that while all of the venture rounds and almost all the growth rounds were in consumer-oriented companies, at the early venture stage, the picture changes
• Half of early venture investments in DACH were in enterprise-oriented companies
• It’s too early to tell if this will turn into a long-term trend
• DACH seed-stage investors do still seem to prefer consumer-oriented startups
71%
33%
100%
86%
14%
50%
14%
17%
14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Seed (<2)
Early Venture (2-8)
Venture (8-20)
Growth (20-100)
Investment in DACH by target market by stage bracket June to September 2014 (Number of investments)
Consumer Enterprise Government OEM @gdibner blog: yankeesabralimey 21
Investment rounds by vertical • Financial (“fintech”)
startups drove the highest number of VC rounds
• Deep diversity across Europe
Financial, 19
Infrastructure, 13
Electronics, 13 Marketing, 8
Data, 8
Adtech, 8
Food, 8
Security, 7
Media, 7
Lifestyle, 6
Development, 5
Communications, 5 Gaming, 5
European & Israeli venture financing by target market June to September, 2014 (number of investments)
@gdibner blog: yankeesabralimey 22
Which verticals for which markets? • SMB-focused companies
were concentrated in only two verticals: financial and marketing
• Most other verticals saw investment into both consumer- and enterprise-oriented businesses
Industrial Children
Sports Water
Education Storage
Transportation Energy
Durables HMI
Logistics Fashion
Real Estate Productivity
Travel Health
Employment Development
Communications Gaming Lifestyle
Media Security
Marketing Data Food
Adtech Infrastructure
Electronics Financial
0 2 4 6 8 10 12 14 16 18 20
European & Israeli venture financing by target market June to September, 2014 (number of investments)
Consumer
Enterprise
Government
OEM
SMB
Telecom
@gdibner blog: yankeesabralimey 23
What business models are attracting the most VC investment in Europe & Israel? • In terms of dollars invested,
commerce is the clear leader, with over one-quarter of the invested capital
• Software (21%) and SaaS (13%) are significant, as one would expect
• Marketplace business models take third place, with 19% of invested capital
Commerce, 574, 27% Software, 444, 21%
Marketplace, 403, 19%
SaaS, 262, 13%
Services, 230, 11%
Systems, 135, 7%
Semiconductors, 29, 1%
Components, 23, 1%
Media, 5, 0%
European & Israeli venture financing by target market June to September, 2014 (in US $M)
@gdibner blog: yankeesabralimey 24
US VC interest is concentrated in specific business models • US VC firms investing in
Europe & Israel focused mainly on SaaS, software, and services
• Media, components, and semiconductors attracted little interest from local VCs, and no interest at all from US VCs
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Semiconductors
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Commerce
Marketplace
Services
Software
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VC Investments in Europe & Israel June to September, 2014
US VC involved No US VC involved @gdibner blog: yankeesabralimey 25
The most popular segments in Europe • The 153 investments in
Europe & Israel fell into 87 distinct segments
• Of these, 70 fell into 22 segments of 3 or more companies
• The top four segments, each with 6 investments, were:
• Consumer food commerce • Consumer financial services • Enterprise security software • Enterprise infrastructure
software
0 1 2 3 4 5 6 7
Enterprise Adtech Marketplace
OEM Electronics Systems
Consumer Electronics Systems
Consumer Lifestyle Marketplace
Enterprise Development SaaS
Consumer Real Estate Marketplace
Enterprise Financial SaaS
Consumer Travel Commerce
Consumer Media Services
Enterprise Infrastructure SaaS
Enterprise Financial Software
Consumer Gaming Software
OEM Electronics Components
Enterprise Data SaaS
Enterprise Marketing SaaS
Enterprise Security Software
Consumer Food Commerce
Enterprise Infrastructure Software
Consumer Financial Services
Investment in Europe and Israel by segment by country June to September 2014 (segments with 3 or more investments)
UK & Ireland Israel DACH Nordic France Iberia Benelux South. Eur. East. Eur. @gdibner blog: yankeesabralimey 26
The most popular segments in Europe & Israel for US VC firms • Across Europe & Israel, US
VC firms invested in 15 enterprise companies, 12 consumer companies, and 1 government-oriented company
• All four consumer commerce companies that attracted investment from US VCs were from the DACH region
0 1 2 3 4 5 6 7 8
Software
Software
Systems
Marketplace
Services
Commerce
Marketplace
Services
Software
SaaS
Gov
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Ente
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US VC Investments in Europe and Israel by segment by country June to September 2014
Israel Germany UK Spain France Ireland Netherlands Norway Portugal Sweden @gdibner blog: yankeesabralimey 27
Average investment size by target market • Growth rounds involving US
firms are significantly larger than rounds that do not
• This effect is especially pronounced for enterprise companies
• Companies targeting SMBs raise much larger growth rounds than companies targeting consumer or the enterprise
• At the early venture and venture stages, the involvement of US firms does not imply a larger round
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OEM
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Cons
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Early Venture (2-8) Venture (8-20) Growth (20-100)
Average round size, US $M
No US VC involved US VC involved @gdibner blog: yankeesabralimey 28
Average investment size by business model • Growth rounds involving US
VC firms were larger across the board
• This was especially true for systems companies
• Commerce companies were the exception: commerce companies with US backers tended to raise smaller rounds
5 4 5 4 4 3
4 4 4
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Early Venture (2-8) Venture (8-20) Growth (20-100)
Average round size, US $M
No US VC involved US VC involved @gdibner blog: yankeesabralimey 29
Focus on fintech: investment volume • $364M was invested across
Europe & Israel into 24 fintech companies
• The UK was far and away the leader in terms of dollars invested in fintech startups
• Other regions, however, are attracting similar levels of investment in early venture and venture stages
21 4 7 4 5
10
14 25 22
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UK Sweden Germany Israel Spain
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Fintech VC investment in Europe and Israel by bracket by region, Jun-Sep 2014
Growth (20-100) Venture (8-20) Early Venture (2-8) @gdibner blog: yankeesabralimey 30
Focus on fintech: target markets • UK & Ireland lead in terms
of the number of fintech companies raising finance
• Fintech companies in the Nordics and the UK & Ireland are diversified across Enterprise, Consumer, and SMB
• Fintech financing rounds in DACH and Iberia are consumer-heavy
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UK Germany Sweden Israel Spain Denmark
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Fintech VC investment in Europe and Israel by bracket by region, Jun-Sep 2014
SMB Enterprise Consumer @gdibner blog: yankeesabralimey 31
Focus on enterprise SaaS: investment volume • 40 enterprise SaaS
companies raised $355M
• The biggest investment volume was in the UK, followed by Israel
• Growth investments were limited to the UK, Israel, and Norway
28 29
5 10 10 5 6 4
25
43
14 8 10
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UK Israel Norway Sweden France Ireland Spain Germany Finland Denmark
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Enterprise SaaS VC investment in Europe and Israel by bracket by country June to September 2014
Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2) @gdibner blog: yankeesabralimey 32
Focus on enterprise SaaS: verticals • Enterprise Marketing SaaS
was the most common segment, with nine companies raising VC money
• Six companies in the Enterprise Data SaaS raised VC financing, suggesting that the big data trend is alive and well in Europe & Israel
0 2 4 6 8 10
Health
Media
Development
Adtech
Financial
Employment
Productivity
Infrastructure
Data
Marketing
Enterprise SaaS VC investment in Europe and Israel by vertical by country, June to September 2014 (number of investments)
UK Israel France Spain Sweden Germany Finland Norway Denmark Ireland @gdibner
blog: yankeesabralimey 33
Focus on consumer electronics systems • Despite the widely expected
boom in consumer hardware startups, only $40M was invested across Europe into this space
• Five companies in the space raised money in the UK, Israel, and Sweden
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8.0
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Amou
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Consumer electonics VC investment in Europe and Israel by bracket by region, Jun-Sep 2014
Early Venture Venture @gdibner blog: yankeesabralimey 34
About the author
Partner at based in Previously helped run European seed program for Worked seven years as a VC in Investments include If you found this useful, I hope you’ll subscribe to my blog.
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