PARIS LONDON BERLIN European Innovation Financing H1 2015 Update About Clipperton Finance Clipperton is a leading European corporate finance boutique exclusively dedicated to the High Tech and Media industries. Clipperton advises high growth companies on financial transactions, fundraisings, or Mergers and Acquisitions. With teams based in London, Berlin and Paris and an international reach, Clipperton is a recognized leader in the sector. CONTRIBUTORS Martin Vielle Associate Thibaut Revel Partner In collaboration with About Digimind and WhoGotFunded.com Digimind is a SaaS intelligence software company based in Paris, Boston and Singapore, providing advanced information management platforms and technologies that perform massive data collection, automatic intelligence extraction and visualisation. Using its unique web mining expertise, Digimind developed WhoGotFunded.com, the world's most comprehensive funding database, discovering over 100 fresh funding deals every day in real time all across the world. Antoine Ganancia Senior Associate
Transcript
PARIS LONDONBERLIN
European Innovation Financing H1 2015 Update
About Clipperton Finance
Clipperton is a leading European corporate finance boutique exclusively dedicated to the High Tech and Media industries. Clipperton advises high growth companies on financial transactions, fundraisings, or Mergers and Acquisitions. With teams based in London, Berlin and Paris and an international reach, Clipperton is a recognized leader in the sector.
CONTRIBUTORS
Martin VielleAssociate
Thibaut RevelPartner
In collaboration with
About Digimind and WhoGotFunded.com
Digimind is a SaaS intelligence software company based in Paris, Boston and Singapore, providing advanced information management platforms and technologies that perform massive data collection, automatic intelligence extraction and visualisation. Using its unique web mining expertise, Digimind developed WhoGotFunded.com, the world's most comprehensive funding database, discovering over 100 fresh funding deals every day in real time all across the world.
Antoine GananciaSenior Associate
Clipperton European Innovation Financing Update - July 2015
The momentum of private funding for European innovative companies is reaching new highs. This traction is felt across the board, in different spaces of the tech industry from internet to software and biotech and in all major geographies. The acceleration of large funding rounds (north of $30m) we had highlighted in past newsletters is massive. In the digital space, despite a few high profile IPOs such as JustEat last year, private markets seem to have become the preferred funding route for companies looking for 50m$+. The recent Made.com transaction led by Partech Ventures or FanDuel’s $275m Series-E round led by KKR announced mid-July are good examples. This phenomenon of "private IPOs" has been widely commented in the US. This does not apply however to the biotech space where the IPO market remains robust.
With such unprecedented levels of funding pouring into the European tech ecosystem, is there a risk of irrational exuberance in terms of valuation? Seemingly not: on one side, an impressive new wave of super fast growing companies with real business models, new segments of investors moving to the tech space and successful companies deciding against or deferring their IPOs, and on the other, increasing competition between investors for the top deals driving higher multiples while large exits are not that common in Europe.
Do trees grow to heaven in 2015 in the tech space? Impressive growth of 85% yoy of investment value vs H1 2014!
Trends --> "(much) more of the same":
- more Consumer Internet
- more UK deals - but Germany and France also strong
- more large rounds
HEADLINES
2
Introduction................................................................p.2Innovation Financing Overview..............................p.3Geographical and Sectorial Views...........................p.4Top Deals by Geography..........................................p.5Top Deals by Sector...................................................p.6Methodology & Disclaimer......................................p.7
One key driver: money is coming increasingly from new pockets such as Russian funds (DST very active in 2015 in Europe), Middle East investors (e.g. Showroomprive secondary deal following Venteprivee last year), listed companies (the Rocket Internet phenomenom) and increased activity from US tech funds having established presence in London (TCV, Google Ventures)
DISTRIBUTION BY ROUND SIZE - VOLUMEH1 2014 - H2 2014 - H1 2015
European VCs increasingly investing in larger rounds with a 82% increase versus H1 2014
TOTAL AMOUNT INVESTED IN EUROPE H1 2013 to H1 2015
Clipperton European Innovation Financing Update - July 2015
Mega-rounds for Europe’s unicorns pushing Venture funding to a record-high $7B
• We tracked 541 venture financing deals in total in H1 2015, a solid 37% increase vs H1 2014
• Strong uptake in the number of large rounds (above $10m) with 135 deals across Europe (vs only 78 in the previous semester)
• The number of deals below the $10 million mark has been on par with what we observed in the previous semester with 406 transactions announced (same figure as H2 2014)
Driven by a strengthening fundraising environment across the globe, the venture ecosystem deployed significantly more capital to the European Innovation economy in H1 2015 than in the previous semester (70% increase). The European Innovation industry sets a new record, racking up $7.0 billion in total investments in a very active 6-months of deals.Despite signs of some parts of the market overheating, investors have renewed their confidence in Europe’s Unicorns (Delivery Hero, Funding Circle, Home24, Spotify, ...) that have taken advantage of the favorable funding environment by taking on more money to fuel their growth. In total, the Top 10 deals of H1 2015 account for a whopping $2.2B or exactly a third of total innovation-driven investments during that period (with a big assist from Delivery Hero’s monster $0.7B round that saw Rocket Internet acquire a 30% stake in the business).
OTHER COUNTRIES (Southern Europe, Ireland, Benelux, Eastern Europe)
Internet and New
Media 74%Hardware /
Telecom 7%Business Cloud
and Software 17%
(2) Includes the $526m investment in Spotify
Consumer
Electronics 2%
The increase in VC money spent in H1 2015 spreads over all sectors of innovation
• Strong increase in innovation financing driven by the UK, France and DACH: respectively +126%, +78% and +222% (+133% excluding Delivery Hero) in value vs. H1 2014
• +74% vs. H1 2014 in deal value in the UK at $1.8B
• A handful of British start-ups in the fintech space grabbed significant amount of money during the quarter, with landmark transactions including Funding Circle, Transferwise, Worldremit, Azimo and Currency Cloud
• Proven appetite for DACH foodtech start-ups in the wave of Rocket Internet: IPO candidate Delivery Hero grabbed $670m, Foodpanda closed a $110m round, and Hellofresh cashed-in $126m from Rocket Internet and US-based Insight Venture
• Mega-deals in the DACH region make it #1 investment area in value in H1 2015
• Solid H1 in France: + 130% and 60% in Q1 and Q2 respectively vs. the same periods last year. IoT Network operator Sigfox received $115m in Q1 from a couple of strategics. Other French businesses closed large funding rounds with US investors such as Believe Digital with TCV ($60m) or Advanced Accelerator Applications with Adage Management ($26m)
• France ranks #1 in deal volume with 159 transactions closed in H1 vs. 154 for the UK and 81 for DACH
• Number of deals in Spain & Portugal grew from 9 transactions in H1 last year to 20 deals. The $40m Series-B closed by local mobile marketplace Wallapop saw Insight Venture joining Accel on board with a $25m investment
• Besides Spotify’s mega-round aside, the Nordics decreased by 13% in value, with fewer large deals vs. H1 2014
• IT start-ups attracted 80% of total innovation financing in H1 2015, with $5.6B invested in the sector during the semester, (+95% vs. last year)
• Money invested in Internet and New Media businesses more than doubled vs. last year to $4.1B (up from $1.8B). Volume deals only grew by 37% which suggests larger transactions in the sector
• Almost $1B was invested into Business Cloud and Software start-ups, an increase of 20% vs. last year
• Rebound of the Consumer Electronics segment with 21 transactions announced and $96m invested during H1 2015. Two $20m+ transactions in France with Innov8 ($27m) and Devialet ($20m)
• Cleantech start-ups seem to have re-captured investor interest: north of $420m across 40 transactions to be compared with $156m and 20 transactions in H1 2014
• 82 Life Sciences transactions were closed over the period (+30%), with north of $1B invested in the sector (+30%)
5
FRANCE
TOP DEALS BY GEOGRAPHY - H1 2015
COMPANY AMOUNT INVESTORS
Google Ventures, MSD Capital
Showroomprivé.com $80m
Believe Digital $60m
Echosens $40m
Clipperton European Innovation Financing Update - July 2015
Stefnir, General Catalyst, The Wellcome Trust, Novator Partners
DACH
COMPANY AMOUNT INVESTORS
Delivery Hero $568m
Kreditech $200m
Home24 $132m
Hellofresh $126m
Nabriva Therapeutics $120m
OTHER COUNTRIES
COMPANY AMOUNT INVESTORS
Trustpilot (DK) $74m
Cortendo (SE) $60m
$36m Vivo Capital, Versant Ventures, OrbiMed,The Baupost Group
Rocket Internet, Insight Venture
Rocket Internet
Baillie Gifford, Rocket Internet
MOST ACTIVE FUNDS
After raising close to $1.5 billion upon IPO in October 2014, Rocket Internet was particularly active during the first half of 2015, with a strong appeal for foodtech businesses - Delivery Hero ($568m + $56m secondary deal), Hellofresh ($126m) or Foodpanda/Hellofood ($110m investment in March) - but not only as it participated in fundings for Home24 ($132m), Westwing ($30m), Helpling ($45m) or Borro ($20m). While ‘usual suspects’ Index Ventures and Accel Partners closed respectively 12 and 7 deals, one would notice the participation of Yuri Milner’s DST Global in two landmark fundraisings with European businesses: UK lending platform Funding Circle ($150m raised in April) and German used-car trader Auto1 Group. Also worth noticing is Goldman Sachs investing in a handful of European tech businesses including Foodpanda, Mister Spex, Windeln (pre-IPO) OneTwoTrip and Spotify.In France and Germany, public funds were quite active, with Bpifrance participating in 12 deals (including Sigfox - $115m, Actility - $25m or Augure - $15m) and High-tech Gründerfonds investing in 13 start-ups. Active French VCs include Alven Capital who invested in Drivy (follow-up), Dataiku, Algolia or Capitaine Train, Serena in Dataiku, Augure, Textmaster or Cheerz and Partech Ventures in Kantox, Teads, Alkemics, ISKN.
Clipperton European Innovation Financing Update - July 2015
Digital MusicThe much commented launch of AppleMusic in June following the acquisition of Beats last year seems to have kickstarted a global battle for leadership in the digital music area as standalone competitor Spotify announced it received half a billion dollar from investors including Goldman Sachs and TCV. At the same time, new players are emerging in the value chain offering right owners with solutions to manage, distribute and monetize their digital content. While Sony acquired the remaining stake in digital music distribution service provider The Orchard in March this year, there seems to be a growing interest from investors for this kind of asset. For instance, French digital media distributor and label service provider Believe Digital received $60 million from US growth equity fund TCV along with historical investors XAnge and Ventech. Present in 30 countries, the company provides content owners with a suite of services including music and video distribution (its MCNs* record over 3 billion views per month), digital marketing and promotion or content production & management. With the acquisition of TrueCore in April, Believe also assists artists and labels in monetizing their content more efficiently with royalty management and monitoring services. Also tackling the issue digital right management, London-based Kobalt Music closed a third round of financing of $60 million with Google Ventures joining Michael Dell’s MSD Capital, Spark Ventures and Balderton on board. Founded in 2000, the company leverages big-data technology to enable artists and labels track and collect royalties across the variety of digital music platforms. In late 2014, Kobalt Music acquired the American Mechanical Rights Agency (later renamed the American Music Rights Agency) and now stands as the second largest music publisher in the industry according to Billboard.
Mobile ClassifiedsOne of oldest sector of the digital economy, the online classifieds landscape is being shaken-up by the rise of mobile apps allowing shoppers to buy second-hand products directly from their smartphones. Frontrunner Wallapop, a Barcelona-based hyper-local mobile marketplace for second-hand products, received $40 million in funding from Insight Venture in May this year, following a $3 million Series-A with Accel in 2014. Another sign of the growing appeal for the space, UK-counterpart Depop closed an $8 million A-round in January led by Balderton. Future will tell how market incumbents on top of which Schibsted, Axel Springer and Ebay will react as these new-comers are making inroads into this multi-billion dollar market.
Clipperton European Innovation Financing Update - July 2015
METHODOLOGY
This report is based on collaborative work and research performed by Digimind and Clipperton Finance. Based on Digimind’s WhoGotFunded comprehensive financing deals database which is built in real-time through text-mining technologies, the analysis is focused on European deals with the following characteristics:
- Investments completed in a European company (Russia included/ Israel excluded)- The company is considered innovative i.e. with a clear technology or business model innovation – which excludes companies who operate technolo-gies that they have not developed- Investments higher than $500k, in order to exclude “friends & family” seed rounds- Secondary deals (i.e. minority sales of shares to private funds) are included, majority deals are excluded.- Fundraisings through public markets (IPO or public equity financing) are excluded
This represents a list of about 200-400 deals per quarter, which are then allocated to an innovation universe (IT / Life Science / Cleantech) and to a sub-segment (e.g. Consumer Internet within IT).
This document has been prepared by Clipperton Finance in collaboration with Digimind. It is communicated solely for the purpose of information and should not be construed as a sollication or an offer to buy or sell any security or related financial instrument.
This publication is based of data and information made available to the public and other sources deemed reliable. While efforts have been made to garan-tee maximum exactitude and reliability, neither Clipperton nor Digimind can be held responsible for omission or errors. The information and analysis accessible in this publication highlight industry trends in general, and should not be construed as providing any particular recommendations or analy-sis for any specific company that is mentioned in the publication. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of Clipperton’s or Digimind’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.
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