Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Is Europe delivering enough venture backed exits ?
February 2017
2
Venture backed exits in Europe have been consistently
around €30 billion (1) per year between 2014 and 2016
VC-backed exits (1) Tech exits with no known VC backing
€ 34.1B
€ 23.5B
€ 37.1B
€ 17.5B
€ 40.3B
€ 109.3B
91
219 256
93
500
412
2014 2015 2016 2014 2015 2016
Value
Number of exits
Rocket Internet / IPO €6.7B King.com / Activision €5.4B Supercell / Tencent €9.3B (2)
King.com / IPO €6.4B HERE / BMW & Daimler & Audi €2.8B Playtika / Giant Interactive Group €4B
Zalando / IPO €5.3B Sophos / IPO €1.5B Trivago / IPO €3.6B (2)
IHS Markit / IPO €3.9B TeamSystem / H&F €1.2B FleetMatics / Verizon €2.2B (2)
CSR / Qualcomm €2B Skrill / Optimal Payments €1.1B Skyscanner / Ctrip €1.7B
Just Eat / IPO €1.8B AVITO.ru / Naspers €1.9B AVG / Avast Software €1.2B (2)
Zoopla / IPO €1.1B 360T / Deutsche Boerse €0.7B Takeaway.com / IPO €1B
TeamViewer / Permira €0.9B showroomprive.com / IPO €0.7B Heptagon / Ams €0.8B
Fotolia / Adobe Systems €0.7B Yemeksepeti / Delivery Hero €0.5B Valtech Cardio / Edwards €0.6B
DeepMind / Google €0.5B Photobox / Electra P& Exponent €0.5B Automic / CA Technologies €0.6B (2)
Top 10examples:
PokerStars / Amaya €4.5B WorldPay / IPO €5.8B NXP Semiconductors / Qualcomm €42.8B
Mojang / Microsoft €2.3B Informatica / Permira €4.8B ARM Group / SoftBank €28.8B
VKontakte / vk.ru / Mail.ru Group €2.1B TelecityGroup / Equinix €3.2B Global Switch / Chinese group €6B
Trader Media / Apax Partners €2B Scout24 Holding / IPO €3.2B Kuka / Midea Group €4.5B
Travelport / €1.8B Wood Mackenzie / Verisk Analytics €2.5B Philips Lighting / €3B
GlobalCollect BV / Ingenico Group €0.8B Euro Garages / IPO €1.8B Allegro / Cinven & Permira €3B
Viber / Rakuten €0.8B bwin / GVC Holdings €1.3B Home Retail Group / Sainsbury's €1.7B
PubliGroupe AG / Swisscom €0.5B Financial Times / Nikkei €1.2B Kuoni / EQT Private Equity €1.3B
CarTrawler / BC Partners & Insight €0.4B Airwave Solutions / Motorola €1.1B Hotelbeds Group / Cinven & CPPIB €1.2B
Vizrt / Nordic Capital €0.3B E-shelter Berlin / NTT €0.8B Argus Media / General Atlantic €1.1B
Exits that have no known VC backing. This list excludes traditional telecom. 2016 was driven by mega exits such as ARM and NXP. Some may have received unknown VC or angel backing in early stages.
This report focuses on companies with known VC backing which had an exit in last three years. Includes both IPOs, strategic acquisitions and buyouts.
1. Based on 100% of the company value, even if not 100% was sold at exit. The actual amount is likely higher because exit amounts are not always disclosed. Dealroom estimates that after
correcting for undisclosed exits, actual exit amount is 10-20% higher. The median size of all exit rounds is about €70M, while the median size of exit rounds below €500M is €50M.
2. Initial VCs had already sold most or all shares in Supercell, Trivago, Automic, Fleetmatic and AVG by the time of the exit mentioned here, being replaced by new VC/PEs.
3
Strategic acquisitions and buyouts were driving the growth.
IPO markets slowed down, but more IPOs are on the horizon
IPOs of VC-backed companies (1) Acquisitions of VC-backed companies (1)(2)
€ 25.2B
€ 3.6B€ 6.0B
€ 8.9B
€ 19.9B
€ 31.1B
9 14 16
82
205 240
2014 2015 2016 2014 2015 2016
Value Number of exits
A handful of big IPOs in 2014 and steep decline thereafter. The market for IPOs has historically been unpredictable. However, the advent of VC mega-rounds have made IPOs generally less desirable, and arguably even disadvantageous during high growth phase of companies. However, strong pipeline of some big upcoming tech IPOs:
Rocket Internet / IPO €6.7B Sophos / IPO €1.5B Trivago / IPO €3.6B
King.com / IPO €6.4B showroomprive.com / IPO €0.7B Takeaway.com / IPO €1B
Zalando / IPO €5.3B Mimecast / IPO €0.5B Paradox Interactive / IPO €0.4B
IHS Markit / IPO €3.9B Windeln.de / IPO €0.4B THQ Nordic / IPO SEK 2B
Just Eat / IPO €1.8B PurpleBricks / IPO €0.3B WISeKey / IPO €200M
Zoopla / IPO €1.1B On The Beach Holidays / IPO €0.3B Ayondo / IPO $117M
Hostelworld Group / IPO €0.2B
Topexamples:
CSR / Qualcomm €2B King.com / Activision €5.4B Supercell / Tencent €9.3B
TeamViewer / Permira €0.9B HERE / BMW & Daimler & Audi €2.8B Playtika / Giant Interactive Group €4B
Fotolia / Adobe Systems €0.7B TeamSystem / H&F €1.2B FleetMatics / Verizon €2.2B
Google DeepMind / Google €0.5B Skrill / Optimal Payments €1.1B Skyscanner / Ctrip €1.7B
NaturalMotion / Zynga €0.5B AVITO.ru / Naspers €1.8B AVG / Avast Software €1.2B
Clear2Pay / FIS Global €0.4B 360T / Deutsche Boerse €0.7B Heptagon / Ams €0.8B
Wilocity / Qualcomm €0.3B Yemeksepeti / Delivery Hero €0.5B Valtech Cardio / Edwards €0.6B
Eyeworks / Warner Bros. €0.2B Photobox / Electra & Exponent €0.5B Automic / CA Technologies €0.6B
Telerik / Progress Software €0.2B ClickSoftware / Francisco Partners €0.4B Hibernia Networks / GTT €0.5B
M and M Direct / Bestseller €0.2B Ricardo Group / Tamedia €0.2B Privalia / Vente-Privee €0.5B
Momondo / Priceline €0.5B
Remarkable growth in venture backed exits via strategic acquisitions and buyouts. Growth is led by a few landmark mega deals like Supercell, King.com and Playtika, but a healthy range of medium sized exits too.
1. Based on 100% of the company value.
2. Strategic acquisitions and buyouts.
Source: Dealroom.co
Expected IPOs:
and more…
€ 16.9B
€ 9.6B
€ 18.4B
€ 8.1B
€ 6.5B
€ 10.8B
€ 9.1B
€ 7.4B
€ 7.9B
€ 34.1B
€ 23.5B
€ 37.1B
2016 2015 2014
Exits in top 3 (≈ 0.5%) Exits in top 10 (≈ 1.5%) All other exits
4
Extreme concentration: the top 0.5% of rounds drive 40-50%
of the returned capital. The top 1.5% of rounds drive 70-80%
High concentration of VC backed exits Proceeds from exits below €1 billion
Rocket Internet / IPO €6.7B King.com / Activision €5.4B Supercell / Tencent €9.3B
King.com / IPO €6.4B HERE / BMW & Daimler & Audi €2.8B Playtika / Giant Interactive Group €4B
Zalando / IPO €5.3B Sophos / IPO €1.5B Trivago / IPO €3.6B
IHS Markit / IPO €3.9B TeamSystem / H&F €1.2B FleetMatics / Verizon €2.2B
CSR / Qualcomm €2B Skrill / Optimal Payments €1.1B Skyscanner / Ctrip €1.7B
Just Eat / IPO €1.8B AVITO.ru / Naspers €1.9B AVG / Avast Software €1.2B
Zoopla / IPO €1.1B 360T / Deutsche Boerse €0.7B Takeaway.com / IPO €1B
TeamViewer / Permira €0.9B showroomprive.com / IPO €0.7B Heptagon / Ams €0.8B
Fotolia / Adobe Systems €0.7B Yemeksepeti / Delivery Hero €0.5B Valtech Cardio / Edwards €0.6B
DeepMind / Google €0.5B Photobox / Electra P& Exponent €0.5B Automic / CA Technologies €0.6B
50%
74%
41%
69%50%
79%
Top 3exits:
Top 10exits:
€ 580M
€ 369M
€ 771M
€ 90M € 68M € 65M
2014 2015 2016
Average size of all exits Median size of all exits
Smaller exits are equally important to support a healthy ecosystem. Steady growth in exits below €1 billion.
Source: Dealroom.co
Top 3Exits
(0.5%)
Top 10Exits
(1.5%)
€ 4.5B€ 6.0B
€ 7.4B
€ 2.5B
€ 2.5B
€ 4.1B
€ 7.0B
€ 8.5B
€ 11.5B
2014 2015 2016
Exits between €500 million and €1 billion Total
5
Healthy ratio of capital returned vs. invested. But to sustain
growth in VC activity, exits will need to increase even further
1. On average VC backed companies do 3 rounds untill their exit. For larger exits, the number of rounds to exit is higher.
Source: Dealroom.co
Capital returned
VC ownership at exit is typically 60-70% (1). Assuming a 2x target return on capital for the VC industry.
This implies that total exits should return 3x the amount invested by VCs, to achieve target VC return of 2x
Back-of-the-envelope analysis:European performance
In 2014 to 2016, €25-35 billion of capital was returned each year. In the preceding years, roughly €5-8 billion in VC was invested each year (2006 to 2013). This implies a very healthy ratio for industry on a whole.
Currently, €12-15 billion of VC is being invested in European companies each year. To deliver adequate returns going forward, exits would need to substantially increase to levels well over €35 billion each year (to roughly €45 billion each year).
2006 to 2013 2014 2015 2016 2017 & beyond
(€ 5B)(€ 10.2B)
(€ 15.2B) (€ 16.2B)
€ 34.1B
€ 23.5B
€ 37.1B
Required amount
of exits to achieve 2x return on
venture capital(indicative)
Venture capital invested Capital returned
Ratio of capital returned ÷ invested
Capital invested
6
Who are buying European (VC backed) tech companies:
an increasingly diverse group of acquirors and investors
Asian buyers U.S. buyers European buyers IPOs
€ 15.4B
€ 6.5B € 7.4B € 5.7B€ 2.4B
€ 11.1B € 10.0B
€ 25.2B
€ 3.6B€ 6.0B
€ 40.2B
€ 2.9B
€ 11.0B
€ 50.1B
€ 11.9B
€ 17.7B€ 16.0B
€ 1.8B
€ 9.5B € 3.0B€ 3.5B
€ 55.5B
€ 9.4B
€ 18.4B
€ 55.8B
€ 14.3B
€ 28.8B€ 26.1B € 27.0B
€ 13.1B
€ 9.0B
2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016
Not VC-Backed exits VC-Backed exits
So far mostly Japan (Softbank) and China (Tencent and others). Soon also Korea, India, Malaysia, and other Asian countries.
Outside Asia: Middle Eastern sovereign wealth funds as well.
World’s largest pool of big tech companies (Google, Apple, Amazon, Facebook, IBM, Cisco, Microsoft, …). Now also joined by traditional firms moving into tech.
Non-tech firms moving aggressively into tech (automotive, electronics, FMCG, banking, telecom, energy, …).
IPO window opens and closes depending on market conditions.
Source: Dealroom.co
7
Capital efficiency varies greatly per country, because few
big exits drive so much of the returns
Realised VC backed exits 2014-2016 Unrealised large potential future exits
€ 30.9B
€ 22.8B
€ 9.7B
€ 7.9B
€ 5.1B
€ 2.8B
€ 2.4B
€ 1.4B
€ 1.2B
€ 1.1B
United Kingdom
Germany
Finland
Israel
Netherlands
France
Russia
Italy
Sweden
Spain
United Kingdom Funding Circle, Farfetch, Deliveroo, Fanduel, The Hut Group
Germany Auto1 Group, HelloFresh, Global Fashion Group, Delivery Hero, Check24
Finland ?
Israel Infinidat, Gett
Netherlands Adyen
France Vente Privee, Sigfox, Jumia, Blablacar
Russia ?
Italy ?
Sweden Spotify, Klarna
Spain Letgo, Cabify
Other Zendesk, Unity (Denmark), Mindmaze (Switzerland)
Source: Dealroom.co
Mainly driven by TeamViewer
Does not include King.com (UK). Also large unrealised gains via Spotify and Klarna
Ranked #3 despite low investment. Outperforming mainly thanks to Supercell
France among most active in terms of VC investment. After big exits like CRITEO and Fotolia, what will be the next big exit?
8
Capital returned by industry: gaming and search
outperform; FinTech and HealthTech still to deliver
€ 26.3B
€ 13.9B
€ 13.7B
€ 11.6B
€ 7.2B
€ 6.9B
€ 6.7B
€ 6.5B
€ 4.8B
€ 4.0B
€ 3.8B
€ 3.7B
€ 3.6B
Gaming
Fashion
Enterprise software
Food
Transportation
Financial
Search
Travel
Healthcare
Security
Content
Semiconductors
Real estate
2014 2015 2016
Note: some overlap, and therefore doublecounting between industries, resulting in them adding them up to more than total exit volume.
1. Comparison of capital invested in same years. Not return on capital. Only indicative of relative capital efficiency till thus far of industry.
FinTech has been a leading receiver of VC funding (6.1 billion between 2014-2016) but so far not delivering in terms of exit. The industry is still in a earlier stage of development.
Gaming outperforms all industries in terms of capital efficiency. However, very hard to pick winners.
29.5x
4.7x
2.3x
3.2x
2.6x
1.1x
6.1x
2.7x
1.0x
2.0x
2.2x
7.4x
7.3x
Capital efficiency ratio (1)
Search includes Yandex, Trivago, Skyscanner, and Momondo. Like gaming, search has been a highly capital efficient category.
Health tech has had some big exits but also received lot of capital
Notable heavy hitting venture capital investors into
big European (potential) exits
9Note: Selected landmark exits of European VC-backed companies. Grey boxes indicate selected notable $1 billion+ companies. List is not fully exhaustive.
1. Late stage VC and growth equity.
Index VenturesSupercel l
(€5.0B)Skype (€2.3B)
King.com
(€5.4B)Just Eat (€1.7B) Betfa i r (€1.7B) CRITEO (€1.5B) MySQL (€0.9B) Priva l ia (€0.5B)
Photobox
(€0.5B)
Mimecast
(€0.5B)
SwiftKey
(€0.2B)Asos Adyen Del iveroo Funding Circle
Insight Venture Partners Trivago (€0.7B) Wix (€0.7B) Priva l ia (€0.5B)Photobox
(€0.5B)
TeamViewer
(€0.9B)
Mimecast
(€0.5B)Del ivery Hero Letgo Hel loFresh
Balderton Capital Betfa ir (€1.7B) MySQL (€0.9B) Talend (€0.7B)Natura lMo-
tion (€0.4B)Yoox (€1.8B) Bebo (€0.7B) The Hut Group
Accel PartnersSupercel l
(€5.0B)Avito.ru (€2.7B)
Showroom-
privee (€0.7B)
SwiftKey
(€0.2B)Spoti fy Letgo Check24 Funding Circle Del iveroo
Bessemer Venture Partners Skype (€2.3B) CRITEO (€1.5B) Wix (€0.7B)TeamViewer
(€0.9B)
TA Associates (1) ION (€3.8B) Fotol ia (€0.7B) AVG (€0.8B) Sophos (€0.8B)
Institutional Venture PartnersSupercel l
(€5.0B)
Fleetmatics
(€2.2B)MySQL (€0.9B) Klarna
Scottish Equity Partners CSR (€2.0B)Skyscanner
(€1.7B)BioVex (€0.9B)
LakestarKing.com
(€5.4B)Skype (€2.3B) Spoti fy Klarna
Highland Capital Partners Priva l ia (€0.5B)Photobox
(€0.5B)
Socia l Point
(€0.3B)
Vitruvian Partners Just Eat (€1.7B)Skyscanner
(€1.7B)
HV Holtzbrinck VenturesZalando
(€5.3B)CityDeal Hel lofresh Home24
Baillie GiffordSkyscanner
(€1.7B)Hel lofresh Funding Circle Home24 Auto1 Group xyz
= (partia l ly)
rea l ised exi t
Northzone Avito.ru (€2.7B) Wallapop Letgo Spoti fy
Baring Vostok Yandex (€7.3B) Avito.ru (€2.7B) xyz= unreal ised
potentia l ga in
83North Hybris (€0.9B)Socia l Point
(€0.3B)
Greylock Just Eat (€1.7B)Socia l Point
(€0.3B)