Europe & Israel 3Q15 Deals Done Review

Venture Capital in Europe & IsraelVenture Investment Data: Third Quarter, 2015

Prepared by Gil Dibner @gdibnerblog: yankeesabralimey

Steinerne Brücke, Regensburg, GermanyOldest vaulted stone bridge in Germany (built 1135-1146)

http://www.twitter.com/gdibner

http://yankeesabralimey.tumblr.com/

The data• Around the middle of last year, 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 still under-reported, but I got a bit better at capturing it in the fourth

quarter. Rounds smaller than $500K are generally excluded from this analysis• The analysis is limited to ICT categories and excludes life sciences• The analysis excludes Turkey and FSU countries• I’m converting EUR and GBP into USD using monthly average exchange rates

2@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies



http://www.angel.co/gdibner/syndicate

Monthly pace of venture investment• During the third quarter of

2015, there were 286 venture investments in Europe &Israel totaling $3.2B

• July’s investment volume was just under June’s in terms of total dollars invested, but it was a record-breaking month in terms of deals reported

• August saw a massive slowdown in activity due most likely to summer vacations. Note, however, that while August 2015 was one third of the July 2015 volume, it was roughly even with August 2014.

@gdibnerblog: yankeesabralimey 3Syndicate for European & Israeli Enterprise Companies

493565

644 625562

725

905971 997

791 787

1,555 1,517

567

1,157

42 30 50 79 73 52 92 75 103 78 95 98 119 65 102

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

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

Qtr3 Qtr4 Qtr1 Qtr2 Qtr3

2014 2015

Num

ber o

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VC Investments in Europe & Israel, July 2014 - September 2015

Invested amount (US $M) Number of investments




Quarterly pace of venture investment• Europe & Israel saw another

record-breaking quarter in 3Q, with $3.252 billion flowing into 286 venture transactions

• Since I started collecting this data in 3Q14, every quarter has set a new high


1,703 1,912 2,873 3,133 3,241

122

204

270 271286

0

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2014 2015

Amou

nt in

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S $M

)

Num

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VC Investments in Europe & Israel

Invested amount (US $M) Number of investments




Mega-rounds skew the investment totals• This analysis breaks down VC

investments into brackets by size:• Seed (less than $2M)• Early venture ($2-8M)• Venture ($8-20M)• Growth ($20-100M)• Mega ($100M+)

• Four mega-rounds took place in Europe this quarter:

• Kreditech, a German-based lending platform, raised $110M in July

• Fanduel, a Scottish-based fantasy sports gaming provider, raised $275M in July

• Letgo, a Spanish mobile classifieds application, raised $100M in September

• Blablacar, a French ride-sharing platform, raised $200M in September (following a $100M raise in 2014)

• Adjusting for mega-rounds, 3Q15 was a record-breaking quarter, especially for growth rounds.


248 343 285 354 369345

312 556731 565

539

935

1,154 7921,509

0

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2014 2015

Amou

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Pace of VC Investment in Europe and Israel

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)




Strong year-over-year growth• 3Q15 total investment volume

in Europe & Israel was up 85% over 3Q14 (excluding seed deals, where data is more spotty)

• Early venture volume grew by 49%

• Venture volume grew by 64%

• Growth volume grew by 180%, nearly tripling from 3Q14 levels


248 369345

565539

1,509

554

685

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Qtr3 Qtr3

2014 2015

Tota

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US

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VC investment volume in Europe and Israel by bracket

Mega (>100) Growth (20-100)Venture (8-20) Early Venture (2-8)




Number of investments, by bracket• Excluding seed deals, the

total number of VC investments per quarter was 180 in 3Q15, roughly the same as last quarter (179) but nearly double that of one quarter ago (106)

• Despite the typical summer slowdown in August, the quarter showed no sign of a slowdown from the previous quarter


6082 77 85 94

30

26 42

63 44

13

2633

25 38

3

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6 4

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2014 2015

Num

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VC investment volume in Europe and Israel by bracket





Corporate VC activity, by bracket• Excluding seed deals, the

total number of corporate VC investments was 21 in 3Q15, down significantly from a peak of 36 in 2Q15


6 4 5

16

7

43

9

12

74

4

7

8

7

3

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40


2014 2015

Num

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Corporate VC investment volume in Europe and Israel by bracket





Corporate VC activity, by country• During the first three quarters

of 2015, Israel saw the highest number of corporate VC investments, with 33

• The UK saw 21 corporate VC investments during that period

• Nine other countries saw corporate VC activity across Europe, but at much lower levels


107

41 2 1 1 1 1

14

5

4

12

1 1

8

8

1

32

1

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35

Isra

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any

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en

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Num

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Number of corporate VC investments in Europe and Israel by bracket(1Q15-3Q15)

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)




Average round size• Previously, I presented this

broken down by bracket, but I think the data is more meaningful when taken in aggregate.

• This average excludes seed rounds and mega rounds, so it reflects all rounds done in Europe & Israel between $2M and $100M

• Since February, average round sizes across all venture rounds were hovering between $10M and $12M

• The third quarter saw consistently higher average round sizes – between $13M and $14.5M on average


11.1

17.6

6.8

11.7 11.4

12.7

15.8

11.211.9

11.110.1

11.4

13.913.2

14.3

4

6

8

10

12

14

16

18

20

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


2014 2015

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Average investment size in Europe and Israel(Round sizes of 2-100M)




Total venture investment by country, 3H 2015• The UK took the top spot in

3Q15 with nearly $900M in total capital invested

• Israel took second place with $628M in venture capital investment

• France (boosted by Blablacar) nearly eclipsed Germany (which was helped by Kreditech) – both countries saw just under $500M of capital invested in the quarter


896.8627.8

484.7477.9

181.0139.9

109.587.1

81.046.6

33.515.213.312.09.99.17.56.81.40.6

UKIsrael

GermanyFrance

SpainSweden

NetherlandsIrelandFinland

BelgiumGreece

NorwayItaly

SloveniaPoland

SwitzerlandDenmark

CzechLatvia

Estonia

0 100 200 300 400 500 600 700 800 900 1,000

Total VC investment volume by country, 3Q15 (US $M)




Total venture investment by country, 3H 2015(excluding mega rounds)• Once again, when mega-

rounds ($100M+) are excluded, Israel takes the top slot, with the UK coming in just behind it

• Excluding mega-round, Germany is a solid third place at $375M, with France at $278M


627.8621.8

374.7277.9

139.9109.5

87.181.081.0

46.633.5

15.213.312.09.99.17.56.8

1.40.6

IsraelUK

GermanyFrance

SwedenNetherlands

IrelandSpain

FinlandBelgiumGreece

NorwayItaly

SloveniaPoland

SwitzerlandDenmark

CzechLatvia

Estonia

0 100 200 300 400 500 600 700

Total VC investment volume by country, 3Q15 (Excludes mega-rounds, US $M)




Total venture investment by country, 3Q14 to 3Q15• To get a better sense of VC

volumes in various countries, this analysis excludes mega-rounds

• Investment volumes increase in all of the top five markets

• Israel retained it’s top spot, but just barely

• Germany bounced back up to third place


315

567543

475

628

369

263

719

437

622

180

284

389

209

375

29

163118

232278

74 12389

112140


100

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800

Tota

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US

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Total VC investment, 3Q14 - 3Q15 (top 5 countries, excluding mega-rounds)

IsraelUKGermanyFranceSweden




Average venture round sizes, by country• This analysis excludes mega-

rounds and rounds less than $2M

• UK & Ireland companies raised the largest round sizes on average in 3Q, just as they did in 2Q

• When we compare 3Q15 to 3Q14, all regions saw increased round sizes, except DACH and Iberia

• DACH round sizes contracted to bring them in line with the rest of the leading markets

• Round sizes in France increased, bringing France in line with other leading markets.


Benelux, 10.6

Benelux, 13.1

DACH, 18.0

DACH, 14.8

France, 3.7

France, 13.5

Iberia, 10.4Iberia, 8.6

Israel, 11.6

Israel, 15.2

Nordic, 7.7

Nordic, 10.4

UK & Ireland, 11.9

UK & Ireland, 16.3

0.0

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2014 2015

Aver

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Average investment size in Europe and Israel (rounds of $2-20M)




Total venture investment by region, 3Q14 to 3Q15• When VC investments across

Europe are aggregated into regions, Israel, DACH, UK & Ireland, the Nordics, and France are the clear and consistent leaders

• Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments (Adyen, Prezi, and many others), but the volumes are still low


UK & Ireland, 399.0 UK & Ireland, 262.9

UK & Ireland, 932.2UK & Ireland, 680.7

UK & Ireland, 983.9Israel, 315.2 Israel, 567.5

Israel, 834.6

Israel, 625.2

Israel, 627.8

DACH, 532.2 DACH, 290.2

DACH, 573.3

DACH, 565.8

DACH, 493.8

Nordic, 124.0Nordic, 219.3

Nordic, 190.1Nordic, 775.7 Nordic, 245.5

France, 129.3 France, 163.3

France, 233.0France, 231.6

France, 477.9

Benelux, 31.9Benelux, 284.9

Benelux, 46.7Benelux, 98.3 Benelux, 156.1

Iberia, 168.1

Iberia, 56.5

Iberia, 53.7

Iberia, 137.2 Iberia, 181.0

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2014 2015

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Total VC investment by region

UK & Ireland IsraelDACH NordicFrance BeneluxIberia East. Eur.South. Eur.




Rounds by bracket & region• To get a better sense of deal

volume, this analysis excludes seed deals which are often poorly reported

• Excluding seed deals, UK & Ireland led in the number of announced deals, with 43 investments announced

• Israel took second place with 40

• DACH took third place with 26


2318

14 139 7 5

2 3

811

75

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22

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1111

44

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Israel DACH Nordic France Benelux Iberia South. Eur. East. Eur.

Num

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Number of investments in Europe and Israel by bracket, 3Q 2015

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)




Investment by region, by bracket• In 3Q, UK & Ireland led in

terms of total VC dollars invested, even with Fanduelmega-round excluded

• Israel was in second place


98 62 61 41 49

96 146 92 92 69

490400

217136 111

105

275

110200

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UK &Ireland

Israel DACH France Nordic Benelux Iberia South. Eur. East. Eur.

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Investment in Europe and Israel by bracket by region, 3Q 2015(ranked excluding mega-rounds)

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)




Participation rate of US VC firms, by bracket• US VC firms are increasingly

active in the European and Israeli VC markets

• Year to date, US VC firms participated in 15% of the venture rounds in Europe

• US VCs participated in only 5% of seed rounds, 11% of early venture rounds, and 21% of venture rounds

• As a company moves from bracket to bracket, the chance of US VC participation doubles with each bracket change


5%11%

21%

36%

75%

95%89%

79%

64%

25%

0%

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30%

40%

50%

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100%

Seed (.5-2) Early Venture (2-8) Venture (8-20) Growth (20-100) Mega (>100)

Perc

enta

ge o

f rou

nds

Did US VC firms participate in European VC rounds? (1Q15-3Q15)

No Yes




Rate of participation by US firms has recovered• US VC firm participation in

European & Israeli venture rounds held steady at just over 20%


16%24% 20% 22% 21%

84%76% 80% 78% 79%

0%

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40%

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2014 2015

Perc

enta

ge o

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Did US VC firms participate in European VC rounds?(Excludes seed rounds, 3Q14-3Q15)

No Yes




Participation of US VC firms by country• In 3Q, US VCs firms were

active in 15 different European countries, up from 10 in 2Q

• US VC firms were most active in Israel, where they participated in 14 investment rounds out of 57 (26%)

• The UK saw 7 investments with US VC participation, down from 11 in 2Q

• In the Netherlands, 4 of a total of 15 investments saw US VC participation (27%)


147 4 30

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Num

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In which countries are US VCs most active?3Q, 2015

No US VC involved US VC involved




Dimension Categories Explanation/Example

1. Target market Consumer, SMB, Enterprise, Government, Telecom, OEM

What sort of customer does the company target?

2. Vertical marketAdtech, 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 modelCommerce, Components, Content, Marketplace, SaaS, Semiconductors, Services, Software, Systems,

How does the company makemoney? What are customers paying for?

Segment descriptor Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers

Three-dimensional approach to sector mapping

• Excluding mega-rounds, investment activity decreased in both consumer and enterprise over 2Q

• Consumer-oriented investments hit a new high of $1.1B in 3Q

• SMB-oriented and OEM-oriented investment volume both increased

22@gdibnerblog: yankeesabralimey

What target markets are attracting the most VC investment in Europe & Israel?

Syndicate for European & Israeli Enterprise Companies

475 595980 850

1,172494

794

953808

905133

121

153

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114

106

182

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(US

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European & Israeli venture financing by target market3Q14 to 3Q15 (excluding mega-rounds, US $M)

Government

Telecom

OEM

SMB

Enterprise

Consumer




• When Israel is excluded from the sample, 62% of all VC dollars in Europe went to consumer-oriented companies

• Enterprise dropped from 48% in 4Q14 to 24% in 3Q15


Consumer investment leads Europe


62%

36%

56% 63% 62%

18%

48%

34% 22% 24%6%

10% 4% 12% 8%5%4% 2% 4%6%8%

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2014 2015

European venture financing by target market3Q14 to 3Q15 (excluding Israel, percent of US $M)

Government Telecom OEM SMB Enterprise Consumer




• When the sample set is limited to rounds under $20M, the ratio of consumer to enterprise investments looks a bit more balanced –and steadier over time


Consumer accounts for half of early rounds


39%51% 46% 41% 46%

41%36% 50%

48% 39%

3%

10%2%

7% 9%11%2% 2% 3%

0%2%

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2014 2015

European venture financing by target market3Q14 to 3Q15 (excluding Israel, rounds up to $20M, percent of US $M)





Breakdown by region & target market• All regions except Israel saw

more consumer investment than enterprise/SMB investment

• Investments across DACH were dominated by consumer-oriented companies

• UK & Ireland, France, and the Nordics showed a healthy balance


546

225

435276

135 119 104

218

275 150

66 57

133

87

71

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UK & Ireland Israel DACH France Nordic Iberia Benelux

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Investment in Europe and Israel by target market by region3Q, 2015 (US $M)





Distribution of investment rounds by country• Across Europe & Israel, 44%

of VC investment rounds were in consumer companies in 3Q

• In DACH, 62% of rounds were into consumer companies, the highest proportion of any region

• In UK, the number of consumer rounds was equal to the number of enterprise rounds


29%

30%

36%

41%

43%

53%

55%

62%

71%

51%

54%

41%

30%

28%

30%

22%

5%

7%

14%

17%

12%

15%

11%

14%

4%

5%

9%

5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

South. Eur.

Israel

France

UK & Ireland

Benelux

Nordic

Iberia

DACH

Investment in Europe and Israel by target market by country3Q 2015 (Number of investments)

Consumer Enterprise SMB OEM Telecom Government




Early rounds trending away from consumer• This graph shows the

percentage of seed ($0-$2M) and early venture ($2M-$8M) rounds by target market

• These early rounds provide a leading indicator of things to come

• The percentage of rounds into consumer companies peaked in 1Q15 at 50% and has been trending downward since


39% 44% 50% 48% 44%

47%44% 39% 38%

40%

9%8% 12%

8% 4%

0%

10%

20%

30%

40%

50%

60%

70%

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90%

100%


2014 2015

Investment in Europe and Israel by target market(Rounds of up to $8M, number of investments)





Growth rounds by target market• Looking at rounds over

$20M, it’s hard to draw a clear trend

• From 4Q14 to 2Q15, there was an upward trend towards consumer-oriented companies in growth investing, but this trend reversed itself in 3Q15


56%

37%46%

58%43%

25%

41%

46% 23%38%

7%10% 12%

6% 11% 6% 7%

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2014 2015

Investment in Europe and Israel by target market(Rounds over $20M, number of investments)





DACH investors shift back to consumer• DACH is clearly a region with

a record of strong consumer-oriented investment

• In 4Q14 this began to change, but it wasn’t clear if the trend would be long-lived.

• In 3Q15, consumer-oriented investments accounted for 64% of rounds in DACH


71%

36%

57% 57%64%

14%

56%

41%31% 22%

7%9% 11%

7%

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100%


2014 2015

Investment in DACH by target market(Number of investments)

OEM SMB Enterprise Consumer




The Nordics shift back to the consumer• Investment patterns in the

Nordics seem to be shifting away from enterprise and towards the consumer


47%

62%

37% 43%56%

40%

28%

47%43%

29%

9%12%13%

7% 7% 9%

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2014 2015

Investment in the Nordics by target market(Number of investments)





…especially in terms of dollars invested• When we look at dollars

investment as opposed to the number of investments, 3Q15 saw a sharp rise in consumer-oriented investing

• Spotify’s massive round in 2Q has been removed from this graph


42%

59%

29% 29%

59%

37%

25%

65% 64%

29%

4% 12%22% 16%

6%

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2014 2015

Investment in the Nordics by target market(Percentage of total US $M invested)





France shifts even further towards enterprise• In France, only 33% of

investments in 3Q15 were consumer-oriented

• Enterprise investments accounted for 56% of rounds in France


60%52% 55%

44%33%

30%38%

39%

44%56%

10% 12% 7%10% 6%

0%

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2014 2015

VC Investment in France by target market(Number of investments)





…with enterprise taking share from SMB• When the data is presented

by the amount of dollars, it becomes clear that more and more of French VC dollars are flowing towards enterprise-oriented companies

• 3Q15 saw a shift from SMB towards enterprise


69%61%

28% 27% 27%

17%20%

68%

43%54%

18%30%

14%13%

4% 5%

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2014 2015

VC Investment in France by target market(Percentage of total US $M)





• Once again, Finance and Marketing were the first and second most commonly funded verticals

• Lifestyle (which is a catch-all consumer category) took the third slot

• IT Infrastructure and security took the fourth and fifth slots


Finance returned to being the top vertical


Financial, 36

Marketing, 31

Lifestyle, 15

Infrastructure, 14

Security, 13

Social, 12

Productivity, 11

Employment, 11

Fashion, 11

Data, 10

Electronics, 10Development, 9

Health, 8

Logistics, 8Payments, 7

Entertainment, 7Gaming, 6Adtech, 6CRM, 6Education, 6

Durables, 5Industrial, 5

Real Estate, 5

Travel, 5

European & Israeli venture financing by target market3Q 2015 (number of investments)




• This graph shows number of investments in the top 12 verticals across 3Q14 and 3Q15

• All verticals increased in frequency except Adtech, which declined from 8 investments in 3Q14 to 6 in 3Q15

• The number of finance-related investments more than tripled from 11 in 3Q14 to 36 in 3Q15

• Marketing-related investments increased from 6 in 3Q14 to 31 in 3Q15.


How have the most popular verticals grown?


Financial, 11

Financial, 36Marketing, 6

Marketing, 31

Infrastructure, 10

Infrastructure, 14

Lifestyle, 5

Lifestyle, 15

Electronics, 10

Electronics, 10

Security, 6

Security, 13

Data, 7

Data, 10

Employment, 5

Employment, 11

Productivity, 4

Productivity, 11

Development, 5

Development, 9

Adtech, 8

Adtech, 6

Fashion, 3

Fashion, 11

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Qtr3 Qtr3

2014 2015

European & Israeli venture financing by vertical market(top 12 verticals, number of investments)




• Once again, financial startups were the most commonly funded category in 3Q, including consumer, enterprise, and SMB-oriented companies

• The single most common category was enterprise marketing, also unchanged from last quarter

• Consumer lifestyle, social, and fashion startups were particularly active as well

• In contrast with last quarter, gaming and health startups didn’t crack the top ten segments


Which verticals for which segments?


Data

Electronics

Fashion

Employment

Productivity

Social

Security

Infrastructure

Lifestyle

Marketing

Financial

0 5 10 15 20 25 30 35 40

European & Israeli venture financing by target market3Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB

OEM

Government




• This chart shows the ten most commonly funded verticals across Europe & Israel by quarter

• Financial, marketing, and security show increasing strength over time

• Adtech and health are declining


The most popular verticals in the past 12 months



2014 2015

0

20

40

60

80

100

120

140

160

180

European & Israeli venture financing by vertical market(number of investments, top 10 verticals)

Financial

Marketing

Lifestyle

Infrastructure

Adtech

Electronics

Health

Security

Employment

Data




• Lifestyle, which is admittedly a bit of a catch-all consumer category, continues to show tremendous strength in terms of VC volume

• Finance took the second place overall, and first place in 3Q15

• Electronics (which typically means consumer electronics systems companies) has shown increasing strength through 1Q, but little investment in 2Q & 3Q

• Gaming, travel, and food-related categories seem to be declining

• Consumer-oriented logistics plays seem to be emerging as an important category for VC investment


Consumer VC investment trends



2014 2015

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10

20

30

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50

60

70

80

90

100

European & Israeli venture financing by consumer verticals(number of investments, top 10 verticals)

Lifestyle

Financial

Fashion

Travel

Gaming

Social

Health

Logistics

Electronics

Education

Food




• Enterprise marketing continues to show strength as an area for VC investment

• Adtech, while it has been the second most popular category for investment over the past 15 months, faded significantly over the past two quarters

• Investment in developer tools has picked up

• Health industry-related enterprise investment disappeared in 3Q15


Enterprise VC investment trends



2014 2015

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10

20

30

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50

60

70

80

90

100

European & Israeli venture financing by enterprise verticals(number of investments, top 10 verticals)

Marketing

Adtech

Infrastructure

Security

Data

Development

Financial

Employment

Health

CRM




• After a diverse 2Q, investment trends in Israel returned to form in 3Q with enterprise, SMB, and OEM investments dominating

• Security jumped to the top spot, including one consumer-oriented company

• Enterprise marketing tech was a very strong category for Israeli VC investment

• Financial companies took the third place slot

• Enterprise infrastructure was back in the top ten

• Developer tooling was nowhere to be seen


A closer look at Israeli venture in 1Q15


Industrial

Information

Entertainment

Logistics

Productivity

Infrastructure

Communications

Electronics

Financial

Marketing

Security

0 1 2 3 4 5 6 7 8 9 10

Israeli venture financing by target market3Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB

OEM




• For the third quarter running, Fintech was the dominant category of investment in the UK

• Enterprise marketing, security, and infrastructure were important categories

• Consumer-oriented companies dominated most categories of VC funding across the UK

• UK investors still seem willing to bet on Adtech


UK VCs continue to bet heavily on fintech


Energy

Fashion

Data

Social

Logistics

Food

Adtech

Education

Employment

Payments

Security

Marketing

Infrastructure

Financial

0 2 4 6 8 10 12 14 16

UK venture financing by target market3Q, 2015 (number of investments, top verticals)

Consumer

Enterprise

SMB

OEM




• The top three categories in German VC investment in 3Q15 were consumer lifestyle, consumer finance, and consumer social applications

• Enterprise marketing and enterprise data companies emerged as important categories as wel

• In total, the top 10 categories in Germany generated 32 investments, 22 of which were in consumer companies


The German consumer party continues


Health

Infrastructure

Adtech

CRM

Education

Travel

Logistics

Food

Real Estate

Durables

Fashion

Data

Marketing

Social

Financial

Lifestyle

0 1 2 3 4 5 6

German venture financing by target market3Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB

OEM

Telecom




• While Nordic investment swung back towards consumer, the mix was interesting

• Electronics were the most frequently funded vertical –mostly consumer but also one OEM play and one government-oriented investment

• Productivity software took second place


As usual, Nordic VC was unconventional


Infrastructure

ERP

Marketing

Entertainment

Gaming

Lifestyle

Financial

Social

Employment

Productivity

Electronics

0 1 2 3 4 5 6

Nordic venture financing by target market3Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB

OEM

Government




• As software eats the world, services will become an increasingly important business model for venture-backed startups

• This was certainly the case in 3Q15, with services taking 29% of the venture dollars invested in Europe & Israel

• Commerce continues to be important, with 20%

• SaaS and software were neck-and-neck at 17% and 15%

• Marketplaces – business that serve a price discovery function – declined to just 7%


Services & commerce dominated 3Q15


Services, 748, 29%

Commerce, 516, 20%

SaaS, 439, 17%

Software, 394, 15%

Marketplace, 170, 7%

Media, 123, 5%

Systems, 96, 4%

Components, 68, 3%

European & Israeli venture financing by target market3Q, 2015 (in US $M) (excluding mega-rounds)




• Services jumped to first place with $748M invested

• Commerce leaped over SaaS to take second place with $516M invested

• Marketplaces seem to be slowly declining


In 3Q, services recovered their lead


0

100

200

300

400

500

600

700

800


2014 2015

European & Israeli venture financing by business model(top five, in US $M, excluding mega-rounds)

Services

SaaS

Software

Commerce

Marketplace




US VCs focused on SaaS & services• US VC interest was skewed

heavily towards SaaS, Software & Services models

• Markets, commerce, and media investments also attracted US VC interest, but at much lower levels


12 11 94 3 3

64

29

63

18

33

1812

0

10

20

30

40

50

60

70

80

SaaS Software Services Marketplace Commerce Media Components Systems

VC Investments in Europe & Israel3Q, 2015 (number of investments)

No US VC involved US VC involved




• Enterprise marketing SaaS was again the most popular segment for VC investment in 3Q15 with 20 investments across the region

• Consumer social media again took the second slot, with 12 investments

• Consumer financial services were tied for second place, with 12 investments

• SMB financial services were a close third, with 11 investments


Enterprise marketing & consumer social media


0 5 10 15 20 25

SMB Marketing SaaS

Enterprise Data Software

Enterprise Development SaaS

Enterprise Security Software

Consumer Lifestyle Commerce

Consumer Fashion Commerce

SMB Financial Services

Consumer Financial Services

Consumer Social Media

Enterprise Marketing SaaS

Number of VC investments

Investment in Europe & Israel by segment by country3Q15 (segments with 5 or more investments)

UK & Ireland IsraelDACH FranceNordic IberiaBenelux South. Eur.East. Eur.




• Across Europe & Israel, US VC firms invested in 18 enterprise companies, 14 consumer companies, 2 SMB companies, and 1 OEM-oriented companies

• Enterprise SaaS & Software attracted by far more US VC interest than any other space


What business models attract US VC investments?


0 2 4 6 8 10 12

Systems

SaaS

Services

Software

Media

Services

Commerce

Marketplace

Services

Software

SaaS

OEM

SMB

Cons

umer

Ente

rpris

e

US VC Investments in Europe and Israel by end market, business model, & country, 3Q 2015 (excludes seed & mega-rounds)

Israel

UK & Ireland

Nordic

DACH

South. Eur.

East. Eur.

Benelux

France




SMB fintech is a UK-dominated segment• Over the past 15 months, 26

SMB fintech companies raised VC financing

• 14 of these companies were based in the UK

• 12 of these investments took place in 3Q15, up from 5 in 2Q15

• France and Israel saw 3 companies each in the space


0

2

4

6

8

10

12

14


2014 2015

Num

nber

of i

nves

tmen

ts

SMB Fintech VC investment in Europe and IsraelNumber of investments

Germany Belgium Finland Estonia Spain France Israel UK




Consumer electronics systems – farewell?• Over the past 15 months, 23

consumer electronics systems companies (consumer IoTdevices) raised venture finance in Europe & Israel

• Only 6 raised in the past six months, down from a record breaking 11 in 1Q15 alone


0

2

4

6

8

10

12


2014 2015

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of i

nves

tmen

ts

Consumer electronics systems - VC investment in Europe and IsraelNumber of investments

Germany Norway Poland Belgium LatviaIsrael Netherlands Finland Denmark SpainUK France Sweden




Security, strong as ever• 3Q15 saw a record-setting

number of security investments

• Within the security space, Israel and UK are the biggest sources of companies, with Sweden and Spain close behind


0

2

4

6

8

10

12

14


2014 2015

Num

nber

of i

nves

tmen

ts

Consumer gaming - VC investment in Europe and IsraelNumber of investments

Netherlands Finland Germany Spain Sweden UK Israel




Show me the SaaS• The most popular category

by far for SaaS investments across the geography was marketing

• Productivity SaaS applications came in second, with a focus on consumer and SMB offerings

• SaaS-based development tools and CRM SaaS products are also important categories


0 5 10 15 20 25 30

Financial

Infrastructure

Security

Data

Employment

Collaboration

CRM

Development

Productivity

Marketing

SaaS VC investment in Europe and Israelby vertical and target market, 3Q 2015 (top 10 verticals)

Consumer Enterprise SMB




Services, diverse & dominated• This graph shows the top ten

verticals within the services category

• Not surprisingly, the category is dominated by financial services and payments – two services types that are relatively easy to deliver digitally

• But the there is a huge diversity of the types of services being delivered by venture-backed startups, including educations, marketing, communications, and logistics


0 5 10 15 20 25 30

Communications

Education

Logistics

Lifestyle

Adtech

Employment

Marketing

Infrastructure

Payments

Financial

Services VC investment in Europe and Israelby vertical and target market, 3Q 2015 (top 10 verticals)

Consumer Enterprise SMB




Based in , I was previously a partner at . Before that, I helped run the

European seed program for . I moved to London after seven years in

during which I worked as a VC with and . I’m originally from .

My VC investments include and . Angel investments include and many more.

If you found this useful, I hope you’ll subscribe to my blog.54

Gil DibnerTo invest in the best European & Israeli enterprise startups,

consider backing me on here. Lots of exciting stuff in thepipeline – and you’ll be in pretty good company.

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Thank youPrepared by Gil Dibner @gdibnerblog: yankeesabralimey

Steinerne Brücke, Regensburg, GermanyOldest vaulted stone bridge in Germany (built 1135-1146)



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