Venture Capital Report

Europe | 3Q | 2017

VENTURE CAPITAL REPORT VENTURE CAPITAL REPORT

The following report presents Dow Jones VentureSource’s quarterly findings for European venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 3Q 2017 include: • Both the number of funds and amount raised by European venture capital funds decreased compared to the previous quarter. • Venture capital investment into European companies fell by 25% from 2Q 2017 in terms of amount raised, but was up 48% year-on-year. • The number of and amount raised through M&As fell 30% and 43%, respectively, compared with the previous quarter. • Exits via IPOs saw a steep drop in the third quarter compared to 2Q 2017, both in terms of amount raised and number of IPOs.

VENTURE CAPITAL REPORT 2 EUROPEAN VENTURE CAPITAL FUNDRAISING EXPERIENCES SIGNIFICANT DROP IN 3Q 2017 FUNDRAISING

European VC Fundraising 20 European venture capital funds raised Based on multiple closings (2014–2017) €1.58 billion during 3Q 2017. Compared with 2Q 2017, total 40 € 3.50 capital raised experienced a 48% drop, and the number of € 3.04 35 € 2.85 € 3.00 fund closings decreased by 41%. € 2.57 30 Compared with the same quarter last year, amount raised € 2.23 € 2.50 € 2.08 25 increased by 24%, despite closing 13% fewer funds. € 2.03 € 1.58 € 2.00 € 1.70 20 Partech International Ventures VII, which raised €400 million, € 1.40 € 1.30 € 1.20 € 1.27 € 1.50 was the largest fund of the quarter, accounting for 25% of the 15 total amount raised in 3Q 2017. € 0.83 € 1.00 10

5 € 0.50

0 € 0.00 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Amount Raised (€B) € 0.83 € 1.40 € 1.30 € 2.03 € 1.20 € 1.70 € 2.85 € 2.57 € 1.27 € 2.08 € 2.23 € 3.04 € 1.58 Number of Funds 22 29 24 27 19 27 29 25 23 24 19 34 20

VENTURE CAPITAL REPORT 3 LARGEST EUROPEAN VC FUNDS RAISED IN 3Q 2017 FUNDRAISING

Offering Firm Name Fund Name Amount (€M) Location Fund Type Fund Category Closing Type Status

Partech International Early-stage Partech Ventures €400.00 Paris, France Closed Venture Capital Final Ventures VII Venture Capital

Multi-stage Cathay Innovation Cathay Innovation Fund €280.05 Paris, France Closed Venture Capital Final Venture Capital

Luxembourg City, Early-stage Mangrove Capital Partners Mangrove V Fund €148.78 Closed Venture Capital Final Luxembourg Venture Capital

Multi-stage BlackFin Capital Partners SAS BlackFin Tech Fund 1 €100.00 Paris, France Open Venture Capital Venture Capital First

London, Multi-stage Abingworth LLP Abingworth Bioventures VII LP €88.11 Open Venture Capital Interim United Kingdom Venture Capital

VENTURE CAPITAL REPORT 4 INVESTMENT INTO EUROPEAN VENTURE-BACKED COMPANIES PARES BACK GAINS IN 3Q 2017 FINANCING Equity Financings into Europe-based, European companies raised approximately €3.29 billion through VC-backed Companies (2014–2017) 513 deals in 3Q 2017. € 4.50 700 650 In comparison to the same quarter last year, the amount € 4.00 600 companies raised increased by 48%, while the total number of € 3.50 550 deals closed fell by some 5%. 500 € 3.00 Quarter-over-quarter figures show both the amount raised and 450 number deals declining by 25% and 7%, respectively. € 2.50 400 350 The quarter’s decline in the number of deals continued the year-to- € 2.00 300 date downward trend in this area. Moreover, the correction in the 250 € 1.50 amount raised by European venture-backed companies in 3Q 2017 200 might suggest last quarter’s spike was more of an anomaly and € 1.00 150 100 not fully representative of how the rest of the year’s equity € 0.50 financings could develop. 50 € 0.00 0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Amount Raised (€B) € 2.39 € 2.09 € 2.92 € 4.11 € 3.43 € 3.56 € 2.85 € 3.21 € 2.23 € 3.51 € 2.97 € 4.39 € 3.29 Number of Deals 402 473 497 516 471 591 543 598 539 608 610 554 513

VENTURE CAPITAL REPORT 5 EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2014–2017) FINANCING

320 Number of Deals

280

240

200

160

120

80

40

0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Seed 43 51 43 61 47 56 58 55 51 63 71 80 79 First 193 230 244 225 219 300 241 292 261 272 253 225 186 Second 72 83 87 82 89 102 106 105 103 121 146 110 118 Later 58 58 81 110 75 78 84 91 74 94 76 80 84 Restart 1 1 1

VENTURE CAPITAL REPORT 6 EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (3Q 2014–3Q 2017)

FINANCING

€ 2,500 Amount Raised (€M)

€ 2,000

€ 1,500

€ 1,000

€ 500

€ 0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Seed € 19 € 32 € 36 € 43 € 38 € 43 € 48 € 46 € 42 € 65 € 79 € 83 € 113 First € 495 € 500 € 654 € 683 € 721 € 803 € 757 € 902 € 740 € 1,116 € 961 € 1,007 € 584 Second € 247 € 830 € 446 € 937 € 643 € 811 € 800 € 580 € 455 € 597 € 755 € 730 € 827 Later € 886 € 681 € 1,690 € 2,295 € 1,981 € 1,452 € 1,053 € 1,607 € 902 € 1,615 € 846 € 1,559 € 1,556 Restart € 2 € 1 € 2

VENTURE CAPITAL REPORT 7

EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES (3Q 2014–3Q 2017) FINANCING

€ 2.50 Median Equity Deal Size [€M]

€ 2.00

€ 1.50

€ 1.00

€ 0.50

€ 0.00 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Median Equity Deal Size (€M) € 1.48 € 1.60 € 1.59 € 1.86 € 1.78 € 1.86 € 1.90 € 1.56 € 1.81 € 2.05 € 2.20 € 1.96 € 2.36

VENTURE CAPITAL REPORT 8 EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES, BY INDUSTRY GROUP (3Q 2017) FINANCING 3Q 2017 Industry Breakdown Business and Financial Services

By Number 26% 26% Consumer Goods Consumer Services received the largest allocation of investment during 3Q 2017, of Deals raising €996 million through 121 deals. The sector attracted 30% of capital raised Consumer Services by European VC-backed companies in the quarter, and a 24% share of all deals Energy & Utilities 3% 4% completed in the quarter. Healthcare

Business and Financial Services ranked second, raising some €904 million 14% Industrial Goods & Materials 24% 3% through 134 deals. The sector attracted 27% of the total amount invested into Information Technology European VC-backed companies as well as a 26% share of all deals completed in the quarter. 3Q 2017 Industry Breakdown Business and Financial Services Information Technology (IT) placed third in terms of euros invested, raising €641 20% By Amount 27% Consumer Goods million, or some 20% of the total amount invested into European VC-backed Raised Consumer Services companies for the quarter. Additionally, IT, with 136 financing rounds, was 4% Energy & Utilities Europe’s most active industry, beating out Business and Financial Services by 3% Healthcare two deals. 14% Industrial Goods & Materials 2% 30% Information Technology

VENTURE CAPITAL REPORT 9 TOP 5 DEALS INTO EUROPEAN VC-BACKED COMPANIES (3Q 2017) FINANCING

Industry Industry Industry Brief Close Round Raised Round Investors Co. Name Location Code Segment Group Description Date Type (€M) (* denotes lead) Accel Partners, Digital Sky Technologies Ltd., London, Roofoods Ltd. Shopping Consumer Provider of a food delivery Later Fidelity Management & Research Co.*, General United Consumer Services 24/09/2017 €301.79 (Deliveroo) Facilitators Information Services platform. Stage Catalyst Partners, Index Ventures, T. Rowe Price Kingdom Group Inc.*

Movie / Music Operator of an online platform to Atlantic Labs Manager GmbH, Doughty Hanson, Berlin, Later SoundCloud Ltd. Producers and Media & Content Consumer Services send, receive, and distribute 11/08/2017 €142.94 Temasek Holdings Pvt. Ltd.*, The Raine Group Germany Stage Distributors music. LLC*, Union Square Ventures

Lilium GmbH Gilching, Commercial Aerospace Industrial Goods Developer of small-scale electric Second Atomico, LGT Group, Obvious Ventures 05/09/2017 €75.87 (Lilium Aviation) Germany Aircraft & Defense & Materials aircrafts. Round Management LLC, Tencent Holdings Ltd.

TTTech Software Vienna, Information Provider of time-triggered Later Computer- Development Software 14/09/2017 €75.00 Samsung Strategy & Innovation Center* Austria Technology systems. Stage technik AG Tools

Arix Bioscience Investments Ltd., Cormorant Asset London, Biotechnology Provider of biopharmaceutical Later Management LLC*, Nextech Invest Ltd., Syncona Autolus Ltd. United Biopharmaceuticals Healthcare 26/09/2017 €64.42 Therapeutics solutions. Stage Partners LLP, Woodford Investment Management Kingdom LLP

VENTURE CAPITAL REPORT 10 MOST ACTIVE INVESTORS FOR EUROPE-BASED, VC-BACKED COMPANIES (3Q 2017) FINANCING

16 Deals Completed

14 14 13 12 12 11 10 10 10 9 9

8

6

4

2

0 Force Over Mass Bpifrance Partech Ventures High-Tech Kima Ventures Sunstone Capital Balderton Capital Global Founders Capital LLP Investissement Gruenderfonds A/S Management LLP Capital SAS Management GmbH

VENTURE CAPITAL REPORT 11 EQUITY FINANCINGS INTO EUROPE-BASED, VC-BACKED COMPANIES BY COUNTRY (3Q 2017) FINANCING Number of Deals in 3Q 2017 United Kingdom The United Kingdom remained the most favored destination for equity by Country 28% financings in 3Q 2017, attaining some 41% of amount raised and 28% of all (Top 4) 37% France deals. The region received €1.34 billion across 146 deals. The amount invested was down 35% from last quarter while the deal flow decreased by 12%. Germany

Germany ranked second with €603 million raised through 70 deals. This 23%15% Russia represents a 33% decrease in capital invested and a 8% rise in the number of 6% 14% deals compared to last quarter. Rest of Europe France came in third, raising €504 million in 78 deals. It attracted 11% more capital than last quarter, through a similar level of deals. Amount Raised in 3Q 2017 United Kingdom 22% Switzerland, garnering €146 million across 30 deals, was just two financings by Country Germany shy of being in the Top 4 outright for both amount raised and number of deals. (Top 4) 41% 4% Instead, Russia, with 31 deals, rounded out the Top 4 for number of financings. France

19% 15% Switzerland

18% Rest of Europe

VENTURE CAPITAL REPORT 12 EUROPE 3Q 2017 VENTURE CAPITAL EXIT ACTIVITY LIQUIDITY

Exits for European VC–backed Companies (2014–2017) During the quarter, 46 venture-backed M&As took place in Europe, a 30% quarter-on-quarter drop and a 3Q'17 2Q'17 39% drop compared to the same quarter last year. 1Q'17 The total amount raised through European VC-backed 4Q'16 3Q'16 M&As in 3Q 2017 was €1.8 billion, representing a 43% 2Q'16 decrease from last quarter and a 52% decline from 3Q 1Q'16 2016. 4Q'15 3Q'15 Eight European venture-backed companies completed 2Q'15 initial public offerings in the quarter, indicating M&As 1Q'15 continue to be the preferred exit strategy for venture- 4Q'14 3Q'14 backed companies. 0 10 20 30 40 50 60 70 80 90 100 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 IPOs 16 11 12 17 8 17 7 11 13 17 10 17 8 M&As 60 59 63 53 64 45 67 66 75 74 62 66 46

VENTURE CAPITAL REPORT 13 TOP 3 M&As IN EUROPE (3Q 2017) LIQUIDITY

Brief Industry Close Round Amount Paid Company Name Location Industry Segment Industry Group Acquirer Description Code Date Type (€M)

Operator of an e-commerce site Berlin, for industrial and trade supplies Shopping Consumer Contorion GmbH Consumer Services 26/07/2017 Acquisition €120.00 Hoffmann SE Germany in the maintenance repair and Facilitators Information Services operations (MRO) parts sector.

Manufacturer of laser- spectroscopy systems for Electronic Cobalt Light Abingdon, United Electronics & Information Agilent Technologies pharmaceutical analysis, Components 07/07/2017 Acquisition €45.59 Systems Ltd. Kingdom Computer Hardware Technology Inc. research, security, and / Devices biomedical analysis

The Social Travel Operator of an international Travel Resort London, Club Ltd. (Love vacation home exchange Arrangement / Travel & Leisure Consumer Services 31/07/2017 Acquisition €45.59 Condominiums United Kingdom Home Swap) website. Tourism International Ltd.

VENTURE CAPITAL REPORT 14 EUROPEAN VC-BACKED IPOs (3Q 2014-3Q 2017) LIQUIDITY

During 3Q 2017, both the number of IPOs and the amount raised fell significantly in comparison to the prior quarter. € 2,500.00 18 Only eight venture-backed companies went public in the 16 quarter, down markedly from the 18 IPOs in 2Q 2017. This € 2,000.00 figure represents 53% fewer IPOs than last quarter and 38% 14 fewer than the same quarter last year. Furthermore, the 12 € 1,500.00 €207.60 million raised through the quarter’s IPOs 10 constituted a 72% and 57% decline compared to last quarter 8 and 3Q 2016, respectively. € 1,000.00 6 The largest European VC-backed IPO during the quarter was 4 NuCana PLC, which raised €84.34 million at a valuation of € 500.00 €450.07 million for its offering on NASDAQ. 2

€ 0.00 0 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Raised (€M) through IPO € 447.47 € 2,264.11 € 417.40 € 576.70 € 699.69 € 612.93 € 155.78 € 227.64 € 483.22 € 202.04 € 357.82 € 749.81 € 207.60 Number of IPOs 16 11 12 17 8 17 7 11 13 17 10 17 8

VENTURE CAPITAL REPORT 15 TOP 3 IPOs IN EUROPE (3Q 2017) LIQUIDITY

Brief Industry Close Raised through Company Name Location Industry Segment Industry Group Exchange: Ticker Description Code Date IPO (€M)

Provider of biopharmaceuticals for Biotechnology NuCana PLC United Kingdom Biopharmaceuticals Healthcare 28/09/2017 €84.34 NASDAQ: NCNA anti-cancer therapies. Therapeutics

Developer of gene therapies for Nightstar Biotechnology United Kingdom retinal dystrophies, such as Biopharmaceuticals Healthcare 28/09/2017 €63.26 NASDAQ: NITE Therapeutics Ltd. Therapeutics choroideremia (CHM).

Rovio Recreational / Home Information Finland Provider of entertainment products. Software 29/09/2017 €30.00 HEL: ROVIO Entertainment Ltd. Software Technology

VENTURE CAPITAL REPORT 16 ABOUT US & METHODOLOGY

Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and partnership opportunities, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It provides accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry and stage of development throughout the world.

The investment figures included in this report cover venture backed companies headquartered in Europe, and are based on aggregate findings of Dow Jones’ proprietary research for VentureSource.

This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. To be included, companies have to receive financing from a venture capital or private equity firm. Our figures do not include companies that have received funding solely from individual, corporate and/or government investors. The data in this report only accounts for equity funding, not convertible debt deals.

Figures contained throughout the report are current at time of editorial but subject to change without notice. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.

VENTURE CAPITAL REPORT 17 ABOUT DOW JONES

Dow Jones is a global provider of news and business information, delivering content to consumers and organizations around the world across multiple formats, including print, digital, mobile and live events. Dow Jones has produced unrivaled quality content for more than 125 years and today has one of the world’s largest newsgathering operations globally. It produces leading publications and products including the flagship Wall Street Journal, America’s largest newspaper by paid circulation; Factiva, Barron’s, MarketWatch, Financial News, DJX, Dow Jones Risk & Compliance, Dow Jones Newswires, and Dow Jones VentureSource.

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