EUROPEAN TECH EXITS REPORT Q2 2016 INTRODUCTION Since we started, one of the key aims of the team at This report mostly focuses on acquisitions, IPOs and Tech.eu has been to track all of the funding rounds and mergers involving venture-backed companies. exits in Europe, providing the most comprehensive and accurate record and analysis of the European technology This report does not include investment activity in the scene. biotech, pharma and cleantech sectors.
We do this by meticulously monitoring hundreds of We’ve worked to make this report as comprehensive and sources, across multiple languages and regions. valuable as possible. Please don’t share it publicly without written consent. Please refer to the end of this During the last 12 months we’ve published multiple report for methodology and disclaimers. For any reports focused on the funding and M&A markets at a questions or comments regarding the report we invite Europe-wide level, as well as country and vertical specific you to email [email protected]. reports. This report was written by: This report focuses on the European, Israeli and Turkish exit activity in Q2 2016. • Jaime Novoa, Analyst at Tech.eu • Robin Wauters, founding editor of Tech.eu In this report we take an in-depth look at the local exit markets in the second quarter of 2016, we discover the bigger startup exits in the old continent, as well as the investors that participated in such deals. 2 INDEX
Introduction 2 Top 10 VC-backed exits in Q2 2016 19 Index 3 Which investors had the most exits in their portfolio in Q1 2016? 20 Key Q2 2016 Exit Takeaways 4 Notable exits 21 Q2 2016 Exit Analysis 5 Notable exits: Supercell 22 Key trends 6 Notable exits: Paradox Interactive 23 Exit activity by quarter (VC-backed or not) 7 Notable exits: Withings 24 Type of exit activity by quarter (VC-backed or not) 8 Notable exits: Ticketbis 25 Exit activity by country 9 Notable exits: Onefinestay 26 Top 10 exits in Q2 2016 10 Other notable European exits 27 How many of the exited companies were VC-backed? 11 A closer look at country-specific exit activity 28 VC-backed exit activity by quarter 12 Israel 29-30 Type of VC-backed exits by quarter and total capital involved 13 Sweden 31-32 A closer look at VC-backed IPOs by quarter 14 UK 33-34 Number of VC-backed exits by size of transaction and by vertical 15 France 35-36 VC-backed exit distribution by capital raised at the time of transaction Germany 37-38 16 size and exit ratio European M&A landscape: Future predictions 39 Location of VC-backed acquired companies and acquirers 17 What does the future hold? 40 US involvement in VC-backed exits 18 Methodology and disclaimers 41-43
3 KEY Q2 2016 EXIT TAKEAWAYS
4 Q2 2016 EXIT ANALYSIS KEY TRENDS
Contraction in funding and contraction in exit activity Internet, Just Eat and Zalando hit the public markets.
Following a record-breaking first quarter for European tech, With abundant capital in the market, including at the late and mostly in terms of investment activity, the region’s various growth stages, companies continue to postpone going public, technology ecosystems saw a drop in both funding and exit opting instead to remain private and avoid the scrutiny of the activity in Q2 2016. public markets.
Total exit value, including both venture-backed and non-venture- In Q2 2016, there were four IPOs, which combined for almost backed technology companies, stood at €22 billion, down from €450 million, the second-lowest amount since the beginning of €24 billion in Q1 and €28 billion in the same quarter a year ago. 2015. Measured as total number of deals, Europe and Israel as a whole also experienced a contraction in exit activity. US participation in exits and Germany’s dominance
In terms of venture-backed companies, the same trends apply. Germany saw the highest number of venture-backed exits in the All in all, 75 private companies which had received funding from region in Q2, at 16, followed by Israel, Spain and the UK. investors exited in Q2 2016, combining for €2.4 billion; both figures represent a slight quarter-on-quarter decrease. US-based companies continued to be the main acquirers of their overseas counterparts, accounting for 22 of the region’s VC- Companies continue to choose to stay private longer, avoiding backed acquisitions. Interestingly, the involvement of US the public markets technology companies in European exits went up, both measured as a percentage of all deals and exit value, after Europe has not seen a +€1 billion IPO from a technology several quarters of continued drops. company since 2014, when local powerhouses such as Rocket 6 ANALYSIS Exit activity by quarter (VC-backed or not) €35 200 deals of Number
180 €30 Billions 160 • The combined value of all European and Israeli tech exits decreased for the second consecutive quarter €25 140 120 €20 100 • Q2 2016 was a down quarter for Europe and Israel in terms of €15 fundraising activity, and the same happened in the M&A and 80 IPO markets. Total exit value reached €22 billion in the €10 60 second quarter of 2016, 8% and 21% less than in the previous 40 quarter and year ago period, respectively €5 20 €33 €33 €7 €18 €27 €28 €19 €29 €24 €22 €- 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 • In the first half of 2016, liquidity events from local technology 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 companies reached €45 billion, versus €55 billion in the first Exit volume Exit deals half of 2015
Exit deals Exit volume • The number of exits also decreased versus the previous quarter. However, it’s worth noting that the number of M&A YoY change -2% -21% transactions and IPOs have increased significantly compared QoQ change -7% -8% to 2014, from 102 in Q2 2014 to 165 in Q2 2016 7 ANALYSIS Type of exit activity by quarter (VC-backed or not) 200 180 • In Q2 2016, there were: 160 • 147 acquisitions 140 • 11 mergers Number of deals 120 • 7 IPOs 100 80 • The number of acquisitions decreased in the second quarter 60 of 2016, from 164 in the first quarter to 146 in the most recent 40 period, a -11% drop 20 0 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 • On the other hand, both mergers and IPOs increased on a 2014 2014 2014 2015 2015 2015 2016 quarterly basis 2014 2015 2016 Acquisition IPO Merger
• As the graph shows, and as highlighted in the previous slide, Acquisition IPO Merger the number of exits in Europe and Israel has remained stable over the past six quarters YoY change -3% -30% -38% QoQ change -11% +17% +22%
8 ANALYSIS Exit activity by country Location of exited companies Location of buyers
• In Q2 2016, 33 German companies were involved in an M&A Germany 33 US 44 transaction or hit the public markets, the highest number in Europe with a significant advantage compared to Israel, Israel 20 Germany 22 which came in second with 20 total exits Sweden 18 France 15
• Sweden, Spain and the UK rounded the top five, with 18, 18 Spain 18 UK 10 and 17 exits, respectively. France was the only other country UK 17 Sweden 7 in Europe to surpass the 10 exits milestone in the second
quarter of 2016 France 12 Russia 7
Russia 8 Denmark 7 • 17 different countries in Europe and Israel saw at least one exit in the period Switzerland 7 Spain 6
Denmark 7 The Netherlands 5 • US-based companies continued to be the main acquirers of The 6 their overseas counterparts, accounting for 44 exits. Germany Netherlands Israel 5 and France were second and third, respectively, as a consequence of domestic deals 9 ANALYSIS Top 10 exits in Q2 2016 All industries Internet/digital sector
• Finland-based gaming powerhouse Supercell was Supercell (FI) €9,100 Supercell (FI) €9,100 responsible for the largest exit in Europe and Philips Lighting (NL) €3,000 Qlik Technologies Israel in Q2 2016. Tencent acquired an 90% stake (SE) €2,700 in the company, which was previously owned by SoftBank, valuing it at €9.1 billion Qlik Technologies (SE) €2,700 Premier Farnell (UK) €860
Saft (FR) €950 Xura (IL) €584
Premier Farnell (UK) €860 • The lightning division of Philips, valued at €3 Privalia (ES) €500 billion in an IPO, and Qlik Technologies’ Yoigo (ES) €612 Paradox Interactive acquisition by private equity firm Thoma Bravo for (SE) €377 €2.7 billion, were the two other larger exits of Q2 Xura (IL) €584 SintecMedia (IL) €363
Privalia (ES) €500 Apical (UK) €318 • In terms of pure internet and/or digital companies, Paradox Interactive (SE) €377 it’s worth noting that three different Israeli CloudLock (IL) €266 companies ranked in the top 10, the largest SintecMedia (IL) €363 number for any single country Withings (FR) €170
Million Million 10 ANALYSIS How many of the exited companies were VC-backed?
• 48% of all exited companies in Q2 2016 had previously raised 100% funding from venture capital firms, virtually the same rate as 90% in the previous quarter 80%
70%
• This means that the number of European and Israeli VC- 60% backed companies being acquired or floated on the public markets continues to be on the rise, especially when 50% compared with previous quarters in 2014 and 2015 40%
30%
20% • In total, 75 VC-backed companies were acquired in Q2 2016, the second highest amount since the beginning of 2014, only 10% surpassed by 86 venture-backed companies that were 0% involved in an exit in Q1 2016 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 VC-backed Non-VC backed
11 ANALYSIS VC-backed exit activity by quarter €18 100 Number of deals of Number €16 90 80 Billions €14 • Liquidity events for VC-backed technology companies in €12 70 Europe and Israel was also down on a quarterly basis. In Q2 60 €10 2016, total exit value for venture-backed startups reached 50 €8 €2.4 billion, down from €3.1 in the previous quarter and €7.1 40 €6 billion in the same quarter a year ago 30 €4 20 €2 10 €8.5 €6.9 €2.3 €16.0 €2.5 €7.1 €3.1 €4.6 €3.1 €2.4 €- 0 • The number of VC-backed exits decreased compared to Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 too, falling from 86 to 75. On a yearly basis, exit deals 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 increased +29% and continued to be on the rise since the Exit volume Exit deals beginning of 2015 100% 80% • In terms of exit volume, exit activity from VC-backed 60% companies in the first half of 2016 has dropped by almost 40% 50% compared to the first six months of 2015 20% 0% • In only 33% of all venture-backed exits was the actual price of Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 the transaction revealed, a similar rate compared to previous 2014 2015 2016 quarters Disclosed Not disclosed 12 ANALYSIS Type of VC-backed exits by quarter and total capital 100 involved 90 80 • Acquisitions accounted for the vast majority of venture- 70 60 backed exits in Q2 2016, at 72, down from 80 in the 50
previous quarter. These 72 acquisitions combined for €1.9 Number of deals 40 30 billion, versus €2.5 billion in Q1 20 10 0 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 2014 2014 2014 2015 2015 2015 2016 • As the first graph to the right shows, in terms of number of 2014 2015 2016 deals, exit activity from VC-backed companies increased Acquisition IPO Merger significantly in the first half of 2016 compared to the same period a year ago €14 €12 €10 Billions €8 • Whilst the number of IPOs remained relatively the same €6 compared to the previous quarter, mergers increased €4 €2 significantly, from one to five €- Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016
Acquisition IPO Merger 13 ANALYSIS A closer look at VC-backed IPOs by quarter
14 € 7 • IPO activity in Europe and Israel continues to be limited. There have been no IPOs of at least €1 billion since 2014, Billions 12 € 6 when companies such as Rocket Internet, Zalando, Zoopla or Just Eat hit the public markets 10 € 5
8 € 4 • The largest IPO since 2014 was Showroomprive’s in late 2015, at a €660 million valuation 6 € 3
• The four IPOs that took place in Q2 2016 combined for 4 € 2 almost €450 million, the second lowest amount since the beginning of 2015 2 € 1
0 € 0 • These were the VC-backed companies that went public in Q2 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 2016: 2014 2014 2014 2015 2015 2015 2016 • Paradox Interactive (Sweden): €377 million 2014 2015 2016 • Kerlink (France): €37.1 million IPO transaction volume Number of IPOs • Osirium (UK): €22.6 million • Simris (Sweden): €13 million 14 ANALYSIS Number of VC-backed exits by size of transaction and 30 by vertical 25 • For the second consecutive quarter, there were no exits 20 greater than €500 million involving venture-backed 15 10
technology companies Number of deals 5 0 • Exits smaller than €20 million and of between €20 million Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 and €50 million increased versus Q1 2016, whilst those in the 2014 2015 2016 €50 million to €250 million range dropped < €20M €20-50M €50-100M €100-250M €250-500M €500M-1B >€1B Number of deals of Number • Category-wise, e-commerce ranked first as a sector in Europe €900 14 €800 12 and Israel, mostly thanks to Privalia’s acquisition by Vente- €700 €600 10 Privee for €500 million. E-commerce was also the category Millions €500 8 with the highest number of exits, at 13 €400 6 €300 4 €200 €100 2 • Gaming came in second, at €377 million, largely as a €0 0 consequence of Paradox Interactive’s IPO
Exit volume Exit deals 15 ANALYSIS VC-backed exit distribution by capital raised at the time of transaction and exit ratio Funding raised by exited companies
• The charts to the right represent the amount of funding 5 European and Israeli exited companies had raised at the time 4 of exit. The analysis is limited by the number of deals in which the price of the acquisition is disclosed and/or the 3 company’s previous funding is known 2 2
1 1 1 1 1
• Five of the companies which exited in Q2 2016 had raised less than €5 million, and four had raised between €20 million < €5M €5-10M €10-20M €20-50M > €100M and €50 million Exit-to-funding ratio
5 4 • Exit-to-funding ratio shows a significant increase in bigger 3 3 3 exits -in comparison to raised capital- in Q2 2016 versus Q1. 2 Nine of the companies that were sold or floated in the public 1 1 markets exited for at least five times the amount of funding they had previously raised < 1X 1X to 2X 2X to 5X 5X to 10X > 10X Q1 2016 Q2 2016 16 ANALYSIS Location of VC-backed acquired companies and acquirers
• As was the case in terms of overall exit Germany 16 US 22 activity, Germany accounted for the highest number of VC-backed exits in Q2 2016, with 16 Israel 12 Germany 12
Spain 10 France 7
• Israel and Spain ranked second and third, with UK 9 UK 3 12 and 10 exits, respectively. No other country saw more than 10 VC-backed exits in the Sweden 6 Sweden 3 second quarter of 2016 France 6 Spain 3
Israel 3 Denmark 4 • US companies remained as the main acquirers Denmark 3 of European and Israeli technology startups, Russia 2 with 22 deals, or one third of all acquisitions in The Netherlands 2 the period Finland 2
Russia 2 Belgium 2
17 ANALYSIS US involvement in VC-backed exits US acquisitions of European and Israeli tech companies
€4.0 25 deals of Number €3.5 20 • The involvement of US companies in European and Israeli €3.0 Billions tech exits went up in Q2 2016. US-based companies were €2.5 15 responsible for 22 exits, compared to 17 in the previous €2.0 quarter; these exits combined for more than €700 million €1.5 10 €1.0 5 €0.5 €0.6 €0.7 €3.5 €0.7 €0.8 €0.6 €0.7 €1.3 €0.7 €0.0 €0.3 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 • The importance of US companies in local exits had trended Exit volume Acquisitions by US companies down over the past few quarters, but increased in Q2 2016 as a percentage of all deals, at 29%
43% 29% 28% • US acquisitions of European and Israeli tech companies 21% accounted for 28% of the region’s €2.4 billion in venture- backed exits in the second quarter of 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016
US involvement as % of all deals US involvement as % of total exit value 18 ANALYSIS Top 10 VC-backed exits in Q2 2016
Privalia (ES) €500 • Barcelona-based online private sales club Privalia got acquired by French competitor Vente-Privee for €500 million, Paradox Interactive (SE) €377 becoming the largest venture-backed exit by a European technology company in Q2 CloudLock (IL) €266
Withings (FR) €170 • Privalia had raised north of €200 million in funding from Ticketbis (ES) €165 Caixa Capital Risc, Nauta Capital, Highland Capital Partners, Index Ventures, Sofina, Insight Venture Partners and General Magic Pony Technology (UK) €136 Atlantic Stylight (DE) €80
• Paradox Interactive and CloudLock were the two other Vinzeo (ES) €74 companies with exits bigger than €200 million Onefinestay (UK) €72
• It’s also worth highlighting the acquisitions of Withings (€170 MagnaCom (IL) €54 million) by Nokia and Ticketbis, acquired by eBay for €165 million. Spain was the country with most exits in the top 10 Million
19 ANALYSIS Which investors had the most exits in their portfolio in Q2 2016?
OurCrowd 3 • 11 different investors had more than one exit in Q2 2016. OurCrowd, Holtzbrinck Ventures and Index Ventures ranked Holtzbrinck Ventures 3 the highest, with three exits each Index Ventures 3
• The ranking of European and Israeli investors with most exits Ventech 2 in Q2 is dominated by UK and Germany-based firms, with Seed Capital 2 notable examples such as Holtzbrinck Ventures, Balderon Capital, Index Ventures, Octopus Investments, IBB or Octopus Investments 2 E.ventures. It’s worth noting that, while located in Germany and the UK, some of these firms have a strong pan-European IBB Beteiligungsgesellschaft 2 focus, investing across Europe E.Ventures 2
Creathor Venture 2 • Nordic firms Seed Capital or Creathor Venture had two exits each in Q2 Balderton Capital 2
Intel Capital 2 • Intel Capital was the only corporate investor to complete more than one exit in Q2 2016 20 NOTABLE EXITS NOTABLE EXITS IN Q2 2016 Supercell
Finnish mobile gaming powerhouse Supercell has become one of the greatest successes in the history of European entrepreneurship.
SoftBank first acquired a 51% stake in the company in 2013, at a valuation of $1.5 billion. Less than two years later, the Japanese telco upped its take in Supercell to 73.2%, increasing its Name of company Supercell valuation to more than $3 billion. Vertical Gaming
Prior to both deals, Supercell had raised more than €120 million Founded in 2010 in funding from Accel Partners, Atomico, Initial Capital, Index Ventures and London Venture Partners, amongst others. Employees* 319 VC-backed - The company co-founded and led by Ilkka Paananen, which has produced hit games such as Hay Day and Clash Of Clans, Acquired by Tencent exchanged hands once again in June 2016, as China’s Tencent reached an agreement to buy Supercell from SoftBank, at a Price €9.1 billion valuation of $10.2 billion, thus becoming one of the greater exits in the history of European tech. Investors -
* According to LinkedIn data. 22 NOTABLE EXITS IN Q2 2016 Paradox Interactive
Whilst European gaming companies such as Supercell, King.com or Rovio have grabbed most of the headlines over the past few years, there’s also a group of experienced and pre-internet studios that continue to produce solid titles and strong financial results.
Stockholm-based Paradox Interactive is an example of the latter. Name of company Paradox Interactive The company, founded in 1999, has focused since day one on building historical strategy computer games, brining in more Vertical Gaming than €60 million in revenue in 2015. Founded in 1999
Throughout the years, Paradox had raised funding from Spiltan Employees* 186 and Peter Lindell, partner and chairman of Rite Ventures, and VC-backed Yes most recently sold a 5% stake in the business to Chinese giant Tencent. Acquired by IPO
More than 15 years after its foundation, Paradox Interactive went Valuation €377 million public on the Nasdaq First North on May 2016, at a valuation of €377 million. Investors Spiltan, Peter Lindell
* According to LinkedIn data. 23 NOTABLE EXITS IN Q2 2016 Withings
France-based Withings is one of the oldest connected health product manufacturers in Europe. The company, founded by Eric Carreel and Cedric Hutchings in 2008, has developed multiple products over the years, including activity trackers, smart weighing scales, thermometers, blood pressure monitors, home and baby monitors.
Name of company Withings Prior to its acquisition by Nokia in April 2016 for €170 million, Withings had raised €30.3 million in funding from French Vertical Health investors, including Ventech, Bpifrance, IDInvest Partners and Founded in 2008 360 Capital Partners. Employees* 204
As a result of its acquisition, which is expected to receive final VC-backed Yes (€30 million) approval by regulators in Q3 2016, Withings will become part of the company’s Nokia Technologies business. Acquired by Nokia
Withings has more than 200 employees across offices in Paris, Price €170 million Cambridge, the US and Hong Kong. Ventech, Bpifrance, IDInvest Partners, 360 Investors Capital Partners
* According to LinkedIn data. 24 NOTABLE EXITS IN Q2 2016 Ticketbis
Jon Uriarte and Ander Michelena co-founded Ticketbis in 2009 with the objective of following in the footsteps of established ticket marketplaces such as Viagogo or Seatwave.
The company focused from the very beginning on building a scalable and global business model, launching in 48 countries in five years. Name of company Ticketbis Since its foundation, Ticketbis raised north of €15 million from Vertical E-commerce various investors, including Spanish public entities, the venture Founded in 2009 arm of local municipalities in Spain, and Active Venture Partners, the only institutional investor on board. Employees* 232 VC-backed Yes In May 2016, the company was acquired by eBay for €165 million, providing a solid return to investors and also for the Acquired by eBay company’s founding team, which still owned the majority of the company. Price €165 million
Ticketbis currently operates under eBay’s StubHub umbrella, the Investors Active Venture Partners ticketing platform acquired by eBay in 2007.
* According to LinkedIn data. 25 NOTABLE EXITS IN Q2 2016 Onefinestay
Multiple travel companies have been founded over the past few years, but not many have been able to build a significant business that challenge traditional hotel chains and more established companies.
Onefinestay is an exception, as the London-based company was able to gain traction in the market by providing a similar service Name of company Onefinestay to Airbnb, but focused on high-end homes with a combination of a hotel-like service for hosts and travelers. Vertical Travel Founded in 2009 Founded in 2009, Onefinestay raised more than €70 million throughout the years, from notable investors such as Index Employees* 321 Ventures, Intel Capital, PROfounders Capital, as well as the VC-backed Yes venture arm of hotel chains such as Hyatt. Acquired by Accor Hotels The company was acquired in Q2 2016 by Accor Hotels for €148 Price €148 million million, as the French travel giant tries to enter the private rentals for high-end stays market. Index Ventures, Intel Capital, Canaan Partners , Investors Hyatt Hotels Corp, PROfounders Capital, Intel Capital, Quadrant Capital Advisors
* According to LinkedIn data. 26 OTHER NOTABLE EUROPEAN EXITS VC-backed (or not)
Privalia CloudLock Magic Pony Technology Yogitech (Spain, Vente Privee) (Israel, Cisco) (UK, Twitter) (Italy, Intel)
Crosswise Two Big Ears Seene StickyAds (Israel, Oracle) (UK, Facebook) (UK, Snapchat) (France, Comcast)
27 A CLOSER LOOK AT COUNTRY-SPECIFIC EXIT ACTIVITY ISRAEL: ANALYSIS VC-backed exit activity in Q2 2016 11 9 8 8 7 6 6
€428 million 3 3 2 12 exits 1 1 1 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 Location of acquirers of Israeli companies Acquisition IPO Merger
5 25% 30% 36% 31% 40% 50% 47% 67% 67% 63% 3
2 75% 70% 64% 69% 60% 50% 53% 1 1 33% 33% 37%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 US Israel Australia Singapore Sweden 2014 2015 2016 VC-backed Non VC-backed 29 ISRAEL: ANALYSIS VC-backed exit activity in Q2 2016
12 Israeli companies were involved in an exit in Q2 2016, Notable venture-backed Israel exits in Q2 2016: combining for €428 million. The latter represents a significant decrease compared to the previous quarter, • CloudLock: €266 million, Cisco when exits from Israel-based startups reached €1.3 billion, despite the number of total exits increasing on • MagnaCom: €54 million, Broadcom quarterly basis. • Crosswise: €45 million, Oracle All 12 exits were acquisitions or mergers, with no IPO involving an Israeli company in the second quarter of • Rocketick: €36 million, Cadence 2016. • Implisit Insights: undisclosed, Salesforce The traditionally strong relationship between the US and Israel continued, as overseas companies were responsible for five of Israel’s 12 venture-backed exits in Q2.
30 SWEDEN: ANALYSIS VC-backed exit activity in Q2 2016 5
4
3 3 €412 million 2 2 2 1 1 1 1 1 1 6 exits Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 Acquisition IPO Merger Location of acquirers of Swedish companies
2 33% 50% 50% 53% 71% 69% 67% 86% 87% 1 1 100% 67% 50% 50% 47% 29% 31% 33% 14% 13% US UK Sweden Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 VC-backed Non VC-backed 31 SWEDEN: ANALYSIS VC-backed exit activity in Q2 2016
Both the number of exits and total exit volume went down Notable venture-backed Swedish exits in Q2 2016: in Sweden, compared to the previous quarter. The country recorded six venture-backed exits worth €412 • Paradox Interactive: €377 million, IPO million, compared to eight and €523 million in Q1. • X5 Music: €22 million, Warner Music 91% of all exit value generated in Swedish exits could be attributed to Paradox Interactive’s IPO. The gaming • Simris: €13 million, IPO company hit the public markets in May at a €377 million valuation. The company had previously raised €21 million • Expertmaker: undisclosed, eBay from Spiltan and other private investors.
Despite not being a venture-backed company anymore, it’s also worth noting the €2.7 billion of Qlik Technologies by Thoma Bravo. The currently US-headquartered company continues to have a significant presence in the Swedish market and went public on the Nasdaq in 2010.
32 UK: ANALYSIS VC-backed exit activity in Q2 2016
11
8 6 5 5 5 5 5 3 3 €306 million 2 1 1 1 1 9 exits Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 Acquisition IPO Merger Location of acquirers of UK companies
7
47% 63% 62% 61% 73% 64% 72% 67% 73% 84%
53% 38% 38% 39% 1 27% 36% 28% 33% 27% 16% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 US France 2014 2015 2016 VC-backed Non VC-backed 33 UK: ANALYSIS VC-backed exit activity in Q2 2016
UK venture-backed exits decreased in Q2 2016 Notable venture-backed UK exits in Q2 2016: compared to the previous quarter, when the country’s exit activity peaked at 11 M&A transactions. In Q2, the • Onefinestay: €148 million, Accor country saw nine exits worth €306 million, representing a slight quarter-on-quarter drop (from €316 million). • Magic Pony Technology: €136 million, Twitter
All but one exit were acquisitions. The exception was • Seene: undisclosed, Snapchat security startup Osirium, which went public at a €22.6 million valuation in April. The company had received • Two Big Ears: undisclosed, Facebook funding from Octopus Investments and Herald Investments, among others. • HouseTrip: undisclosed, TripAdvisor
US companies were responsible for seven of the country’s eight acquisitions. Several US-based tech giants acquired at least one UK company in Q2, such as Facebook, Twitter or Snapchat.
34 FRANCE: ANALYSIS VC-backed exit activity in Q2 2016 8
5 5 5 5 4 €219 million 3 2 6 exits 1 1 1 1 1 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 Acquisition IPO Merger Location of acquirers of French companies
2 47% 57% 50% 50% 67% 69% 62% 89% 1 1 1 100% 100%
53% 43% 50% 50% 33% 31% 38% 11% France Finland UK US Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 VC-backed Non VC-backed 35 FRANCE: ANALYSIS VC-backed exit activity in Q2 2016
There were six VC-backed exits in France in Q2 2016, Notable venture-backed French exits in Q2 2016: one more than in the previous quarter. These exits combined for €219 million, a slight drop compared to Q1 • Withings: €170 million, Nokia (€275 million). • Kerlink: €37.1 million, IPO All but one of the six deals were acquisitions. French Internet of Things company Kerlink went public at a €37.1 • StickyAds: undisclosed, Comcast million valuation after having raised about €1 million from various private investors. • LocalEyes: undisclosed, BeMyEye
The highlight of the quarter was arguably the acquisition • Finsquare: undisclosed, Lendix of hardware startup Withings by Nokia for €170 million, which had raised €30 million from well known investors IDInvest Partners, Bpifrance, Ventech and 360 Capital Partners.
36 GERMANY: ANALYSIS VC-backed exit activity in Q2 2016 19 18
12 11
7 7 6 4 3 2 2 2 €104 million 1
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 16 exits 2014 2015 2016 Acquisition IPO Merger
Location of acquirers of German companies 42% 47% 52% 12 61% 62% 67% 78% 68% 77% 93%
58% 53% 48% 1 1 1 39% 38% 33% 22% 32% 23% 7% Germany US Switzerland The Netherlands Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 2014 2015 2016 VC-backed Non VC-backed 37 GERMANY: ANALYSIS VC-backed exit activity in Q2 2016
There were 16 venture-backed exits in Germany, the Notable venture-backed German exits in Q2 2016: highest number for any European country in Q2 2016. These exits combined for €104 million. Both cases • Stylight: €80 million, 7commerce / ProSiebenSat.1 represent a slight drop compared to the previous quarter. • Auctionata: undisclosed, Paddle8 (merger)
It’s important to note than in only two of Germany’s 16 • SumUp: undisclosed, Payleven (merger) exits was the price of the acquisition disclosed. This means that the actual exit figure for the quarter could be • Amaze: undisclosed, Zalando significantly higher than €104 million. • Easyfolio: undisclosed, Hauck & Aufhäuser
The vast majority of deals were domestic (German • Inexio: undisclosed, Warburg Pincus companies buying local startups).
38 EUROPEAN M&A LANDSCAPE: FUTURE PREDICTIONS WHAT DOES THE FUTURE HOLD?
Contraction in the exit market - The involvement of US companies in European and Israeli exits went up for the first time in several quarters, both In terms of exit volume, exit activity from VC-backed measured as a percentage of all venture-backed deals companies in the first half of 2016 has dropped by almost and total exit volume 50% compared to the first six months of 2015. This, in essence, is not good news for European and Israeli Contraction in the exit market entrepreneurs and investors. Despite the fact that companies are opting to stay private However, a closer look at the data reveals a few facts that longer in most technology ecosystems around the world, the would represent solid improvements in local exit activity, case in Europe is notable, since the region has not seen an such as: IPO of at least €1 billion since 2015.
- The number of venture-backed companies being sold has An increasing number of companies going public would increased significantly over the past few quarters, from represent good news for entrepreneurs and investors alike, 113 in the first half of 2015 to 161 in the same period in and we hope the number grows in coming quarters. 2016 However, it’s worth noting that the beginning of the third - Exit-to-funding ratio shows a significant increase in bigger quarter of 2016 has seen two of the larger exits in the history exits -in comparison to raised capital- in Q2 2016 versus of European tech, Supercell’s acquisition by Tencent at a Q1. Nine of the companies that were sold or floated in the €9.1 billion valuation and ARM’s exit to SoftBank for €29 public markets exited for at least five times the amount of billion, which took place in early Q3 2016.
funding they had previously raised 40 METHODOLOGY & DISCLAIMERS
From November 2013 onwards, we’ve continuously from the euro, we’ve converted the amounts around the monitored approximately 120+ sources of news and date the transaction was first announced or reported – information across multiple European regions and we cannot guarantee that the converted amount exactly languages. All the mergers, acquisitions (including all mirrors the price at the time of closing of an agreement purchases of majority stakes as well as full take- (mainly because that date is rarely shared). overs)and initial public offerings by European technology companies that we tracked this way have been listed and We have opted to include non-European Union member analysed by the Tech.eu team for the purpose of this states such as Russia, Turkey, Israel, Norway, Switzerland report, along with additional transactions that were not and others in this analysis, as we consider them an reported by any of the aforementioned sources but integral part of the European technology industry as such. flagged by people from our collective networks. This is in line with Tech.eu’s overall editorial policy.
In most cases, the deal size was not disclosed, but we’ve Considering the vastness, fragmentation and breadth of included the price for acquisitions and mergers for any different languages that defines Europe, it is possible that transaction reported by a publication that we consider certain M&A transactions or IPOs were not included in our reliable and trustworthy. For IPOs, we have opted to look analysis. We believe, however, that this is as at the valuation given by the market at the moment comprehensive a report as possible for 2015. We have shares were publicly traded for the first time. In addition, included M&A transactions and IPOs based on the date when a deal size was disclosed bu tin a currency different that they were initially reported by an authoritative source
41 METHODOLOGY & DISCLAIMERS not necessarily the inking of the agreements or listings in Finally, we would like to add that our system of question. Hence, exit agreements that were sealed at the monitoring sources, and structurally saving data for end of 2015 maybe included in the data for 2016. reports, has greatly improved since we started in November 2013. It is possible that the data set has We’ve included transactions involving small and large allowed for better analysis as the past year has technology corporations, and everything in between. progressed, and we continually work to improve our data ‘Technology’ in this case encompasses digital, Web, collection and reporting. mobile, infrastructure and hardware, but we chose not to include transactions involving companies that are active Please subscribe to our newsletter to be kept up-to date in the fields of biotechnology, life sciences and on future reports, which will dive into specific verticals, ‘cleantech’ as we consider them categories worth geographies and other groups. tracking separately.
The data used for this report does not only include transactions for startups or digital-only tech companies, but also more ‘legacy’ corporations such as telcos, Internet service providers, as well as infrastructure, hardware and ‘high tech’ firms because we consider them European technology companies as much as e.g. a European-founded mobile app development startup. 42 METHODOLOGY & DISCLAIMERS
We welcome any feedback you may have on our report and methodology. If you’d like to report inaccuracies, flag possible omissions or additions to the data set, or have any other comment to share or questions to ask, please reach out to [email protected] and we will respond as soon as possible.
Thank you for reading our analysis.
Robin Wauters Jaime Novoa (Founding editor, Tech.eu) (Analyst, Tech.eu)
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