Venture Capital Report Europe | 3Q | 2019 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 2019 include: • European companies smashed the all-time record for annual investment, surpassing the amount raised in 2000 during the dot-com bubble. • Despite the upcoming Brexit deadline, the UK continued to take the lion’s share of startup investment and exits. • VC fundraising is on track for the best year since 2000, with €3.34 billion raised in 25 fund closings during 3Q. • While M&A activity was fairly average in 3Q, the IPO market suffered through another anemic quarter with the fewest IPOs in 6 years. VENTURE CAPITAL REPORT 2 EUROPEAN VC FINANCING SETS NEW ANNUAL RECORD FINANCING Equity Financings in European VC-Backed Companies (2016–2019) With one quarter remaining in 2019, European entrepreneurial ventures have already broken the € 10.00 1200 all-time annual record for VC financing set during the € 9.00 dot-com bubble 19 years ago. While the number of 1000 € 8.00 deals has been trending downward since 2Q 2018, € 7.00 the total amount raised in 3Q was the second-largest 800 since 2000. The fact that this milestone has been € 6.00 achieved in spite of the turmoil surrounding Brexit, € 5.00 600 along with credible signs of recession, makes this all € 4.00 400 the more remarkable. € 3.00 € 2.00 FlixMobility GmbH, a German provider of long 200 distance mobility services, raised the top deal of the € 1.00 € 0.00 0 quarter with a €500 million 4th round. 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 Amount Raised (€B) € 3.82 € 4.27 € 4.58 € 5.54 € 5.81 € 5.63 € 4.91 € 6.33 € 5.48 € 5.62 € 7.14 € 9.39 € 8.19 Number of Deals 776 876 891 853 840 927 831 959 811 876 816 859 723 VENTURE CAPITAL REPORT 3 EQUITY DEALS BY ROUND CLASS FINANCING Number of Deals for European VC- Backed Companies (2016-2019) 300 250 200 150 100 50 0 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 Seed 75 93 92 103 120 126 104 144 123 113 89 85 82 First 253 235 231 247 212 277 232 263 238 261 244 267 237 Second 95 114 143 120 126 110 110 143 113 126 132 152 103 Later 207 257 238 220 229 265 260 271 236 263 255 274 248 VENTURE CAPITAL REPORT 4 EQUITY INVESTMENT BY ROUND CLASS FINANCING Amount Raised (€M) by European € 7,000 VC-Backed Companies (2016-2019) € 6,000 € 5,000 € 4,000 € 3,000 € 2,000 € 1,000 € 0 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 Seed € 74 € 93 € 106 € 83 € 149 € 88 € 101 € 137 € 165 € 122 € 116 € 106 € 166 First € 668 € 930 € 925 € 1,010 € 590 € 921 € 724 € 1,200 € 1,005 € 1,137 € 1,106 € 1,134 € 872 Second € 426 € 556 € 848 € 812 € 931 € 772 € 1,000 € 1,271 € 1,236 € 808 € 1,432 € 1,168 € 1,519 Later € 2,464 € 2,450 € 2,190 € 2,488 € 3,766 € 3,319 € 2,860 € 3,231 € 2,600 € 3,086 € 3,912 € 6,659 € 5,419 VENTURE CAPITAL REPORT 5 EQUITY FINANCINGS IN EUROPEAN VC-BACKED COMPANIES, MEDIAN DEAL SIZE (2016–2019) FINANCING € 3.50 Median Equity Deal Size [€M] € 3.00 € 2.50 € 2.00 € 1.50 € 1.00 € 0.50 € 0.00 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 Median Equity Deal Size (€M) € 1.52 € 1.54 € 2.00 € 1.60 € 1.91 € 1.57 € 1.70 € 2.39 € 2.50 € 2.00 € 2.52 € 2.46 € 3.00 VENTURE CAPITAL REPORT 6 EQUITY INVESTMENT BY INDUSTRY GROUP (3Q 2019) FINANCING Industry Information Technology Breakdown 2% 5%3% by Number Business & Financial Services of Deals 29% Healthcare startups secured the largest share of VC funding in 16% Consumer Services 3Q, raising €2.29 billion in 113 deals. Following close behind Healthcare was Business & Financial Services, with €2.23 billion across 182 Consumer Goods rounds. 20% Industrial Goods and Materials Drilling down to more specific sectors, the biggest winners were 25% Energy and Utilities companies in the Payment/Transactional Processing, Biotechnology Therapeutics, Clinical Decision Support Software, 2% Business Applications Software, and Transportation Services Industry Healthcare Breakdown 3% 2% spaces. Business & Financial Services by Amount 28% 19% Raised Consumer Services Information Technology Energy and Utilities 19% Industrial Goods and Materials 27% Consumer Goods VENTURE CAPITAL REPORT 7 TOP EUROPEAN EQUITY DEALS (3Q 2019) FINANCING Industry Industry Industry Brief Close Round Raised Round Investors Company Name Location Code Segment Group Description Date Type (€M) (* denotes lead) Technology Crossover Ventures*; Permira Holdings Ltd.*; Odyssey 44; Luxor Capital FlixMobility Munich, Transportation Consumer Provider of long distance Travel and Leisure 7/18/2019 VC 4th €500.00 Group; HV Holtzbrinck Ventures Adviser GmbH; GmbH Germany Services Services mobility services. European Investment Bank; BlackRock Alternative Investors; Baillie Gifford & Co. Ltd. Provider of a subscription Medical Software Vostok New Ventures Ltd.; Saudi Arabia Public Babylon Clinical Decision health service that enables London, UK and Information Healthcare 8/2/2019 VC 3rd €495.12 Investment Fund*; Munich Re/ERGO Corporate Holdings Ltd. Support users to consult a doctor via a Services Venture Fund; Kinnevik AB; Individual Investor(s) mobile app. Merian Chrysalis Investment Company Ltd.; IVP; Payment/ Financial Business and IPGL; HMI Capital LLC; Forsta AP-fonden; Klarna Stockholm, Provider of payment solutions Transactional Institutions and Financial 8/6/2019 VC 5th €414.10 Dragoneer Investment Group*; Commonwealth Holding AB Sweden for e-commerce. Processing Services Services Bank of Australia; BlackRock Alternative Investors Struengmann Family Office; Steam Athena Developer of personalized Capital; Redmile Group LLC; Platinum Asset Mainz, Biotechnology BioNTech SE Biopharmaceuticals Healthcare therapies for cancer and other 7/9/2019 VC 3rd €287.93 Management; Mirae Asset Venture Investment Germany Therapeutics diseases. Co. Ltd.; Jebsen Capital; Invus Group; FMR LLC*; BioVeda China Fund Zhejiang United Investment Group; Watrium AS; CMR Cambridge, Medical Devices Developer of surgical robotics LGT Capital Partners Ltd.; Escala Capital Surgical Devices Healthcare 9/17/2019 VC 4th €218.75 Surgical Ltd. UK and Equipment solutions. Investments Cyprus; Cambridge Innovation Capital Plc VENTURE CAPITAL REPORT 8 MOST ACTIVE INVESTORS IN EUROPEAN VC-BACKED COMPANIES (3Q 2019) FINANCING 35 33 Deals Completed 30 25 20 15 12 12 11 10 9 5 0 Hiventures Venture Capital Bpifrance Investissement Mercia Technologies PLC Partech Partners Idinvest Partners Fund Management Co. Ltd. SAS VENTURE CAPITAL REPORT 9 UK COMPANIES CONTINUE TO SHRUG OFF BREXIT, LEADING EUROPE IN VC INVESTMENT FINANCING Number of 6% Rest of Europe Deals by 7% Country 31% United Kingdom The United Kingdom retained its longstanding position as (Top 5) 13% Europe’s dominant country for VC investment and deal flow in 3Q, Germany despite the upcoming Brexit deadline. The UK’s share of deals France and total financing was just shy of one-third. 13% 23% Sweden Germany was the runner-up, taking one-quarter of European 30% funding. Spain Amount Raised 7% United Kingdom by Country 7% (Top 5) 33% Germany 10% Rest of Europe France 19% 18% Sweden 25% Switzerland VENTURE CAPITAL REPORT 10 VC FUNDRAISING ON TRACK FOR BEST YEAR SINCE 2000 FUNDRAISING European VC Fundraising (2016–2019) European fundraisers powered another strong quarter, Based on multiple closings raising €3.34 billion across 25 fund closings in 3Q. 45 € 4.00 While these figures were down slightly from 2Q, it still 40 qualified as the second-best quarter since 2010. If this € 3.50 35 trend continues, 2019 will be the best year for € 3.00 fundraising since 2000. 30 € 2.50 Berlin-based firm Rocket Internet AG had the top fund 25 € 2.00 closing of the quarter, raising €911.45 million in the first 20 close of its Rocket Internet Capital Partners Fund II. € 1.50 15 German funds accounted for 38% of the total amount € 1.00 10 raised in 3Q, with €1.28 billion. 5 € 0.50 0 € 0.00 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 Amount Raised (€B) € 1.13 € 2.40 € 2.28 € 3.17 € 1.56 € 2.53 € 2.04 € 2.00 € 2.72 € 1.58 € 1.48 € 3.44 € 3.34 Number of Funds 22 35 20 39 19 35 32 26 21 20 24 27 25 VENTURE CAPITAL REPORT 11 TOP EUROPEAN VC FUND CLOSINGS IN 3Q 2019 FUNDRAISING Amount Closed Offering Firm Name Fund Name Location Fund Type Closing Type (€M) Status Rocket Internet Capital Multi-Stage Rocket Internet AG €911.45 Berlin, Germany Open First Partners Fund II Venture Capital Multi-Stage Lakestar LP Lakestar III €508.50 Zurich, Switzerland Open Second Venture Capital Multi-Stage Medicxi Ventures Medicxi III LP €400.00 London, UK Closed Final Venture Capital Wellington Partners Life Multi-Stage Wellington Partners €210.00 Munich, Germany Closed Final Science Fund V Venture Capital Multi-Stage Odlander, Fredrikson & Co AB HealthCap VIII LP €188.54 Stockholm, Sweden Open First Venture Capital VENTURE CAPITAL REPORT 12 EUROPEAN VENTURE CAPITAL EXIT ACTIVITY (2016-2019) LIQUIDITY The total number of exits for European VC-backed Exits for European VC–backed Companies (2016–2019) companies dipped 8% from 2Q, and it was also 11% 3Q'19 below the previous 12-quarter average.