VOLUME 14, ISSUE 6 ■ AUGUST 2018 PRIVATE EQUITY & VENTURE CAPITAL SPOTLIGHT THE RISE OF VENTURE AND IN THIS ISSUE GROWTH CAPITAL IN EUROPE €11bn in capital has already been secured by venture and growth capital funds focused on Europe that have closed this FEATURE 3 year; this is the highest figure seen at this stage in recent The Rise of Venture years. We put activity in the region under the microscope, examining the economic factors that have contributed to and Growth Capital in this. Europe Find out more on page 3 INDUSTRY NEWS 7 THE FACTS ■ Private Equity in the 9 PRIVATE EQUITY IN THE NORDIC Nordic Region REGION ■ Public Pension Funds 12 Investing in Private With the capital raised by managers based in the Nordic Equity region reaching record highs, we take a look at the growing private equity market in terms of fundraising activity, investor make-up and largest exits in the region. CONFERENCES 14 Find out more on page 9 RECENTLY RELEASED: THE 2018 PREQIN PRIVATE CAPITAL FUND TERMS THE 2018 PRIVATE CAPITAL All data in this newsletter ADVISOR can be downloaded to PREQIN FUND TERMS ADVISOR Excel for free Order Your Copy Download Sample Pages Sign up to Spotlight, our free monthly newsletter, providing insights into performance, investors, deals and fundraising, powered by Preqin data: Alt Credit Intelligence European and US Fund Services Awards: Best Data and Information Provider | Africa Global Funds Awards 2016: Best Research and Data Provider | The Queen’s SIGN UP Award for Enterprise: International Trade | HedgeWeek Global Awards: Best Global Hedge Fund Research Provider | CAIA Corporate Recognition Award www.preqin.com/contact | [email protected] 13-16 November | Hotel Okura, Amsterdam 10% Preqin discount with VIP Code: FKR2463PRQSP Hello, Attend the 18th annual SuperInvestor 2018; the world’s largest global private equity conference focused on LP/GP relations for your chance to… • Meet more than 1,100+ global attendees • Network with 380+ powerful LPs • Hear from an incomparable line-up of 250+ industry heavyweight speakers • View the delegate list & arrange invaluable meetings ahead of time on the online app We are delighted to announce the following keynote speakers have recently confirmed…. • David Rubenstein, Co-Founder & Co-CEO, The Carlyle Group • Thomas von Koch, Managing Partner & CEO, EQT • Joe Topley, Director, Ontario Teacher's Pension Plan • Seth Brody, Partner and Global Head of the Operational Excellence Practice, Apax Partners • Ilona Brom, Managing Director, Wilshire Private Markets Claim your 10% Preqin discount To register please get in touch with the event organiser on +44 (0) 20 7017 7200, [email protected] or book online. Make sure you quote your VIP code: FKR2463PRQSP. Best regards, The SuperInvestor Team THE RISE OF VENTURE AND GROWTH CAPITAL IN EUROPE THE RISE OF VENTURE AND GROWTH CAPITAL IN EUROPE With the value of venture capital transactions in Europe reaching a record high in 2017, we examine the impact of this on the exit and fundraising environments as well as investor interest in the region. hile North America has historically failed to raise more than €10bn in any is encouraging to see sustained investor Wdominated the venture capital year; however, 2017 marked the second appetite in the region. industry, and despite Asia accounting for consecutive year in which this figure had the greatest proportion of growth capital been surpassed, and 2018 has already A RECORD YEAR FOR EUROPEAN VENTURE secured over the years, Europe’s overall reached totals upwards of €11bn as at CAPITAL DEALS shares of venture and growth capital have July (Fig. 1). The largest fund closed so far Over the years, venture capital investment increased recently in line with investors’ this year is Inflexion Partnership Capital activity in Europe has increased, and twice growing interest in the region. We examine II; managed by London-based Inflexion as many transactions were completed in the activity of established firms within Private Equity Partners, the growth vehicle 2016 than in 2009. Last year, there were these markets, as well as the boosted exceeded its £700mn target to close on 2,354 venture capital deals in Europe for economies and the unprecedented rise of £1.0bn in May 2018, securing commitments a record €16bn (Fig. 2). This healthy deal the European technology industry. from prominent investors such as New flow has continued into 2018, with the total York State Teachers’ Retirement System value of deals already exceeding €10bn for STRONG FUNDRAISING IN RECENT YEARS and Illinois Municipal Retirement Fund. the fourth consecutive year. In 2008-2015, Europe-focused venture With increasing uncertainty over the future capital and growth funds collectively relationship between the UK and EU, it Fig. 1: Europe-Focused Growth and Venture Capital Fundraising, Fig. 2: Venture Capital Deals* in Europe, 2008 - 2018 YTD 2008 - 2018 YTD (As at July 2018) (As at July 2018) 140 10 Aggregate Capital Raised (€bn) 3,000 18 16 Aggregate Deal Value (€bn) 120 2,500 8 14 100 2,000 12 80 6 10 60 1,500 4 8 40 No. of Deals 1,000 6 No. of Funds Closed 2 20 4 500 0 0 2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 0 YTD No. of Growth Funds Closed No. of Venture Capital Funds Closed 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Aggregate Venture Aggregate Growth 2018 YTD Capital Raised (€bn) Capital Raised (€bn) No. of Deals Aggregate Deal Value (€bn) Source: Preqin Source: Preqin Fig. 3: Venture Capital Deals* in Europe by Location, Fig. 4: Venture Capital Exits in Europe, 2017 - 2018 YTD 2013 - 2018 YTD (As at July 2018) (As at July 2018) 100% 100% Other 7% 90% Ireland 90% 15% 26% 80% Finland 80% 6% Russia 70% 5% 70% Write-off Netherlands 60% 60% Italy IPO & Follow-on 50% 50% Switzerland Sale to GP 40% 40% Sweden 73% 69% Proportion of Total Proportion of Total Trade Sale 30% Spain 30% 20% France 20% 10% Germany 10% 0% UK 0% No. of Aggregate No. of Aggregate Deals Deal Value Exits Exit Value Source: Preqin Source: Preqin *Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt. 3 Private Equity & Venture Capital Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com THE RISE OF VENTURE AND GROWTH CAPITAL IN EUROPE THE UK AND GERMANY DOMINATE THE Fig. 5: Fund Types that Investors View as Presenting the Best Opportunities in Private MARKET Equity over the Next 12 Months Almost a third (32%) of Europe-based Small to Mid-Market Buyout 44% venture capital deals since 2013 were located in the UK, accounting for 36% of Venture Capital 25% aggregate deal value; Germany accounts for 14% of deals and 18% of aggregate Growth 21% deal value (Fig. 3). Notably, the 10 largest European venture capital deals since Secondaries 14% 2017 all took place in either country (Fig. Large to Mega Buyout 13% 7). The largest deal in the UK involved Improbable Worlds Ltd., a London- Fund of Funds 11% based start-up that provides a computer simulation platform. SoftBank, a new Other 7% investor, led a $502mn Series B fundraise; Temasek Holdings, Horizons Ventures and 0% 10% 20% 30% 40% 50% Andreessen Horowitz also participated in Proportion of Respondents the transaction. The largest transaction Source: Preqin Investor Interviews, June 2018 in Germany involved Auto1 Group GmbH, a Berlin-based online marketplace for Fig. 6: Regions that Investors View as Presenting the Best Opportunities in Private Equity over the Next 12 Months automobile dealership networks; in January 2018, the company raised €460mn North America 48% from SB Investment Advisers through SoftBank Vision Fund. Europe 36% REALIZING INVESTMENTS AT HIGH VALUE Emerging Markets 20% As aggregate venture capital deal value has remained strong in Europe in recent Asia 19% years, so too has the aggregate exit value: Latin America 3% this figure in 2013 was more than tiwce as high as 2012, and has remained steady Australasia 2% since then – although the number of venture capital exits in Europe has seen a Middle East 2% year-on-year fall since 2015. While there have only been 95 venture capital exits so 0% 10% 20% 30% 40% 50% far in 2018, these transactions amount to Proportion of Respondents €11bn, the second highest amount in the Source: Preqin Investor Interviews, June 2018 Fig. 7: Largest Venture Capital Deals* in Europe, 2017 - 2018 YTD (As at July 2018) Deal Size Deal Portfolio Company Investor(s) Industry Location Stage (mn) Date Andreessen Horowitz, Horizons Ventures, Improbable Worlds Ltd. 502 USD Other IT UK Series B/Round 2 May-17 SoftBank, Temasek Holdings Auto1 Group GmbH SB Investment Advisers 460 EUR Internet Germany Unspecified Round Jan-18 Delivery Hero AG Naspers Ventures 387 EUR Internet Germany Unspecified Round May-17 Farfetch UK Limited JD.com 397 USD Internet UK Unspecified Round Jun-17 Accel, DST Global, Fidelity Management & Research Roofoods Limited Company, General Catalyst Partners, Index 385 USD Internet UK Series F/Round 6 Sep-17 Ventures, T Rowe Price Truphone Limited Minden, Vollin Holdings Ltd 255 GBP Telecoms UK Unspecified Round Oct-17 Bestseller, GMPVC German Media Pool, ABOUT YOU GmbH 300 USD Internet Germany Unspecified Round Jul-18 SevenVentures Andreessen Horowitz, Baillie Gifford, Institutional Venture Partners, Mitsui & Co., Old Mutual TransferWise Ltd 280 USD Internet UK Series E/Round 5 Nov-17 Global Investors, Sapphire Ventures, World Innovation Lab (WiL) Fidelity Management & Research Company, Invus BioNTech AG Group, Janus Henderson Investors, Redmile Group, 270 USD Healthcare Germany Series A/Round 1 Jan-18 The Struengmann Family Office Draper Esprit, DST Global, Index Ventures, Revolut Limited 250 USD Telecoms UK Series C/Round 3 Apr-18 Ribbit Capital Source: Preqin *Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.