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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)
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
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
f inv
estm
ents
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
4@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
1,703 1,912 2,873 3,133 3,241
122
204
270 271286
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
50
100
150
200
250
300
350
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Amou
nt in
vest
ed (U
S $M
)
Num
ber o
f inv
estm
ents
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.
5@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
248 343 285 354 369345
312 556731 565
539
935
1,154 7921,509
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Amou
nt In
vest
ed (U
S $M
)
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
6@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
248 369345
565539
1,509
554
685
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Qtr3 Qtr3
2014 2015
Tota
l VC
inve
stm
ent (
US
$M)
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
7@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
6082 77 85 94
30
26 42
63 44
13
2633
25 38
3
1
6
6 4
0
20
40
60
80
100
120
140
160
180
200
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Num
ber o
f VC
inve
stm
ents
VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100)Venture (8-20) Early Venture (2-8)
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
8@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
6 4 5
16
7
43
9
12
74
4
7
8
7
3
0
5
10
15
20
25
30
35
40
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Num
ber o
f VC
inve
stm
ents
Corporate VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100)Venture (8-20) Early Venture (2-8)
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
9@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
107
41 2 1 1 1 1
14
5
4
12
1 1
8
8
1
32
1
1
1
0
5
10
15
20
25
30
35
Isra
el UK
Germ
any
Fran
ce
Swed
en
Spai
n
Irela
nd
Nor
way
Switz
erla
nd
Esto
nia
Belg
ium
Num
ber o
f inv
estm
ents
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
10@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Amou
nt In
vest
ed (U
S $M
)
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
11@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
12@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
13@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
315
567543
475
628
369
263
719
437
622
180
284
389
209
375
29
163118
232278
74 12389
112140
Qtr3 Qtr4 Qtr1 Qtr2 Qtr30
100
200
300
400
500
600
700
800
Tota
l VC
inve
stm
ent (
US
$M)
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.
14@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Qtr3 Qtr3
2014 2015
Aver
age
roun
d siz
e (U
S $M
)
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
15@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Tota
l VC
inve
stm
ent (
US
$M)
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
16@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
2318
14 139 7 5
2 3
811
75
7
22
2
1111
44
4
21
1
1
1
1
1
0
5
10
15
20
25
30
35
40
45
50
UK &Ireland
Israel DACH Nordic France Benelux Iberia South. Eur. East. Eur.
Num
ber o
f inv
estm
ents
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
17@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
98 62 61 41 49
96 146 92 92 69
490400
217136 111
105
275
110200
100
0
200
400
600
800
1,000
1,200
UK &Ireland
Israel DACH France Nordic Benelux Iberia South. Eur. East. Eur.
Tota
l am
ount
inve
sted
(US
$M)
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
18@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
5%11%
21%
36%
75%
95%89%
79%
64%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
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%
19@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
16%24% 20% 22% 21%
84%76% 80% 78% 79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Perc
enta
ge o
f Rou
nds
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%)
20@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
147 4 30
10
20
30
40
50
60
70
Isra
el UK
Net
herla
nds
Germ
any
Fran
ce
Swed
en
Finl
and
Irela
nd
Gree
ce
Spai
n
Belg
ium
Switz
erla
nd
Pola
nd
Nor
way
Czec
h
Num
ber o
f VC
inve
stm
ents
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
275
114
106
182
0
500
1,000
1,500
2,000
2,500
3,000
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Tota
l VC
inve
stm
ents
(US
$M)
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
23@gdibnerblog: yankeesabralimey
Consumer investment leads Europe
Syndicate for European & Israeli Enterprise Companies
62%
36%
56% 63% 62%
18%
48%
34% 22% 24%6%
10% 4% 12% 8%5%4% 2% 4%6%8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
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
24@gdibnerblog: yankeesabralimey
Consumer accounts for half of early rounds
Syndicate for European & Israeli Enterprise Companies
39%51% 46% 41% 46%
41%36% 50%
48% 39%
3%
10%2%
7% 9%11%2% 2% 3%
0%2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
European venture financing by target market3Q14 to 3Q15 (excluding Israel, rounds up to $20M, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
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
25@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
546
225
435276
135 119 104
218
275 150
66 57
133
87
71
0
200
400
600
800
1,000
1,200
UK & Ireland Israel DACH France Nordic Iberia Benelux
Tota
l am
ount
inve
sted
(US
$M)
Investment in Europe and Israel by target market by region3Q, 2015 (US $M)
Government Telecom OEM SMB Enterprise Consumer
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
26@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
27@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
39% 44% 50% 48% 44%
47%44% 39% 38%
40%
9%8% 12%
8% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Investment in Europe and Israel by target market(Rounds of up to $8M, number of investments)
Government Telecom OEM SMB Enterprise Consumer
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
28@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
56%
37%46%
58%43%
25%
41%
46% 23%38%
7%10% 12%
6% 11% 6% 7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Investment in Europe and Israel by target market(Rounds over $20M, number of investments)
Government Telecom OEM SMB Enterprise Consumer
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
29@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
71%
36%
57% 57%64%
14%
56%
41%31% 22%
7%9% 11%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
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
30@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
47%
62%
37% 43%56%
40%
28%
47%43%
29%
9%12%13%
7% 7% 9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Investment in the Nordics by target market(Number of investments)
OEM SMB Enterprise Consumer
…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
31@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
42%
59%
29% 29%
59%
37%
25%
65% 64%
29%
4% 12%22% 16%
6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
Investment in the Nordics by target market(Percentage of total US $M invested)
OEM SMB Enterprise Consumer
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
32@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
60%52% 55%
44%33%
30%38%
39%
44%56%
10% 12% 7%10% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
VC Investment in France by target market(Number of investments)
OEM SMB Enterprise Consumer
…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
33@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
69%61%
28% 27% 27%
17%20%
68%
43%54%
18%30%
14%13%
4% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
VC Investment in France by target market(Percentage of total US $M)
OEM SMB Enterprise Consumer
• 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
34@gdibnerblog: yankeesabralimey
Finance returned to being the top vertical
Syndicate for European & Israeli Enterprise Companies
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.
35@gdibnerblog: yankeesabralimey
How have the most popular verticals grown?
Syndicate for European & Israeli Enterprise Companies
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
0
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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
36@gdibnerblog: yankeesabralimey
Which verticals for which segments?
Syndicate for European & Israeli Enterprise Companies
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
37@gdibnerblog: yankeesabralimey
The most popular verticals in the past 12 months
Syndicate for European & Israeli Enterprise Companies
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
0
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60
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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
38@gdibnerblog: yankeesabralimey
Consumer VC investment trends
Syndicate for European & Israeli Enterprise Companies
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
0
10
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40
50
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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
39@gdibnerblog: yankeesabralimey
Enterprise VC investment trends
Syndicate for European & Israeli Enterprise Companies
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015
0
10
20
30
40
50
60
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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
40@gdibnerblog: yankeesabralimey
A closer look at Israeli venture in 1Q15
Syndicate for European & Israeli Enterprise Companies
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
41@gdibnerblog: yankeesabralimey
UK VCs continue to bet heavily on fintech
Syndicate for European & Israeli Enterprise Companies
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
42@gdibnerblog: yankeesabralimey
The German consumer party continues
Syndicate for European & Israeli Enterprise Companies
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
43@gdibnerblog: yankeesabralimey
As usual, Nordic VC was unconventional
Syndicate for European & Israeli Enterprise Companies
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%
44@gdibnerblog: yankeesabralimey
Services & commerce dominated 3Q15
Syndicate for European & Israeli Enterprise Companies
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
45@gdibnerblog: yankeesabralimey
In 3Q, services recovered their lead
Syndicate for European & Israeli Enterprise Companies
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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
46@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
12 11 94 3 3
64
29
63
18
33
1812
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30
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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
47@gdibnerblog: yankeesabralimey
Enterprise marketing & consumer social media
Syndicate for European & Israeli Enterprise Companies
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
48@gdibnerblog: yankeesabralimey
What business models attract US VC investments?
Syndicate for European & Israeli Enterprise Companies
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
49@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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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
50@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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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
51@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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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
52@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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
53@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
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.
Thank youPrepared by Gil Dibner @gdibnerblog: yankeesabralimey
Steinerne Brücke, Regensburg, GermanyOldest vaulted stone bridge in Germany (built 1135-1146)