Venture Capital Report - Dow Jones

Venture Capital Report

Europe | 4Q | 2014


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 4Q 2014 include: European venture capital fundraising experiences uptick from 3Q 2014, but suffers declines in both fund closings and euros raised for the 12 month period;

Venture capital investment into European companies falls from 3Q 2014, but improves by a quarter year over year;

Despite an overall fall in exit activity, the total amount raised through venture-backed Initial public offerings (IPOs) reached its highest point since 2Q 2000.

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European Venture Capital Fundraising Experiences Uptick in 4Q 2014

FUNDRAISING

18 European venture capital funds accumulated €927 million during 4Q 2014, an increase of 33% in euros raised and 20% in the number of funds with closings from 3Q 2014. Despite the uptick in fundraising from 3Q 2014, the number of funds with closings during 4Q 2014 fell by 51% compared with the same period last year, while euros raised fell by 49%. The largest fund of the quarter was Principia SGR’s Fund III which raised €160 million, accounting for 17% of the total amount raised for 4Q 2014. Overall, the number of fund closings in 2014 was down by 4% to 76 from the year prior, while the total amount raised by venture funds fell by 18% from 2013 to €3.4 billion.

European VC Fundraising (2011 – 2014)

€ 2.50

40

Based on multiple closings 35 € 2.00 30 25

€ 1.50

20 € 1.00

15 10

€ 0.50 5

0

4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14

€ 0.00

Amount Raised (€B) € 2.17 € 0.98 € 1.18 € 0.76 € 1.19 € 0.76 € 1.03 € 0.50 € 1.81 € 0.69 € 1.03 € 0.70 € 0.93 Number of Funds 36 17 21 15 29 15 17 10 37 23 20 15 18

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Largest European VC Funds Raised in 4Q 2014

Venture Capital Report FUNDRAISING

Firm Name

Fund Name

Amount (€M) Closed in 4Q

Location

Offering Status

Fund Type

Fund Category

Principia SGR

Principia Fund III

€160.00

Milan, Italy

Open

Multi-stage venture capital

Venture Capital

Infocomm Investments Pte. Ltd.

Infocomm European Technology Fund

€158.43

Singapore, Singapore

Closed

Early-stage venture capital

Venture Capital

Northzone Ventures AS

Northzone VII

€100.00

Oslo, Norway

Closed

Early-stage venture capital

Forbion Capital Partners

Forbion Capital Fund III

€92.00

Naarden, Netherlands

Open

Advent Venture Partners LLP

Advent Life Sciences Fund II LP

€70.24

London, United Kingdom

Closed

Closing Type

First

Final

Venture Capital

Final


Venture Capital

First


Venture Capital

Final

4


Investment into European Venture-backed Companies Falls in 4Q 2014

FINANCING

European companies raised €1.8 billion for 332 deals during 4Q 2014, a fall of 24% in the amount raised from 3Q 2014 despite just five fewer deals being completed.

In contrast with the year ago period, investment improved by 1% despite a 28% reduction in the number of completed deals.

In 2014 as a whole, European venture-backed companies attracted €7.9 billion across 1460 deals, a decline of 11% in deals completed from 2013 but an improvement of 25% in euros invested.

Equity Financings into Europe – based, VC-backed Companies (2011 – 2014)

€ 2.50

500 450

€ 2.00

400 350

€ 1.50

300 250

€ 1.00

200 150

€ 0.50

100 50

€ 0.00

4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14

0

Amount Raised (€B) € 1.46 € 1.06 € 1.56 € 1.15 € 1.24 € 1.21 € 1.57 € 1.75 € 1.76 € 1.54 € 2.26 € 2.32 € 1.77 Number of Deals 374 347 375 326 373 371 420 384 461 387 404 337 332

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Venture Capital Report FINANCING

Equity Financings into Europe-based, VC-backed Companies, by Round Class (2011 – 2014) Number of Deals

240

200

160

120

80

40

0 Seed

4Q'11 45

1Q'12 38

2Q'12 38

3Q'12 53

4Q'12 61

1Q'13 35

2Q'13 34

3Q'13 52

4Q'13 67

1Q'14 32

2Q'14 24

3Q'14 19

4Q'14 23

First

168

161

192

155

187

197

207

197

207

210

203

176

171

Second

62

63

60

55

57

64

89

63

81

67

87

60

64

Later

73

70

55

46

43

53

65

51

81

56

73

65

55

Restart

3

0

0

0

0

0

0

0

0

0

0

0

0

6


Equity Financings into Europe-based, VC-backed Companies, by Round Class (Year over Year, 2004 – 2014 ) Number of Deals

900 800 700 600 500

400 300 200 100 0 Restart

2004 14

2005 9

2006 10

2007 12

2008 5

2009 3

2010 2

2011 6

2012 0

2013 0

2014 0

Later

437

482

339

385

316

290

304

238

214

250

249

Second

289

283

242

267

274

251

268

261

235

297

278

First

519

541

643

845

712

598

669

664

695

808

760

Seed

66

55

93

100

99

93

97

134

190

188

98

7


Equity Financings into Europe-based, VC-backed Companies, by Round Class (2011 – 2014) Amount Raised (€M)

€ 1,200

€ 1,000

€ 800

€ 600

€ 400

€ 200

€0

4Q'11

1Q'12

2Q'12

3Q'12

4Q'12

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

2Q'14

3Q'14

Seed

€ 23

€ 17

€ 23

€ 15

€ 26

€ 20

€ 14

€ 19

€ 27

€ 16

€ 17

€ 11

4Q'14 € 14

First

€ 433

€ 298

€ 537

€ 289

€ 449

€ 403

€ 418

€ 526

€ 349

€ 441

€ 563

€ 510

€ 403

Second

€ 355

€ 278

€ 257

€ 300

€ 291

€ 229

€ 479

€ 697

€ 391

€ 319

€ 468

€ 207

€ 683

Later

€ 604

€ 448

€ 673

€ 531

€ 449

€ 543

€ 639

€ 458

€ 937

€ 642

€ 1,039

€ 877

€ 647

Restart

€ 15

€0

€0

€0

€0

€0

€0

€0

€0

€0

€0

€0

€0

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Equity Financings into Europe-based, VC-backed Companies, Median Equity Deal Size (€M) (2011 – 2014)

€ 2.50

€ 2.00

€ 1.50

€ 1.00

€ 0.50

€ 0.00

4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Median Equity Deal Size (€M) € 1.41 € 1.50 € 1.90 € 1.20 € 1.22 € 1.50 € 1.52 € 1.00 € 1.40 € 1.58 € 2.00 € 2.00 € 2.30

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Equity Financings into Europe-based, VC-backed Companies, by Industry Group (4Q 2014)


Business and Financial Services received the largest allocation of investment during 4Q 2014 (32%), accumulating €557 million through 80 deals. The sector remained the most attractive sector despite investment dropping by 41% from 3Q 2014. Deal flow remained flat.

Healthcare rose to second in terms of equity financing, taking a 30% share of all 4Q 2014 investment. The sector raised €535 million across 60 deals, an increase of 64% in capital raised and 25% in deals completed from the previous quarter.

Consumer Services was pushed down to third, with companies in the sector gathering 18% of the total amount invested for the quarter. The sector received €327 million across 96 deals; a fall of 53% and 3% from 3Q 2014 in capital invested and deal flow respectively.

4Q'14 Industry Breakdown By Number of Deals

4Q’14 Industry Breakdown By Amount Raised

Business and Financial Services 21%

24% Consumer Goods

Business and Financial Services

15% 1%

32%

Consumer Services

Consumer Services

2% 2%

Energy & Utilities

Energy & Utilities 30% 18%

2%

Healthcare 4%

29%

Industrial Goods & Materials

Information Technology

Consumer Goods

2%

18%

Healthcare Industrial Goods & Materials (0.5%) Information Technology

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Equity Financings into Europe-based, VC-backed Companies, by Industry Group (2014)


2014 Industry Breakdown By Number of Deals

2014 Industry Breakdown By Amount Raised ($B)

Business and Financial Services 406


12%

260 1%

Consumer Goods

31%

Consumer Goods

38 Consumer Services

Consumer Services 22%

Energy & Utilities

220

Energy & Utilities

56 2%

Healthcare

Healthcare

3%

44 432

Industrial Goods & Materials Information Technology

29%

Industrial Goods & Materials Information Technology

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Top 5 Deals into European VC-backed Companies (4Q 2014)

FINANCING

Co. Name

Location

Industry Group

Industry Segment

Industry Code

Brief Description

Close Date

Round Type

Adyen BV

Netherlands


Financial Institutions and Services

Payment/ Transactional Processing

Provider of an Internet payment system for international merchants.

16/12/2014

Second

Verne Global

Iceland


Electronics and Computer Hardware

Data Storage

Provider of renewable energy-powered data centers.

31/12/2014

Second

€78.24

General Catalyst Partners, Novator Partners, Stefnir*, Wellcome Trust

Powa Technologies Ltd.

United Kingdom



Payment/ Transactional Processing

Provider of an integrated mobile payments and e-commerce platform.

7/11/2014

Second

€63.88

Wellington Management Co. LLP*

Biotechnology Therapeutics

Provider of antigenspecific T-Cell immunotherapy treatments for the treatment of infectious disease and cancer.

25/11/2014

4th

€63.87

Imperial Innovations*, Invesco Perpetual, Woodford Investment Management LLP

€47.91

Janus Capital Group, OrbiMed Advisors LLC*, RA Capital Management LLC, Rock Springs Capital Management, Sectoral Asset Management Inc., Sofinnova Partners, Sofinnova Ventures Inc.*, Venrock, Vivo Capital*

Cell Medica Ltd.

Ascendis Pharma A/S

United Kingdom

Denmark

Healthcare Biopharmaceuticals

Healthcare Biopharmaceuticals

Drug Development Technologies

Developer of long-acting prodrug therapies to address large markets with significant unmet medical needs.

24/11/2014

3rd

Raised (€M)

€199.60

Round Investors (* denotes lead) Felicis Ventures, General Atlantic LLC*, Index Ventures, Temasek Holdings Pvt. Ltd.

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Most Active Investors for Europe-based, VC-backed Companies by Deals Completed (4Q 2014)

18

17

16 14 12 10 8 8

7 6

6

Northzone Ventures AS

Kima Ventures

6 4 2 0 High-Tech Gruenderfonds Management GmbH

Truffle Capital SAS

Bpifrance Investment

13

Equity Financings into Europe-based, VC-backed Companies, by Country (4Q 2014)


The United Kingdom was the most favoured destination for equity financing during 4Q 2014, receiving €524 million across 69 deals. The country took in 30% of all investment into European VC-backed companies for the quarter.

FINANCING

Germany placed second, capturing 18% of European investment. Investment fell by 73% from the prior quarter to total €322 million. Deal flow remained relatively stable, however, with 66 completed. The Netherlands rose to third position raising €243 million, a 14% share of investment. France placed in fourth position with a 12% share, raising €218 million during 3Q 2014.

Number of Deals in 4Q 2014 by Country (Top 4)

Amount Raised in 4Q 2014 by Country (Top 4)

21%

26%

33%

20%

30%

United Kingdom

United Kingdom

Germany

Germany

France

Netherlands

Spain

France Rest of Europe

Rest of Europe 12% 18%

8% 18%

14%

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Europe Sees Overall Decrease in 4Q 2014 Venture Exit Activity

LIQUIDITY

42 venture-backed M&As took place in Europe during 4Q 2014, down 9% from 3Q 2014 but one up on the figure for 4Q 2013.

The largest M&A for 4Q 2014 was Belgium’s Clear2Pay NV, an e-payment solutions provider, which was acquired by Fidelity National Information Services for €375 million.

55 venture-backed IPOs took place during 2014, tripling the number of listings seen across Europe in 2013. 201 M&As were completed during the course of 2014, a 21% increase on the 166 that took place during 2013.

Exit Opportunities for European VC – backed Companies (2011 – 2014)

4Q'14 3Q'14 2Q'14 1Q'14 4Q'13 3Q'13

2Q'13 1Q'13 4Q'12

3Q'12 2Q'12 1Q'12

4Q'11 0 IPOs

4Q'11 3

M&As

45

10 1Q'12 2Q'12 6 3 38

42

20 3Q'12 2

4Q'12 5

30 1Q'13 1

2Q'13 5

40 3Q'13 3

4Q'13 9

50 1Q'14 8

2Q'14 21

30

46

34

36

41

41

51

42

60 3Q'14 16 46

70 4Q'14 10 42

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Top 3 M&As in Europe (4Q 2014)

LIQUIDITY

Company Name

Location

Brief Description

Industry Code

Industry Segment

Industry Group

Close Date

Round Type

Amount Paid (€M)

Acquirer

Clear2Pay NV

Mechelen, Belgium

Provider of e-payment solutions.

Vertical Market Applications Software

Software


2/10/2014

Acquisition

€375.00

FIdelity National Information Services

Business and Financial 8/10/2014 Services

Acquisition

€277.25

Intercontinental Exchange


Acquisition

€209.98

Progress Software Corp.

SuperDerivatives Inc.

Telerik AD

London, United Kingdom

Provider of cloudbased derivatives data and technology for Financial financial and Data/Information commodity markets worldwide.

Provider of an end-toend platform that Software Sofia, Bulgaria combines user Development Tools interface (UI) tools and cloud services.


Software

2/12/2014

16


European VC-backed IPOs (2011-2014)

LIQUIDITY

10 IPOs were completed during 4Q 2014, a decline of 38% from the previous quarter’s total but an increase of one on those completed during 4Q 2013. IPOs raised €2.3 billion during 4Q 2014, more than six times the figure seen in 4Q 2013 and the highest sum since 2Q 2000 when 71 IPOs raised a total of € 3.8 billion. The largest European VC-backed IPO of 4Q 2014 was Rocket Internet AG’s October listing on the Frankfurt Stock Exchange. The company raised a total of €1.4 billion, accounting for 62% of the total amount raised through European venture-backed company IPOs for the quarter.

European VC-backed IPO Activity (2011 - 2014)

€ 2,500.00

25

€ 2,000.00

20

€ 1,500.00

15

€ 1,000.00

10

€ 500.00

€ 0.00

5

4Q'11

1Q'12

2Q'12

3Q'12

4Q'12

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

0

Raised (€M) through IPO € 18.66 € 157.40 € 26.76 € 52.08 € 142.99 € 19.22 € 89.24 € 25.51 € 366.10 € 448.63 € 529.53 € 447.47 € 2,250 Number of IPOs 3 6 3 2 5 1 5 3 9 8 21 16 10

17


Top 3 IPOs in Europe (4Q 2014)

LIQUIDITY

Company Name

Country

Brief Description

Industry Code

Industry Group

Close Date

Raised through IPO (€M)

Exchange/ Symbol


2/10/2014

€1,400.00

XETRA: RKET

Retailers

Consumer Services

1/10/2014

€526.24

XETRA: ZAL

Biopharmaceuticals

Healthcare

15/10/2014

€174.67

NASDAQ: FWP

Industry Segment

Rocket Internet AG

Operator of an ecommerce focused Incubators/Business Business Support Germany venture capital (VC) firm Development Services and a startup incubator.

Zalando SE

Provider of an ecommerce platform Clothing/Accessory Germany specializing in the retail Retailers of brand name shoes.

Forward Pharma A/S

Developer of immunomodulatory Denmark drugs for the treatment of immune disorders.

Biotechnology Therapeutics

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Venture Capital Report ABOUT US

Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and partnership opportunities, perform comprehensive due diligence, and examine trends in venture capital investment, fund-raising, and liquidity. It provides accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry, and stage of development throughout the world. The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. These venture capital statistics cover equity investments into early stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. Figures contained throughout the report current at time of editorial but are subject to change without notice. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice. About Dow Jones

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