2015 q2 europe & israel vc trends review

Venture Capital in Europe & IsraelVenture Investment Data: Second Quarter, 2015

Prepared by Gil Dibner @gdibnerblog: yankeesabralimey

The Dead Sea, IsraelLowest point on earth, 427M below sea level

http://www.twitter.com/gdibner

http://yankeesabralimey.tumblr.com/

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



http://www.angel.co/gdibner/syndicate

Monthly pace of venture investment• During the 12 months ended

June, 2015, there were 866 reported venture investments across Europe & Israel

• A total of $9.581B was invested in Europe & Israel during this period, an average of $798M per month

• June 2015 was a record-breaking month for total investments, with over $1.5B raised across 98 rounds

• Spotify, which raised $526M in June, significantly skews the June figure (see slide 5)

@gdibnerblog: yankeesabralimey 3Syndicate for European & Israeli Enterprise Companies

493565

644 625562

725

905971 997

751 787

1,555

42 30 50 79 73 52 92 75 103 77 95 98

0

200

400

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800

1,000

1,200

1,400

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1,800

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Num

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VC Investments in Europe & Israel, July 2014 - June 2015

Invested amount (US $M) Number of investments




Quarterly pace of venture investment• Despite June’s record deal

volumes, the second quarter of 2015 saw only a slight uptick in activity over the first quarter

• Amusingly, there were exactly 270 deals recorded in both the first and second quarter of 2015


1,7031,912

2,8733,093122

204

270 270

0

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2014 2015

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Num

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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+)

• Six mega-rounds took place in Europe in the first quarter:

• Funding Circle, a British financial services company, raised $150M in April

• Food Panda, a German food delivery company, raised $100M in April

• Infinidat, and Israeli enterprise storage systems company, raised $150M in May

• Home24, a German commerce company, raised $134M in June

• Delivery Hero, a German food delivery company, raised $110M in June

• Spotify, a Swedish music streaming service, raised $526M in June

• Adjusting for mega-rounds, 2Q was slightly below 1Q in terms of total volume, but still above Q3 & Q4


248 343 285 354345

312 556731539

935

1,154 752

0

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Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Amou

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Pace of VC Investment in Europe and Israel

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)




Number of investments, by bracket• Deal volume across the geo

seems to have stabilized in terms of the number of investments

• Early venture and seed volumes seem to be down slightly

• Ventures ($8-20M) rounds seem to have increased somewhat

• Throughout 2015, Europe & Israel seem to have stabilized at around 80-100 deals per month


6 3 7

28 2615

37 3045

30 34 282114

25

31 29

22

2420

33

2333

29

9

5

16

106

10

1316

13

16

2126

5

7

1

1012

4

18

5

10

6

6 12

0

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120


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2014 2015

Num

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inve

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Number of investments in Europe and Israel by bracketJuly 2014 to June 2015

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (<2)




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


11.1

17.6

6.8

11.7 11.4

12.7

15.8

11.211.9

10.4 10.1

11.4

4

6

8

10

12

14

16

18

20


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Amou

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Average investment size in Europe and Israel(Round sizes of 2-100M)




Total venture investment by country, 2H 2015• Powered by Spotify’s massive

round, Sweden took the top spot in funds raised in 2Q

• Israel, UK, Germany, and France rounded out the rest of the top five


638.5625.2

587.4553.6

231.6103.1

93.371.1

64.432.8

27.221.5

12.210.09.5

5.41.81.61.10.80.60.5

SwedenIsrael

UKGermany

FranceDenmark

IrelandNetherlands

SpainPortugalBelgiumEstonia

SwitzerlandPolandFinland

ItalyGreece

NorwayLatvia

HungarySlovenia

Iceland

0 100 200 300 400 500 600 700

Total VC investment volume by country, 2Q15 (US $M)




Total venture investment by country, 2H 2015• When mega-rounds

($100M+) are excluded, Israel takes the top slot, with the UK coming in just behind it

• With Spotify excluded, Sweden’s total drops to $112.5M, putting in the fifth slot

• Germany and France round out the top five in the third and fourth place


475.2437.4

231.6208.9

112.5103.1

93.371.1

64.432.8

27.221.5

12.210.09.5

5.41.81.61.10.80.60.5

IsraelUK

FranceGermany

SwedenDenmark

IrelandNetherlands

SpainPortugalBelgiumEstonia

SwitzerlandPolandFinland

ItalyGreece

NorwayLatvia

HungarySlovenia

Iceland

0 50 100 150 200 250 300 350 400 450 500

Total VC investment volume by country, 2Q15 (Excludes mega-rounds, US $M)




Total venture investment by country, 3Q14 to 2Q15• To get a better sense of VC

volumes in various countries, this analysis excludes mega-rounds

• UK venture activity trended down in 2Q15 after skyrocketing in 1Q15

• Investment volume in Israel regained its first place slot

• France has showed continued strength, overtaking both Sweden and Germany in terms of investment volume


Israel, 315

Israel, 567

Israel, 543

Israel, 475

UK, 369

UK, 263

UK, 719

UK, 437

Germany, 180

Germany, 284

Germany, 389

Germany, 209

France, 29

France, 163France, 118

France, 232

Sweden, 74 Sweden, 123Sweden, 89

Sweden, 112

Qtr3 Qtr4 Qtr1 Qtr20

100

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800

Tota

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inve

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US

$M)

Total VC investment, 3Q14 - 2Q15 (top 5 countries, excluding mega-rounds)




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 2Q, but much less on average than in 1Q

• DACH startups fell from first place in terms of average size to seventh place

• Generally, average round sizes seem to be converging across the broader geography into very tight band between $8M and $12M


Benelux, 10.6Benelux, 9.9

DACH, 18.0

DACH, 8.9

France, 3.7

France, 10.8

Iberia, 10.4

Iberia, 12.3

Israel, 11.6

Israel, 9.9Nordic, 7.7

Nordic, 11.1

UK & Ireland, 11.9

UK & Ireland, 18.9

UK & Ireland, 12.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

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2014 2015

Aver

age

roun

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e (U

S $M

)

Average investment size in Europe and Israel (rounds of $2-20M)




Total venture investment by region, 3Q14 to 1Q15• 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


Nordic, 124.0 Nordic, 219.3 Nordic, 190.1

Nordic, 775.7UK & Ireland, 399.0 UK & Ireland, 262.9

UK & Ireland, 932.2

UK & Ireland, 680.7

Israel, 315.2 Israel, 567.5

Israel, 834.6

Israel, 625.2

DACH, 532.2DACH, 290.2

DACH, 573.3DACH, 565.8

France, 129.3 France, 163.3

France, 233.0France, 231.6



Iberia, 168.1Iberia, 56.5

Iberia, 53.7Iberia, 97.2

0

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2014 2015

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Total VC investment by region

Nordic UK & IrelandIsrael DACHFrance BeneluxIberia East. Eur.South. Eur.




Rounds by bracket & country• To get a better sense of deal

volume, this analysis excludes seed deals which are often poorly reported

• Excluding seed deals, Israel again led the region in the number of VC deals reported

• The UK and DACH followed• Despite an impressive three

mega-rounds into German companies, DACH was a distant third in terms of deal volumes


2218

14 11 125

18

15

88 6

34

7

8

22 3

1

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31

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Israel UK &Ireland

DACH Nordic France Benelux Iberia East. Eur. South. Eur.

Num

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Number of investments in Europe and Israel by bracket, 2Q 2015

Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)




Investment by region, by bracket• In 2Q, UK & Ireland led in

terms of total VC dollars invested

• Israel was in second place• Excluding Spotify’s $526M

round, the Nordics are in third place, still ahead of France and DACH


70 98 48 50 55

176 197

85 72 99

261 172

99 105 61

150150

526

345

0

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UK &Ireland

Israel Nordic France DACH Benelux Iberia East. Eur. South. Eur.

Tota

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$M)

Investment in Europe and Israel by bracket by region, 2Q 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

• Over the past twelve months, US VC firms participated in 16% of the venture rounds in Europe

• US VCs participated in only 5% of seed rounds, 11% of early venture rounds, and 25% of venture rounds

• As a company moves from bracket to bracket, the chance of US VC participation doubles with each bracket change


5% 11%

25%

42%

81%

95% 89%

75%

58%

19%

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? (3Q14-2Q15)

No Yes




Rate of participation by US firms has recovered• Reversing the negative trend

in the first quarter, US VC firm participation in European & Israeli venture rounds increased in the second quarter

• Within rounds of between $2M and $20M, US VC participation rose from 8% of rounds in February to 20% of rounds in June


10% 5%17%

24%17% 16% 19%

8% 11% 15% 17% 20%

90% 95%83%

76%83% 84% 81%

92% 89% 85% 83% 80%

0%

10%

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30%

40%

50%

60%

70%

80%

90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Perc

enta

ge o

f Rou

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Did US VC firms participate in European VC rounds? (3Q14-2Q15)

No Yes




Participation of US VC firms by country• In 2Q, US VCs firms were

active in 10 different European countries, flat from 1Q and down from 12 countries in 4Q

• US VC firms were most active in Israel, where they participated in 14 investment rounds

• The UK saw 11 investments with US VC participation

• Germany saw 5 investments with US VC participation


14 115

43 48

25

18 159 11

0

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Isra

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any

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Num

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In which countries are US VCs most active?2Q, 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 market

Adtech, 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?

Combined segment descriptor Consumer + Travel + Marketplace AirBnB has built a travel-related marketplace for consumers 18

Three-dimensional approach to sector mapping

• Excluding mega-rounds, investment activity decreased in both consumer and enterprise

• SMB-oriented and OEM-oriented investment volume both increased

19@gdibnerblog: yankeesabralimey

What target markets are attracting the most VC investment in Europe & Israel?

Syndicate for European & Israeli Enterprise Companies

475 595980 811

494

794

953808

78

133

121

153

78

114

47

106

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2014 2015

Tota

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$M)

European & Israeli venture financing by target market3Q14 to 2Q15 (excluding mega-rounds, US $M)

Government

Telecom

OEM

SMB

Enterprise

Consumer




• Last quarter ’s trend reversed itself, with consumer-oriented companies accounting for 54% of all VC investment in Europe & Israel, up from 43% in 1Q

• Enterprise dropped from 55% in 4Q14 to 31% in 2Q15

• SMB-oriented companies accounted for 10% of investment dollars, a new high – driven mostly by funding circle


The return of consumer investment


54%

31%43%

54%

29%55%

47% 31%

5% 7% 4% 10%5%6% 3%7%

0%10%20%30%40%50%60%70%80%90%

100%

Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

European & Israeli venture financing by target market3Q14 to 2Q15 (percent of US $M)

Government Telecom OEM SMB Enterprise Consumer




Breakdown by region & target market• The Israeli VC landscape

continued to be dominated by non-consumer companies

• The DACH region saw a continuation of the dominance of consumer-oriented companies in VC financing (all three of Germany’s mega-rounds in 2Q were consumer companies)

• FundingCircle’s massive round helped explain why more money went into SMB in the UK & Ireland than into enterprise

• If Spotify’s $526M round is removed, the Nordics seemed to continue their shift towards the enterprise


599

288146

466

64 50

160

169 404

55

99

182

70

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Nordic UK & Ireland Israel DACH France Benelux Iberia

Tota

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(US

$M)

Investment in Europe and Israel by target market by country2Q, 2015 (US $M)





Distribution of investment rounds by country• Across Europe & Israel, 46%

of VC investment rounds were in consumer companies in 2Q, down slightly from 47% in 1Q

• Benelux, France, and the Nordics saw a majority of investments happening into non-consumer companies


65%

56%

50%

50%

45%

44%

39%

30%

20%

31%

36%

25%

41%

44%

39%

56%

10%

8%

11%

5%

12%

11%

4%

5%

25%

9%

7%

6% 6%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Iberia

DACH

UK & Ireland

South. Eur.

Nordic

France

Benelux

Israel

Investment in Europe and Israel by target market by country2Q 2015 (Number of investments)

Consumer Enterprise SMB OEM Telecom Government




Trending away from consumer?• Over the past few months,

the trend seems to be away from consumer investing


38% 40% 44% 44% 37% 42% 50%35%

54% 56%42% 40%

50% 40%44% 42%

48%48% 38%

57%36% 29% 48%

42%

5% 9% 14% 7%6%

6%10%

7%

10%6% 6% 8% 6%7%

0%10%20%30%40%50%60%70%80%90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Investment in Europe and Israel by target market by country,3Q14 to 2Q15 (Number of investments)





Seed and growth swing back to consumer• As in last quarter, a clear

majority of both growth deals and seed deals were in consumer-oriented companies

• Early venture deals also reflected this trend

• Venture deals, however, showed continued interest in non-consumer categories –mostly enterprise


52%

54%

33%

54%

31%

37%

55%

24%

7%

8%

6%

15%

8%

7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Seed (<2)

Early Venture (2-8)

Venture (8-20)

Growth (20-100)

Investment in Europe (excluding Israel) by target market by stage bracket 2Q 2015 (Number of investments)

Consumer Enterprise SMB OEM Telecom Government




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. Indeed, 1Q15 saw a majority of investments in DACH go into consumer companies

• 2Q15, however, saw the pendulum in DACH start to shift back towards non-consumer categories


100%

67% 60%

40%

13%

57% 60%

33%

73% 69% 63%

43%

17%20%

40%88%

43% 40%

67%

20% 23% 38%

36%

20%10%

7%21%17% 10% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Investment in DACH by target market by stage bracketJuly 2014 to June 2015 (Number of investments)

OEM SMB Enterprise Consumer




The Nordics shift towards the enterprise…• The Nordic region saw pretty

diverse investment patterns in 3Q14 and 4Q14, but in 1Q15 there was a clear shift towards the enterprise which seemed to continue into 2Q

• OEM-oriented investments which almost vanished in 1Q, returned in 2Q


40%25%

67%83%

50%64%

20%

50%38% 33%

50% 47%

60%

50%

17%42%

27%

60%

50%

38% 44%

44%35%

8%

10% 14%

6%

6%25%17% 17%

9% 10% 10%22%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Investment in the Nordics by target marketJuly 2014 to June 2015 (Number of investments)





…especially in terms of dollars invested• When we look at dollars

investment as opposed to the number of investments, the trend in the Nordics is even clearer

• Spotify’s massive round has been removed from this graph

• June seemed to buck the trend, with an increase in consumer and OEM-oriented investments


32%

11%

72% 75%

44%52%

43%

20%12% 5%

27%45%

68%

49%

6% 0% 55%24%

55%

80%

72% 87%

72% 36%

12%

40%

21% 25% 24%

4% 8%18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

Investment in the Nordics by target marketJuly 2014 to July 2015

(Percentage of total US $M invested, excluding mega-rounds)





Over 50% of French VC deals were SMB or enterprise…• In France, the ratio of

enterprise deals to consumer deals seems roughly constant from September 2014 to June 2015


100% 100%

50% 46%58%

50%62% 60%

46% 50%

29%

50%

38% 38%

33% 50% 31% 40%

46% 33% 71% 33%

15% 8%17% 17%13% 8% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

VC Investment in France by target marketJuly 2014 to June 2015 (Number of investments)





…but money increasingly flows to enterprise• 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


100% 100%

59%44%

65%77%

33% 31%19%

50%

14%28%

23%46% 10%

23%

64% 69%

74%25%

86%

30%

10%25% 25%

41%

18%3% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

VC Investment in France by target marketJuly 2014 to June 2015 (Number of investments)





• Finance recovered its top slot• Marketing-related companies

took the second slot• Digital health opportunities

were in third place• Perhaps somewhat

surprisingly, Adtech took fourth place


Finance returned to being the top vertical


Financial, 23

Marketing, 22Health, 16

Adtech, 12 Lifestyle, 12Travel, 11

Gaming, 11

Social, 11

Logistics, 11

Security, 10Development, 9

CRM, 9Electronics, 8

Entertainment, 8Food, 8

Industrial, 8Productivity, 8

Payments, 7Fashion, 7Education, 6Infrastructure, 6Employment, 6

Data, 5Durables, 5

ERP, 3

Energy, 3

Legal, 3

European & Israeli venture financing by target market2Q 2015 (number of investments)




• Financial startups were the most commonly funded category in 2Q, including consumer, enterprise, and SMB-oriented companies

• The single most common category was enterprise marketing

• Consumer lifestyle, social, and gaming startups were particularly active as well


Which verticals for which segments?


Security

Logistics

Gaming

Social

Travel

Lifestyle

Adtech

Health

Marketing

Financial

0 5 10 15 20 25

European & Israeli venture financing by target market2Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB

OEM




• This chart shows the ten most commonly funded verticals across Europe & Israel throughout 2015, by quarter

• Financial, marketing, and health show increasing strength over time

• Infrastructure shows a decline


The most popular verticals in the past 12 months


Qtr3 Qtr4 Qtr1 Qtr20

20

40

60

80

100

120

140

160

European & Israeli venture financing by vertical market3Q14-2Q15, 2015 (number of investments, top 10 verticals)

Financial

Marketing

Infrastructure

Adtech

Lifestyle

Electronics

Health

Logistics

Travel

Employment




• Lifestyle, which is admittedly a bit of a catch-all consumer category, has shown tremendous strength in terms of VC volume

• Electronics (which typically means consumer electronics systems companies) has shown increasing strength through 1Q, but little investment in 2Q

• Gaming, health, and food-related investments seem to be increasing in 2Q


Consumer VC investment trends


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

0

10

20

30

40

50

60

70

80

90

European & Israeli venture financing by consumer verticals3Q14-2Q15, 2015 (number of investments, top 10 verticals)

Lifestyle

Financial

Travel

Gaming

Fashion

Health

Electronics

Logistics

Education

Food




• The most popular enterprise verticals are marketing, adtech, and infrastructure

• Infrastructure and data-related investment declined over the past few quarters

• CRM seems to have picked up steam over the past few quarters

• Other verticals largely holding steady


Enterprise VC investment trends


Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

0

20

40

60

80

100

120

European & Israeli venture financing by enterprise verticals3Q14-2Q15, 2015 (number of investments, top 10 verticals)

Marketing

Adtech

Infrastructure

Data

Security

Development

Financial

Employment

Health

Logistics

CRM




• VC activity in Israel was very diverse in 2Q15, with health-related and consumer social investments rising the 3rd and 4th slots

• Interestingly, infrastructure investments weren’t in the top ten

• Not surprisingly, security was solidly in the second slot


A closer look at Israeli venture in 1Q15


Electronics

Productivity

CRM

Development

Financial

Energy

Logistics

Data

Adtech

Social

Health

Security

Marketing

0 1 2 3 4 5 6 7 8 9

Israeli venture financing by target market2Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB

OEM

Telecom

Government




• Last quarter, Fintech was the most popular vertical in the UK – this quarter fintech was far and away the dominant category in the UK

• Consumer-oriented companies dominated most categories of VC funding across the UK, with enterprise marketing and enterprise CRM as the two notable exceptions


Consumer fintech dominated the UK


Industrial

Development

Infrastructure

ERP

Food

Health

Entertainment

Logistics

Lifestyle

Fashion

CRM

Travel

Gaming

Education

Marketing

Payments

Financial

0 2 4 6 8 10 12 14

UK venture financing by target market2Q, 2015 (number of investments, top verticals)

Consumer

Enterprise

SMB

OEM




• The top three categories in German VC investment in 2Q15 were consumer durables, consumer fashion, and enterprise employment

• In total, the top 10 categories in Germany generated 23 investments, 14 of which were in consumer companies


German VC was mostly about consumer


Financial

Food

Education

Logistics

Marketing

Payments

Travel

Fashion

Durables

Employment

0 1 2 3 4

German venture financing by target market2Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

SMB




• Nordic VC interest in entertainment startups wasn’t confined to Spotify – and this category was the most popular category in 2Q, including one enterprise offering (Soundtrack Your Brand)

• Perhaps surprisingly, social media was the second most popular category in the Nordics

• Note the strength of enterprise and SMB-related companies


Nordic VC was very diverse


Electronics

Security

Adtech

Development

Health

Gaming

Financial

Marketing

Social

Entertainment

0 1 2 3 4 5 6

Nordic venture financing by target market2Q, 2015 (number of investments, top 10 verticals)

Consumer

Enterprise

OEM




• In terms of dollars invested during 2Q15, SaaS (28%) and services (22%) were the leaders

• Commerce models were third, at 17% of dollars invested

• The bottom of the distribution was a bit more diverse, including relatively strong showings for media and systems companies


SaaS jumped ahead of services in 2Q


SaaS, 536, 28%

Services, 432, 22%

Commerce, 319, 17%

Software, 194, 10%Marketplace, 139, 7%

Systems, 130, 7%

Media, 108, 6%

Semiconductors, 40, 2%

Components, 24, 1%

European & Israeli venture financing by target market2Q, 2015 (in US $M) (excluding mega-rounds)




• SaaS returned to its growth trend, both in absolute and relative terms.

• Perhaps driven by the increase in SaaS funding, note the precipitous decline in software funding (non SaaS)

• E-commerce and marketplace models trended down

• Service models declined, but took the number two slot and were up dramatically compared to 3Q and 4Q


In 2Q, SaaS was king & software collapsed


0

100

200

300

400

500

600

700

800

Qtr3 Qtr4 Qtr1 Qtr2

2014 2015

European & Israeli venture financing by business model3Q14 to 2Q15 (in US $M, excluding mega-rounds)

Software

SaaS

Services

Marketplace

Commerce




US VCs focused on SaaS & services• US VC interest was skewed

heavily towards SaaS & Services models

• Commerce and marketplace models also attracted some US VC attention


1711

4 4

55

48

3222

18 1831

0

10

20

30

40

50

60

70

80

SaaS Services Commerce Marketplace Media Systems Software Components Semiconductors

VC Investments in Europe & Israel2Q, 2015 (number of investments)

No US VC involved US VC involved




• Enterprise marketing SaaS was again the most popular segment for VC investment in 2Q15 with 15 investments across the region

• Surprisingly, consumer social media took the second slot, with 11 investments

• Enterprise CRM SaaS took third place, with investments across the UK, Israel, the Nordics, Benelux, and Iberia

• Consumer financial services took the fourth slot, dominated by UK-based startups


Enterprise marketing & consumer social media


0 2 4 6 8 10 12 14 16

Enterprise Health SaaS

Consumer Travel Commerce

Consumer Lifestyle Commerce

Enterprise Adtech Services

Consumer Fashion Commerce

Consumer Food Commerce

Enterprise Security Software

Consumer Gaming Software

Consumer Financial Services

Enterprise CRM SaaS

Consumer Social Media

Enterprise Marketing SaaS

Number of VC investments

Investment in Europe & Israel by segment by country2Q15 (segments with 5 or more investments)

UK & Ireland IsraelNordic DACHBenelux IberiaFrance South. Eur.East. Eur.




• Across Europe & Israel, US VC firms invested in 16 enterprise companies, 14 consumer companies, 2 SMB companies, and 2 OEM-oriented companies

• Enterprise SaaS attracted by far more US VC interest than any other space

• The only Nordic companies that attracted US VC interest were in the enterprise SaaS space

• The only Germany companies that attracted US VC interest were in the consumer and SMB spaces


What business models attract US VC investments?


0 2 4 6 8 10 12

Components

Semiconductors

SaaS

SaaS

Systems

Commerce

Media

Marketplace

Services

Software

Services

SaaS

OEM

SMB

Cons

umer

Ente

rpris

e

US VC Investments in Europe and Israel by end market, business model, & country, 2Q 2015 (excludes seed & mega-rounds)

Israel UK & IrelandFrance DACHIberia NordicBenelux




Focus on dev tools: everywhere you look• Over the past 12 months, 31

dev tooling companies raised VC money across Europe & Israel

• These companies were distributed across eleven countries

• Israel led the pack with 8; the UK saw 5, Sweden 4, and both France and the Netherlands saw 3 each

• This strength continued unabated into 2Q


0

1

2

3

4

5

6

7

Jul Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2014 2015

Num

nber

of i

nves

tmen

ts

Development tools VC investment in Europe and Israel3Q14 to 2Q15, Number of investments

Ireland Belgium Norway LatviaEstonia Germany Netherlands FranceSweden UK Israel




Focus on SaaS: what’s powering the growth• 64 SaaS companies raised VC

financing across Europe & Israel in 2Q15

• Marketing and CRM led the category

• Significantly, health SaaS came in third

• Driven by health-related enterprise SaaS, we are seeing the proliferation of SaaS models into new verticals such as logistics, legal, and education


0 2 4 6 8 10 12 14 16 18 20

Education

Travel

Agtech

Legal

SCM

Logistics

Adtech

ERP

Development

Infrastructure

Productivity

Health

CRM

Marketing

SaaS VC investment in Europe and Israelby vertical and target market, 2Q 2015 (top 10 verticals)

Consumer Enterprise Government SMB




Focus on health• In 2Q15, 16 health-related

startups raised VC money across Europe & Israel

• Israel and Spain saw 5 health-related investments each, the UK saw 2, and Sweden, Finland, the Netherlands, and Poland each saw 1

• 8 of these investments were consumer-oriented, mostly marketplaces and services

• 7 were enterprise oriented (5 of which were SaaS models)


0 1 2 3 4 5 6

SaaS

SaaS

Commerce

Software

Commerce

Services

Marketplace

Software

SMB

Ente

rpris

eCo

nsum

er

Health-related VC investment in Europe and Israelby vertical by country, 2Q 2015 (number of investments)

Israel

Spain

UK

Sweden

Finland

Netherlands

Poland




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.47

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.

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2015 q2 europe & israel vc trends review

Technology

reported venture investments

data sources seed investment

available data sources

data ive

total investments

vc rounds

number of investments

paid data sources