investments in startups in spain march 2015

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STATE OF IT INVESTMENT IN SPAIN March 2015 (Q1)

Venture Watch Research Madrid, March 2015

http://venture.watch [email protected]

Venture Watch Research

© 2015 http://venture.watch The State of IT investment in Spain – Mar 2015 2

Authors: Alejandro Pérez, Alejandro Barrera, Jen Allerson Madrid, March 2015

Press42 Copyright © 2015



Index INDEX ......................................................................................................................................................... 3 PREFACE ................................................................................................................................................... 4 METHODOLOGY ...................................................................................................................................... 5 MARCH 2015 ........................................................................................................................................... 6 Q1 2015 ................................................................................................................................................... 11 OPERATIONS BY INDUSTRY SECTOR .................................................................................................................... 12 INVESTMENT TYPOLOGY AND ORIGINS ............................................................................................................... 14 TOP 15 IT ROUNDS IN Q1 2015 ......................................................................................................................... 17 TOP VCS BY IT OPERATIONS ................................................................................................................................ 21

SUGGESTED STARTUPS ...................................................................................................................... 22 TRENDS AND CONCLUSIONS ............................................................................................................ 30



Preface PRESS42.COM TEAM

Venture Watch Research is a joint venture between Press42 and Brandexit. Our goal is to keep regular tabs on venture activity in countries across Europe and to facilitate investment in local-ecosystems.

Currently we’re focused on the Spanish IT ecosystem. The VC ecosystem in this region is expanding rapidly and many European investors are looking to Southern Europe for new deals.

We focus on nearly all types of IT deals excluding Biotechnology (Biotech), Green technology (Greentech), Nano technology (Nanotech), Pharmatheutical innovation (Pharma) or industrial technology sectors. We may add them in the future, but for now we’ve decided to stay focused on tech deals that are traditionally harder to track.



Methodology These reports are generated with an automated tracking system developed by Press42. We currently only track published deals on the IT space in Spain.

The data in the report should be taken as an approximation. In some cases, deals are not made public and are not published, so our tracker can’t catch them. In other cases, the round is known but the total investment hasn’t been released, so we’ll count the operation, but we can’t compute the total investment.

We’re continually revising the data and we’re open to input on any rounds we’ve missed or other information that’s relevant. The numbers are always true, to the best of our knowledge, but statistics may vary if we’ve updated old deals or added new ones. Found something we’ve missed? Drop us a note at [email protected]

Once again, keep in mind that the data is always evolving. Thus, the ballpark figure will be reliable but there may be discrepancies on a granular level. Please use at your own risk.



March 2015 March has been a good month this year. After the hiatus in February, the activity has picked up again, being driven by two big rounds.



As we see on the previous chart, while last March maintained a pretty constant profile, in 2015 we’re seeing a clear increase in the activity with two big rounds in Week 9 and Week 13.



One of the most striking differences this year is the relentless growth of equity crowdfunding. March saw the largest round in that space ever recorded in Spain. Surprisingly, it’s been driven by a media company, something that rarely happens.



Both deals and investment volume have increased considerably (+140%) with respect to March 2014. Despite the two big rounds, the median round is slowly but consistently growing with respect from last year (~800.000 euros). While February was a slow month with various industries getting some investment, March is dominated, once again, by investment in FinTech. It’s also important to point out El Español which set a record with the largest equity crowdfunding round ever done in Spain, led, not surprisingly, by the founder of the publication, the all mighty Pedro J. Ramirez, former founder and President of Unidad Editorial, the largest media group in Spain.



Q1 2015

The first quarter of 2015 has been an impressive. Momentum from previous years continues today with a healthy activity both in terms of total investment volume and number of deals.

While February is naturally a slow month, March activity has picked up with the most deals of the year so far.



The accumulated chart shows a nice exponential growth, which we expect to continue through out the year. Operations by industry sector



One of the most interesting changes in this first quarter of 2015 is the industry fragmentation. FinTech keeps positioning itself as the sexiest industry in recent months, while Ecommerce, the one omnipresent industry in Spain, takes second stage.

While last year there were several industries clearly leading the pack, this year we see a clear departure from that trend, with multiple industries receiving equal investments and a long tail (34.8% of other industries in 2015 vs. 7.1% of other industries in 2014).



While last year had a more balanced investment distribution, when it comes to volume invested, this first quarter is clearly polarizing and leaning towards FinTech and Ecommerce, marking the maturity of both spaces. Investment typology and origins



As in the previous year, Venture Capital is the major force driving investment in Spain. Nevertheless, business angels have also been active this quarter. It’s also interesting to note the appearance of equity crowdfunding investments so early on. In 2014, equity crowdfunding accounted for 1.4% of the total investment recorded, but this year, it already accounts for 1.6%, which is impressive, especially if we remember the legislation problems that kind of investment is having in Spain.



We saw big changes in the origin of funds this quarter. United States position themselves as the number one investor by volume size, mainly due to their massive Wallapop 36 million euros round. The United Kingdom emerged as the second largest, with nearly 5% more investment than Spanish investors.

Also, several countries from outside of Europe, like Japan, Singapore and Dubai, invested, indicating the trend of investment from the MENA region we started seeing last year is likely to continue.



Top 15 IT rounds in Q1 2015 The top rounds for this quarter are clearly dominated by the ever-present Ecommerce and FinTech. The industry is growing and attracting larger rounds, which drove the investment during this quarter.

The general tendency for this quarter is quite different. Last year we saw logarithmic growth, while this quarter we’re experimenting a marked exponential growth.

Many sources are already talking about another technology bubble. Nevertheless, all meaningful metrics (p/e, IPOs, revenues, etc.) are quite different from the 2001 bubble. That said, the change in the tendency of the investment curve could be a warning indicator if taken alone. The previous chart shows how both deals and



investment value grow at similar speed. Clear deviations of these tendencies might indicate something worse.

The monthly mean and median is substantially higher this quarter (152% and 123% respectively), but as the standard deviation shows (287% higher), this is mostly due to abnormally sporadic high deals like Wallapop, PeerTransfer or Digital Origin’s ones.



There is a clear increase of both the monthly median and mean investment month-over-month with an even difference of +250.000 euros, which is good news with respect to last year.



Top VCs by IT operations

We saw a very impressive first quarter with the usual suspects at the top of the board. Caixa Capital Risc is tied with Kibo Ventures, Cabiedes & Partners and Sitka Capital. Interestingly, Caixa had a slower quarter than usual. We expect the slowdown is temporary and due to work surrounding their new ICT funds, which we’re expecting to go live very soon.

FIDES (Fundación Jose Manuel Entrecanales) and Inveready showed strong growth, whereas Civeta Investment which had a very active 2014, showed a slowdown, perhaps depleting their funds for 2015.

Other funds with one operation during this first quarter include Axon Partners Group, Startcaps Ventures and big names like Accel Partners and Spark Capital.



Suggested startups

The following section is devoted to select a list of interesting startups to watch during the next months. Some are early-stage, others are a lot more mature.

We haven’t performed any formal due diligence, so be advise that the companies on following list should be treated as suggestions and not validated investment opportunities.

1. Datosphera (Data) Url: http://datosphera.com/ About: The Barcelona-based company helps entrepreneurs and VCs validate information on their idea or potential competitors. It resembles CB Insights or Mattermark. The race is on!



Investments: The company, founded in 2014, has been incubated at Incubio and is currently attending the Spain Tech Center Immersion program in San Francisco, US. They haven't raised any funds to date. 2. iContainers (Logistics) Url: http://www.icontainers.com/ About: One of those startups that you would never envision but when you know of them you realize how awesome their service is. iContainers allows anyone on the Internet to send or receive merchandise through boat containers, removing the hassle of being an export/import expert.

Investments: The company has raised a big Series A round of 1.3 million euros from Vitamina K and Kibo Ventures. Previous to this round, they've had two other seed rounds amounting to 550.000 euros.



3. Infantium (Education) Url: https://infantium.com/es/ About: Despite their confusing web, they're a cognitive platform for children that analyzes the behavior of kids with digital contents and based on that recommends additional content that is tailored to their brain needs. Their first product is Weshare, in partnership with Telefonica.

Investments: The Barcelona-based startups has raised around 500.000 euros mainly from Wayra and some other partners like 101 Startups or several business angels. Currently they've been visiting Boston with Dat Venture to work with their US partners like MIT (As they've also been awarded the MIT TR35 price).



4. Mobincube (Development) Url: http://www.mobincube.com/es/ About: Mobincube is one of the most successful native app builders out there. They allow for multiple app templates and a high degree of configuration, payments included.

Investments: Mobincube is an interesting case of a startup raising a 300.000 euros round through equity crowdfunding and then going on to raise an additional 700.000 euros with top VCs like Inveready and Bankinter. Although they're based in Valencia, they currently have presence in Silicon Valley too.



5. PeekMed (eHealth) Url: http://www.peekmed.com/ About: PeekMed is a Portuguese startup that creates a 3D software model of your medical CT scans so doctors can better assist patients. The upgrade from current technology in this space is enormous, both in image resolution and money.

Investments: So far the company is being incubated at Startup Braga in Portugal and hasn't received any investment but is definitely a great example of amazing startups appearing in the eHealth space with deep ties to the industry.



6. Sunn 4i (Data) Url: http://www.sunn4i.com/landing About: SUNN is a technology scouting platform, or essentially a place to find both startups in a specific innovation field, as well as research groups, companies looking for things in such spaces, etc.

Investments: SUNN is a spin-off from 4i, an already established innovation company. So far they haven't raised any money, but they're already operating at an international level with their AI innovation platform Sunn.



7. UptoDown (Marketing) Url: http://en.uptodown.com/ About: The incredible story of two guys from Malaga who built a software catalog that in 2013 became the third most popular in the world. They receive more than 60 million visitors per month and growing.

Investments: As far as we can tell, the company has never raised a private round and was already making 1.5 million euros in 2013, probably beating that mark in 2014. They're currently in Boston with Dat Ventures partnering up with local players like MIT or Northeastern University.



8. Zhilabs (Data / Telecommunications) Url: http://www.zhilabs.com/new_z/ About: Zhilabs is probably the oldest startup of the bunch but with good reason. They help Telco companies and mobile operators analyze their traffic data to locate problems in their network, both with data or voice over IP services. Even for big companies that have plenty of data, have a hard time extracting actionable business insights, Zhilabs does this for them.

Investments: Zhilabs was founded in 2008 and has received an undisclosed round by our friends from Bullnet capital. Since then, they've been growing and have recently opened an office in Brazil to keep up with their international expansion.



Trends and conclusions The first quarter of 2015 hasn’t disappointed. We saw strong growth in all metrics with consistent increases of around 60%. January proved to be especially prolific for Business Angels, while February is, historically, a slow month. During March we saw a comeback of the VCs with big operations and plenty of money invested.

In terms of industries, as predicted, FinTech has been growing strong, while Ecommerce maintains its ground with the massive Wallapop investment. It’s interesting to note how polarized investment in specific industries has been compared to last year’s rounds spread out across multiple industries.

We’re also seeing the first trends of new foreign investors eyeing Spain as a potential market. Among them, MENA stands out with significant funds from Dubai and Abu Dhabi.

Overall, it’s a great start to 2015. We’ll be keeping an eye on the bubble warnings which we do believe should be taken seriously, but the metrics aren’t that crazy (yet).

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