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Note: This report covers all capital raises and acquisitions with announced values greater than or equal to $25M in the Internet & Digital Media sector.

Q2'19 Internet Sector Key Highlights

This report highlights key Internet sector trends and tracks notable industry transactions in Q2'19.

As we review recent activity in the public and private markets, we also offer insight into potential storylines that could develop in the coming months.

Deal Activity Remains Robust

We saw 20 meaningful acquisitions, showing an uptick in M&A activity relative to the previous two quarters but down in comparison to Q2'18. Average transaction size for the quarter was $359M with two notable transactions of over a billion dollars in deal value. Transactions of note include the acquisition of Shutterfly by Apollo Global Management ($2.8B) and Edgewell’s acquisition of Harry’s ($1.4B).

Valuations increased in Q2 as the average Internet forward revenue multiple increased to 5.1x vs. 4.8x in Q1'19 but slightly below the same period a year ago – 5.2x. Valuations took a major dip as a result of the U.S. / China trade war at the end of 2018 but have subsequently rebounded relatively on par with Q2'18 levels.

$14.0B was invested across 86 deals in all subsectors, highlighted by large capital raises across the globe from OYO Rooms, JD Health, Rappi, DoorDash, and Deliveroo.

After Lyft opened the IPO market in Q1, we saw 11 IPOs in Q2 including the highly anticipated IPOs of Pinterest, Uber, Revolve, Chewy, and The RealReal.

-Trends Worth Watching

Trend #1: The race for one-day delivery is heating up with eCommerce players investing heavily to chase Amazon.

Trend #2: Several tech unicorns have emerged in Latin America as global investors show increased focus on the region.

Trend #3: Initiatives in cloud gaming platforms have fueled new excitement around the gaming industry.

Trend #4: Strategics and financial sponsors’ appetite for eCommerce / DTC companies is heating up.

In This Issue

Key Internet Trends in Q2'19

Stifel Internet Market Update and Observations

Stifel Q2'19 Activity

Internet Deal Activity Dashboard

Internet Subsector Snapshot

Capital Markets Overview

Market Performance

M&A Activity & Trends

Private Capital Raising Activity & Trends

Stifel Internet & Digital Media Investment Banking

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Key Internet Trends in Q2'19

E-Comm 3.0 and the DTC Surge

Many DTC companies have been successful in raising private capital, which has investors asking what the end game may be given correspondingly high valuations

The recent quarter showcased investor appetite for eCommerce / DTC companies through successful IPOs from The RealReal and Revolve at premium valuations to traditional Web 1.0 businesses

However, one of the biggest acquisitions in the quarter, Edgewell / Harry’s, illustrates that many highly valued private companies see the value in a strategic partner vs. the IPO route

LatAm Unicorns Begin to Stampede

Q2'19 saw the emergence of several South American Internet businesses achieving unicorn status with recent raises from Loggi, Rappi, and Gympass

Despite the size of the Latin American Internet market, global VC firms have been relatively slow to invest heavily in the region

2018 VC funding in Latin America doubled to $2B compared to 2017 and is quadruple the $500M invested in 2016

Softbank announced its $5B Innovation Fund, which acts as the largest-ever technology fund focused solely on the fast-growing Latin American market

Gaming’s Shift to the Cloud

Recent announcements out of E3 on cloud gaming initiatives and streaming services by high profile companies (i.e., Google, Microsoft, Tencent) have fueled excitement around the gaming industry

Cloud gaming utilizes streaming technology, enabling users to play video games via a remote server, instead of a local machine (i.e., console / PC) by offloading the processing power to the server

Streaming aims to expand the addressable market, make video games more accessible by removing the upfront cost of hardware and installation, and push gaming companies further towards subscription-based models

Microsoft’s xCloud and Google’s Stadia are viewed as the early major contenders in cloud gaming

Even though we are only in the early innings of the transformation, the initiatives grow more real as 5G capabilities that support high quality streaming for gaming come to market

The Race for One-Day Delivery

As consumers become more accustomed to quick and free eCommerce delivery, the race for one-day delivery is heating up with eCommerce players investing heavily to chase Amazon

Amazon announced on its latest earnings call that 10M+ items are now available for one-day delivery, the new standard for Prime members as convenience as a purchase motivator grows in importance

Prior to Amazon’s announcement, Walmart launched a one-day delivery service of its own on ~200K items; this puts it more in competition with Target Restock, a similar offering with ~35K items

Other players in the race are investing similarly; Loggi raised $100M as it constructs a Brazil-wide logistics service enabling one-day delivery for MELI and others

Shopify also announced its move into physical distribution for its customers to help speed up delivery for retailers as more and more eCommerce players bid to offer the whole supply chain for its clients and their customers

M&A

Capital Raises

JD Health

Released

IPOs & Follow-ons

Upcoming

Owned & Operated Partnered

Online Content

Online Travel

eCommerce

Common to the market, companies are having to overcome problems relating to infrastructure and pricing; however, as an emerging market, LATAM has low legacy barriers allowing for greater opportunity for disruption and rapid adoption of innovative technologies

Unicorn Fundraises

Source: Bloomberg, Crunchbase.

New Fundraises

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Activity in Q2'19

Internet Market Update and Observations

Valuations

Internet stocks were relatively flat in Q2'19 vs. Q2'18 following the overall market rebound at the start of 2019, as the Dow and Nasdaq finished +3% and +4%, relative to their Q1'19 performances of +11% and +16%, respectively

By the end of quarter, the biggest gains were seen in Social Media +13% (Snap +30%, Twitter +6%), Online Real Estate +10% (Zillow +34%, CoStar Group +19%), FoodTech +9% (Grubhub +12%, HelloFresh +1%), and eCommerce +6% (Rakuten +25%, Boohoo +9%)

11 out of 12 Internet sectors finished in positive territory, as well as the DJIA and NASDAQ

The average Internet forward revenue multiple increased to 5.1x (vs. 4.8x in Q1'19)

IPO and Capital Markets Activity

There was little IPO activity in Q1'19 due to December 2018’s market volatility and the federal government shutdown, but public market activity has come roaring back this quarter

Q2'19 ignited what is widely expected to be a banner year of IPOs. There were 11 Internet IPOs across Online Marketplaces, Online Content, eCommerce, Online Gaming, and Subscription Services including the highly anticipated $8.1B IPO of Uber

IPO proceeds made this quarter the biggest second quarter since 2000, with Uber, Pinterest, and Chewy having $8B+ valuations at offer

This quarter also saw large public follow-on offerings from Huya ($442M), Bilibili ($373M), Carvana ($314M), and LoveSac ($103M)

Private Capital Raising Activity

Internet companies raised $14.0B in Q2'19, a slight increase from the $13.9B raised in Q2'18; the number of deals increased to (86 vs. 80) across all Internet

The number of companies raising capital increased, yet the size of the rounds was slightly smaller on average this quarter ($162M vs. $174M)

There were a number of large $1.0B+ transactions this quarter, including OYO Rooms ($1.1B), JD Health ($1.0B), and Rappi ($1.0B)

The largest private capital raises from this quarter were diverse across geographies, with considerable activity in the U.S., China, and India

M&A Activity

M&A volume decreased by 84% in Q2'19 vs. Q2'18 ($7.2B vs. $43.9B), and the number of deals (with disclosed valuations) decreased (20 vs. 29)

Where Q2'18 saw mega deals by strategics such as Walmart acquiring Flipkart for $20.8B and Alibaba acquiring Ele.me for $9.5B, the two biggest deals of Q2'19 involved Apollo Global Management acquiring Shutterfly ($2.8B) and Edgewell Personal Care acquiring Harry’s ($1.4B)

Deal activity was concentrated in eCommerce, Online Gaming, and Online Marketplaces:

Social Media 13%

Real Estate 10%

NTM Revenue Multiple to 5.1x

Sub. Services 2%

SaaS (2%)

Top Movers (Q2'19) Laggards (Q2'19) IPOs Follow-Ons & Converts

$233M $247M

$300M $623M

$2.8B $1.4B

Note: This report covers all capital raises and acquisitions with announced values greater than or equal to $25M in the Internet & Digital Media sector.

(Yunji)

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Electronic Entertainment Expo (E3) Dinner – Los Angeles

At the 2019 Electronic Entertainment Expo, Stifel hosted an industry dinner with Drew Crum, Stifel’s gaming analyst who has covered the sector since 2005, and several leading industry players including:

Stifel Cross Sector Insight Conference (CSI) – Boston

Stifel Q2'19 Activity

~2,000 Attendees

~365 Participating

Companies

~140 Financial Sponsor

Attendees

~4,600 One-on-One

Meetings

The 2019 CSI Conference included various thought-provoking panels addressing a range of timely topics:

Automation & Robotics

5G Technology

Emerging Video

Evolving Cannabis Industry

For highlights from this year’s event

please click here

Keynote Speakers:

Roger McNamee, Author of Zucked

Barry Bannister, Stifel Chief Equity

Strategist

Old Dominion Stifel Chief Equity strategist, Barry Bannister

Keynote Speakers Private Concert

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Source: 451 Research, Pitchbook, Capital IQ.

Note: This report covers all capital raises and acquisitions with announced values greater than or equal to $25M in the Internet & Digital Media sector.

Internet Deal Activity Dashboard

Date Company HQ Amount

($M)

4/1 $1,100

5/10 JD

Health 1,000

4/30 1,000

5/23 600

5/20 575

Date Acquirer Target Amount

($M)

6/11 $2,758

5/9 1,370

6/13 623

5/1 415

4/23 300

80

86

Q2'18 Q2'19

# Disclosed Deals

Date 3/28

Company

Amount ($M) 2,556

Market Cap @ Pricing ($M)

$24,633

$5.6B

$2.9B

$2.2B

$0.9B

$0.7B

$0.6B$0.1B $0.1B

$0.1B

Q2'19 Financing Transactions

Q2'19 IPOs

Q2'19 M&A Transactions

$4.3B

$0.9B

$0.9B

$0.7B

$0.2B$0.2B

$14.0B

Financing

$7.2B

M&A

$9.7B

$1.4B

$0.5B

$0.4B $0.1B

$12.2B IPO

Marketplaces Online Real Estate eCommerce Social Media Online Travel

Subscriptions Online Content Online Gaming Online Marketing FoodTech

5

11

Q2'18 Q2'19

# Disclosed Deals

$13.9 $14.0

Q2'18 Q2'19

Volume ($B)

29

20

Q2'18 Q2'19

# Disclosed Deals

$7.9

$12.2

Q2'18 Q2'19

Volume ($B)

Q2'19 M&A Transactions

Date Company Amount

($M) Mkt. Cap @ Pricing

5/9 $8,100 $75,463

4/17 1,425 10,272

6/13 1,023 8,769

5/2 352 2,022

6/28 345 1,658

20.8

9.5

13.6

$43.9

$7.2

Q2'18 Q2'19

Volume ($B)

(Ele.me)

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FoodTech 37% 53% 0% 3% 1 0

Online Real Estate

23% 54% 15% 18% 4 0

eCommerce 14% 60% 28% 30% 17 4

Online Marketplaces

20% 43% 5% 5% 34 7

Subscription Services

12% 73% 13% 17% 8 1

Online Content

25% 69% 8% 13% 5 1

Online Gaming

13% 76% 28% 30% 2 4

Online Travel 20% 63% 26% 27% 10 2

Social Media 4% 82% 18% 19% 2 1

Online Marketing

18% 63% 10% 13% 3 0

Source: FactSet Research Systems and Capital IQ as of 6/28/19.

Note: All EBITDA multiples over 40.0x or below 0.0x are N.M.

Internet Subsector Snapshot

Public Comparables

Median Comp Set

2019E EBITDA Margins

2020E EBITDA Margins

# of Deals (PP / M&A)

2019E Gross

Margins

2019E YoY Rev. Growth

EV / 2019E Revenue

EV / 2019E EBITDA

EV / 2019E Revenue Median (3.4x)

EV / 2019E EBITDA Median (15.9x)

Online Travel composite includes: AMADY, EDR, EXPE, DESP, MMYT, BKNG, TZOO, TRIP, TRVG.

FoodTech composite includes: APRN, DHER, HFG, GRUB, JE, MMM, TKWY, WTRH.

Online Content composite includes: IAC, LFRG, MTCH, MOGU, PINS, LOV, TTGT.

Online Marketing composite includes: CRTO, GRPN, ICLK, MCHX, PERI, QNST, RUBI, SOGO, TTD, TLRA, TRUE.

eCommerce composite includes: AMZN, ASC, BOO, BTOW3, CHWY, CVNA, H24, KOOV, LOVE, OSTK, PDD, RAKUTEN, QRTE.A, SECO, SFIX, W, ZAL.

Marketplaces composite includes: ANGI, AUTO, CARS, CAR-AU, CARG, DHX, EB, EBAY, ETSY, EVER, FTCH, GRUB, JE, LC, LYFT, TREE, MELI, MEITUAN, RBZ, SEK, SSTK, REAL, TRUE, TC, UBER, UXIN, UPWK, WEW.

Sub. Services composite includes: ALRM, APRN, CRCM, CHGG, EHTH, HFG, IQ, JCOM, LOV, MTCH, MEET, MMM, NFLX, SPOT, STMP, SFIX, SVMK, TME, TRUP.

Gaming includes: ATVI, BILI, CDR, CDM, DIB, EA, GLUU, HUYA, ROVIO, SCPL,SE, SUMO, TTWO, TM17, UBI, ZNGA.

Social Media: FB, KAKAKU, LN, MEITU, RENN, SINA, SNAP, TWTR, WB, O1BC, YELP.

Real Estate: CSGP, PURP, REA, RP, RLGY, RDFN, RMV, G24, SFUN, OTMP, ZG.

1.2x

5.8x

1.8x

3.9x

4.4x

3.2x

4.5x

2.0x

3.6x

3.2x

10.1x

14.6x

14.8x

15.2x

15.6x

16.2x

17.9x

18.3x

20.8x

22.4x

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Recent Market Activity

Source: Dealogic and FactSet as of 6/28/19.

Includes all SEC registered transactions with base deal value over $20M.

Capital Markets Overview

Key TMT Market Activity

Markets

Volatility in Q2'19 picked up, as the markets reacted to conflicting sentiment regarding the trade talks between the U.S. and China

Despite some selling in mid-May due to uncertainty surrounding economic growth, and a surge in trade tensions, the Fed’s dovish tone on monetary policy powered technology stocks, and the indices as a whole, back to all-time highs

Both the Dow and the S&P 500 reached new all time trading highs in the latter half of Q2'19 Heading into Q3'19 we can expect investors to view the Technology sector with optimism, but to

proceed with caution as trade negotiations continue between the world’s largest economies

IPOs

Follow-Ons

TMT was a leader in the 2018 follow-on market, with $22.7B in proceeds raised. A total of 77 deals priced, making it the second most active sector behind Healthcare (238 deals)

Investors continue to reward performance and liquidity in transactions and aftermarket performance 45 TMT FOs have priced YTD, with $16.0B in proceeds raised This is in line with the $15.2B in proceeds raised in 2018YTD from 49 offerings

Converts

25 TMT Convertibles have priced YTD, with $10.5B in proceeds raised This is behind the $17.5B in proceeds raised in 2018YTD from 36 offerings However, issuance has picked up in recent weeks and the attractive terms being achieved by Tech

issues are indicative of high demand in the market

TMT led the 2018 IPO market in terms of dollar value, with $20.6B in proceeds raised. A total of 50 deals priced, making it the third most active sector behind Healthcare (73 deals) and Financials (61 deals)

Compelling signs that the Technology IPO strength should continue into the next quarter include the recent success of new issues as well as the recent gains of technology stocks despite the headwinds posed by market volatility and trade concerns

25 TMT IPOs have priced YTD, with $19.2B in proceeds raised. 23/25 priced within / above the filing range

2019 has seen a number of large and high profile TMT IPOs price, including Lyft ($2.6B), Zoom ($0.9B), Pinterest ($1.6B), Uber ($8.1B), Crowdstrike ($0.7B), and Chewy ($1.2B)

Nasdaq: 8,006.2 1 Week Change: (0.3%) 1 Month Change: 5.2% 1 Quarter Change: 3.6% 1 Year Change: 6.6%

VIX: 15.1 1 Week Change: (2.1%) 1 Month Change: (13.8%) 1 Quarter Change: 10.0% 1 Year Change: (6.3%)

DJIA: 26,600.0 1 Week Change: (0.4%) 1 Month Change: 4.9% 1 Quarter Change: 2.6% 1 Year Change: 9.6%

Russell: 1,566.6 1 Week Change: 1.1% 1 Month Change: 4.2% 1 Quarter Change: 1.7% 1 Year Change: (4.7%)

VIX: 15.1 1 Week Change: (2.1%) 1 Month Change: (13.8%) 1 Quarter Change: 10.0% 1 Year Change: (6.3%)

Indexed Price Performance Volatility Index

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Market Performance

Eleven out of twelve sectors within Internet have performed positively over the past three months, as well as the NASDAQ and DJIA. Market performance was mixed across Internet sectors

Social Media was the top performing sector this quarter led by SNAP (+30%) following research upgrades and price target increases, MAU stabilization, and a relative lack of direct scrutiny from global regulators

Online Real Estate remained positive bolstered by Zillow (+34%) which reported faster growth than expected in its homes business. CoStar Group (+19%) also outperformed for the quarter driving a series of research upgrades

eCommerce saw disparate returns across its constituents. Rakuten (+25%) led the sector following their announcement of a partnership with JR East to promote cashless payments and deal with NEC and Altiostar to forge a 5G radio network. Boohoo (+9%) delivered strong annual results while highlighting the potential to achieve loftier margins. Carvana (+8%) witnessed substantial growth to start the quarter, but fell since then after reporting another earnings miss

Some Online Travel constituents have struggled in Q2 including TripAdvisor (-10%), MakeMyTrip (-10%), and Despegar (-7%), while others have persisted. Notably, TravelZoo (+15%) reported significant growth in first quarter profitability attributable to an update made to combine their hotel and flight booking platforms

Leading the Marketplaces sector was DHI Group (+47%), which reported strong quarterly growth and received an unsolicited merger proposal from Sakthi Global. MercadoLibre (+20%) reported strong payments growth and improved profitability driving upgrades to price targets

Source: FactSet Research Systems. Online Travel composite includes: AMADY, EDR, EXPE, DESP, MMYT, BKNG, TZOO, TRIP, TRVG. Internet Leaders composite includes: BABA, AMZN, EBAY, FB, GOOGL, LYFT, NFLX, TENCENT. FoodTech composite includes: APRN, DHER, HFG, GRUB, JE, MMM, TKWY, WTRH. Online Content composite includes: IAC, LFRG, MTCH, MOGU, PINS, LOV, TTGT. Online Marketing composite includes: CRTO, GRPN, ICLK, MCHX, PERI, QNST, RUBI, SOGO, TTD, TLRA, TRUE. SaaS composite includes: ALRM, APPF, TEAM, BOX, CARB, DBX, FIVN, LPSN, RP, CRM, ZEN. eCommerce composite includes: AMZN, ASC, BOO, BTOW3, CHWY, CVNA, H24, KOOV, LOVE, OSTK, PDD, RAKUTEN, QRTE.A, SECO, SFIX, W, ZAL. Marketplaces composite includes: ANGI, AUTO, CARS, CAR-AU, CARG, DHX, EB, EBAY, ETSY, EVER, FTCH, GRUB, JE, LC, LYFT, TREE, MELI, MEITUAN, RBZ, SEK, SSTK, REAL, TRUE, TC, UBER, UXIN, UPWK, WEW. Sub. Services composite includes: ALRM, APRN, CRCM, CHGG, EHTH, HFG, IQ, JCOM, LOV, MTCH, MEET, MMM, NFLX, SPOT, STMP, SFIX, SVMK, TME, TRUP.

Gaming includes: ATVI, BILI, CDR, CDM, DIB, EA, GLUU, HUYA, ROVIO, SCPL,SE, SUMO, TTWO, TM17, UBI, ZNGA.

Social Media: FB, KAKAKU, LN, MEITU, RENN, SINA, SNAP, TWTR, WB, O1BC, YELP.

Real Estate: CSGP, PURP, REA, RP, RLGY, RDFN, RMV, G24, SFUN, OTMP, ZG.

FoodTech

9%

Social Media

13%

Real Estate

10%

Sub. Services

2%

SaaS

(2%)

Gaming

3%

Online Content

3% Marketplaces

3%

Online Travel

5%

eCommerce

6%

Online Marketing

6%

DJIA

3% Internet Leaders

2%

NASDAQ

4%

+40%

+30%

+20%

+10%

0%

-10%

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Date

AnnouncedAcquirer Target

Enterprise

Value ($M)

EV / LTM

Revenue

EV / LTM

EBITDA

6/11/19 $2,758 1.3x 8.3x

5/9/19 1,370 N.A. N.A.

6/13/19 623 N.A. N.A.

5/1/19 415 N.A. 15.5x

4/23/19 300 N.A. N.A.

5/30/19 247 N.A. N.A.

4/11/19 233 5.7x 15.0x

4/30/19 200 N.A. N.A.

4/16/19 200 N.A. N.A.

6/12/19 160 N.A. N.A.

5/31/19 122 1.2x N.A.

Source: 451 Research, Capital IQ, Pitchbook, Company websites.

Note: Data reflects all capital raises and acquisitions with announced values greater than or equal to $25M in the Internet & Digital Media sector.

Note: All EBITDA multiples over 40.0x or negative are N.M.

M&A Activity & Trends

Internet Convergence Maintains Course

eCommerce had the strongest showing this quarter comprising over half of total deal value (60%), Online Gaming and Marketplaces constituted 13% and 12% of total deal value, respectively, while Travel, Online Content, Subscription Services, and Social Media shared the remaining 15% of total deal value for the quarter

A few transactions to highlight:

6/10/19 – Apollo Global Management acquired online print service company Shutterfly in a deal that valued the Company at $2.8B or $51.00 / share

- Valuation was 8.3x LTM EBITDA and 1.3x LTM revenue, representing a 13% premium from its $45.22 share price on February 5, 2019, the last day of trading before announcing it was exploring a sale

- Apollo plans to merge Shutterfly with rival Snapfish, whose owners will become minority shareholders in the combined business

6/13/19 – Gamesys, a game developer and operator, was acquired by JPJ Group for $623M

- The acquisition of Gamesys, a U.K.-based operator of several online slots, casino, and bingo sites, will enable JPJ Group to cut its reliance on third-part tech platforms and allow them to leverage Gamesys’ brands for international growth

5/09/19 – Edgewell Personal Care Company made a $1.4B acquisition of Harry’s, a men’s grooming company specializing in shaving products and manufacturing its own line of razors and replacement blades on a subscription based model

4/23/19 – Getaround acquired European ride-share startup Drivy for $300M

- Fueled by a $300M Series D raised by SoftBank last August, the startup acquired Drivy to expand its European presence, as the Paris-headquartered car sharing company operates in 170 European cities

- Combined, Getaround now has more than 5M users as it seeks to further capitalize on the mobility revolution

Recent Internet M&A Activity

Q2'19 YoY deal value dropped significantly ($7.2B vs. $43.9B), as well as deal volume (20 vs. 29); however, two deals contributed to 69% of the total deal value in Q2'18 (Walmart’s acquisition of Flipkart and Alibaba’s acquisition of Ele.me) skewing YoY data. Regardless, quarterly YoY deal value and volume both saw a significant decline

Median M&A multiples declined in the sequential quarter from 3.6x LTM revenue and 15.1x LTM EBITDA in Q1 of this year

1.3x Median

EV / LTM Revenue EV / LTM EBITDA

15.0x

Select Transactions

@Leisure

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Date

AnnouncedTarget Deal Size ($M)

Post Money

Valuation ($M)Segment Investors

4/1/19 $1,100 5,000 Online Travel SoftBank

5/10/19 1,000 N.A. eCommerce

Baring Private Equity Asia, China

International Capital Corporation,

CITIC Capital

4/30/19 1,000 N.A.Online

MarketplacesPalm Drive Capital, SoftBank

5/23/19 600 12,600Online

Marketplaces

Darsana Capital Partners, Sands

Capital Ventures

5/20/19 575 4,000Online

Marketplaces

Amazon, Fidelity Investments,

Greenoaks Capital Partners,

T. Rowe Price

6/15/19 500 4,500 Online Real Estate

General Atlantic, Sequoia Capital,

Tencent Holdings, Tiantu

Investments International

6/3/19 500 N.A.Online

Marketplaces

Fresh Capital (China), JD.com,

Morningside Venture Capital

4/30/19 500 N.A.Online

MarketplacesPaypal

4/3/19 500 1,000 Online Travel Mahindra & Mahindra

5/16/19 484 N.A. Online Travel

GIC, Heartcore Capital, Korelya

Capital, Lakestar, SoftBank,

Temasek, Zürcher Kantonalbank

6/12/19 300 1,000Subscription

ServicesSoftBank

6/27/19 250 4,000 Online Travel

Andreessen Horowitz, Lightspeed

Venture Partners, SGVC, Zeev

Ventures

5/23/19 250 N.A. Online Travel Tencent Holdings

5/6/19 250 N.A. Online Content

23 Capital, Soros Fund

Management, Monroe Capital,

Fortress

6/18/19 230 1,000Online

Marketplaces

Avenir Growth Capital, Eurazeo,

Prime Ventures

4/10/19 225 1,230 Online Travel SoftBank

4/2/19 220 N.A. Online Real EstateFirstMark Capital, Accomplice,

Juxtapost

5/15/19 200 N.A. eCommerceSoftBank Vision Fund, KTB, Tiger

Global, Sequoia Capital

5/7/19 200 1,500Online

MarketplacesVolkswagen

6/6/19 182 N.A. Online Content ByteDance

4/10/19 181 511Online

MarketplacesLithia Motors

6/10/19 180 1,000 Online TravelAgoda Company, Booking

Holdings, GIC Private

Source: 451 Research, Capital IQ, Pitchbook, Company websites.

Note: Data reflects all capital raises and acquisitions with announced values greater than or equal to $25M in the Internet & Digital Media sector.

Private Capital Raising Activity & Trends

Macro Private Placement Trends

$14.0B was invested into Internet businesses this quarter, maintaining the trend from Q2'18 as another strong quarter in the year

Deal count slightly increased in the quarter (86) compared to Q2'18 (80) with an aggregate deal value of $14.0B (vs. $13.9B last year); investors remain active and continue to invest in high quality, high growth businesses across the sector

Despite Internet companies continuing to raise private capital through late-stage investment rounds, Q2'19 has been a banner quarter for companies exiting to the public markets via IPOs

Valuation & Sector Trends

Median post-money valuation for private companies continued to climb ($1.0B vs. $625M Q2'18), however the average disclosed post-money valuation decreased to $1.6B in Q2'19 vs. $2.1B last year

17 unicorns raised additional capital in Q2'19 – all up rounds compared to their last fundraisings

Investors continued to fund Marketplaces / Gig Economy businesses to the tune of $5.9B (42% of total) across 34 deals (40% of total); Online Travel also received a large portion of the total capital raised in Q2'19 highlighted by OYO Rooms, GetYourGuide, TripActions, Klook, and Zoomcar

SoftBank led a number of the largest capital raises (OYO Rooms, GetYourGuide, Gympass, Klook); roughly half of the $100B Vision Fund’s dry powder has been spent in less than two years

Most Active Subsectors in Internet:

Select Transactions

eCommerce

(17 Deals)

Marketplaces

(34 Deals)

Guazi

Danke Apartments

JD

Health

(Mafengwo)

11

100 135 190

0 137 134

35 31 32

169 176 137

228 114 0

175 175 175

202 140 184

120 178 87

0 72 122

107 33 70

102 102 153

212 0 47

255 204 0

0 112 60

204 215 234

94 110 102

Palette

RGB

values

Stifel collectively refers to Stifel, Nicolaus & Company, Incorporated and other affiliated broker-dealer subsidiaries of Stifel Financial Corp.

Stifel Internet & Digital Media Investment Banking

Stifel Internet & Digital Media Team

ANDRE MANCL

Managing Director,

Head of Internet & Digital Media

SETH RUBIN

Managing Director,

Head of U.S. Equity Capital Markets

CHRIS AULD

Managing Director,

Leveraged Finance

ZEESHAN MEMON

Managing Director,

Technology Financial Sponsors

JASON STACK

Managing Director,

Technology Mergers & Acquisitions

LEWIS CHIA

Director,

Equity Capital Markets

DAVID LAMB

Director,

Internet & Digital Media

ANTHONY YAMSON

Vice President,

Internet & Digital Media

NINA YANG Director,

Asia Technology

YURI LEE

Associate,

Internet & Digital Media

Recent Internet & Digital Media Transactions

PEG JACKSON

Managing Director,

Internet & Digital Media

BILL BUNTING

Managing Director,

Head of Private Placements

PETER GLOBOKAR

Managing Director,

European Technology

WALDO GLASMAN

Managing Director,

Head of Latin America

COLE BADER

Managing Director,

Head of Mergers & Acquisitions and Co-Head of Global Technology Group

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