Annual European Venture Capital Report

2017 edition

February 2018
Intelligent global database to identify & track growth
opportunities and innovative companies
About this report
Data sources and transparency The authors of this report
■ Dealroom.co is a proprietary global database providing business
intelligence on innovative companies and venture capital

■ Basic access to the database is free. Throughout this report, links are
provided to relevant underlying data

■ Data is maintained daily, sourced through a combination of: processing of

Yoram Wijngaarde Daryia Paliksha Julien Puls
public news-flow, data feeds, web scraping, crowd-sourced contributions
Founder & CEO Analyst Data Scientist
(verified by Dealroom) and manual research
yoram@dealroom.co daryia@dealroom.co julien@dealroom.co
■ Dealroom’s clients include world-leading Silicon Valley firms, VC and buyout
firms, multinationals and governments. Dealroom’s software, database and
bespoke research help to stay at the forefront of innovation and identify
growth & strategic opportunities

Marco Squarci Irina Anihimovskaya

Notes on methodology Manager Operations Analyst
marco@dealroom.co irina@dealroom.co
■ Venture capital funding excludes debt, lending capital, grants and ICOs

■ Secondary rounds, buyouts, M&A and IPOs are treated as exit transactions
(excluded from funding data, but included in exit data)

■ Europe excludes Israel, unless specified otherwise For feedback or questions please get in touch

If you like this report, please share!

3
Summary
▪ Venture capital investors are betting on Europe at record levels: €19.2 billion was invested (€22.1 billion including Israel)
Record ▪ The number of investment rounds declined by 12% to 3,513 (including Israel 3,753). But that decline is likely to diminish once all smaller rounds
have been accounted for. Dealroom tracked 4,828 funding rounds in total, however this includes debt, ICOs, grants, and other excluded rounds
investment
▪ This presentation includes a reconciliation with different reported investment figures and methodologies on page 9 and 10
▪ 2017 saw 17 rounds over €100 million (Improbable, Delivery Hero, Farfetch, Deliveroo, …), compared with 13 rounds in 2016
Growth ▪ However, even when excluding the 10 largest rounds investment still grew by 30%
drivers ▪ UK investment grew by 87% to €7.1 billion, more than Germany, France and Sweden combined. But France is #1 by number of VC-backed rounds
▪ U.S. investment is still 8x higher per inhabitant, indicating plenty of growth opportunity in Europe

▪ Deep tech (1), fintech, and healthcare were the leading investment themes of 2017, approaching combined €8 billion investment. Decreased new
Investing activity in SaaS, content, marketing & advertising, travel, booking platforms, ecommerce
trends ▪ There is a noticeable trend to fewer larger rounds: fewer but larger early stage rounds, and increase in larger follow-on rounds above €5 million

▪ Fundraising by European venture firms slowed down in 2017, but is still at historically high levels with plenty of capital is available to be invested
Sources of ▪ The UK is no longer the undisputed capital of European venture capital. Continental Europe is catching up, while France is almost on par already
capital ▪ Investment activity has grown roughly proportionally across funds and corporate investors in 2017
▪ Asia is becoming a significant investor in European tech, thanks to a handful of mega-rounds

▪ Number of exits grew to 294, but there were far fewer meaningful exits compared with previous years (€12bn realised in 2017, vs. €35bn in 2016)
Venture ▪ Acquirers of European tech are still most likely to come from within Europe, followed by USA
backed exits ▪ However, an extremely strong pipeline of European exits on the horizon (Spotify, Farfetch, Adyen, Klarna, Deliveroo, Auto1 Group, …)

1. Container term which includes robotics, artificial intelligence, autonomous driving & delivery, space-flight, aviation, computer vision, speech recognition, AR/VR. 4
Dealroom data: trusted by world-leading publications

An overview of Dealroom featured articles is available in this blog post

5
Contents

1. Venture capital investment

2. Growth drivers
3. Investing trends
4. Sources of capital
5. Venture backed exits
Venture capital investors are betting on Europe at an
unprecedented pace Decline in number of rounds reflects:
1. a trend towards large deals (big tech)
2. time lag: some smaller rounds appear

Investment in € billions 1,098

1,127
with a 12-24 month delay

1,045
1,010 1,024
990 1,077
973
1,016
Europe excl. Israel Israel 899
966 950 957
Nr. of rounds excl. Israel Incl. Israel 919 820
815 799 891

737
845 € 6.4B
680 € 5.8B 761
668 € 0.9B
650 735 732 € 5.4B
628 € 0.7B
590 672 € 5.0B
568 € 4.7B € 0.8B
519
629
609 € 4.4B € 4.5B
592 € 0.9B
576 € 0.6B € 4.1B € 0.5B
451 535 € 0.4B € 3.8B € 3.7B
522 € 3.6B € 3.7B € 0.5B
487
€ 3.2B € 0.5B € 0.5B € 0.6B
€ 0.7B
407 € 2.7B € 0.5B € 2.6B
€ 2.1B € 0.2B
€ 0.4B
€ 1.8B
€ 1.5B € 1.5B € 0.3B
€ 0.4B
€ 1.2B € 0.1B
€ 0.5B
€ 0.2B

€ 1.0B € 1.4B € 1.0B € 1.5B € 1.7B € 2.4B € 2.7B € 2.2B € 3.2B € 3.2B € 4.0B € 3.2B € 4.1B € 4.2B € 3.0B € 3.5B € 4.0B € 5.1B € 5.5B € 4.6B

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014 2015 2016 2017

Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, ICOs, lending capital, grants. 7
 In 2017 a record €19.2 billion in
Click below to view data & underlying
venture capital was invested in
rounds online. Click on the chart columns to
see rounds in each year. View to quarterly
Europe (€22bn incl. Israel)
vs. annually.
Investment in € billions
Europe (excl. Israel) Israel Nr. of rounds excl. Israel Incl. Israel
4,260
Europe & Israel investment

3,978 3,753
3,324 3,513
€ 22.1B

€ 2.9B
2,626 3,030
€ 17.6B
€ 15.5B € 2.7B
2,128 2,406
€ 1.9B

1,951 € 10.6B
€ 1.6B € 19.2B
€ 6.1B € 13.6B € 14.8B
€ 1.1B
€ 9.1B
€ 5.0B

2013 2014 2015 2016 2017

Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, ICOs, lending capital, grants. 8
Comparing 2017 European venture capital reports:
differences in scope & methodology
Number of rounds tracked Reported US$ investment Key differences
(1) ▪ Dealroom excludes ICOs, grants, secondary rounds, debt,
Dealroom 4,524 4,828 $ 21B $ 24B lending capital from funding amounts

▪ Based on Dealroom data, but excludes biotech and Israel

Atomico 3,449 3,699 $ 19B $ 22B ▪ Otherwise, methodology consistent with Dealroom

▪ Includes debt rounds such as Auto1 €360 million. Dealroom

Pitchbook 3,306 3,556 $ 19B $ 22B excludes such debt rounds from totals

▪ Tech.eu’s includes secondary rounds such as Com Hem and

Tech.eu 3,150 3,400 $ 24B $ 27B Klarna. Includes debt rounds such as Auto1

▪ Includes debt rounds such as OVH €400 million debt round.

CB Insights 2,483 2,733 $ 18B $ 21B Dealroom excludes such debt rounds from totals

VentureSource 2,250 2,500 $ 16B $ 19B ▪ Methodology mostly consistent with Dealroom

▪ Includes ICOs such as SIRIN Labs. Prioritises Israel location

Gil Dibner 1,541 1,941 $ 16B $ 20B (e.g. SIRIN Labs). Includes secondary rounds such as Klarna,
debt round such as Auto1 Group

Crunchbase Not available Not available ▪ European data not found

Europe Israel

Source: Israel added for comparative purposes. If Israeli data not provided, Dealroom numbers are used.
1. Total number of rounds tracked including debt, lending capital, ICOs and grants. 9
Atomico’s State of European Tech 2017: excluding
biotech US$ 18.8 billion was invested
Investment in € billions Investment in US$ billions
$ 24.3B
26% growth
€ 22.1B from 2016
3.2

37% annual 2.9 Total Europe $ 19.3B

growth 2.3 $18.8B compares with $19.1B
= €19.2 bn
€ 17.6B 2.1 $ 17.0B predicted back in Nov 2017 in
3.0
Atomico’s State of European Tech
€ 15.5B 2.7 2.1 report.
1.3
1.9 1.2 1.9 Tom Wehmeier, Partner & Head of
1.8 $ 11.7B Research at Atomico:
€ 10.6B “Europe's entrepreneurial, talent,
1.7 community and capital foundations
1.6 1.2 $ 18.8B are strong. In fact, European tech
1.1 € 17.1B today is the healthiest it has ever
$ 6.7B $ 15.0B
€ 6.1B € 13.6B been. As Dealroom.co's data shows,
1.2 $ 13.0B
1.1 € 11.8B investors from Europe and beyond
0.7 0.7
$ 8.8B are backing the region's
€ 8.0B
entrepreneurs at record levels.”
€ 4.3B $ 4.7B

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Europe (excl Biotech) Biotech Israel

Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital, grants. 10
Contents

1. Venture capital investment

2. Growth drivers
3. Investing trends
4. Sources of capital
5. Venture backed exits
2017 saw 17 rounds over €100 million, Mega-rounds were a key growth
compared with 13 rounds in 2016.
Click image below to explore the largest
Click
rounds ofbelow
2017: to view data &
driver, but not the only factor
underlying rounds online Investment in € billions € 19.2B

Number of rounds (heatmap)

Europe & Israel investment
€ 14.8B
€ 13.6B

€ 9.1B

€ 16.4B
€ 5.0B € 12.6B
€ 11.1B
€ 7.3B 30% growth YoY excluding
€ 4.1B top-10 largest rounds

2013 2014 2015 2016 2017

Spotify (€ 250M) Rocket Internet SE (€ 445M) Delivery Hero (€ 546M) Spotify (€ 500M) Improbable (€ 502M)
Zalando (€ 154M) Delivery Hero (€ 350M) Spotify (€ 526M) Global Fashion Group (€ 363M) Delivery Hero (€ 426M)
Supercell (€ 130M) Adyen (€ 250M) Landbay (€ 330M) Deliveroo (€ 275M) Farfetch (€ 397M)
Sungevity Netherlands (€ 125M) Ozon (€ 150M) Zencap (€ 253M) OVH (€ 275M) Deliveroo (€ 385M)
Truphone (€ 118M) Jumia Group (€ 150M) Kreditech (€ 200M) Jumia Group (€ 248M) Truphone (€ 337M)
Powa Technologies (€ 76M) Jumia Market (€ 150M) BlaBlaCar (€ 200M) Skyscanner (€ 169M) Gryphon Group (€ 238M)
AVITO (€ 50M) The Hut Group (€ 132M) Auxmoney (€ 165M) SIGFOX (€ 165M) OakNorth Bank (€ 203M)
Ulmart (€ 50M) Borro (€ 112M) Global Fashion Group (€ 165M) Cool Blue (€ 154M) Letgo (€ 175M)
Groupe Santiane (€ 44M) BlaBlaCar (€ 100M) Reward Gateway (€ 158M) Future Finance (€ 132M) SoundCloud (€ 170M)
Arria NLG (€ 40M) Klarna (€ 99M) Funding Circle (€ 150M) Oxford Nanopore (€ 126M) Tricentis (€ 165M)

Source: Dealroom.co. Excludes crowdfunding only rounds, buyouts, secondary transactions, debt, lending capital. Excludes Israel. 12
UK investment grew by 87% to €7.1 billion, more than
Germany, France and Sweden combined
Main city (€B) Total country (€B) Nr. of rounds
€ 10B Drop in rounds in 2,000
Italy, Switzerland,
Ireland, Belgium

€ 8B UK investment accounted 1,600

1,540
€ 7.1B for 37% of Europe’s total
of €19.2 billion. In
previous years this was
€ 6B around 28% of total € 5.5B 1,200
€ 5.0B

€ 4.2B
€ 4B € 3.8B € 3.7B 800
765
€ 3.2B 703
€ 2.6B
€ 2.8B € 2.9B € 2.8B € 2.7B € 2.9B
€ 2.5B
€ 2.0B € 2.0B 356 € 1.8B € 1.9B
€ 2B 389 € 1.5B € 1.6B 400
€ 1.3B € 1.2B
€ 1.1B € 1.0B € 1.2B € 1.1B
€ 0.7B € 0.8B 240
€ 0.5B
€ 0.4B

€ 0B –
'13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17

UK Germany France Sweden Rest of Europe Israel

London Berlin Paris Stockholm All main cities Tel-Aviv

Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital. Includes Israel & Biotech. 13
 But… France has overtaken the UK
Click below to view data &
underlying rounds online
Click below to view data &
by number of VC-backed rounds
Europe & Israel investment
underlying rounds online
Number of rounds (heatmap)
Number of VC rounds (excl. crowdfunding rounds)

800
724
674 692 688 France
700
672 United Kingdom
600 544 629

500

400 387 Germany

298 353 Sweden
300
225
Caveat: some smaller rounds
186
200 appear with a 12-24 month
delay. This can impact numbers
by 10-15% (indicative)
100

- Click on amounts to see underlying rounds

–
- Switch between quarterly vs. annually 2013 2014 2015 2016 2017
- Switch amounts vs. volume
United Kingdom Germany France Sweden

Source: Dealroom.co. Excludes crowdfunding only rounds, buyouts, secondary transactions, debt, lending capital. Includes Israel. 14
U.S. investment is still 8x higher per inhabitant,
indicating plenty of growth opportunity in Europe
Venture capital investment per capita in 2017 (US$)
Israel $368
USA $250
Sweden $136
United Kingdom $120
Ireland $82
Finland $61
Austria $42
Netherlands $41
France $40 ▪ Europe has roughly 700 million inhabitants. Investment of
€19 / $21 billion implies $30 per capita
Germany $38 ▪ USA annual investment is roughly $80 billion (1) and with
Denmark $31 320 million inhabitants this implies $250 per capita
Europe (excl. Israel) $30 ▪ Asia has roughly 4.5 billion inhabitants and $80 billion
invested in 2017
Belgium $26
Norway $24
Spain $21
Asia $18
Russia $2
Opportunity in Italy: investment
Italy $2 of $100 million, in a country of
Portugal $1 over 61 million people.
Turkey $0

Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital, ICOs.
1. Average of Pitchbook and CB Insights. 15
Across Europe, investment activity is gradually
increasing, as local funding options are expanding
Number of VC rounds (excl. crowdfunding rounds)

Includes Amount funding Nr. of rounds

Roivant’s €1bn
€ 2.0B 250
Softbank round € 1.7B
200
€ 1.5B
€ 1.0B € 0.9B 150
€ 1.0B € 0.9B
€ 0.6B € 0.6B € 0.6B
€ 0.5B € 0.6B € 0.5B € 0.5B € 0.6B 100
€ 0.4B € 0.4B € 0.4B
€ 0.5B
€ 0.2B
€ 0.3B € 0.2B € 0.2B € 0.2B € 0.2B € 0.2B € 0.2B
€ 0.3B € 0.2B € 0.2B € 0.2B € 0.3B € 0.3B 50
€ 0.1B
– –
'13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17
Spain Switzerland Netherlands Ireland Russia Finland

Amount funding Nr. of rounds

€ 0.4B 120
100
€ 0.3B € 0.3B
€ 0.2B € 0.2B 80
€ 0.2B € 0.2B € 0.2B
€ 0.2B € 0.2B € 0.2B € 0.2B 60
€ 0.1B € 0.1B
€ 0.1B € 0.1B € 0.1B € 0.1B 40
€ 0.1B € 0.1B € 0.1B € 0.1B € 0.1B
€ 0.1B € 0.1B € 0.0B
€ 0.0B € 0.0B € 0.0B € 0.0B € 0.0B 20
€ 0.0B € 0.0B € 0.0B
– –
'13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17
Belgium Norway Denmark Austria Poland Italy

Source: Dealroom.co. Excludes buyouts, secondary transactions, debt, lending capital. Includes Israel. 16
Contents

1. Venture capital investment

2. Growth drivers
3. Investing trends
4. Sources of capital
5. Venture backed exits
Deep tech, fintech, and healthcare were the leading
investment themes of 2017
Amount invested, 2017 (1) Number of rounds, 2017 (1)
Deep Tech € 4.1B Deep Tech 557
Fintech € 4.1B Fintech 556
Healthcare € 3.8B Healthcare 423
Marketplace € 3.4B Marketplace 410
Artificial intelligence € 3.2B Manufacturing 362
Analytics € 2.5B SaaS 360
Biotech € 2.4B Analytics 328
SaaS € 2.1B Marketing 303
Manufacturing € 1.8B Artificial intelligence 292
eCommerce / Trading € 1.7B eCommerce / Trading 259
Food € 1.4B Transportation 242
Transportation € 1.2B Content 204
Back office € 1.1B Home 197
Marketing € 1.1B Food 177
Developer tools € 1.0B Back office 176
InternetOfThings € 0.9B InternetOfThings 164
Home € 0.8B Travel 162
Gaming € 0.8B Energy 158
Telecom € 0.8B Education 150
Classified listing € 0.7B Booking 143
Booking € 0.7B Cleantech 133
Fashion € 0.7B Biotech 125
Travel € 0.7B Security 118
Security € 0.6B Real estate 110
Energy € 0.6B Advertising 110
Insurance € 0.6B Jobs Recruitment 105
Virtual reality € 0.6B Sports 104
Cleantech € 0.6B Gaming 102

Source: Dealroom.co.
1. Values overlap as companies can be included in more than one investment theme (e.g. both fintech and SaaS, or deep tech and biotech). 18
Decreased new activity in SaaS, content, marketing &
advertising, travel, booking platforms, ecommerce
Investment activity in 2017 vs. annual average in 2014-’16

Amount invested: increase / (decrease) Number of rounds: increase / (decrease)

Deep Tech € 2.4B Healthcare 144
Fintech € 2.3B Fintech 129
Artificial intelligence € 2.2B Energy 48
Healthcare € 1.8B Real estate 33
Analytics € 1.5B Home 28
Biotech € 1.0B Sports 25
Developer tools € 0.8B Transportation 24
Marketplace € 0.6B Cleantech 21
Back office € 0.6B Food 19
Gaming € 0.6B Back office 18
Insurance € 0.5B Jobs Recruitment 14
Virtual reality € 0.5B Security 10
SaaS € 0.4B Gaming 9
Transportation € 0.4B Artificial intelligence 7
InternetOfThings € 0.4B Biotech 3
Telecom € 0.3B Manufacturing (2)
Manufacturing € 0.2B Deep Tech (4)
Security € 0.2B InternetOfThings (4)
Marketing € 0.2B Education (10)
Home € 0.1B Travel (24)
Cleantech € 0.1B Trend towards larger deals Booking (31)
Food € 0.0B leading to disconnect in trends Analytics (42)
Travel € 0.0B by number of rounds vs. eCommerce / Trading (45)
Classified listing € 0.0B amount invested. Example: SaaS Marketing (47)
Energy (€ 0.0B) saw fewer deals but still more Marketplace (52)
eCommerce / Trading (€ 0.1B) capital. Advertising (82)
Booking (€ 0.1B) Content (91)
Fashion (€ 0.4B) SaaS (132)
(€ 1.0B) – € 1.0B € 2.0B € 3.0B (200) (100) – 100 200

Source: Dealroom.co. 19
New wave of investment in Fintech, Health, Deep Tech
dwarfs 2014-2015 investment in B2C marketplaces
Investment into B2C verticals such as Fashion, … whereas investment into FinTech, HealthTech,
Wellness, Taxi, Travel peaked at €4 billion. Enterprise and Deep Tech is already
Companies focusing on execution & consolidation ... approaching double that amount at €8 billion
€ 7.6B

€ 5.7B Fintech

€ 5.0B
€ 4.2B
€ 3.4B € 3.2B
€ 2.9B Health
€ 2.9B
Content
Travel
Wellness € 1.5B
€ 1.2B Fashion
Deep Tech (1)
Food

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Source: Dealroom.co.
Note: Some companies are included in more than one industry vertical, leading to some double counting of investment data by industry.
1. Container term which includes robotics, artificial intelligence, autonomous driving & delivery, space-flight, aviation, computer vision, speech recognition, AR/VR. In 20
this chart, deep tech excludes fintech and health tech to avoid double counting.
 Where is the smart money
Click image below to review Europe’s
investing, relative to the market?
most prominent venture capital Investment themes of top investors are broadly in line with market, but
investors and their investment activity some notable deviations:

Most prominent investors Entire European market (1) Rounds by Europe’s top 30 investment firms (2)

Deep Tech 71
Fintech 75
Healthcare 43
Marketplace 69
Manufacturing 24
SaaS 54
Analytics 37
Marketing 21
Artificial intelligence 44
eCommerce / Trading 23
Transportation 30
Content 16
Home 19
Food 10
Back office 28
InternetOfThings 9
Travel 18
Energy 11

Source: Dealroom.co.
1. Same data as previous page.
2. As per Dealroom’s investor prominence ranking: Index, Holtzbrinck, Balderton, Northzone, Lakestar, Sequoia, Accel, Insight,
Rocket, Intel, 83North, Atomico, Goldman Bessemer, IDInvest, Partech, SVB, Naspers, Greylock, Creandum, Benchmark, 360
Capital Partners, DN Capital, HTGF, General Atlantic, Wellington, Mangrove, Acton, Octopus, TA Associates. 21
Median round sizes have come back up in 2017
(and valuations likely increased too)
Seed rounds See next slide for
data by country
Series A rounds
€ 0.9M
Average Average € 8.0M
€ 0.7M € 0.7M See next slide
Median Median € 7.1M
for data by
€ 0.6M € 5.7M € 5.8M € 5.9M
€ 0.5M
country

€ 5.5M
€ 0.5M € 0.5M
€ 0.4M € 4.0M
€ 3.6M € 3.6M
€ 0.3M € 2.9M
€ 0.2M

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Series B rounds Series C rounds

Average € 20.1M Average
Median Median € 28.8M
€ 27.4M

€ 14.0M € 22.8M € 23.5M

€ 13.5M
€ 11.8M
€ 11.0M
€ 20.9M
€ 11.8M € 12.3M € 18.2M
€ 10.0M
€ 14.3M
€ 7.9M € 8.0M € 12.5M
€ 6.5M € 10.0M

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Source: Dealroom.co. 22
Number of rounds below €5 million stabilising,
growth is driven by larger rounds
Rounds up to €5M Rounds above €5M
€ 0-2M € 0-2M in UK and Germany € 2-5M € 5-10M € 10-20M € 20-50M € 50M+

2,500 Some smaller rounds

350
appear with a 12-24
month delay 300
2,000
250

1,500
200

Noticeable decline in €0-2M

rounds in UK and Germany since 150
1,000
2014 (also see next slide)
100
500
50

– –
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017

Source: Dealroom.co. Excludes Israel. 23

Early stage median round sizes have increased,
especially seed rounds in the UK and Germany
Bigger single rounds may have taken place
of several smaller rounds (Potential Median rounds size
explanation for decline in €0-2M seed
€ 1.5M rounds in UK and Germany)
€ 1.2M

€ 1.0M
Seed € 0.6M
€ 0.5M
rounds € 0.5M € 0.4M € 0.4M € 0.5M

€ 0.0M
United Kingdom Germany France Spain Sweden Netherlands

2012 2013 2014 2015 2016 2017

€ 8.0M
€ 6.9M
€ 6.4M € 6.3M
€ 5.7M
€ 6.0M € 5.1M € 5.2M
Series A
€ 4.0M
rounds
€ 2.0M

€ 0.0M
United Kingdom Germany France Spain Sweden Netherlands

Source: Dealroom.co. 24
About 25-30% of seeded companies also graduate to
series-A round. About 15% graduate to series B
% of startups reaching next funding round
100%
Graduation rates:
Note: not reaching series-A does not mean that company failed. Some
companies become self-sustaining and/or exited.
80% COHORT SEED SERIES A SERIES B SERIES C SERIES D
2011 100% 27% 13% 4% 1%
2012 100% 28% 13% 3%
2013 100% 27% 12%
60%
2014 100% 24% 7%

40%
2014 cohort likely
27% will still improve,
especially Series B
20% 24% 13%

4%
1%
0% 7%
SEED SERIES A SERIES B SERIES C SERIES D
2011 cohort 2012 cohort 2013 cohort 2014 cohort

Source: Dealroom.co. Europe only. Note: the average time between rounds is roughly 18 months. Therefore, it takes an average of nearly three years to move
from Seed to Series B. For this reason, the data only includes cohorts from 2014 and earlier. 25
Contents

1. Venture capital investment

2. Growth drivers
3. Investing trends
4. Sources of capital
5. Venture backed exits
 Fundraising by European venture
The UK is no longer the undisputed capital
of European venture capital. Continental
Europe’s venture capital industry is catching
firms slowed down in 2017, but is
up to the UK.
Click below to see how France is nearly on
still at historically high levels
par with the UK, while other countries are
also on the rise:

VC fundraising Investment
€ 19.2B
VC fundraising by country

€ 14.8B
€ 13.6B
€ 13.0B

€ 9.9B
€ 9.1B

€ 6.8B
€ 4.6B Plenty of new capital is available to be invested
in 2018 and beyond. Investable capital is also
less concentrated around the UK, more
distributed across Europe than ever before.

2014 2015 2016 2017

Source: Dealroom.co. 27
Investment activity has grown roughly proportionally
across funds and corporate investors in 2017
Investment funds Corporate venturing Angels, crowdfunding, other

€ 20.0B 2,500
Investment in € as % of total
74% 76%
63% 68% 68%
€ 16.0B € 14.9B 2,000
32% 27% 29%
22% 20%
3% 3% 4% 5% 3%
€ 11.9B
€ 12.0B Investment Fund Corporate Other 1,500
€ 9.8B 2013 2014 2015 2016 2017

€ 8.1B
€ 8.0B € 6.4B 1,000

€ 4.6B € 5.0B € 4.8B

€ 4.0B 500
€ 2.2B
€ 1.4B € 0.8B
€ 0.2B € 0.3B € 0.7B € 0.7B
– –
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Investment Number of rounds

1. U.S based funds = Funds only. Excludes investment by U.S. corporates (Microsoft, GE, …). 28
Asia is becoming a significant investor in European
tech, thanks to a handful of mega-rounds
Europe USA Asia Rest of World

€ 12.0B 3,000
€ 11.0B € 11.1B
Investment in € as % of total
€ 10.0B € 9.5B 2,520 59% 56% 62% 63% 2,500
50%
36% 32% 32%
26% 30%
15%
7% 6% 8%
€ 8.0B 1% 3% 4% 1% 3% 4% 2,000
€ 6.6B
€ 6.0B Europe USA Asia RoW
2013 2014 2015 2016 2017
€ 6.0B 1,500
€ 4.9B
€ 4.6B
€ 4.0B € 3.6B € 3.4B € 3.4B 1,000
€ 2.2B
€ 2.0B 450 € 1.4B 500
€ 0.8B € 0.9B € 1.0B
€ 0.5B
€ 0.1B 147 € 0.2B € 0.4B € 0.2B
– 12 –
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Investment Number of rounds

Source: Dealroom.co. 29
 Number of unique active investors
Click image below to review over
growing, but not as fast as in 2016
9,000 active professional investors
Number of firms with one or more investments per year
Investors

Graph excludes angel investors. 2,122

Number of angel investors nearly
80
quadrupled from 335 in 2016 to
1,875
1,278 in 2017. However, this is
partially driven by better data 97
collection by Dealroom.

1,242 1,495
+33% (1)
74 +11% YoY (2)
1,341
918
66
657 905
51
682
480
+44% (1)
547
437 +25% YoY (2)
170 263
126

2013 2014 2015 2016 2017

Corporate Investment Fund Accelerator, crowdfunding, other (excl. angel investors)

Source: Dealroom.co. Investors who participated in at least one VC round in that year. Excludes Israel.
1. Annual growth between 2012 and 2016. 2. Growth from 2016 to 2017. 30
Contents

1. Venture capital investment

2. Growth drivers
3. Investing trends
4. Sources of capital
5. Venture backed exits
 The number of exits grew in 2017, but
Click image below to view exits data &
far fewer meaningful exits, compared
underlying rounds. Click on the chart
columns to see rounds in each year. Switch
with previous years
to quarterly vs. annually.

VC Backed exits in Israel and Europe

VC backed exits in Europe (excl. Israel)

Realised exit value (€B) Unrealized value (€B) Number of exits

€ 60.0B 360
€ 55.6B

294
€ 50.0B 274 300

€ 40.0B € 38.1B € 37.4B 240

230
€ 29.9B
€ 30.0B 180

122
€ 20.0B 120
83 € 35.0B
€ 11.1B
€ 10.0B € 21.8B 60
€ 14.5B € 12.0B
€ 7.0B
– –
2013 2014 2015 2016 2017

Source: Dealroom.co. Excludes Israel.

Note: Realised value is based on % sold. Unrealised value is based on remaining % unsold. 32
Healthy ratio of capital returned vs. invested. But to sustain
growth in VC activity, exits will need to increase even further
Ratio of capital returned ÷ invested
Investment (€B) Total firm value of exits (€B)
How much exits should we
expect? A rule of thumb:

At the time of exit, VC ownership

is typically 60-70% (1)
Assume a 2x target return on
capital for the VC industry.
€ 55.6B
This implies that the target ratio
of exits to VC investment should € 38.1B € 37.4B
approach 3x, in order to achieve € 29.9B
target VC return of 2x.
€ 11.1B

(€ 5.0B)
(€ 9.1B)
(€ 13.6B) (€ 14.8B)
Amount of capital invested each (€ 19.2B)
year has increased dramatically

2013 2014 2015 2016 2017

Source: Dealroom.co. Excludes Israel.

1. On average, VC backed companies do three VC rounds before the exit. Each round involves circa 15-25% dilution. 33
European exits by target location: 2017 was a relatively slow
year for venture backed exits across the board
United Kingdom Germany France Sweden Spain Netherlands

(secondary)

€ 10.0B 100

€ 8.7B
€ 8.0B
€ 8.0B € 7.5B 80

66
€ 5.9B
€ 6.0B 60
55

€ 4.0B € 3.6B 41 40
€ 3.4B 38
€ 2.9B € 2.9B € 3.0B

€ 2.0B € 2.0B
€ 2.0B 20
€ 1.2B € 1.2B 18
€ 1.2B € 1.1B € 1.0B€ 1.1B 15
€ 0.9B€ 1.0B€ 0.9B € 0.9B
€ 0.7B
€ 0.4B
€ 0.0B € 0.1B€ 0.1B€ 0.3B € 0.0B € 0.0B € 0.1B
– –
'13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17

Realised exit value (€B) Number of exits

Source: Dealroom.co. Excludes Israel. 34

Acquirers of European VC-backed companies are still most
likely to come from within Europe, followed by USA
Europe USA Asia IPOs

€ 35.0B 175

€ 30.0B € 29.2B € 29.1B 150

€ 25.0B 125

€ 20.0B 100

€ 14.6B
€ 15.0B € 13.3B 75
€ 11.4B
€ 9.5B € 9.3B € 9.1B € 8.5B
€ 10.0B € 8.1B 50
€ 7.0B € 7.4B

€ 5.0B € 3.6B € 3.5B € 2.8B 25

€ 1.9B € 2.4B € 2.7B € 2.2B
€ 0.1B
– –
'13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17 '13 '14 '15 '16 '17

Total firm value of exits (€B) Number of exits

Source: Dealroom.co. Excludes Israel. VC backed exits only. 35

2017 saw an increase in smaller exits, IPO rounds and
secondary exit rounds

250
214
195
200 170
150
Exits by
100 82
type (1) 47 45
50 23 21 29 31 35 28
7 13 8 8 12 4 10 3 4 7 5
– –
–
Acquisition Buyout Merger IPO Secondary

2013 2014 2015 2016 2017

250
191
200 178
151
Exits by 150
size 100 75
59 64
44 43
50 26 30
5 10 18 14 12 4 8 4 9 8 5 10 13 14 8
–
$ 0-100M $ 100-250M $ 250-500M $ 500M+ Size not disclosed

Source: Dealroom.co. Excludes Israel.

1. IPOs include also post-IPO followon transactions.
36
 However, strong pipeline of
Click image below to view the long list of European exits on the horizon
Europe’s most valuable private companies
Selected European unicorns
Indicative Industry
Company City Investors
valuation vertical
Companies valued > €750M Rakuten, Endeavor Catalyst, The Venture City, GAT Investments, Seaya
Cabify €1 bn Transportation Barcelona Ventures, Winklevoss Capital, Marc Bell Ventures, The Venture City, Red
Swan Ventures, Resolute Partners

SoftBank, Target Global, Baillie Gifford, Barclays, Citigroup, Goldman Sachs,

Auto1 Group €3 bn Transportation Berlin
BNP Paribas, JPMorgan, DN Capital, DST Global, Piton Capital

Accel, Index Ventures, General Catalyst Partners, DST Global, Fidelity, T.Rowe
Deliveroo €2 bn Food London
Price, Felix Capital. Greenoaks Capital Management

MarketInvoice €1.5 bn Fintech London Northzone, British Business Bank, MCI Capital, Paul Forster

Visa, Creandum, Northzone, Wellington Management, Sequoia Capital, DST

Klarna €2.5 bn Fintech Stockholm
Global, General Atlantic

Adyen >€5 bn Fintech Amsterdam ICONIQ Capital, Index Ventures, General Atlantic, Felicis Ventures, Temasek

JD.com, Temasek, Oleg Tscheltzoff, Fabrice Grinda, e.ventures, DST Global,

Farfetch >€4 bn Fashion London
Felix Capital, IDG Capital Partners, Eurazeo, Vitruvian Partners

Accel, Index Ventures, Rocket Internet, DST Global, Temasek, Baillie Gifford,
FundingCircle €1 bn Fintech London
Union Square Ventures, Ribbit Capital

Accel, DST Global, Goldman Sachs, GP Bullhound, GSV Capital, Fidelity,

Spotify €12 bn Music Stockholm
Kleiner Perkins Caufield & Byers, EquityZen, Northzone

Index, LocalGlobe, Kima, Valar, Seedcamp, IA Ventures, The Accelerator

Transferwise €1.5 bn Fintech London
Group, Richard Branson, Andreessen Horowitz, Baillie Gifford

Subtotal €30 billion +

Source: Dealroom.co. 37