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Europe & Israel 3Q16 Deals Done Review
1. Venture Capital in Europe & Israel
Venture Investment Data: Third Quarter, 2016
Prepared by Gil Dibner
Hammerfest, Norway – Northernmost city in the world
70°39′45″N 23°41′00″E
blog
2. The data
• 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 all currencies into USD using monthly average exchange rates
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3. Top 10 deals by region YTD (US $M)
DACH NordicFrance
Israel UK & Ireland Iberia
50
50
50
50
50
50
50
50
70
70
72
76
96
300
Phinergy
Elastifile
SiSense
jFrog
Roboteam
WalkMe
Kaltura
Vroom
Via
Zerto
Sirin
ForeScout
Skybox Security
Gett
0 50 100 150 200 250 300 350
50
50
50
54
60
65
70
110
170
192
275
MUBI
HighQ
Intercom
Blippar
Student.com
Darktrace
Starling
FarFetch
FutureFinance
Skyscanner
Deliveroo
0 50 100 150 200 250 300
6
7
7
7
12
22
38
42
55
120
Glovo
Sherpa
iContainers
TravelPerk
ABA English
Veniam
CornerJob
Jobandtalent
OutSystems
Cabify
0 20 40 60 80 100 120 140
17
17
19
20
25
33
35
37
49
88
Sol Voltaics
Widespace
Skeleton Technologies
Polight
Vivino
AlphaSense
Klarna
M-Files
StarBreeze
Apptus
0 20 40 60 80 100
22
23
23
24
30
35
35
35
47
109
MisterFly
Dashlane
Cedexis
BlaBla Car
Nuxeo
Acco
Drivy
Zenly
Teads
Deezer
0 20 40 60 80 100 120
34
34
40
45
45
55
70
90
100
374
Smava
Spotcap
Number26
Egym
Home24
Brillen.de
SoundCloud
Heliatek
MindMaze
Global Fashion Group
0 100 200 300 400
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4. Quarterly pace of venture investment
• In 3Q16, Europe & Israel saw
$3.1 billion flowing into 393
venture transactions
• This represents a 24%
decrease in activity from 2Q
• These numbers, and the rest
of this deck, do not reflect
the $1B in debt raised by
Spotify in March
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2,873
3,139
3,248
2,856
3,752
4,112
3,124
0
100
200
300
400
500
600
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
Amountinvested(US$M)
VC Investmentsin Europe& Israel
(January 2015 - September 2016)
Invested amount (US $M) Number of investments
5. Monthly pace of venture investment
• Looked at on a monthly
basis, the 3Q slowdown was
mostly attributable to a very
slow July
• August and September saw a
return to normal levels of
investment
• It’s difficult to attribute this to
seasonality, as July 2015 was a
very strong month
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905
971
997
791
787
1,561
1,517
568
1,164
1,083
1,059
714
1,661
1,052
1,039
1,401
1,450
1,262
737
1,100
1,286
0
20
40
60
80
100
120
140
160
180
200
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
InvestedAmount(US$M)
VC Investmentsin Europe& Israel
(January 2015 - September 2016)
Invested amount (US $M) Number of investments
6. 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+)
• Only one mega-rounds took
place in Europe this quarter:
Deliveroo’s $275M round
• Adjusting for mega-rounds,
3Q16 was $300M less than
2Q16
354 368 507 603 635 586
716 567
559
731 695 762
813
1,513 1,187
1,669 1,678
1,337
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
AmountInvested(US$M)
Pace of VC Investment in Europe and Israel
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
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7. Strong year-over-year growth
• The first three quarters of
2016 saw 17% more venture
investment than the first
three quarters of 2015
• Early venture deal volume
increase 81% for the first
three quarters, venture
volume increase 19%, growth
volume increased 35%.
Mega-deal volume
decreased, however, by 33%
• These increases mask a year-
on-year decline of 5.5% for
the third quarter when it’s
looked at in isolation
1,007
1,824
1,839
2,188
3,481
4,684
2,622
1,751
0
2,000
4,000
6,000
8,000
10,000
12,000
2015 2016
TotalVCinvestment(US$M)
VC investment volume in Europe and Israel by bracket
(1Q-3Q 2015 vs 1Q-3Q 2016)
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
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8. Number of investments, by bracket
• Excluding seed deals, the
total number of VC
investments per quarter was
248 in 3Q16, down a bit from
270 in 2Q16 – but still the
third highest number of deals
per quota since I started
tracking this 60
83 77 85 93
139 153 157
14230
26 42
62 44
46
61 57
65
13
26
33
26 38
35
45 52
40
3
1
6
6 4
3
4 4
1
0
50
100
150
200
250
300
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
NumberofVCinvestments
VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100)
Venture (8-20) Early Venture (2-8)
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9. Brexit? Nothing to see here. Carry on.
• Looking just at UK VC deal
volume, there’s so far no
evidence that Brexit caused
any slowdown whatsoever in
VC activity
• UK has been running at
around 15 VC deals per
month for the past year
• July 2016 peak of 25 deals is
exactly the number of deals
that were done in July 2015
9
3
7 7
9 8
5 5 5 4
8
6
14
2
6 5
9 9 9
11 11 10
7
11
13
11 10
1
1
4
2
3
7
3
1
5 8
4
3
1 4
4 3
8 4
2
1 7
4
10
4
4
2
2
1
2 1
1
4
1
4
1
1
3
6
3
1
3
1
6
3
5
4
4 1
2
2
2
1
1
1
1
1
2
1
1
1
0
5
10
15
20
25
30
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
NumberofVCinvestments
VC investment volume in the UK by bracket
Mega (>100) Growth (20-100)
Venture (8-20) Early Venture (2-8)
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10. Corporate VC activity, by bracket
• Excluding seed deals, the
total number of corporate VC
investments dropped by 28%
to 43 in 3Q16
• This is the first quarterly drop
in over a year, but still
represents more than double
the 3Q15 level 6 4 5
16
7
22 19
23
184
3
9
12
7
12
6
16
19
4
4
7
8
7
7
20
18
6
3
1
3
3
0
10
20
30
40
50
60
70
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
NumberofVCinvestments
Corporate VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
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11. Corporate VC activity, by country
• During the third quarter of
2016, Israel yet again saw the
highest number of corporate
VC investments, with 17,
down from 25 last quarter
• The UK saw 9 corporate VC
investments during that
period, down from 10
• Nine other countries saw
corporate VC activity across
Europe, but at much lower
levels
4 4
2 2
1
2
1 1 1
9
3
2
1
2
1
1
4
2
0
2
4
6
8
10
12
14
16
18
Israel
UK
Germany
France
Sweden
Finland
Italy
Norway
Switzerland
Spain
Denmark
Numberofinvestments
Number of corporate VC investments in Europe and Israel by bracket
(3Q16)
Growth (20-100) Venture (8-20) Early Venture (2-8)
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12. 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
• With very few exceptions, most
months saw average round
sizes of $10-12M and there is
seems to be little pattern other
than mean reversion
• 3Q15 is the only systematic
outlier to this trend, with
average round sizes of $12-
15M throughout the quarter
• I’ll continue to monitor this, but
see no reason to expect a
major shift here
4
6
8
10
12
14
16
18
20
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
AmountInvested(US$M)
Average investment size in Europe and Israel
(Round sizes of 2-100M)
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13. Total venture investment by country, 3Q 2016
• Israel maintained it’s lead with
$877M raised
• The UK was just behind Israel,
with $830M raised
• Germany dropped behind
the UK with $461M raised
877
830
461
339
194
102
74
48
31
28
28
26
24
16
15
14
6
4
2
1
1
1
1
1
Israel
UK
Germany
France
Sweden
Netherlands
Spain
Switzerland
Norway
Denmark
Finland
Ireland
Belgium
Estonia
Italy
Iceland
Czech
Portugal
Austria
Greece
Croatia
Latvia
Slovenia
Poland
0 100 200 300 400 500 600 700 800 900 1,000
Total VC investment volume by country, 3Q16 (US $M)
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14. Total venture investment by country, 3Q14 to 2Q16
• To get a better sense of VC
volumes in various countries,
this analysis excludes mega-
rounds
• With this filter, volumes and
rankings are more consistent
• Israel still led with volume, but
3Q dropped below both 1Q
and 2Q
• Once Deliveroo is backed out
of the analysis, UK levels were
basically flat in 3Q against 2Q
• What is most notable
important about this chart is
the consistent gradual growth
in Germany, France, and
Sweden
315
567
543
475
628
699
963
1,064
877
369
267
719
437
621
444
892
552 555
180
284
389
209
379
339 333
392
461
29
163
118
232 279
225 281
367
339
74
123
89 112
140
84
140 150
194
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
0
200
400
600
800
1000
1200
TotalVCinvestment(US$M)
Total VC investment, 3Q14 - 3Q16 (top 5 countries, excluding mega-rounds)
Israel
UK
Germany
France
Sweden
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15. Total venture investment by country, 3Q14 to 3Q16
• To get a better sense of VC
volumes in various countries,
this analysis excludes mega-
rounds
• The “second five” countries
for VC investment were
Finland, Denmark, Spain,
Ireland, and the Netherlands
• Note that in recent quarters,
investment trends across
these countries have been
whipsawing intensely
• One trend that can be
spotted here is persistent
strength in the Netherlands
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
TotalVCinvestment(US$M)
Total VC investment, 3Q14 - 3Q16
(countries ranked 6-10, excluding mega-rounds)
Spain
Netherlands
Finland
Ireland
Denmark
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16. Average venture round sizes, by region
• For a while, I had been seeing
a trend towards convergence
in the sizes of rounds across
the geography
• I think that is still true, but
round sizes do seem to be
diverging a bit
• I suspect that the decreases
in round size across France,
Portugal, and Spain are likely
due to increased (and better)
reporting around small
rounds
Benelux, 4.7
Benelux, 14.1
DACH, 14.9
DACH, 12.7
France, 8.2 France, 8.7
Iberia, 7.2
Iberia, 5.9
Israel, 15.9
Israel, 14.1
Nordic, 11.5
Nordic, 10.1
UK & Ireland, 8.5 UK & Ireland, 9.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Qtr4 Qtr4 Qtr3
2014 2015 2016
Averageroundsize(US$M)
Average investment size in Europe and Israel (rounds of $2-100M)
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17. Total venture investment by region, 3Q16
• When VC investments across
Europe are aggregated into
regions, UK & Ireland, Israel,
DACH, France, and the
Nordics are the clear and
consistent leaders
• Benelux, Iberia, Southern
Europe, and Eastern Europe
do produce meaningful VC
investments, but the volumes
are still low
Israel, 877
UK & Ireland, 856
DACH, 511
France, 339
Nordic, 312Benelux, 126
Iberia, 78
South. Eur., 18
East. Eur., 6
Total VC investment by region, 3Q16
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18. Rounds by bracket & region
• To get a better sense of deal
volume, this analysis excludes
seed deals which are often
poorly reported
• Excluding seed deals, the UK
and Israel were tied for the
number of venture deals, with
62 each 26
36
22 25
16
9
3 4 1
21
19
10 4
10
1
15
6
7
6
1
1
4
1
0
10
20
30
40
50
60
70
Israel UK & Ireland DACH France Nordic Iberia Benelux South. Eur. East. Eur.
Numberofinvestments
Number of investments in Europe and Israel by bracket, 3Q 2016
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
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19. Participation rate of US VC firms, by bracket
• In the third quarter, US VCs
participated in 14% of the VC
financing rounds in EU and
Israel
• As usual, US VCs are much
more likely to participate in
later rounds
1% 15%
25%
38%
100%99%
85%
75%
63%
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)
Percentageofrounds
Did US VC firms participate in European VC rounds? (3Q16)
No Yes
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20. US VC firm participation rate are consistent
• In 3Q, US VCs participated in
about 21% of the rounds that
took place in Europe
• This rate is flat with 2Q and at
the top end of the historical
range
15%
23%
17% 20% 20% 16% 16%
21% 21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
PercentageofRounds
Did US VC firms participate in European VC rounds?
(Rounds of $2M-$100M, 3Q14-3Q16)
No US VC in the round US VC in the round
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21. US VC firm participation rate are consistent
• Rates of US VC participation
vary wide across different
countries
• I’ve tried to limit the analysis
to countries with venture
scenes active enough that the
statistics would be meaningful
• On this metric, in 2016, Israel
and Ireland leap to the top of
the list, with 40% and 35%
respectively
• Spain and France bring up
the rear, with only 5% and 7%
40%
35%
26%
21% 17% 16%
8% 7% 5%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Ireland Israel Netherlands Germany UK Finland Sweden France Spain
PercentageofDollarsInvested
Did US VC firms participate in European VC rounds?
(Nine months ended September 2016)
No US VC in the round US VC in the round
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22. Participation of US VC firms by country
• In 3Q16, US VCs firms were
active in only 9 different
European countries (down
from 12 in 2Q)
• US VC firms were most active
in Israel, where they
participated in 25 investment
rounds
• The UK saw 11 investments
• US VCs invested in 6 German
companies and 3 French
ones
25
11
6
3 3 3 2 1 10
5
10
15
20
25
30
Israel
UK
Germany
France
Sweden
Netherlands
Switzerland
Ireland
Finland
NumberofVCinvestments
Rounds with a US VC involved
(3Q, 2016)
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23. Participation of US VC firms by country
• This chart shows US VC
activity within Europe
throughout 2015 and 2016
• The overwhelming bulk of US
VC activity is in Israel, the UK
& Ireland, DACH
Israel, 12 Israel, 14 Israel, 14 Israel, 14 Israel, 16
Israel, 27 Israel, 25
UK & Ireland, 10
UK & Ireland, 13
UK & Ireland, 9 UK & Ireland, 8
UK & Ireland, 12
UK & Ireland, 11
UK & Ireland, 12
DACH, 8
DACH, 6
DACH, 4
DACH, 9
DACH, 6
DACH, 8 DACH, 8
Nordic, 2
Nordic, 3
Nordic, 5
Nordic, 5
Nordic, 5
Nordic, 4
Benelux, 5
Benelux, 3
Benelux, 3
France, 3 France, 2
France, 2
France, 3
France, 3
Iberia, 3
Iberia, 4
Iberia, 3
0
10
20
30
40
50
60
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2015 2016
NumberofVCinvestments
Investments with US VC participation
Israel UK & Ireland DACH Nordic Benelux France Iberia East. Eur. South. Eur.
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24. 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 model
Commerce, Components, Content,
Marketplace, SaaS, Semiconductors,
Services, Software, Systems,
How does the company make
money? How is value delivered to
customers? What are customers
paying for?
For example: Consumer + Travel + Marketplace
AirBnB has built a travel-related
marketplace for consumers
Three-dimensional approach to sector mapping
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25. • Excluding mega-rounds,
investment activity decreased
in both consumer and
enterprise
• Investment activity has been
trending up in OEM-oriented
companies
What target markets are attracting the most VC
investment in Europe & Israel?
475 595
980 850
1,177
930 1,078
1,243 1,092
494
798
953
814
907
1,112
1,679
1,644
1,288
78
133
121
153
275
135
224 91
177
78
114
47
106
182
150
166 186
219
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
TotalVCinvestments(US$M)
European & Israeli venture financing by target market
3Q14 to 3Q16 (excluding mega-rounds, US $M)
Government
Telecom
OEM
SMB
Enterprise
Consumer
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26. • When Israel is excluded from
the sample, 52% of all VC
dollars in Europe went to
consumer-oriented
companies
• OEM-oriented companies
continued their rise,
accounting for 8% of all VC
dollars in Europe
Consumer investment leads Europe
62%
36%
56%
63% 62%
57% 53% 58%
52%
18%
49%
34% 22% 24% 31% 35%
33%
32%
6%
10%
4% 12% 8% 6% 5% 3%
7%5%
4% 2% 4% 5% 6% 5% 8%6%8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
European venture financing by target market
3Q14 to 3Q16 (excluding Israel, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
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27. • When the sample set is
limited to rounds under
$20M, the ratio of consumer
to enterprise investments
shifted back to where it has
been in the past
• Consumer investments as a
percentage of rounds
accounted for 45% of early
rounds
• Interestingly, OEM & SMB
investments doubled as a
percentage of the total from
2Q to 3Q – and entirely at
the expense of enterprise
deals
Early-stage consumer deals come back
39%
50% 46% 41% 46% 50%
38%
46% 45%
41%
37% 50%
47% 39% 36%
47%
41%
33%
3%
9%
2%
7% 9% 6% 9% 5%
11%
11%
2% 2% 2% 3% 7% 5% 5% 9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
European venture financing by target market
3Q14 to 3Q16 (excluding Israel, rounds up to $20M, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
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28. Breakdown by region & target market
• In 3Q, enterprise companies
represented the plurality of
investments in Israel, the
Nordics, and Benelux
• DACH and the Nordics show
relatively high concentrations
of OEM investments
196
521
282
170
84 46 55
568
246
75
161
147
69
110
59
0
100
200
300
400
500
600
700
800
900
1,000
Israel UK & Ireland DACH France Nordic Benelux Iberia
Totalamountinvested(US$M)
Investment in Europe and Israel by target market by region
3Q, 2016 (US $M)
Government Telecom OEM SMB Enterprise Consumer
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29. Distribution of investment rounds by country
• Across Europe & Israel, 43%
of VC investment rounds
were in consumer companies
in 3Q16
63%
60%
56%
48%
41%
41%
17%
16%
31%
20%
26%
35%
33%
31%
73%
68%
6%
10%
11%
10%
16%
11%
16%
7%
6%
10%
15%
10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
France
South. Eur.
Iberia
UK & Ireland
DACH
Nordic
Israel
Benelux
Investment in Europe and Israel by target market by country
3Q16 (Number of investments)
Consumer Enterprise SMB OEM Telecom Government
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30. Growth rounds by target market
• From 4Q14 to 2Q15, there
was an upward trend towards
consumer-oriented
companies in growth
investing, but this trend
reversed itself in 3Q15 and
continued into 1Q16
• In 2Q, this trend reserved
itself for the first time in four
quarters and persisted into
3Q
56%
37%
46%
56%
43% 39% 37%
43% 44%
25%
41%
46% 25%
38%
50% 51%
50% 44%
6%
7%
5%
9% 12%
3% 6% 5%6% 11%
6%
7% 5% 6% 5% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
Investment in Europe and Israel by target market
(Rounds over $20M, number of investments)
Government Telecom OEM SMB Enterprise Consumer
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31. • Fintech was yet again the
most popular vertical across
Europe & Israel, with 33
investments in the category
• Lifestyle (a catchall category
for consumer commerce) was
the second most popular
vertical, with 28
Finance returned to being the top vertical
Financial, 33
Lifestyle, 28
Marketing, 27
Security, 23
Electronics, 20
Infrastructure, 17
Industrial, 16
Travel, 16
Logistics, 15
Adtech, 14
Data, 14
Communications, 13
Fashion, 13
Education, 11
Gaming, 11
Food, 10
Productivity, 10Automotive, 9Health, 9Employment, 9Payments, 8
HMI, 7
Energy, 7
Social, 7
Entertainment, 6
CRM, 6
European & Israeli venture financing by target market
3Q 2016 (number of investments)
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32. • This graph shows number of
investments in the top 10
verticals across 3Q15 and
3Q16
• The two most popular
verticals, finance and
marketing, both declined
slightly in frequency
• Most of the other categories
registered strong increases
• Travel and industrials, for
example, tripled; and
electronics doubled
How have the most popular verticals grown?
Financial, 36 Financial, 33
Marketing, 31
Marketing, 27
Lifestyle, 15 Lifestyle, 28
Security, 13
Security, 23Infrastructure, 14
Infrastructure, 17
Electronics, 10
Electronics, 20
Fashion, 11
Fashion, 13
Data, 10
Data, 14
Logistics, 8
Logistics, 15
Industrial, 5
Industrial, 16
Travel, 5
Travel, 16
Productivity, 11
Productivity, 10
0
50
100
150
200
250
Qtr3 Qtr3
2015 2016
European & Israeli venturefinancing by vertical market
(top 10 verticals, number of investments)
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33. • Finance was once again the
most frequently funded
vertical
• Consumer lifestyle companies
took second place
• Marketing was the third most
frequently funded vertical,
with enterprise-oriented
marketing taking the lion’s
share within that category
• Enterprise security took
fourth place
• Electronics (both consumer
systems and OEM
components) was the fourth
most funded category in the
quarter
Which verticals for which segments?
Data
Adtech
Logistics
Industrial
Travel
Infrastructure
Electronics
Security
Marketing
Lifestyle
Financial
0 5 10 15 20 25 30 35
European & Israeli venture financing by target market
3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Government
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34. • This chart shows the ten most
commonly funded verticals
across Europe & Israel by
quarter
• 3Q was fairly consistent with
2Q, with decreased volume
across most categories
The most popular verticals in the past 2 years
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
50
100
150
200
250
300
European & Israeli venture financing by vertical market
(number of investments, top 10 verticals)
Adtech
Health
Logistics
Electronics
Lifestyle
Employment
Security
Infrastructure
Marketing
Financial
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35. • Lifestyle, which is admittedly a
bit of a catch-all general
consumer category,
continues to show
tremendous strength in terms
of VC volume
• Finance was the second-most
funded consumer category
• Health and logistics
(transportation, parking, etc.)
show continued decreases
Consumer VC investment trends
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
European & Israeli venture financing by consumer verticals
(number of investments, top 10 verticals)
Social
Travel
Health
Fashion
Food
Electronics
Logistics
Gaming
Lifestyle
Financial
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36. • Enterprise marketing seems
to have levelled off as an area
for VC investment
• Security and infrastructure
also remain stable but
significant
• Adtech decreased slightly
• CRM and employment
decreased significantly
• Data-oriented startups and
industrial startups trended
higher
• Enterprise employment (HR)
related startups attracted
very little investment
Enterprise VC investment trends
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
European & Israeli venture financing by enterprise verticals
(number of investments, top 10 verticals)
CRM
Financial
Industrial
Employment
Development
Data
Infrastructure
Adtech
Security
Marketing
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37. • Security retained the top spot
in Israel, with 11 investments
• Marketing, data,
infrastructure, and electronics
were next
• Adtech was nowhere to be
seen
A closer look at Israeli venture in 3Q16
Industrial
Financial
Agtech
Development
Productivity
Communications
Electronics
Infrastructure
Data
Marketing
Security
0 2 4 6 8 10 12 14
Israeli venture financing by target market
3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Telecom
Government
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38. • Fintech reclaimed its top spot
in the UK VC landscape
The UK VC market in 2Q16
Adtech
Fashion
Communications
Payments
Productivity
Automotive
Real Estate
Infrastructure
Data
Security
Marketing
Lifestyle
Financial
0 2 4 6 8 10 12
UK venture financing by target market
3Q, 2016 (number of investments, top verticals)
Consumer
Enterprise
SMB
OEM
Telecom
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39. • Fintech led the German VC
eco-system in 3Q16, with 7
investments
• Logistics was next
• Fashion and travel tied for
third place, with 4
investments each
The German VC market in 3Q16
Health
Industrial
Data
Infrastructure
Energy
CRM
Marketing
Durables
Payments
Adtech
Social
Employment
Lifestyle
ERP
Travel
Fashion
Logistics
Financial
0 1 2 3 4 5 6 7 8
German venture financing by target market
3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
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40. • Fintech was the most
commonly funded vertical in
the Nordics, with 9
investments, mostly into
SMB-oriented companies
• Gaming was next, followed by
marketing
The Nordic VC market in 3Q16
Infrastructure
Legal
Logistics
Education
Productivity
Health
Communications
Industrial
Electronics
HMI
Energy
Marketing
Gaming
Financial
0 1 2 3 4 5 6 7 8 9 10
Nordic venture financing by target market
3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Telecom
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41. • Uniquely, consumer
electronics dominated the
French VC landscape in 3Q16
• Travel and adtech were
particularly strong in France
in 3Q16
The French VC market in 3Q16
Logistics
Infrastructure
Industrial
Education
Entertainment
Food
Adtech
Travel
Lifestyle
Electronics
0 1 2 3 4 5 6 7 8 9 10
French venture financing by target market
3Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
Government
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42. • SaaS was the again most
funded business model in
3Q16
• As software eats the world,
services are becoming an
increasingly important
business model for venture-
backed startups
• This continued into 2016, with
services taking 23% of the
venture dollars invested in
Europe & Israel in 3Q16
• Commerce rebounded,
accounting for 13% of the
dollars invested
• Marketplaces – businesses
that serve a price discovery
function – were just 5%
SaaS above all
SaaS, 729, 26% Services, 658, 23%
Software, 425, 15%
Commerce, 375, 13%
Systems, 197,7%
Marketplace, 148,5%
Components, 144, 5%
Media, 99, 3%
Semiconductor, 73, 3%
Meda, 2, 0%
European & Israeli venturefinancing by target market
3Q16 (in US $M) (excluding mega-rounds)
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43. • Trends about business models
remained fairly consistent
• SaaS reverted to mean a bit
• Commerce recovered a lot of
lost ground
• Marketplaces hit a new low
In 2Q, SaaS set a record
0
200
400
600
800
1000
1200
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
2014 2015 2016
European & Israeli venture financing by business model
(top five, in US $M, excluding mega-rounds)
Services
SaaS
Software
Commerce
Marketplace
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44. • Enterprise marketing SaaS
was again the most popular
segment for VC investment in
3Q16 with 20 investments
across the region
• Consumer lifestyle commerce
took second place, driven by
8 UK and 3 Spanish
investments
• Enterprise security software
took third place, with 16
investments.
• Consumer financial services
dropped to fourth place, with
14 investments (down from 21
in 2Q)
The 10 most popular investment segments
0 5 10 15 20 25
Consumer Gaming Services
Consumer Education Services
Consumer Travel Marketplace
Enterprise Data SaaS
Enterprise Infrastructure Software
Consumer Fashion Commerce
Consumer Electronics Systems
SMB Financial Services
Consumer Financial Services
Enterprise Security Software
Consumer Lifestyle Commerce
Enterprise Marketing SaaS
Number of VC investments
Investmentin Europe& Israel by segment by country
3Q16 (top 10 segments)
UK & Ireland Israel
France Nordic
DACH Iberia
Benelux South. Eur.
East. Eur.
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45. • Across Europe & Israel, US
VC firms invested in 37
enterprise companies, 14
consumer companies, and 1
OEM company
• Enterprise SaaS & Software
attracted by far more US VC
interest than any other space
What business models attract US VC investments?
0 5 10 15 20 25
Semiconductor
SaaS
Marketplace
Software
Media
Commerce
Services
Systems
Systems
Marketplace
Services
Software
SaaS
OE
MConsumerEnterprise
US VC Investments in Europe and Israel by end market,
business model, & country, 3Q16 (excludes seed & mega-rounds)
Israel
UK & Ireland
DACH
Nordic
Benelux
France
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46. Show me the SaaS
• As usual, the most popular
vertical by far for SaaS
investments across the
geography was marketing
• Data-related SaaS (databases,
analytics, BI) was tied with
productivity SaaS for second
place
• Infrastructure SaaS was third
• Consumer SaaS opportunities
emerged across productivity,
energy, and legal
0 5 10 15 20 25
Employment
CRM
Agtech
Legal
Industrial
Energy
Adtech
Development
Infrastructure
Productivity
Data
Marketing
SaaS VC investment in Europe and Israel
by vertical and target market, 3Q16 (top 10 verticals)
Consumer Enterprise Government SMB
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47. Services investing in 3Q16
• This graph shows the top ten
verticals within the services
category in 3Q16 across
Europe & Israel
• Financial services were (yet
again) far and away the most
frequently funded vertical –
mostly for consumers and
SMBs
• Education services (edtech)
tied with gaming as the
second most funded services
categories
0 5 10 15 20 25 30
Health
Industrial
Entertainment
Real Estate
Communications
Marketing
Security
Payments
Adtech
Logistics
Education
Gaming
Financial
Services VC investment in Europe and Israel
by vertical and target market, 3Q16 (top 10 verticals)
Consumer
Enterprise
SMB
Telecom
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48. 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.
48
Gil Dibner
To invest in the best European & Israeli enterprise startups,
consider backing me on here. Lots of exciting stuff in the
pipeline – and you’ll be in pretty good company.