European Tech Scaleup Market: Q1 2017

The market was expected to decrease, similar to the decrease of Q1 2016 compared to Q1 2015. However, the market is in fact in acceleration mode and has been from September 2016 (see 2016 year end review).

Our Q1 2017 report based on our HTI data (click here) shows:

  1. There has been a recovery in the value of larger deals (≥€75m).
  2. Internet continues to be the main focus of most investors with Fintech and Marketplaces all the rage.
  3. Growing number of substantial Series A transactions: volume up 53% and average value up 8% from 2016.
  4. Rise of ‘generalist’ investors: 6 more deals included at least one generalist investor (69% of total deals).
  5. Large Tech Investment in Europe being carried by the UK, Germany and France.

The market continues to be very active in the traditional European fundraising domain (deals between €10m — €75m) and there has been a recovery in the value of larger deals (≥€75m). Europe is seen as getting better at producing valuable companies, not simply great technologies.

Investments bounce back and the market is in acceleration mode
The upper part of the market is recovering

Looking at the ‘Top 10 Largest Funding Transactions’ we are seeing a growing trend to invest in marketplaces (no stock) rather than ecommerce (inventory risk). Spanish Marketplace, Letgo, had the largest funding round this quarter amounting to €166.1m and also recently closed their Series B round, in May 2016 totalling €88.4m (see our May 2016 Bulletin). Netherlands based Picnic, an online-only supermarket for groceries at the lowest price with free delivery service, raised €100m. Others which also made it in the top 10 include Lampenwelt (Germany) and Vestiaire Collective (France).

The Top 10 transactions reflect the diversity of innovation across Europe

Once again Internet Services is the main focus of most investors, with Fintech the second most popular sub-category after Marketplaces. See our Fintech blog, ‘European fintech in focus: fundamentals too strong’. We are seeing a larger variety of deals compared to the same period last year, with companies like ResearchGate (Germany), a social networking site for scientists and researchers to find collaborators, share papers and ask and answer questions and Digital Media companies Minute Media (UK) and Whistle Sports (UK/US) receiving funding. Outside of the Internet and Software sectors, funding activity is fairly subdued.

Europe is seeing the emergence of a Silicon Valley like Series A segment with a depreciating interest in the involvement in Later Stage rounds, share is down by 9%, yet average value is up by 17%. Series B and C rounds remain relatively steady in volume, however the average value of Series B and Series C rounds is up by 26%. Stockholm-based VC firm Northzone, Munich-based Holtzbrinck Ventures and France-based Idinvest Partners and Partech Ventures, US-based VC firm Accel, and US-based VC firm Sapphire Ventures have participated in the most Series A, B, C and Late Stage rounds respectively.

Looking at the ‘Top 10 Most Active Investors In Europe’ across all the large deals in Q1 2017 we have found that well known VCs Index Ventures, Accel and Northzone are participating in the most deals. Thrive Capital, an NY-based venture capital firm, is leading two major fintech investments for Raisin (Germany), previously known as SavingGlobal, a financial marketplace enabling savers to access the best deposit rates across Europe and Monzo (UK), a mobile banking app.

Thrive Capital leading two major Fintech investments Q1 2017

What’s clear is that we have seen a rise of generalist investors this quarter:

  • The French state fund, Bpifrance, features in our ‘Top 10 Most Active Investors In Europe’ for participating in 3 deals for French eHeath (Doctolib), Fintech (Famoco) and software (InterCloud) companies
  • The Chinese conglomerate, Fosun also features in our top 10 for leading two deals namely, The Naga Group (germany), a developer of e-trading financial technology and The Floow (UK), a software that tracks drivers’ behaviour
  • Family offices Edmond De Rotheschild, Global Founders Capital, Iconiq and Invus feature as the top investors in Spanish, German, Belgian and Swiss companies respectively
  • Private equity firm NPM Capital features as the top investor in Dutch companies
Large Tech Investment in Europe being carried by the UK, Germany and France

When looking at the HTI deals by country, we find that the UK and Germany are leading in Large Tech Investment in Europe neck and neck, with France following closely.

UK-based VC firm Notion Capital, Germany-based family office Global Founders Capital and France-based state fund Bpifrance are making the most investments in the UK, Germany and France respectively.

The big news is the smaller peripheral countries coming of age, including Spain with the highest average deal size (€56m) followed by the Netherlands (€40m), excluding countries which only had one deal.

To download the full Go4Venture Q1 2017 HTI report, click here.

In Q1 2017 we published a number of “Rated” Company Profiles, providing a detailed look at next generation high growth Scaleup tech companies, that we think are up and coming and meet our ‘Rated Companies’ criteria:

  • Yoyo Wallet (click to read): Yoyo Wallet provides a personalised mobile payment platform with loyalty programmes and marketing offerings delivered to consumers based on their buying patterns.
  • Skara (click to read): Skara is a new cross-platform AAA-rated combination of video games and novels offering a fantasy-world fast action multiplayer game suitable for competitive eSports, but still maintaining the soul of an RPG (role playing game).
  • Rota (click to read): Rota provides a web and mobile app that helps companies primarily in the hospitality industry fill shift-based temporary staff positions quickly using its own data matching algorithm.
  • Pamono (click to read): Pamono is a home and living marketplace which specialises in distinctive design objects (avoiding run-of-the-mill or mass market items) including vintage and contemporary furniture, lighting, accessories and crafts, and the stories behind them.

We also published a total of 70 “Established” Company Profiles (companies with funding rounds ≥€10m) in Q1 2017. To see these company profiles see the ‘transactions featured in this edition’ section of our monthly Bulletins on the Go4Venture equity research platform for January, February and March (click to read).

See links below for our other recently published blog posts and reports:

For more information on our equity research, please email info@go4venture.com and for information on Go4Venture’s syndication service email michael.galvin@go4venture.com.