The European Opportunity — Perspectives from Europe’s Most Active CVC
As centers of innovation continue to emerge all over the world, Salesforce Ventures has made big investments to continue this momentum in the enterprise space. Within the last year, we have launched dedicated regional funds in Canada, Japan, and Australia, and made 75% of our investments outside California. According to CB Insights, Salesforce Ventures is the second-most active Corporate VC (CVC) worldwide.
I’m also delighted to share that in 2018, we were the most active CVC in Europe⁽¹⁾, which is a true testament to the incredible entrepreneurs we’ve been able to support here. We’ve long believed that innovation can come from anywhere in the world. Our activity across Europe is a reflection of that entrepreneurial energy expanding beyond the borders of Silicon Valley. Having been on this side of the pond for some time now, it’s also personally gratifying seeing so many great companies emerge out of Europe.
Last year, over €23 billion was invested across startups in Europe, representing over a 3x growth compared to the level in 2013⁽²⁾. Interestingly, most of this growth has been driven by larger deals, as the sheer number of deals fell in 2018. In parallel, we’re seeing more great opportunities in the B2B / SaaS space than ever before, as SaaS companies received over 20% of the overall funding to exceed €5 billion. Our focus on European investments reflects our belief in the region as an engine for innovation, as well as our commitment to backing the best enterprise entrepreneurs driving that growth.
Our Activity in 2018
Looking at 2018, Salesforce Ventures invested across 9 European countries, which means we’ve now backed entrepreneurs in more than 13 countries across Europe. The majority of our investments last year were in the UK, Germany, Israel and France, which is in line with the broader market⁽²⁾, but we also invested in companies across Portugal, Ireland, Switzerland, Spain and Belgium.
Interestingly, a lot of this activity is occurring outside of the capital cities within each country — such as Oxford and Cambridge in the UK, Hamburg, and Munich in Germany and Nantes and Rennes in France. As we look at our activity in 2019, we are committed to continuing to back great entrepreneurs wherever they may be in Europe.
From a stage perspective, we’re also delighted to support entrepreneurs across the lifecycle. Our ability to invest across multiple stages is a unique differentiator for us in Europe, making us the partner of choice for companies at different stages of growth. Last year, 35% of our investments were Series A, 29% were Series B, 12% were Series C and 24% were Series D or later. We recognize that companies need different value-add across different stages, and we are prepared to support entrepreneurs along that journey as they scale.
Big Exits
Last year was also a big year for us in terms of exits, as we had four European portfolio companies that were acquired in 2018.
NewVoiceMedia
In one of the largest enterprise software M&A exits in Europe, Vonage acquired UK-based NewVoiceMedia for $350 million.
RedKix
Facebook acquired all-in-one email app RedKix for Workplace, Facebook’s enterprise communications app. RedKix, HQ’d in Israel, had raised $17 million before the acquisition.
Emark
Digital agency WPP picked up Dutch-based marketing technology provider Emark as a solution to integrate Salesforce Marketing Cloud and Commerce Cloud.
Fluido
India’s Infosys wanted to expand the reach of its digital transformation business and acquired Finland’s Fluido, one of the largest Salesforce consulting partners in Europe and the leading partner in the Nordics.
Looking at the above, it’s interesting to note that 3 of the 4 exits involved acquirers outside of Europe.
New Investments
In 2018, we also were fortunate to welcome the following exciting new companies to the portfolio in Europe:
- Contentful: headless content management system (alongside Benchmark, General Catalyst, Balderton and Point Nine)
- Unbabel: machine-based language translation for global companies (alongside Notion Capital, Scale Venture Partners, and Samsung NEXT)
- Forter: automated real-time fraud prevention (alongside Sequoia, Scale Venture Partners and NEA)
- FinalCAD: digital transformation and workflow for the construction industry (alongside Draper Esprit, CapHorn, Serena, Aster, and Cathay Innovation)
- Gospel: enterprise data sharing platform built on blockchain (alongside LocalGlobe and IA Ventures)
- Akeneo: product information management platform for e-commerce businesses (alongside Partech and Alven)
- TechSee: AI-powered visual customer engagement (alongside Scale Venture Partners and Planven)
- Copado: deployment and release management for developers (alongside Insight Venture Partners)
- 4C: leading digital transformation partner for Salesforce customers
More Overall Liquidity in Europe
Between exits and new investments, we see a broader trend of increased liquidity in Europe, which is great for the tech ecosystem as a whole. Some notable examples include:
- all-in-one payments platform Adyen IPO’d and is now valued at over $20 billion
- streaming music giant Spotify IPO’d and is now valued at nearly $25 billion
- payments company iZettle sold to PayPal for $2.2 billion
- Anaplan, a Salesforce Ventures portfolio company, IPO’d and is now valued at over $5 billion. A little known fact is that the company was actually founded in the UK and maintains a large R&D presence there
Though most of these companies are outside of the enterprise space, we think the scale of these exits represents an important milestone in the maturity of the European tech ecosystem. We also believe that many of the most promising private companies in Europe are increasingly SaaS businesses, so the balance will continue to shift towards enterprise in the coming years.
Looking Ahead
As I look at our portfolio, it’s also exciting to see the breadth of the companies we’ve been able to back — in spaces ranging from machine-based translation, fraud prevention, content management to enterprise blockchain. As Salesforce’s footprint continues to grow with a bigger product portfolio of our own, the areas of strategic interest for us have also expanded.
We’re already seeing 2019 shape up to be an exciting year for us, and we expect to see even more growth in our investments. To that effect, we’re also hiring another Principal in our London office, so if you’re excited about backing the next generation of enterprise companies in Europe, please reach out.
We also want to take a moment to thank the founders in our portfolio, who are the real agents of change behind this growth. Thank you for your trust, and we look forward to even bigger milestones with you this year!
Sources
¹ Based on Pitchbook data
² Dealroom 2018 Full Year Report. Excludes buyouts, secondary transactions, debt, lending capital, grants
