1Q 2016 European Venture Industry Report

1 Q 2 01 6
I N PA R TN E R S H I P WITH
2 01 4
2 013
3,396
Capital Invested (B)

# of Deals Closed
2 01 5
3,005
2 01 2
2,778
2 01 1
2,289
2 01 6
2 01 0
1,888
2008
1,214
2009
1,365 1,407
PAGE 7
Healthy fundraising totals

PAGE 10
2.4
13.4
9.6
7.5
7.1
5.9
Spotlight: Nordics
5.8
4.5
PAGE 5
3.9
VC invested declines in
tandem with activity
6.4
3.0
55
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Credits & Contact

PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Market Development & Analysis
Content
GARRET T BL ACK Senior Analyst
BRIAN LEE Senior Data Analyst
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EDITORIAL
Contents
editorial@pitchbook.com
SALES
sales@pitchbook.com
Introduction
Overview
Rounds by Region & Sector
Spotlight: Nordics
7-8
Exits
Fundraising
10
1Q 2016 League Tables
11
COPYRIGHT 2016 by PitchBook Data, Inc.

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Feature photograph in Nordics section

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Commons.
3
P I TC H B O O K 1 Q 201 6 E U R O P E A N V E N T U R E I N D U S T RY R E P O R T
European venture
activity slows further
Introduction
European venture investment continued to decline in the first quarter of
2016, not only due to intensifying macro and political concerns but also the
slowing of the VC cycle worldwide. To some degree, European startups were
insulated from the extremes of the cycle that is ongoing in the U.S., in terms
of massively inflated late-stage activity, but they weren't wholly unaffected.
Although figures for VC investment in Europe-based companies may inch up
a bit further even for 1Q, it's clear that any potential hangover among VCs,
on top of the array of other risk-inducing factors, will lead to a subdued year
for VC activity across the continent. Further legislative efforts on a regional
basis, as well as the still-apparent promise of the Capital Markets Union
becoming reality, may shake up the current barrier-abounding environment
to some extent. The boom of VC invested from 2014 through 2015 may also
encourage future entrepreneurial activity as employees leave to found their
own ventures. It's also undeniable that quite a few venture firms are still seeing
success on the fundraising trail, leading to substantial sums of capital awaiting
deployment. Thus, when all is said and done, there are enough positive factors
for European venture activity that this year may not see a dramatic decline in
investment. Numbers will be subdued, relative to the last handful of years, as
larger economic concerns remain to be resolved and the venture investment
shakeout continues, but it isn't so much a time for alarm as for shrewd caution.
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4
Activity by both count and value slides

Overview
account, there remains plenty of
institutional capital looking for
opportunities throughout the
Eurozone, which is one reason why a
In some ways, top-level European

venture trends mirror those in
the U.S. currently. Especially when
foreign investors are taken into
fair number of late-stage rounds still

closed in 1Q 2016. But it's clear that
as activity overall slidesparticularly
at the early stageVCs are pulling
back in the face of increased risk
and consequently fewer worthwhile
opportunities. As opposed to last
year, this slide is now matched by a
slowdown in euros invested, signaling
increased perception of risk. On
a quarterly basis, the number of
completed venture rounds in Europe
declined by nearly 23%, while total
value returned to numbers more
akin to those seen in 2014. Faced
with greater macro uncertainties
in addition to familiar challenges
such as fragmented markets and
regionalized access to capital, there
are more obstacles for both founders
and VCs than in the U.S. At the same
time, the European startup scene
did not overheat nearly as much, so
any coming correction owing to that
won't be as significant a detriment.
All in all, 2016 is shaping up to
resemble 2012 in terms of activity.
Slowest quarter in nearly four years

European VC activity
3,756
Deal value (B)
3,396
3,005
# of deals closed
2,778
2,289
1,888
1,407
1,214 1,365
523
2.4
13.4
9.6
7.5
7.1
5.9
5.8
3.9
4.5
6.4
3.0
855
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Source: PitchBook
*As of 3/31/2016
Late-stage activity remains most resilient, relatively

speaking, while earlier deals plummet
European VC rounds (#) by stage
Investors are still willing to inject significant sums in

late-stage rounds
European VC invested (B) by round size
1,800
16.0
1,600
1,400
1,200
Angel/Seed
25M+
10M-25M
5M-10M
1M-5M
500K-1M
Under 500K
14.0
Early VC
12.0
Late VC
10.0
1,000
Source: PitchBook
*As of 3/31/2016
8.0
800
6.0
600
4.0
5
2016*
2015
2014
2013
2012
2011
Source: PitchBook
*As of 3/31/2016
0.0
2010
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
2009
89
2.0
2008
237
197
2007
200
2006
400
As activity plunges, France/

Benelux & GSA prove resilient
2011. An uptick in caution among

VC firms could be one contributing
factor, but it's also highly probable
that the Brexit wild card is spooking
investors. Access to customers could
be curtailed for at least some time,
while regulatory burdens would
remain unclear and difficult to
navigate. We've seen a handful of VC
surveys indicate talent retention and
recruiting, should the U.K. exit the
Rounds by region & sector

The U.K. & Ireland saw a steep
plunge in venture financing activity
from 4Q 2015 to 1Q; in fact, the region
saw the smallest tally of completed
deals for a single quarter since 2Q
EU, could become more difficult, as

visa processes get reworked. Last but
not least, the implications for taxes,
particularly on investment capital,
remain unknown. Hence the decline
in U.K. & Ireland startup financings,
although it's worth noting that on the
mainland, venture investors are still
plying companies in France/Benelux
and GSA at fairly healthy rates,
comparable at least to 2012 levels.
The U.K. & Ireland have been hit hard, although other, more troubled regions saw relatively greater decreases
European VC activity by region
100%
U.K./Ireland
90%
80%
Southern Europe
70%
60%
Nordic Region
50%
40%
GSA
30%
France/Benelux
20%
10%
0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2011
2012
2013
Most sectors slumped, yet healthcare and pharma &

biotech proved slightly more stable
European VC rounds (#) by sector
Commercial
Services
Consumer Goods &
Recreation
Energy
100%
90%
80%
70%
60%
2014
2015
Central & Eastern

Europe
2016
Source: PitchBook
Healthcare is on pace to record a similar sum as seen

in 2015, although software garnered the most
European VC rounds () by sector
Commercial
Services
Consumer Goods &
Recreation
Energy
100%
90%
80%
70%
Healthcare
Svcs/Suppl./Syst.
IT Hardware
60%
30%
Media
30%
Media
20%
Other
20%
Other
Source: PitchBook
*As of 3/31/2016
6
2015
2016*
2014
2013
2012
2011
2010
2015
2016*
2014
2013
2012
2011
2010
2009
2008
2007
2006
Software
Pharma & Biotech
0%
2009
Pharma & Biotech
0%
10%
2008
10%
40%
2007
40%
Healthcare
Svcs/Suppl./Syst.
IT Hardware
50%
2006
50%
Software
Source: PitchBook
*As of 3/31/2016
Spotlight: Nordics
Overview of VC activity in the Nordics
After such heights, isn't a slowdown to be expected?
Nordic VC rounds
377
Deal value (B)

# of deals closed
183
293
369
378
318
265
Source: PitchBook
*As of 3/31/2016
176 186
132
0.2
1.5
0.9
0.8
0.5
0.6
0.5
0.7
0.6
0.5
76
0.4
Even removing Spotify's massive

late-stage financing from last
year's tally leaves the Nordic region
at more than 1 billion invested in
venture rounds. Consequently, the
230 million invested in the first
quarter of 2016 isn't as much of a
slowdown in money deployed as
it may appear, but rather slightly
over historical quarterly averages.
Activity is off pace, of course, as is
the case across the venture industry
worldwide. The fact the Nordic
region simply saw less overheating
is why the rate of investment hasn't
slowed quite as dramatically as
elsewhere, although investor wariness
is clear. That is also attributable
to sustained local activity. As the
portion of overall activity with U.S.based investor participation slid
over the past few years, even though
venture investment totals steadily
climbed, regional investors ramped
up correspondingly. Unaffected to
the extent that U.S. VC firms have
been by overly optimistic valuations,
Nordic or even Northern and Western
European VCs in general have
found more cause to maintain their
investing pace, if even at a slightly
subdued level relative to the past
three years. There was some minor
swelling of investment sizes, as the
increase in larger rounds indicates
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Fewer financings with U.S. participation speak to growing local strength
Nordic VC rounds with U.S.-based investor participation
80%
75%
70%
Source: PitchBook
*As of 3/31/2016
66.1% 65.8%
65%
% of deals with U.S.-based investor participation
60%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
7
P I TC H B O O K 2015 A N N UA L E U R O P E A N V E N T U R E I N D U S T RY R E P O R T
below. Given how interest in certain

sectorssuch as fintechthat have
strong footholds in the Nordics has
skyrocketed as of late, some degree
of round inflation was bound to
occur, particularly on a sector-bysector basis. The concentration of
capital invested in software is to
be expected, accordingly, although
the success of biotechs in 2016
to date should be noted. Nordic
fintech in particular has only grown
more alluring to investors, given the

potential inherent in the Eurozone's
fragmented payments market as well
as strong institutional support, as
evidenced by Nordea Bank launching
an accelerator program for fintech
startups last year. Such promising
factors are why 1Q 2016 still saw a fair
proportion of rounds at or exceeding
5 million in size. Investors,
particularly of the domestic variety,
still are willing to offer substantial
sums. Going forward, activity should

proceed at a dampened level, similar
to what we observed before the
boom period of 2013-2015. Increased
apprehension is here to stay, but
positive factors such as the krone's
weakness and relatively strong
Swedish growth will help assuage
fears of broader economic troubles
affecting local companies.
Over 60% of all rounds in 1Q were 1M or more in size,

a percentage likely to slide as the year goes on
Nordic VC deals (#) by size
A few large rounds have bolstered capital invested

considerably
Nordic deals (B) by size
100%
100%
25M+
90%
25M+
90%
80%
70%
10M25M
70%
10M25M
60%
5M-10M
60%
5M-10M
80%
50%
1M-5M
40%
30%
500K-1M
50%
1M-5M
40%
30%
500K-1M
20%
20%
Under
500K
10%
Under
500K
10%
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
Activity remains primarily concentrated in software

and healthcare-related niches
Nordic VC deals (#) by sector
Commercial
Services
Consumer Goods &
Recreation
Energy
100%
90%
80%
70%
2016*
2015
2014
2013
2012
2011
2010
2009
2008
2007
2016*
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2006
0%
0%
Amid a slowdown, pharma & biotech startups have

been able to grab most of the capital invested so far
Nordic VC deals (B) by sector
Commercial
Services
Consumer Goods &
Recreation
Energy
100%
90%
80%
70%
Healthcare
Svcs/Suppl./Syst.
IT Hardware
60%
30%
Media
30%
Media
20%
Other
20%
Other
Source: PitchBook
*As of 3/31/2016
8
2016*
2015
2014
2013
2012
2011
2016*
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
Software
Pharma & Biotech
0%
2010
Pharma & Biotech
0%
10%
2009
10%
40%
2008
40%
Healthcare
Svcs/Suppl./Syst.
IT Hardware
50%
2007
50%
2006
60%
Software
Source: PitchBook
*As of 3/31/2016
A temporary slowdown?
European VC-backed exits
1Q was considerably off-pace, more in line with early 2013 totals

European VC-backed exits
Exit value (B)
# of exits closed
480
Source: PitchBook
*As of 3/31/2016
439
361
323
207
252
241
279
195
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Currently, the slowdown is more attributable

to increased caution, as potential buyers
assess prospects more rigorously.
Only a handful of VC-backed IPOs occurred in 1Q, part

and parcel of overall VC trends
European VC-backed exits (#) by type
Interestingly, 1Q saw M&A only just barely outpace

buyouts in terms of exit value
European VC-backed exits by type
600
14
Acquisition
IPO
71
1.2
12.4
10.9
9.5
3.3
5.5
3.4
1.9
2.8
7.8
155
5.3
Although conditions that have

encouraged M&A over the past few
years remain in place, volatility and
uncertainty around growth forecasts
have contributed to a slowdown in
the buying of VC-backed startups
in Europe. Corporate buyers look
to venture portfolios for innovative
technology and talent, not so
much potential synergies that an
established business would provide.
But in the current environment,
strategic acquirers are dialing back
activity as they assess opportunities
more carefully. Some of the more
attractive opportunities in terms of
innovation have seen their valuations
climb, and, given how much they
may be spending, might be just
costly enough that potential buyers
are taking their time to thoroughly
vet prospects. As for IPOs, general
uncertainty still plagues public
markets, discouraging those looking
to debut, although not nearly to the
extent seen in the U.S.
Acquisition (B)
Buyout
12
500
Source: PitchBook
*As of 3/31/2016
IPO (B)
Buyout (B)
Source: PitchBook
*As of 3/31/2016
10
400
8
300
6
200
100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
9
Trending larger, but smaller opportunities remain

Fundraising
were responsible for the surge in
capital raised, ranging from Index
Ventures' two vehicles to Creandum
IV. As we've previously stated, this
2016 started off strong for VC

fundraisers, with 3 billion collected
across 17 vehicles. As the breakdown
by size reveals, a bevy of large funds
Thus far, 2016 is exhibiting strong fundraising numbers

European VC fundraising by year
Capital raised (B)
146
121
# of funds closed
130
110
113
111
105
98
81
17
3.0
7.9
5.5
4.6
4.9
5.2
3.1
8.5
5.7
5.5
6.3
55
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
further testifies to limited partners

exhibiting increased selectivity and
bias toward entrusting larger firms
with their money, particularly given
their advantages in investing across
fragmented markets. Accordingly, it's
important to note that even as the
majority of commitments in terms of
euros has been flowing to bigger and
bigger funds, in last quarter alone
nine funds of 100 million or less
were closed. There is considerable
enthusiasm around seed funding
opportunities in pockets around
Europe, particularly as waves of
talent that have benefited from
the recent venture boom go on to
start their own companies. Granted,
past years have still seen a primary
trend toward larger funds, which
possess considerable advantages in a
fragmented market such as Europe's,
but that doesn't preclude seed
funds from being able to find viable
opportunities.
Source: PitchBook
*As of 3/31/2016
The hefty total of capital raised is primarily due to a

handful of large pools closing
European VC funds (#) by size
Even if the numbers decline as the year wends on, the

elevated median indicates bigger firms remain active
Median & average European VC fund size (M)
100%
200
1B+
90%
180
80%
500M-1B
70%
160
175
Median
Average
157
140
250M500M
60%
50%
100M250M
40%
30%
50M100M
20%
Under 50M
10%
120
97
100
85
80
60
40
20
2016*
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
0%
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Source: PitchBook
*As of 3/31/2016
10
Source: PitchBook
*As of 3/31/2016
League tables
1Q 2016
Most active seed-stage investors by
round count
Most active early-stage investors by

round count
Most active late-stage investors by

round count
High-Tech Grnderfonds
Kima Ventures
11
Finnvera Venture Capital
German Startups Group
Kima Ventures
High-Tech Grnderfonds
IDInvest Partners
Seedcamp
Holtzbrinck Ventures
Salesforce Ventures
Parkwalk Advisors
Imperial Innovations Group
Inventure
Speedinvest
Index Ventures
MMC Ventures
Funding London
Partech Ventures
Notion Capital
IBB Beteiligungsgesellschaft
IDInvest Partners
Finnish Business Angels Network
Heilemann Ventures
Caixa Capital Risc
Eden Ventures
Innovationsstarter Hamburg
Atomico
IQ Capital Partners
Lifeline Ventures
e.ventures
Orange Digital Ventures
Evonik Venture Capital
Midven
Accel Partners
Catapult Ventures Group
JamJar Investments
Archangels Informal Investment
Balderton Capital
IBB Beteiligungsgesellschaft
Balderton Capital
Almi Invest
Funding London
Bayern Kapital
Cambridge Angels
b-to-v Partners
Techstars
Participatiemaatschappij
Vlaanderen
Sunstone Capital
Notion Capital
Voltage Ventures
Octopus Investments
Patrick Joy
Ventech
Seventure Partners
Sofinnova Partners
Point Nine Capital
Index Ventures
2
Source: PitchBook
Most active law firms by round count

Orrick Herrington & Sutcliffe
10
Cooley
DLA Piper
Olswang
Weil, Gotshal & Manges
Jones Day
Oxford Sciences Innovation
Wilson Sonsini Goodrich & Rosati
IQ Capital Partners
Walker Morris
Hill Dickinson
Goodwin Procter
Gunderson Dettmer
Cuatrecasas, Gonalves Pereira
Source: PitchBook
Source: PitchBook
Source: PitchBook
11
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1 Q 2 01 6

Capital Invested (B)

Healthy fundraising totals

VIRTUAL DATA ROOM

Merrill Communications LLC. All rights reserved.

Credits & Contact

Rounds by Region & Sector

1Q 2016 League Tables

COPYRIGHT 2016 by PitchBook Data, Inc.

Feature photograph in Nordics section

M AKE WAY FOR

GARRET T JAMES BL ACK

Activity by both count and value slides

In some ways, top-level European

fair number of late-stage rounds still

Slowest quarter in nearly four years

Deal value (B)

Late-stage activity remains most resilient, relatively

Investors are still willing to inject significant sums in

As activity plunges, France/

2011. An uptick in caution among

Rounds by region & sector

EU, could become more difficult, as

Most sectors slumped, yet healthcare and pharma &

Central & Eastern

Healthcare is on pace to record a similar sum as seen

Pharma & Biotech

Pharma & Biotech

Deal value (B)

Even removing Spotify's massive

below. Given how interest in certain

more alluring to investors, given the

sums. Going forward, activity should

Over 60% of all rounds in 1Q were 1M or more in size,

A few large rounds have bolstered capital invested

Activity remains primarily concentrated in software

Amid a slowdown, pharma & biotech startups have

Pharma & Biotech

Pharma & Biotech

1Q was considerably off-pace, more in line with early 2013 totals

Exit value (B)

Currently, the slowdown is more attributable

Only a handful of VC-backed IPOs occurred in 1Q, part

Interestingly, 1Q saw M&A only just barely outpace

Although conditions that have

Trending larger, but smaller opportunities remain

2016 started off strong for VC

Thus far, 2016 is exhibiting strong fundraising numbers

Capital raised (B)

further testifies to limited partners

The hefty total of capital raised is primarily due to a

Even if the numbers decline as the year wends on, the

Most active early-stage investors by

Most active late-stage investors by

Finnvera Venture Capital

Finnvera Venture Capital

Finnvera Venture Capital

German Startups Group

Imperial Innovations Group

Finnish Business Angels Network

Caixa Capital Risc

Orange Digital Ventures

Evonik Venture Capital

Catapult Ventures Group