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July 2013
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Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin July 2013
Published by Go4Venture Advisers Research, the Equity Research unit of Go4Venture Advisers LLP.
July 2013
Page 2 © Go4Venture Advisers 2013
Contents
This Month in Brief 3
Investments
1.1 - Headline Transactions Index (HTI) 6
1.2 - Large Transactions Summary 7
1.3 - Large Transactions Profiles 9
M&A Transactions
2.1 - M&A Activity Index 27
2.2 - Top 5 Global TMT M&A Transactions Summary 28
Headline European VC & PE-Backed M&A Transactions:
2.3 - Summary 31
2.4 - Profiles 32
List of Acronyms 35
About this Bulletin
The Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin provides a summary of corporate finance activity among emerging European TMT companies:
Investments, i.e. Venture Capital (VC) and Private Equity (PE) financings, including growth equity, financing rounds with single secondaries components (recapitalisations); and
M&A Transactions where the sellers are VC and PE-backed European companies, including all majority transactions with no new investment going into the business (e.g. acquisitions, Management Buyouts (MBOs) and other buyouts).
Investment activity is measured using Go4Venture’s European Tech Headline Transactions Index (HTI), which is based on the number and value of transactions reported in professional publications.
M&A activity is measured using data from a combination of external sources, primarily Capital IQ, with complementary reporting from 451 Group and VentureSource.
Europe is defined as Western, Central and Eastern Europe, excluding Israel.
For more details, please refer to the Methodology Note available on our website.
Please note that no part of the Bulletin can be reproduced unless content is duly attributed to Go4Venture and the details of republishing are notified to [email protected].
July 2013
Page 3 © Go4Venture Advisers 2013
This Month in Brief
Dear Clients and Friends,
Welcome to the latest edition of Go4Venture Advisers’ European Venture & Growth Equity Market Monthly
Bulletin, featuring our proprietary Headline Transaction Index (HTI) of investment activity, as well as a
summary of VC & PE-backed TMT M&A exits of $50 million or more.
A Time of Acceleration (and Caution)
July 2013 was an awesome month for investment. By contrast M&A activity remained soft, with IPOs
markets seemingly easing, at least in London (on the back of strong stock performance from recent IPOs
such as Wandisco PLC (LON:WAND) and Blur (Group) PLC (LON:BLUR)).
Investments
In fact, July 2013 was our largest month ever on record, in part due to the biggest ever deal, a whopping
€300+ million late stage financing for Amsterdam-based Mobileye, a car driving automation technology
company originally from Israel. Even if this particular transaction was taken out (the next largest on record
being Plastic Logic’s €225 million late stage round of December 2010), July would still be the second largest
month ever logged (after September 2012). As a result the year-to-date numbers (by value) are nearly 60%
up against last year, and still a respectable 40% up even without Mobileye.
Interestingly, these results are in line with what is happening in the US as reported in the MoneyTree™
Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA, which
shows a 12% value increase of cumulative investments to June 2013 compared to the same period last
year). This suggests that European venture is actually growing much faster than the US – obviously
from a much lower base (the US market is approximately 4x to 5x larger).
At the risk of being repetitive, the market in July was pulled by (what else?) late stage transactions,
confirming the inverted nature of European venture now dominated (by value) by growth equity plays
– although many would define growth equity more strictly as profitable-only companies, in which case
several of this month’s late-stage companies would not qualify. Nevertheless, we would argue that
companies where the technology, value proposition and go-to-market strategies have been validated and the
financial metrics are somewhat stable, even if not quite profitable, cannot surely be classified as “venture” in
the layman understanding of the word.
From a sector standpoint, of course internet was the champion, followed by software and somewhat more
surprisingly hardware, including two semiconductor investments (Crocus Technology and Movidius). The
creeping up of hardware plays makes us think that we are coming to the end of the semiconductor
stigma as investors slowly realise that the Lapsing of Moore's Law opens up opportunity in chip design and
that Micro- and NanoElectroMechanical Systems (MEMS and NEMS) innovations open up brand new, high
volume markets (such as movement detection). It also reflects the growing risk appetite of investors,
both by VC fund survivors spurred by their growing success in a decimated VC landscape (such as Idinvest
in the case of Crocus or DFJ Esprit for Movidius), and opportunistic institutional investors or corporates
which are bursting with cash and ambition (as in the case of Robert Bosch Venture Capital for Movidius).
July 2013
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This upbeat mood and acceleration confirms our analysis that we have entered the up phase of the
investment cycle (see “The Beginning of the Hype” in our May Bulletin). The theory goes that each cycle
starts with a phase of Downturn (2001-2003; 2008-2009), followed by a phase of Recovery (2003-2006;
2009-2012), which then accelerates into a phase of Hype (2006-2008). We feel we have entered this phase
in the current cycle. The good news is that, if the 1990s cycle is anything to go by (market up between 1996
and 2000), we are facing another few years of good investment returns.
Why then call it a phase of Hype with a pejorative connotation? Because this is the phase when outsiders
join in, egged on by insiders, which inevitably results in a relaxation of investment criteria and
inflated valuations leading to exaggerated momentum investing (where investors try to get ahead by
outspending the opposition) until the merry-go-round stops and the market crashes. An illustration of this
build-up is Rocket Internet, which is now the world’s largest incubator after raising $500mn (€375mn) since
May 2012 from partners Investment AB Kinnevik, a long-established €7bn market cap public investment
company, and Access Industries, the investment vehicle of Len Blavatnik, who sold his $7bn (€5.4bn) stake
in BP’s ill-fated Russian venture TNK-BP in March 2013 (in addition to previous investment by JP Morgan).
As our readers will probably know, Rocket Internet is the operating vehicle of the high profile Samwer
brothers who describe themselves as “the most aggressive guys on the internet”. Caveat Emptor.
M&A Transactions
By contrast with investors who are already getting ahead of themselves, (overall) corporates have been
pretty disciplined since the last bubble burst (2000-2002) despite their vast cash reserves. This stronger
sense of discipline by corporate buyers may explain the unexciting state of the M&A exit market.
There are of course exceptions, especially as the big tech giants try to remain relevant in fast growing
mobile, SaaS, security and storage, and buy their way into these exciting areas. An example in July was
Cisco’s acquisition of security specialist Sourcefire for a neat $2.7bn (€1.8bn) equivalent to no less than
10.7x revenues. Even then the acquisition was rather well received by analysts, who think that Cisco should
be able to make the acquisition pay for itself. Other Top 5 Global Tech M&A transaction were more
reasonable deals to do with Nokia buying out its joint venture partner in Nokia Siemens Networks, Intuit
disposing of a non-core online financial services asset, or (as expected) consolidation in banking software or
hosting services.
On the exit front for VC and PE-backed European venture and growth companies, much of the action was
PE-related rather than VC, except for Albion Ventures’ laudable exit from Opta Sportsdata to publicly-
quoted Perform Group (UK LSE:PER) for £40mn (€47mn). The other two reported transactions which made
our threshold ($50mn) were PE groups rotating their holdings, with Montagu PE selling their stake in Host
Europe Groupe to Cinven, and Tiger Global selling out from AlloCiné to local publicly-quoted investment
holding company Fimalac (ENXTPA:FIM) – at a loss.
So nothing to really boast about on the M&A front, but the excitement on the investment front makes for an
exciting July Bulletin.
Enjoy the reading. Please direct any questions or comments to [email protected]. If you do not
wish to receive future HTI updates from us, please send an email with the title "unsubscribe" to
The Go4Venture Team
July 2013
Page 5 © Go4Venture Advisers 2013
Where to Meet the Go4Venture Advisers Team in September 2013
September 3 – London, UK – E2Exchange - ‘Investor Meets Entrepreneur’ Forum
September 5 – Stockholm, Sweden – CEO-CF Open Day
September 12 – Lisbon, Portugal – Portugal Ventures CEO Day
September 23-24 – Berlin, Germany – Tech Growth Summit
September 25 – Helsinki, Finland – Tekes Investor Day
For more details, please always refer to this document.
About the Headline Transactions Index (HTI)
Where does the HTI measure? The HTI is compiled based on the transactions reported in major publications and news feeds. It is therefore a derivative index which measures both:
The actual level of investment activity in the European Technology sector; and
The level of reporting (“the hype factor” – even though each transaction is only recorded once)
Since its inception in August 2002, the HTI has proven to be a good early indicator of the actual level of private investments in Europe as reported by established industry surveys (e.g. VentureOne Quarterly Venture Capital statistics).
July 2013
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0
100
200
300
400
500
600
700
800
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Va
lue
of T
ran
sa
cti
on
s p
er
Mo
nth
(€m
n)
Source: Go4Venture Advisers HTI Database
Go4Venture HTI Index by Deal Value
2010 2011
2012 2013
1.1 - Headline Transactions Index (HTI)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
To
tal V
alu
e o
f Tra
ns
ac
tio
ns
(€m
n)
Source: Go4Venture Advisers HTI Database
Go4Venture HTI Index by Cumulative Deal Value
2010 2011
2012 2013
July 2012 2013 Year-to-Date 2012 2013
Large Transactions # 8 18 Large Transactions # 65 81
€mn 151.0 649.3 €mn 1,140.3 1,922.4
Other Transactions # 28 41 Other Transactions # 178 224
€mn 68.8 87.8 €mn 507.6 605.8
All Headline Transactions # 36 59 All Headline Transactions # 243 305
€mn 219.7 737.1 €mn 1,647.8 2,528.2
Of Which: Of Which:
Landmark Transactions # 2 6 Landmark Transactions # 18 21
€mn 84.0 516.3 €mn 608.5 1,222.8
Definitions
Large Transactions: > £5mn / €7.5mn / $10mn
Other Transactions: < £5mn / €7.5mn / $10mn
Landmark Transactions: subset of Large Transactions > €20mn / £13mn / $27mn
July 2013
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1.2 - Large Transactions Summary
(>£5mn / €7.5mn / $10mn)
# Company Sector Round €mn Description Investors
1 Mobileye (Netherlands) www.mobileye.com
Hardware Late Stage
305.9 Provider of automated on-board driver assistant systems.
BlackRock Private Equity Partners, Enterprise Holdings, Fidelity Investments, Sailing Capital, Wellington Management.
2 Zalando (Germany) www.zalando.com
Internet Services
Late Stage
100.0 Online Fashion Retailer. Investment AB Kinnevik.
3 Shazam (UK) www.shazam.com
Internet Services
Late Stage
30.6 Provider of a real-time music recognition service available as an app and also as part of interactive TV.
América Móvil.
4 Crocus Technology (France) www.crocus-technology.com
Hardware Late Stage
34.0 Developer of Magnetic Random Access Memories (MRAM).
IDInvest, Industrial Investors, Innovation Capital, NanoDimension Management, Rusnano, Sofinnova Ventures, Ventech.
5 Withings (France) www.withings.com
Hardware B 22.9 Provider of devices and smartphone applications that monitor personal health.
Bpifrance, Idinvest Partners, 360 Capital Partners, Ventech SA.
6 Delivery Hero (Germany) www.deliveryhero.com
Internet Services
Late Stage
22.9 Online food ordering platform.
Holtzbrinck Ventures, Kite Ventures, Kreos Capital, Phenomen Ventures, ru-Net Ventures, Team Europe Ventures, Tengelmann Ventures.
7 Scality (France) www.scality.com
Software C 16.8 Software-driven storage technology for unstructured data.
FSN-PME, Galileo Partners, IDInvest Partners, Iris Capital, Menlo Ventures, Omnes Capital.
8 Open-Xchange (Germany) www.open-xchange.com
Software C 15.3 Provider of SaaS-based office applications suite
BayBG, eCAPITAL entrepreneurial Partners, Hermann-Josef Lamberti, United Internet Ventures.
9 Zimory (Germany) www.zimory.com
Software B 15.3 Provider of cloud infrastructure deployment solutions.
Creathor Venture Management, Deutsche Borse, High-Tech Gruenderfonds Management, IBB Beteiligungsgesellschaft, KfW Mittelstandsbank, T-Venture Holding.
July 2013
Page 8 © Go4Venture Advisers 2013
# Company Sector Round €mn Description Investors
10 Movidius (Ireland) www.movidius.com
Hardware Late Stage
12.2 Fabless semiconductor company developing low power video processing chips for the mobile market.
AIB Seed Capital Fund, Atlantic Bridge Ventures, Capital-E, DFJ Esprit, Robert Bosch Venture Capital.
11 ARKeX (UK) www.arkex.com
Software Late Stage
11.5 Provider of non-seismic geophysical imaging services.
4D Global Energy Advisors.
12 Ocapo (UK) www.e-prospects.com
Internet Services
A 11.0 Provider of performance-based customer acquisition technologies for the consumer finance and insurance industries.
BOOST&Co, Management, Northzone Ventures.
13 Luxury for Less (UK) www.bathempire.com
Internet Services
A 9.9 Provider of bathroom products via an online platform.
ISIS Equity Partners.
14 Coldway (France) www.coldway.com
Cleantech Late Stage
9.3 Provider of portable thermo-chemical cooling systems and self refrigerating containers for the transport of fresh produce and other temperature-sensitive products.
CDC Entreprises, CM-CIC Capital Finance, Emertec Gestion, Sudinnova.
15 Grand Cru (Finland) www.grandcrugames.com
Digital Media
B 8.5 Developer of mobile social games.
Idinvest Partners, Nokia Growth Partners, Qualcomm Ventures.
16 Vivino (Denmark) www.vivino.com
Internet Services
B 7.9 Provider of a mobile application that can recognise wine labels using image recognition technology.
Balderton Capital Management, Creandum, Seed Capital Management.
17 Chemist Direct (UK) www.chemistdirect.co.uk
Internet Services
B 7.6 Provider of prescription medicines and health and beauty products online.
Atomico, DMG Media Investment, Lepe Partners.
18 XConnect Global Networks (UK) www.xconnect.net
Telecom Services
C 7.6 Provider of voice over internet protocol (VoIP) peering and clearing service.
Crescent Point Group, Young Associates.
Source: Go4Venture Advisers HTI Database
Key Bold indicates lead investor(s)
July 2013
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# Company Sector Round €mn Description Investors
1 Mobileye (Netherlands) www.mobileye.com
Hardware Late Stage
305.9 Provider of automated on-board driver assistant systems.
BlackRock Private Equity Partners, Enterprise Holdings, Fidelity Investments, Sailing Capital, Wellington Management.
Mobileye (Netherlands), a developer of vision-based driver assistance systems for
the automotive industry, raised $400.9mn (€305.9mn) in a Late Stage round from
new investors BlackRock Private Equity Partners, Enterprise Holdings, Fidelity
Investments, Sailing Capital and Wellington Management.
We last saw Mobileye in March 2010 when it had raised a €27.3mn round to support the development of its
Advanced Driver Assistance Systems (ADAS). These systems provide car drivers with collision warnings,
alerting them when they stray from their lane, fail to maintain an adequate distance from the vehicle in front
or exceed the local speed limit. They also help to adjust the angle of their headlights.
Since being launched commercially in 2007, Mobileye’s products have been adopted on an OEM basis by 19
automotive manufacturers including BMW, Chrysler, Ford, General Motors, Honda, Mitsubishi and Volvo. By
the end of 2013 over three million cars will have shipped with the firm’s technology.
Mobileye can also retrofit its ADAS either as a standalone system or integrate it with location devices, fleet
management and other telematics systems. In this context the firm is targeting primarily insurance
companies, fleet operators and car leasing companies.
From its research base in Israel, Mobileye is in the process of developing systems to allow vehicles to run
largely on autopilot by 2016. While the firm does not anticipate fully driverless cars for another 15-20 years it
has several competitors in this area. Apart from Google’s high profile efforts, BMW, Bosch and Volvo have
all recently tested driverless cars on public roads. A vehicle developed jointly by the University of Oxford and
Nissan is scheduled to begin road trials later this year.
Prior to this round, Mobileye had raised about €80mn over eight investment rounds since it was founded in
1998 as a spin-out from the Hebrew University of Jerusalem. This round is much larger than the previous
one in 2010 and gives Mobileye a pre-money valuation of $1.5bn. In addition to providing new capital, it also
buys out some of the earlier investors. According to Israeli financial daily Calcalist, some early investors who
went in at $15 (€12) a share were bought out at $35 (€27). All this is good preparation for the prospective
IPO which Mobileye anticipates in about a year and a half. Goldman Sachs led the firm’s previous round in
2010 (Morgan Stanley acted as placement agents), clearly with an eye on underwriting the IPO.
None of the participants in this round are traditional venture investors. The majority are US asset managers
or financial services firms. BlackRock Private Equity Partners (€604mn (2009); AUM €11.3bn) is the private
equity arm of well-known asset management firm BlackRock, Fidelity Investments (AUM €178bn) is the well-
known mutual funds manager (this time not investing through its venture funds) and Wellington Management
is one of world’s largest private, independent investment management companies.
Similar in some ways, Sailing Capital was established by the Shanghai International Group in September
2011. Operating under the guidance of the People’s Bank of China and with the support of the Shanghai
Municipal Government, Sailing should be able to help Mobileye access Chinese markets.
Strategic investor Enterprise Holdings is the owner of well-known car rental firms Alamo, Enterprise and
National and has annual revenues of more than $15mn (€11mn).
July 2013
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# Company Sector Round €mn Description Investors
2 Zalando (Germany) www.zalando.com
Internet Services
Late Stage
100.0 Online Fashion Retailer. Investment AB Kinnevik.
Zalando (Germany), a fashion e-tailer, raised €100.0mn in a Late Stage
round from Investment AB Kinnevik.
We last saw fashion e-tailer Zalando in August 2012 with an estimated €13mn from JP Morgan and
Quadrant Capital. The money was intended to be used for expansion into Poland and Norway, as well as for
the construction of a new logistics centre.
Over the course of 2012 Zalando actually went live in Belgium, Denmark, Finland, Spain and Sweden, in
addition to Poland and Norway. Its new logistics centre in Erfurt (former East Germany) opened in December
2012 and the firm started work on a second logistics centre in Mönchengladbach (near the Dutch border) in
January 2013. It has also increased its range from roughly 1,000 brands to over 1,500.
This expansion allowed Zalando to generate net sales (i.e. revenues less any discounts offered or items
returned) of €1.15bn in 2012. This is roughly double the 2011 figure of €0.51bn and almost eight times the
2010 figure of €0.15bn. Perhaps more importantly, the firm has achieved break-even at the EBIT level
throughout its core DACH region. Its overall EBIT margin for 2012 was minus 8%, which again was an
improvement on the 2011 figure of minus 12%.
This round is actually a follow-on from October 2012 when Investment AB Kinnevik (AUM €7.6bn) acquired
another 10% of Zalando’s equity from three of the firm’s early stage investors – Holtzbrinck Ventures, Rocket
Internet and Tengelmann. This left these three early investors with 56% of the company but Kinnevik had the
option to acquire an additional 3.5% on the same terms. It is this option which Kinnevik has just exercised.
The result is that Kinnevik, which first backed Zalando for its fifth round in 2010, now owns 29% of Zalando
directly. In addition, regular readers may remember that Kinnevik is also the principal backer of Rocket
Internet, through which the firm owns an additional 9% indirectly.
Not only is Kinnevik the principal backer of the Samwer brothers’ Rocket Internet vehicle, but the firm is keen
to continue this relationship. In mid-July Kinnevik announced that it had invested €67mn into Rocket Internet
as part of the firm’s new share issue. This maintains Kinnevik’s current 24% equity stake and means that
Rocket has raised roughly $0.5bn in the last twelve months.
The emerging markets exposure this deal gives to Kinnevik is entirely compatible with its modus operandi so
far. Founded in 1936, Swedish investor Kinnevik invests beyond technology, into business in the telecoms,
online or financial services, media and other industries, and has a long history of investing in emerging
markets. Moreover, the firm has considerable exposure to the consumer sectors within these markets. While
over half (56%) of Kinnevik’s portfolio companies are in Western Europe, 8% are in Africa, 10% in Eastern
Europe and Russia and almost a quarter are in South America. Only about 1% are in the North American
market.
In addition to its equity backing, in October 2012 Zalando agreed long-term debt financing of €40.7mn with
Commerzbank and Sparkasse Mittelthüringen. The money was used for some of the fit-out of Zalando’s
logistics facility in Erfurt, as well as for working capital.
July 2013
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# Company Sector Round €mn Description Investors
3 Shazam (UK) www.shazam.com
Internet Services
Late Stage
30.6 Provider of a real-time music recognition service available as an app and also as part of interactive TV.
América Móvil.
Shazam (UK), a music recognition service and app for smartphones,
raised $40.0mn (€30.6mn) in a Late Stage round from América Móvil.
The money will be used to grow the firm’s user base more quickly and to
expand its management and overhead structure ahead of a $1bn (€765mn) IPO planned for next year.
Shazam last featured in our bulletin in June 2011 with a €22mn round from DN Capital, Kleiner Perkins and
Institutional Venture Partners. The money was to be used for expansion into television and, possibly,
acquisitions.
On the television front the firm has certainly succeeded. In late 2011 it partnered with Twentieth Century Fox
to launch a Shazam-enabled movie promotion campaign, where the Shazam app displays ancillary
information to the movie content on the user’s mobile device; the much-discussed ‘second screen’. A variety
of media-events and advertising series were also Shazam-enabled. Examples include the Cornetto and
Pepsi adverts in Australia, various advertising campaigns running during the US Superbowl, a partnership
with the UK broadcaster ITV to make the Britain’s Got Talent final Shazam compatible and an agreement
with NBC to make the 2012 London Olympics coverage interactive. In Q3 2012, the firm expanded its
Shazam for TV service to cover any US TV show at any time of day.
Branching out into TV seems to have paid off, as the firm is now generating $300mn (€230mn) of affiliate
sales – where Shazam takes a cut every time one of its users buys a song they've tagged. The firm has also
doubled its user base to 350mn (70mn monthly users).
As anticipated, the firm also made some acquisitions. Firstly it bought synchronised lyric technology from
Silicon Valley based Tunezee more or less concurrently with its June 2011 round. Secondly, it reacquired the
rights to its Audio Recognition technology from Broadcast Music Inc. (BMI), one of three US performing
rights organisations. It had sold the rights in 2005 in order to fund development.
Shazam’s London office will grow in line with the company’s user base – it is expected to double in size over
the next two years. Currently, the firm has about 130 employees.
Headquartered in Mexico City, strategic investor América Móvil is one of the largest mobile network
operators in Latin America. Its Chairman and Chief Executive is Carlos Slim who, according to Forbes, is
one of the richest people on the planet. Across all of its networks, the company has just under 250mn mobile
subscribers in 18 countries.
This transaction values Shazam at a little over $400mn and brings total investment to date up to just over
$105mn since the firm was founded in 2000. It will give Shazam access to América Móvil’s subscriber base,
which may provide a big boost in advance of its proposed IPO next year. This will be needed if the firm is to
increase its valuation to the $1bn number that has been mooted.
It is not unusual for América Móvil to invest outside of Latin America – prior investments include stakes in
Dutch telecoms operator KPN and Telekom Austria. It is, however, the first time that the firm has invested
outside of the telecoms sector. From América Móvil’s point of view, the deal will help increase the use of
data services by its Latin American users.
July 2013
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# Company Sector Round €mn Description Investors
4 Crocus Technology (France) www.crocus-technology.com
Hardware Late Stage
34.0 Developer of Magnetic Random Access Memories (MRAM).
Idinvest, Industrial Investors, Innovation Capital, NanoDimension Management, Rusnano, Sofinnova Ventures, Ventech.
Crocus Technology (France), a developer of Magnetic Random Access
Memories, raised €34.0mn in a Late Stage round led by new investor
Idinvest. Idinvest was supported by fellow new investor Industrial
Investors and existing backers Innovation Capital, NanoDimension Management, Rusnano, Sofinnova
Ventures and Ventech. The money will be used to expand manufacturing of its products.
Founded in 2004, Magnetic Random Access Memory (MRAM) developer Crocus has appeared in our
bulletin three times in October 2008, May 2010 and most recently May 2011. As previously described,
Crocus’ technology is essentially a faster, lower power version of the existing non-volatile memories that are
used in devices including USB sticks and solid-state disk drives.
While semiconductor investments – even fabless ones – have been quite rare for some time now, readers
will be aware that it is normal for such investments to have a very long runway, requiring significant
investment before they show a profit. As total investment in Crocus to date amounts to over €130mn,
however, one might legitimately ask when revenues might be expected, particularly as at the time of its
Series E round in 2010 the firm said it anticipated revenues by mid-2011.
Crocus says it now expects its first revenues this year, profitability in 2015 and an IPO in 2015-2016. There
is some backup for this claim. Firstly, since our May 2011 bulletin, the firm has productised its technology as
the memory component of secure smart cards. It is developing this in partnership with IBM in the US.
Readers may remember from our 2008 coverage that IBM had previously walked away from MRAM for
technical reasons. Secondly, Crocus has licensed its Magnetic Logic Unit™ (MLU) technology to Tower Jazz
(NASDAQ:TSEM) a specialist foundry manufacturing embedded System-On-Chip (SoC) applications.
Crocus anticipates $10mn (€ 8mn) in licensing revenue this year. Finally, although far from
commercialisation, the US Intelligence Advanced Research Projects Activity (IARPA) has contracted Crocus
to develop its MLU technology to enhance chip security and crypto-processors.
Competition in this sector includes Avalanche Technology which raised $35mn (€27mn) in July 2012, Spin
Transfer Technologies which raised $36mn (€28mn) in early 2012 and Everspin Technologies, one of the
oldest companies in this space, which released a new generation of products at the end of last year.
Readers will be familiar with transaction leader Idinvest (€281mn (2013); AUM €4bn) (formerly AGF Private
Equity), which features again later in this issue with an investment in Withings. Fellow new investor Industrial
Investors is a Russian industrial investment group which backs companies with a turnover of $50mn-$1bn
(€38-765mn). Normally, Industrial Investors targets companies where there is the possibility of acquiring a
controlling stake. It is not clear how this might be done with an IPO in the offing.
Existing investors returning for this round include French technology and life science venture firm Innovation
Capital (€36mn (2007); AUM €63mn), nanotechnology specialist NanoDimension Management whose
portfolio company BIND Therapeutics has just filed for an $80.5mn (€61mn) IPO, together with well-known
investors Sofinnova Ventures (€337mn (2011); AUM €10.7bn) and Ventech (€150mn (2007); AUM €438mn).
Perhaps the most important returning investor, however, is Rusnano (AUM €3.6bn). In combination with
$55mn (€42mn) from Crocus’ other backers, Russian government-backed fund Rusnano provided $245mn
(€187mn) for the construction of a manufacturing facility in Russia back in 2011.
July 2013
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# Company Sector Round €mn Description Investors
5 Withings (France) www.withings.com
Hardware B 22.9 Provider of devices and smartphone applications that monitor personal health.
Bpifrance, Idinvest Partners, 360 Capital Partners, Ventech SA.
Withings (France), a developer of devices connected to a smartphone app that
monitors personal health, raised €22.9mn in a Series B round led by Bpifrance
with support from new investors 360 Capital Partners and Idinvest Partners together with existing investor
Ventech. The money will be used for international expansion and continued product development.
Founded in 2008, Withings released its first product – the WiFi Body Scale – in 2009. This consisted of a set
of bathroom scales paired with an iPhone app. Having measured a user’s weight and body fat percentage,
these scales were able to upload data to a web dashboard via the user’s home WiFi network.
By exposing the API of its product, Withings enabled other players in the health and fitness industry such as
DailyBurn.com (which had 350,000 members at the time), RunKeeper.com (which had over 900,000 iTunes
app downloads), FitOrbit.com, gymtechnik.com, Google Health and Microsoft’s HealthVault to make use of
its technology. This greatly expanded the number of sites on which users could track their fitness and
enriched the value of the device. Withings’ products now integrate with over 100 partner apps and devices.
Since then, Withings has released a range of products including blood pressure, pulse, sleep and activity
monitors, as well as a baby monitor. The firm has also released a more advanced version of its bathroom
scales – the Smart Body Analyser – which can measure heart rate and air quality in addition to traditional
weight and body composition measurements.
Industry information and market research company IHS forecasts that there will be almost 250mn global
installations of mobile apps for sports and fitness purposes by 2017 – an expansion of 63% from 2012 levels.
While this is the first time that French transaction leader Bpifrance (AUM €22bn) has appeared in our
bulletin, readers may be familiar with its constituent parts. It was formed this year from a combination of
existing French institutions – including FSI (Fonds Stratégique d'Investissement) and FSN-PME (investing in
businesses strategic to the French economy), OSEO (the state-backed bank providing soft loans to
innovative SMEs) and CDC Entreprises (the equity investment subsidiary of Caisse des Dépôts). Bpifrance
is supported 50/50 by the French State and the Caisse des Dépôts et Consignations.
A more familiar name is Idinvest (€281mn (2013); AUM €4bn), which provides investment in funds of funds,
secondary transactions, LBO co-investments and growth equity, as well as mezzanine finance. Having
marked its fifteenth anniversary at the end of last year by announcing plans to double its AUM within five
years, the firm has had two IPOs in 2013 – a $442mn (€338mn) IPO for Dutch biotech Prosena on Nasdaq
and a much smaller €15mn IPO for Erytech Pharma on the NYSE Euronext Paris market.
Based in Milan, Italy with offices in France, Germany and Luxembourg, we last saw 360 Capital Partners
(€60mn (2011); AUM €160mn) in our February 2013 issue with a €15mn round for baby-care e-tailer
Windeln.de. Both stage and sector agnostic (apart from an aversion to biotech) the firm announced the first
close of a new fund at €70mn at the end of 2012. Paris-based but with investment teams in China and Asia,
Ventech (€150mn (2007); AUM €438mn) is a familiar presence in our bulletin which we last saw in March
2013 with a €7.7mn round for Oktogo.ru, an online hotel reservations platform.
July 2013
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# Company Sector Round €mn Description Investors
6 Delivery Hero (Germany) www.deliveryhero.com
Internet Services
Late Stage
22.9 Online food ordering platform.
Holtzbrinck Ventures Adviser, Kite Ventures, Kreos Capital, Phenomen Ventures, ru-Net Ventures, Team Europe Ventures, Tengelmann Ventures.
Delivery Hero (Germany), operator of a portal that provides centralised ordering from
a variety of take-away food suppliers, raised $30.0mn (€22.9mn) in a Late Stage
round led by Phenomen Ventures with support from fellow new investor Holtzbrinck
Ventures. Existing investors Kite Ventures, Kreos Capital, ru-Net Ventures and
Tengelmann Ventures also participated in the round.
Founded in October 2010, we last saw Delivery Hero in August 2012 with an €80mn round led by Kite
Ventures. At the time it was operating in 11 countries and had 22,000 restaurants in its network. In just under
a year the firm has added another 13,000 restaurants and expanded into China, Denmark, India and Mexico,
giving it a network of 35,000 restaurants in fourteen different countries.
This has driven annual revenues of c.$400mn (€306mn). The company has some 600 employees worldwide,
with 300 of these based in its Berlin headquarters, but at scale the take-away portal business has relatively
low marginal costs. For this reason the firm expects to be profitable this year.
As we highlighted in our May 2013 issue in our coverage of Delivery Hero’s rival Foodpanda, food delivery
portals have been a very hot sector for at least the last 18 months. The same is true on the other side of the
Atlantic with a plethora of similar companies including delivery.com, ChowNow, Campus Special, eat25,
grubHub and Seamless. We have also commented on more than one occasion that the critical issue in this
business is reaching critical mass in each country of operation.
For these reasons one might anticipate some consolidation and it looks as though this is beginning to
happen. At the time of writing, Chicago-based GrubHub and New York-based Seamless had just announced
the completion of their merger, with the combined business covering c.25,000 restaurants.
Of course the art to such a merger or acquisition is to balance entry into new territories (which is expensive)
with achieving critical mass/profitability and removing competition in existing territories. We therefore expect
most M&A activity in this sector to focus on companies with a high degree of overlap in their countries of
operation. We may also see the acquisition of local niche players which are strong and profitable in their
home countries as the larger firms seek to achieve scale ahead of IPOs. An interesting candidate for this
might be Yemek Sepeti, which appeared in our September 2012 issue.
This latest round brings Delivery Hero’s total funding to date to $116mn (€89mn) of equity plus an additional
$10mn (€8mn) in venture debt from Kreos Capital (€120mn (2011); AUM €600mn). Intriguingly, given our
earlier discussion of M&A, this round was led by Russian investor Phenomen Ventures (€229mn (2013))
which participated in Foodpanda’s €15mn round in May.
Holtzbrinck Ventures (€177mn (2011)) is another venture firm which has worked with Rocket Internet. Most
recently it backed Rocket’s ‘Asian Amazon’ Lazada as part of a $100mn (€77mn) round in June. Russian
and European investor Kite Ventures led Delivery Hero’s previous round and alongside ru-Net Ventures
(AUM €503mn) will play a key role in Delivery Hero’s Russian expansion.
Team Europe Ventures has just made Markus Fuhrmann a partner. Mr. Fuhrmann co-founded not only
Delivery Hero but also Lieferheld. Well-known e-commerce pioneer Tengelmann Ventures last appeared in
our bulletin in November 2012 with a €12mn investment in Trademob, an app marketing technology provider.
July 2013
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# Company Sector Round €mn Description Investors
7 Scality (France) www.scality.com
Software C 16.8 Software-driven storage technology for unstructured data.
FSN-PME, Galileo Partners, Idinvest Partners, Iris Capital, Menlo Ventures, Omnes Capital.
Scality (France), a provider of a software-only data storage solution running
on standard hardware, raised $22.0mn (€16.8mn) in a Series C round co-led
by Iris Capital and Menlo Ventures (which put in $5mn) with support from
fellow new investor FSN PME (now part of Bpifrance) and existing investors Galileo Partners, Idinvest and
Omnes Capital. The money will be used for sales and marketing activities targeting the enterprise and
service provider markets, as well as to support new R&D initiatives.
Big data analytics, cloud solutions and data centres – all very much part of the current venture wave of value
creation – are underpinned by data storage. Traditional network storage – e.g. SAN (Storage Area Network)
dealing with blocks of data or NAS (Network Attached Storage) operating at file level – and other storage
solutions are typically provided in the form of proprietary hardware from vendors such as EMC, Netapp or
HDS. Not only is this expensive but it can be difficult to achieve the reliability and scalability required at a
commercially viable cost. Moreover some enterprise users are still uncomfortable with using cloud-based
solutions which they do not own.
Scality has developed a software-defined storage solution called RING, which runs on off-the-shelf x86
servers with whatever SCSI, ATA, SAS, SATA or SSD (we’ll spare you the spelling!) storage they happen to
have. Able to scale to petabyte applications, Scality’s solution is a shared-nothing architecture with no single
point of failure. It belongs to the category called “object storage” (no relationship with object database or
object language whatsoever), but with two points of differentiations it is built for mixed load (serving both
High Performance and Archival of data) and it is compatible with traditional storage interfaces such as NFS.
Scality was spun off in 2009 from French e-mail security company Bizanga when the latter was sold to anti-
spam company Cloudmark. Bizanga was a client of Go4Venture Advisers, and we became angel investors
and have remained a trusted advisor to the company ever since. While Scality has moved its head office to
Silicon Valley and opened sales and support offices in New York, Tokyo and Washington, it has kept its R&D
in France.
This round was co-led by Silicon Valley-based Menlo Ventures (€306mn (2010)) and Paris-based Iris Capital
(€170mn (2012); AUM €850mn). Veteran Valley firm Menlo Ventures is stage agnostic and commits
anywhere from $250k (€191mn) of seed money to $30mn (€23mn) for growth equity. Founded in 1976, this
firm is currently targeting companies in mobile, social, cloud, big data and advertising with its $400mn
(€306mn) Menlo XI fund. Iris Capital is a regular in our Bulletin and targets digital economy companies with a
European angle, providing €1-20mn per round with a 4-5 year time-horizon.
Although the third new investor in this round was FSN-PME (€300mn (2011)), this should now more properly
be known as Bpifrance (AUM €22bn), as explained in our coverage of the Withings deal earlier in this issue.
The existing investors were Galileo Partners (€160mn (2006); AUM €314mn), Idinvest (€281mn (2013); AUM
€4bn) and Omnes Capital, all of which supported both Scality’s €4mn Series A in June 2010 and its €6mn
Series B in February 2011. Scality’s approach, where a firm leaves its R&D in its home country but opens a
headquarters in Silicon Valley, is now becoming familiar – following the path well-trodden by Israeli
companies in the 1990s.
July 2013
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# Company Sector Round €mn Description Investors
8 Open-Xchange (Germany) www.open-xchange.com
Software C 15.3 Provider of SaaS-based office applications suite.
BayBG, eCAPITAL entrepreneurial Partners, Hermann-Josef Lamberti, United Internet Ventures.
Open-Xchange (Germany), a provider of a SaaS-based office applications suite,
raised €15.3mn in a Series C round co-led by United Internet Ventures and former
Deutsche Bank COO Hermann-Josef Lamberti, with support from existing
investors BayBG and eCAPITAL. The new funds will be used for further product
development, professional services, international expansion and to buy out an existing investor.
Founded in 2005, Open-Xchange has its headquarters in Nuremberg (Germany) with offices in Olpe
(Germany) New York and San Jose (California). One of the first providers of collaboration software to make
its products accessible through a browser, its tools are targeted at telcos, mobile and web operators and web
hosts. Well-known hosting provider 1&1 was an early adopter of the company’s first SaaS office suite, and
other customers include Bull, Host Europe Group and STRATO.
Revenue has grown 50% year-on-year for the past three years, and total seats sold are now over 80mn.
Moreover, the firm has recently signed a deal with Polish web host home.pl, which will deliver another 1.5mn
seats. Gartner recently predicted that enterprise usage of cloud-based office applications will rise from 8% of
all office suite users today to 33% of users by 2017, and a total of 695mn users worldwide by 2022.
In early 2013 the company launched OX Text, the first product in its new cloud-based OX Documents
productivity suite. Over the next few months, spreadsheet and presentation editing products will be added,
as well as further enhancements covering usability on touch screen devices, accessibility for those with
disabilities, and social messaging. This latest generation of the suite is being built by key members of the
original OpenOffice team, and is partially open source. The complete groupware suite, OX App Suite, also
includes email, task and calendar tools, allowing hosting companies to provide functionality that competes
with Google Docs, Microsoft’s Office 365 and other offerings such as Zoho Docs. Versions of the software
can be installed free of charge, but any hosting company requiring support from Open-Xchange or advanced
features must pay for them.
Listed transaction co-leader United Internet Ventures (UTDI.DE) is the operator of well-known internet host
1&1, web-mail provider GMX and German e-mail and new service WEB.DE. It has been a customer of
Open-Xchange for several years and is one of Europe’s largest internet specialists, providing 13mn
subscription accounts and around 31mn ad-supported free accounts.
Unusually, one of the co-leaders of this transaction was an individual - former Deutsche Bank COO
Hermann-Josef Lamberti. His presence as a transaction co-leader on an internet investment is less
surprising, however, when one realises that he spent thirteen years working in senior positions with IBM.
Existing investor BayBG (Bayerische Beteiligungsgesellschaft) (€50mn (2008); AUM €300mn) is a sector-
agnostic Bavarian investor in SMEs which prefers to limit itself to minority stakes. While the majority of its
investments are in growth equity, the firm is also able to provide venture capital, turn-around funds, MBO
finance and other funding solutions. German technology investor eCAPITAL (€50mn (2010); AUM €150mn)
invests at any round from seed to growth equity, but has different preferences depending on deal stage.
It has been a long time since Open-Xchange last sought finance with a €7.5mn round in 2008. It is one of the
investors from this 2008 Series B round, which was also Open-Xchange’s initial investor in its 2006 Series A
round – BayTech Venture Capital – that is being bought out now.
July 2013
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# Company Sector Round €mn Description Investors
9 Zimory (Germany) www.zimory.com
Software B 15.3 Provider of cloud-infrastructure deployment solutions.
Creathor Venture Management, Deutsche Börse, High-Tech Gruenderfonds Management, IBB Beteiligungsgesellschaft, KfW Mittelstandsbank, T-Venture Holding.
Zimory (Germany), a developer of cloud infrastructure deployment
solutions for enterprises and service providers, has raised $20mn
(€15.3mn) in a Series B round led by new investor Deutsche Börse and
supported by previous investors Creathor Venture, High-Tech Gruenderfonds, IBB
Beteiligungsgesellschaft, KfW Mittelstandsbank and T-Venture Holding. The new funding will be used
to accelerate sales, marketing and product development initiatives.
Founded in 2007 as a spin-off from Deutsche Telekom, Berlin-based Zimory developed a ‘Cloud Suite’ which
permits the rapid creation and management of various types of cloud services on an Infrastructure-as-a-
Service basis. These include public, private (in-house), virtual private (secure externalised) and hybrid cloud
environments. Zimory makes extensive use of open-source software in its solutions.
This latest round of funding follows shortly after Zimory and Deutsche Börse announced their Deutsche
Börse Cloud Exchange joint venture. Due to open early in 2014, cloud computing capacity will be traded
electronically using Zimory’s technology to run the settlement process. Cloud marketplaces already exist.
Examples include Reserved Instance Marketplace by Amazon Web services and SpotCloud by Virtustream
(launched in early 2011 but yet to gather momentum). Zimory claims its offering will be the world’s first
vendor-neutral cloud computing exchange.
In the last year Zimory has quadrupled revenues, created a US subsidiary and made significant
enhancements to its product suite. In addition to its headquarters in Berlin it has development centres in
Erfurt (Germany) and Minsk (Belarus) as well as a new office in New York City. Its existing customers
include Deutsche Börse, Deutsche Telekom, the Austrian Government, the Technical University of Berlin
and The International Securities Exchange (ISE) in New York.
Zimory is one of a recent flood of cloud-related investments, which also includes Scality, a provider of a
software-only cloud storage solution, reported this month.
The presence of Deutsche Börse as transaction leader is yet again another example of the growing
involvement of corporates in venture financing. The prevalence of strategic investors has been increasing
ever since we first published our bulletin in 2003, and has accelerated since 2008. Strategic investor
Deutsche Börse already has experience of launching a new market – it launched the EEX European Energy
Exchange in 2002.
Other existing investors include early stage technology investors Creathor Venture (€80mn (2011); AUM
€140mn) and High-Tech Gruenderfonds (€289mn (2011); AUM €566mn), State and Europe-backed IBB
Beteiligungsgesellschaft (€30mn (2008); AUM €82mn), German regional bank KfW Mittelstandsbank
(€250mn (2004); AUM €943mn) and T-Venture Holding (€50mn (2004); AUM €622mn). Unsurprisingly, T-
Venture (the strategic investment arm of Deutsche Telekom) participated in both Zimory’s €1.5mn seed
round in 2008 and its €4.0mn Series A round in 2010.
July 2013
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# Company Sector Round €mn Description Investors
10 Movidius (Ireland) www.movidius.com
Hardware Late Stage
12.2 Fabless semiconductor company developing low power video processing chips for the mobile market
AIB Seed Capital Fund, Atlantic Bridge Ventures, Capital-E, DFJ Esprit, Robert Bosch Venture Capital.
Movidius (Ireland), a fabless semiconductor company developing low
power video processing chips for the mobile market, raised €12.2mn in a
Late Stage round co-led by three new investors – Atlantic Bridge Ventures, DFJ Esprit and Robert
Bosch Venture Capital. Some of the existing investors – AIB Seed Capital Fund and Capital-E – also
participated. The money will be used to help bring a computational imaging chip to market early next year.
Surprisingly given the recent paucity of semiconductor investments, along with Crocus, Movidius makes two
such deals in this issue. Movidius was set up in 2005 by three students at Trinity College in Ireland. It is
developing an image processing chip for the mobile market and has in mind new applications such as post-
capture refocusing, high-quality zoom, augmented-reality simulation, eye-based user interfaces, gesture
controls, location-based services and scanning for 3D printing.
While most mobile chips use the ARM architecture, Movidius is creating its own new architecture specifically
for low power devices such as smartphones. While this will allow Movidius to tackle problems that existing
processors cannot even address, it is also extremely ambitious considering how much work Movidius will
have to do in establishing a new ecosystem for its chips. They have, however, managed to get to 1 teraflop
performance using only hundreds of milliwatts of power, and are targeting a 28nm manufacturing process.
Movidius has announced partnerships with Chinese electronics manufacturer Keen High Technologies
(Shenzhen, China) for consumer mobile devices (that should generate $25mn (€19mn) of sales in the next
three years), poLight (Horten, Norway) for autofocus cameras and Toshiba Electronics Europe for a
reference design of 3D image capture system for use in smartphones.
Movidius has appointed as Chairman Dan Dobberpuhl, co-founder of chip design firm PA Semi, which was
sold to Apple for $278mn (€213mn) in 2008 enabling the latter to move away from Intel and Samsung for
chip design. Prior to PA Semi, Dobberpuhl started networking chip company SiByte in 1998 and sold it to
Broadcom for $2bn (€1.5bn) in 2000. He was also lead designer for DEC’s Alpha processor.
To date Movidius has received slightly less than €40mn in equity funding. Early investors included Celtic
House and Capital-E, which co-led the firm’s €12mn first round in 2008, Emertec Gestion which supported
each of Movidius’ three previous rounds, as well as AIB Seed Capital which has participated in all rounds.
Like Mobileye (see earlier), Movidius has moved its headquarters to Silicon Valley but left its R&D activities
in Europe, although part of the proceeds from this round will be used to expand its research team in Silicon
Valley.
Technology investor Atlantic Bridge Ventures (€250mn (2005)) also has offices in Dublin and Silicon Valley.
It targets semiconductor and software opportunities which are relevant to the big data, cloud and mobile
sectors. Fellow new investors DFJ Esprit (€100mn (2009); AUM €841m) and Robert Bosch Venture Capital
are both well-known and frequently grace our pages.
The presence of AIB Seed Capital Fund (AUM €53mn) as an existing investor belies Movidius’ Irish origins,
as the firm was established by Allied Irish Bank in partnership with Enterprise Ireland. Belgian investor
Capital-E concentrates on early stage micro/nanoelectronics and advanced materials deals.
July 2013
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# Company Sector Round €mn Description Investors
11 ARKeX (UK) www.arkex.com
Software Late Stage
11.5 Provider of non-seismic geophysical imaging solutions.
4D Global Energy Advisors.
ARKeX (UK), a provider of non-seismic geophysical imaging solutions, raised
$15.0mn (€11.5mn) in a Late Stage round from 4D Global Energy Advisors.
Normally when somebody in the oil and gas industry talks about a ‘geophysical survey’ they are referring to a
seismic survey. Such a survey can be conducted either from the surface, from within a borehole or offshore
using specialised air guns as the seismic sources. As the computing power required to process the results of
a seismic survey has become more readily available, seismic surveys have become more common.
Founded in 2004, ARKeX is a spin-out from a collaboration between Oxford Instruments and ARK
Geophysics. ARKeX has developed an alternative to conducting a seismic survey by measuring the variation
of the earth’s gravitational field. The company’s technology is a superconducting instrument for measuring
gravity gradients which can be flown in a light aircraft, making the survey much cheaper than the seismic
equivalent.
The technology was developed between 2002 and 2005 with support from Shell, Anadarko Petroleum and
integrated Fortune 100 oil company the Hess Corporation (formerly Amerada Hess). In 2007, ARKeX
acquired its spin-off parent ARK Geophysics and has since grown to a staff of 60 people, based in
Cambridge and with other offices in Houston (US) and Sherrington (Southwest England).
Another well-known player in the field is Spectraseis, which repurposed Russian-originated passive
submarine detection technology to survey large areas for oil deposits, as a way to make expensive seismic
surveys more targeted. Since 2004 the company has raised about €30mn from private equity firm Warburg
Pincus, Statoil Technology Invest and Saudi Makamin Company (the Saudi Arabian oilfield services firm).
Historically, smaller and less well capitalised oil, gas and mining companies have gone straight to drilling
with relatively little data, owing to the costs involved with seismic surveys. Some struck it lucky; some didn’t.
With the full tensor gravimetric surveys offered by ARKeX and its competitors costing less than one per cent
of a full seismic survey, more such companies can afford better data and reduce the risk of failure. Moreover,
such surveys are quicker to conduct and can significantly reduce the time from license to well.
4D Global Energy Advisors (AUM €165mn) is a Parisian growth capital and private equity investor
specialising in the energy sector. Established in 2002, the firm targets companies active anywhere in the
hydrocarbon value chain. It will also invest in companies that offer relevant technology or services to the
hydrocarbon industry.
At nine years, 4D Global’s funds are slightly longer lived than those of most venture firms. To date, the firm
has raised three funds – an $81mn (€62mn) fund in 2003, a $181mn (€139mn) fund in 2007 and a $216mn
(€165mn) fund in 2010. Only the latter is still investing and is aiming for investments of $10-40mn (€8-31mn).
These are normally made in equity but the firm may use other equity-related instruments such as warrants,
convertible notes, mezzanine funding, etc. Although it is investing in the oil and gas industry, 4D Global will
not invest in companies whose success depends purely on the success of future exploration, nor will it
provide project finance or finance for operating assets.
July 2013
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# Company Sector Round €mn Description Investors
12 Ocapo (UK) www.e-prospects.com
Internet Services
A 11.0 Provider of performance-based customer acquisition technologies for the consumer finance and insurance industries
BOOST&Co, Management, Northzone Ventures.
Ocapo (UK), a provider of performance-based customer acquisition
technologies for the consumer finance and insurance industries, raised
£9.5mn (€11.0mn) in a Series A round led by Northzone Ventures with
support from BOOST & Co and management. The money will be used for expansion into Brazil, China,
Russia, Southeast Asia and Turkey.
Founded 2007, Ocapo serves fifteen different websites specialising in the consumer finance and insurance
industries. Ocapo has a very tight focus on industry verticals in the financial services sector. It targets only a
dozen different product types - debt management services, equity release schemes, health insurance, home
insurance, income protection, investments, life insurance, loans, mis-sold PPI, mortgages, pensions and
Personal Injury (PI) claims.
What distinguishes Ocapo from other customer acquisition services is its proprietary software and focus on
Search Engine Optimisation (SEO) and Search Engine Marketing (SEM). While SEO focuses purely on the
content and structure of a web page, SEM uses a broader range of internet marketing techniques to increase
a particular site or product’s visibility in Search Engine Results Pages (SERPs). The firm’s proprietary
software, about which it has understandably said very little, matches user web searches with products in real
time.
Ocapo, which claims to be one of the top three lead generators in the UK, runs online marketing campaigns
for over 170 global advertisers. The firm’s 35 strong team, based in London’s Docklands, is able to generate
over 60,000 leads a month. Moreover, their conversion rates (the proportion of web clicks which turn into
purchases of financial services products) can be over 20%. Their typical rates for life insurance, debt and
mis-sold PPI are 23%, 25% and 27%, respectively.
We last saw transaction leader Northzone Ventures (€130mn (2011); AUM €394mn) in December 2012 with
a €10mn round for review sharing platform Trustpilot. Well-known to readers of our bulletin, technology
investor Northzone has offices across the Nordic region in Copenhagen, Oslo and Stockholm, as well as in
London. It will, however, invest anywhere in the world. Since the firm was set up in 1996, it has backed over
75 companies.
This is the first time that venture debt provider BOOST & Co (€47mn (2013); AUM €188mn) has featured in
our bulletin. The firm was set up in 2011 by former ETV Capital and Noble Venture Finance personnel.
Based in London and Paris, it prefers to focus on a small number of life science and technology sectors:
cleantech, hardware, internet businesses, late stage drug development, and software and services. All of
BOOST’s loans are structured specifically for the deal in question. In the case of Ocapo the firm provided a
mix of debt and equity.
July 2013
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# Company Sector Round €mn Description Investors
13 Luxury for Less (UK) www.bathempire.com
Internet Services
A 9.9 Provider of bathroom products via an online platform.
ISIS Equity Partners.
Luxury for Less (UK), an e-tailer of bathroom products via
bathempire.com, raised £8.5mn (€9.9mn) in a Series A round from ISIS
Equity Partners. The money will be used for relocation and new hires.
Founded in 2006, Luxury for Less is an e-tailer of up-scale bathroom suites, furniture and related items. The
company started when serial entrepreneur Chris Li and his partner Vicky Wang were sourcing taps for a
property development project.
Initially operating on eBay, selling taps and showers from a spare room at home, the pair turned over £1mn
(€1.2mn) in their first year. In 2008 the firm relocated from Brighton on the south coast to Nuneaton in the
West Midlands, to take advantage of the area’s transport links and the availability of commercial space, and
in 2009 the pair moved to a dedicated online store at their current URL. Having relocated a couple of times
within the same area as it expanded, the firm turned over £14mn in 2012 and expects to do £20mn in 2013.
The proceeds of this round will be used firstly to relocate the firm to a 169,000 square feet complex on an
industrial estate in the West Midlands. This is more than double the size of the company’s existing base and
will allow significantly more room for warehousing, as well as enabling the firm to create and stock many
more product lines. The fit-out will include 28,000 square feet of new offices and possibly the company’s first
physical showroom. Once the new premises are commissioned, the firm plans to expand its 100-strong
workforce to around 300 over the next three years. The firm is already looking for a CTO and a marketing
director.
The firm has won a number of awards including the Daily Telegraph’s Small Business and Business Start-Up
award and the Small Online Business of the Year at the National Business Awards in 2012. Founder Chris Li
is the current Young Entrepreneur of the Year in the Growing Business Awards and also a winner of the
Nectar Small Business of the Year and Achiever of the Year awards.
From its offices in London, Birmingham and Manchester, independent private equity investor ISIS Equity
Partners (€60mn (2013); AUM €763mn) invests in British companies valued at anywhere between £2-100mn
(€2-117mn). A typical investment round will be anywhere from £2-40mn (€2-47mn). The firm is not a
technology specialist and will invest in most sectors, preferring to focus on the team ahead of the industry
sector.
ISIS originated in 1997/1998 when a small number of senior executives were given a chance to rebuild an
established private equity unit for Friends Provident. The unit was sold to its management team in 2005 as a
result of changed accounting standards.
In practice this means that ISIS’ principals have worked together for a very long time and have a strong
culture, which revolves around backing teams and relationships between people. This is reflected in the
variety of approaches the firm will take, ranging from growth equity and secondary transactions through to
MBOs and straight acquisitions.
We last saw ISIS with a €16.5mn investment in technology consultants Hurleypalmerflatt (HPF) in February
2011.
July 2013
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# Company Sector Round €mn Description Investors
14 Coldway (France) www.coldway.com
Hardware Late Stage
9.3 Provider of portable thermo-chemical cooling systems and self refrigerating containers for the transport of fresh produce and other temperature-sensitive products.
CDC Entreprises, CM-CIC Capital Finance, Emertec Gestion, Sudinnova.
Coldway (France), a developer and manufacturer of portable
thermo-chemical cooling systems for the transport of foodstuffs and
other temperature-sensitive products, raised €9.3mn in a Late Stage
round led by Ecotechnologies (managed by CDC Entreprises, now part of Bpifrance) with support from
fellow new investors CM-CIC Capital Finance and Sudinnova as well as existing investor Emertec
Gestion.
Incorporated in 2001, Coldway has developed a range of thermo-chemical cooling and heating systems,
based on research originally financed by French research body the CNRS, at its IMP-UPR laboratory in
Perpignan. The novel aspect of their technology is the use of solid-gas systems of the chloride ammoniac
type. Not only do these systems avoid the use of the environmentally unfriendly chloro-fluorocarbons (CFCs)
and hydrochlorofluorocarbons (HCFCs), which have been banned by international agreement, but they are
also more energy-efficient than competing systems and can provide more heating or cooling capacity per
unit volume.
In practice this means that the firm has been able to develop a range of self-refrigerating containers. With no
moving parts, there is no noise or vibration and maintenance is greatly reduced. Moreover, the system does
not require an electrical power supply while in operation. Some of the firm’s containers can maintain their
temperature for periods as long as ten hours.
These advantages can be very significant from a logistics point of view. For example, rather than having to
use specialised vehicles for transport, ordinary vehicles can be leased and filled with Coldway’s thermally
regulated storage systems. The firm is working with a number of partners in the pharmaceutical, food-
processing, logistics and other industries.
This is the fifth round of investment for Coldway since a small amount of angel funding in 2003 and an initial
€0.9mn institutional seed round in November 2004. By the time the firm received its first institutional
investment, it had demonstrated a prototype and sold some of its refrigerated containers to pilot clients in the
healthcare industry. As we described in our earlier coverage of Withings, transaction leader
Ecotechnologies, (€150mn (2012)) managed by CDC Entreprises (€400mn (2011); AUM €1.1bn) should now
more properly be referred to as Bpifrance (AUM €22bn) under whose name it has been subsumed. Fellow
new investor CM-CIC Capital Finance (€120mn (2006); AUM €300mn) was created in 2011 by the merger of
CIC Finance, the Bank of Vizille and IPO. Also a new investor, Sudinnova focuses on life science and
technology companies located in the south east region of France.
Existing investor Emertec Gestion (€60mn (2008); AUM €120mn) participated in both of Coldway’s €0.9mn
rounds in November 2004 and March 2006, but did not participate in the intervening rounds. Emertec was
set up in Grenoble in 1999 to stimulate start-up funding, and has since grown into a national venture capital
firm.
July 2013
Page 23 © Go4Venture Advisers 2013
# Company Sector Round €mn Description Investors
15 Grand Cru (Finland) www.grandcrugames.com
Digital Media
B 8.5 Developer of mobile social games.
Idinvest Partners, Nokia Growth Partners, Qualcomm Ventures.
Grand Cru (Finland), a developer of mobile social games, raised €8.5mn in a Series B
round led by existing investor Idinvest Partners with support from new investors Nokia
Growth Partners and Qualcomm Ventures.
Grand Cru – which the company pronounces as ‘grand crew’ – was founded in January
2011 in Helsinki and incubated by specialist health, web and games incubator Lifeline
Ventures. Lifeline, which is also based in Helsinki, incubated Finnish games developer Supercell which
featured in our May 2011 issue and completed a $130mn (€100mn) funding round in February 2013 at a
rumoured $770mn (€580mn) valuation led by Index Ventures, with Institutional Venture Partners and
Atomico joining together with existing investors.
For the past eighteen months Grand Cru has been recruiting a team of experienced mobile games
developers and putting together its debut game ‘Supernauts’. Inspired by well-known social world-building
game Minecraft and other 3D creative social games, Supernauts allows players to build their own unique
worlds whilst also travelling to a flooded Earth to rescue humans. The social aspect comes from inviting
others to see what one has built, or from working together to optimise construction resources. The game will
be free to play and is scheduled for launch on iOS during 2013.
Slightly unusually for a firm which has not yet published a game, Grand Cru has won a number of awards.
Most notable was winning the Amazon Web Services (AWS) Start-Up Challenge in 2013, but the firm also
qualified as a finalist in the 2013 London Web Summit and was named one of the hottest start-ups in Europe
by Wired Magazine.
Grand Cru has received two rounds of investment prior to this one – an undisclosed seed round from Lifeline
in May 2011 and a €1.7mn Series A round led by Idinvest in March 2012.
Part of Allianz until 2010 when it became independent, Paris-based Idinvest Partners (€281mn (2013); AUM
€4bn) has been very active recently. It has four investments in this issue of our bulletin alone. In particular,
the firm has made a number of games investments – especially in social games. Recent examples include
€5.3mn for Kobojo (France) in April 2011, $2.8mn (€2.1mn) for Plumbee (UK) in March 2012, $3.6mn
(€2.8mn) for Pretty Simple (France) in May 2011 and $7.4mn (€5.7mn) for Social Point (Spain) in June 2012.
By backing such a diverse portfolio of games, Idinvest is taking the same approach as games publishers –
backing lots of games in the anticipation that at least one will be a blockbuster, very much the way that the
venture industry used to be before so much emphasis was put on industry expertise and trying to pick
winners. Grand Cru is the only time we have seen Idinvest back a Finnish company. This further underlines
the growing trend towards investments by areas of expertise rather than geography.
Strategic investors Nokia Growth Partners (€191mn (2013); AUM €600mn) and Qualcomm Ventures (€76mn
(2011); AUM €382mn) are the investment arms of mobile manufacturer Nokia (HLSE:NOK1V) and wireless
technology giant Qualcomm (NASDAQ:QCOM), respectively.
July 2013
Page 24 © Go4Venture Advisers 2013
# Company Sector Round €mn Description Investors
16 Vivino (Denmark) www.vivino.com
Telecom Services
B 7.9 Provider of a mobile application which can recognise wine labels using image recognition technology.
Balderton Capital, Creandum, Seed Capital Management.
Vivino (Denmark), provider of a mobile application which can recognise wine
labels using image recognition technology, raised $10.3mn (€7.9mn) in a
Series B round from Balderton Capital Management, Creandum and Seed
Capital Management. The money will be used primarily for marketing throughout Europe and the Americas.
Founded in 2009, Vivino has developed an app which allows users to identify, rate and share wines they
have tasted as well as receiving personalised wine recommendations. Users take a photo of the wine label
using the Vivino app, which is available for both iOS and Android. The image is then matched against a
database of some 1.3mn wines in order to provide the user with information about the wine’s producer,
brand, name, grape varieties and vintage. The firm recently added Optical Character Recognition (OCR)
technology which has helped double the percentage of wines the app recognises to 86%.
Not only does this allow users to identify wines but it also lets them store wines they like, get personalised
wine recommendations, share their wine experiences with their friends and – crucially from an investor’s
point of view – locate the wines in nearby stores. Alongside the free version of its app, the firm also offers a
paid for version with extra functionality (such the ability to do a text search of the database).
While the functionality to add tasting notes exists, this app is targeted primarily at those who do not take their
wine too seriously rather than the committed wine buff. For this reason, the database consists primarily of
wines that can be found on the high street rather than fine wines. The idea is that the app should be popular
enough that it can be a commercial success. At the moment, Vivino users are scanning some two million
bottle labels per month compared with only 80,000 scans when the service first launched in April 2012.
Building apps has been a hobby among IT developers for some time, with many having an app on the
iTunes Store or Google Play which they have developed in their spare time. The reason that most
developers build apps in their spare time rather than giving up their day job is that they realise just how
difficult it is to make money from apps, and that most apps are doomed to obscurity.
With the recent plethora of investments in payment apps (iZettle (June 2012), mPowa, Payleven and SumUp
(August 2012)) and taxi hailing apps (Hailo (March 2012, February 2013) and myTaxi (January 2012)), app
investments are now a fixture of the European venture market. With VC firms able to pick from a huge
selection of apps, the question is whether they can pick winners.
Well-known Balderton Capital Management (€371mn (2009); AUM €1.5bn) seems to be taking a lead on app
investment. We last saw Balderton in this context in our May issue with a €10mn round for mobile social
media app Urturn. Other recent investments by Balderton include £10mn (€12mn) for WorldStores in last
month’s issue and seed money for mobile CMS Contentful and a $2.7mn (€2.1mn) in Series A money for
collaborative web operations platform Opbeat in June. Balderton’s experience at taking its start-ups into
North America may soon see Vivino being used more often in the Napa Valley than Europe.
Nordic technology investor Creandum (€135mn (2012); AUM €210mn), which focuses on consumer,
software and hardware deals, is also an investor in payments firm iZettle. We last saw Creandum in last
month’s issue with an investment in Wrappsody. Existing backer Seed Capital (€91mn (2011); AUM
€201mn) is technically early stage but able to invest up to €9mn per company over the lifetime of a deal.
July 2013
Page 25 © Go4Venture Advisers 2013
# Company Sector Round €mn Description Investors
17 Chemist Direct (UK) www.chemistdirect.co.uk
Internet Services
B 7.6 Provider of prescription medicines and health and beauty products online.
Atomico, DMG Media Investment, Lepe Partners.
Chemist Direct (UK), retailer of prescription medicines and
health and beauty products, raised $10.0mn (€7.6mn) in a
Series B round from Atomico, DMG Media Investment and Lepe Partners. The money will be used to
expand the firm’s product range and its ‘online doctor’ advisory service.
While in the US entrepreneurs traditionally start businesses out of their garage, ChemistDirect is uniquely
British in that it was started in a garden shed. When former blue-chip management consultant Mitesh Soma
visited his wife’s independent pharmacy, he realised just how high the mark-up was in high street chemists.
Given his technical background, it was obvious that here was an opportunity for a classic internet
disintermediation play.
The firm was first launched in 2007 with a personal investment of £100k (€117mn) and a bank overdraft of
£150k (€176mn). Even for an entrepreneur with a consulting background and significant personal equity in
the business, it is difficult to see a high street bank providing this sort of support today.
ChemistDirect’s turnover has now reached ‘double digit millions of pounds’ which the company and its
investors attribute to a focus on customer service. Two thirds of ChemistDirect’s sales are from repeat
customers and the firm has increased its revenues five-fold since its first institutional investment in 2009.
Apart from starting to provide veterinary pharmaceuticals 18 months ago, going forward the firm intends to
target the £35bn (€41bn) health and beauty market, which is also moving online, as exemplified by Palamon
and Sirius’ investment in Feelunique featured in our December 2012 bulletin.
Another interesting feature of this investment is that, just like Luxury for Less which we featured earlier in this
bulletin, the company is based in the West Midlands. Clearly retail businesses have strong logistical reasons
for wanting to be in the middle of the country with good transport links and infrastructure. It is notable,
however, that despite the media hype surrounding Silicon Roundabout in London, many of the investments
we feature in our bulletin are based in the same places they always have been – Silicon Fen around
Cambridge, the M4 corridor, the region around Oxford and Scotland for energy businesses.
Technology investor Atomico (€126mn (2010)) first became involved with ChemistDirect in early 2009 when
it was the sole investor in the firm’s £3mn (€4.4mn) Series A round. Since it was founded by Skype co-
founder Niklas Zennström in 2006, Atomico has become a truly global investor with offices in Beijing,
Istanbul, London, Sao Paulo and Tokyo. Many of the best known and most successful VC firms have taken a
similar approach over the last five years, not just to gain exposure to emerging markets but also because
their investee companies are demanding local investors when they wish to expand into these markets. A
classic example of this is Atomico’s portfolio company Fab, which recently insisted on Asian investors for its
$150mn (€115mn) Series D round.
DMG Media Investment is the investment division of newspaper publisher Daily Mail & General Trust, while
Lepe Partners describes itself as an independent merchant bank for media and consumer entrepreneurs.
July 2013
Page 26 © Go4Venture Advisers 2013
# Company Sector Round €mn Description Investors
18 XConnect Global Networks (UK) www.xconnect.net
Telecom Services
C 7.6 Provider of voice over internet protocol (VoIP) peering and clearing service.
Crescent Point Group, Young Associates.
XConnect Global Networks (UK), a provider of a Voice over IP (VoIP)
peering and clearing service, raised $10.0mn (€7.6mn) in a Series C
round from existing investor the Crescent Point Group and new investor
Young Associates.
Back in the 1990s, IP traffic had to be limited to plain text as there was not enough bandwidth for anything
else. As bandwidth increased, websites became more graphical, and later on people started using the
internet’s IP communications infrastructure to send things other than web-pages. In other words, people
started developing applications like Skype and other Voice over IP (VoIP) services, broadcasting using
Internet Multi-casting Services (IMS) and using video-conferencing systems. In the corporate world there has
long been a drive for so-called Unified Communications (UC).
This is fine if both all those who want to communicate are sitting in the same office on the latest corporate
fibre-to-the-machine network, but they typically are not. More often they are on different ‘islands of IP’ and
the problem is how to communicate between the two without using the legacy PSTN (Public Switched
Telephone Network), which is inefficient, costly and low bandwidth.
Founded in 2005, XConnect provides a secure, neutral and trusted interconnection between the IP networks
of different service providers. This means that rich IP communications are not confined to individual ‘islands
of IP’. In addition, XConnect provides ENUM (E.164 Number to URI Mapping) services which translate
between telephone numbers in the E.164 standard and the URIs (Uniform Resource Identifiers) used for
internet telephony. This means improved call quality by being able to route calls as ‘IP all the way.’
XConnect also takes care of managing multiple interconnect agreements and settlement rates. While
currently only some 5-15% of calls have IP at both ends, this proportion is set to increase.
With headquarters in London and offices in the USA, EMEA and Asia, XConnect's customer base spans
more than 70 countries. Customers include over a hundred major carriers and service providers such as
AT&T, TalkTalk and Vonage. Competitors include Arbinet, IntelePeer, NetNumber, Spring-PIN, Syniverse
and Telcordia, amongst others.
New investor Young Associates (no web site) is an independent private equity firm specialising in telecom,
internet and IT services companies in the UK led by Lord Young of Graffham. In addition to spending twenty
years as an entrepreneur before serving in the British Government in the 1980s, Lord Young also spent five
years as Executive Chairman of Cable & Wireless.
While Lord Young is notoriously secretive about his investments, the firm is known to have invested in
Spectrum Interactive (a WiFi operator sold to Arqiva in 2012) and Eurotel (a telecom service provider sold to
private equity in 2007). Other investments include Cambridge Display Technology, KashFlow, Neos
Networks and Pixology.
Existing investor Crescent Point Group is a sector-agnostic investment management group targeting
emerging market investments in the Asia-Pacific and MENA regions.
July 2013
Page 27 © Go4Venture Advisers 2013
Disclosed European VC & PE-Backed TMT M&A Transactions (2013)
> £30mn / €35mn / $50mn
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Monthly Number # 1 3 3 4 5 7 3
Value €mn 360 202 275 3,479 1,746 1,728 625
Median €mn 360 72 83 157 100 129 67
Cum. Number # 1 4 7 11 16 23 26
Value €mn 360 562 837 4,315 6,061 7,790 8,414
Median €mn 360 65 85 83 94 94 122
2.1 - M&A Activity Index
0
5,000
10,000
15,000
20,000
25,000
30,000
0
50
100
150
200
250
300
350
400
450
500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Dea
l Val
ue
per
Mo
nth
(€m
n)
# o
f D
eals
per
Mo
nth
Disclosed Global TMT M&A Transactions European Deals 2012 (€mn) European Deals 2013 (€mn)
Global Deals 2012 (€mn) Global Deals 2013 (€mn)
# of Global Deals 2012 # of Global Deals 2013
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
0
2
4
6
8
10
12
14
16
18
20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Dea
l Val
ue
per
Mo
nth
(€m
n)
# o
f D
eals
per
Mo
nth
Disclosed European VC & PE-Backed TMT M&A Transactions Value of Deals 2012 (€mn)
Value of Deals 2013 (€mn)
# of Deals 2012
# of Deals 2013
>£30mn / €35mn / $50mn
(1) (3) (2)
Source: Capital IQ; Go4Venture Advisers Analysis (1) Includes Dell acquisition by Silver Lake for €22.3bn (2013)
(1)
Source: Capital IQ; The 451 Group; VentureSource (including transaction value estimates); Go4Venture Advisers Analysis (1) Includes NDS acquisition by Cisco Systems for €3.8bn (2012) (2) Includes ista International acquisition by CVC Capital Partners for €3.1bn (2013) (3) Includes Elster acquisition by Melrose for €2.3bn (2012)
July 2013
Page 28 © Go4Venture Advisers 2013
2.2 - Top 5 Global TMT M&A Transactions Summary
Ranked by Price (€mn) in descending order (includes announced and/or completed deals)
# Target & Acquirer Target Sector Price (€mn)
Rev. (€mn) P/R
Noteworthy Sellers
1 Nokia Siemens Networks (Netherlands) www.nokiasiemensnetworks.com Nokia (Finland OMX:NOK1V) www.nokia.com
Telecoms Equipment
2,964 13,227 0.2x -
Nokia, a multinational communications and IT corporation (and until the evolution of smart phones, the world’s largest mobile phone manufacturer) acquired Siemens' 50% stake in their joint venture, Nokia Siemens Networks. Nokia Siemens Networks was established in 2007, combining Nokia's Networks business group and Siemens' Communications division (fixed and mobile networks business units only), to focus on wired and wireless infrastructure. It quickly proceeded with the acquisitions of Atrica, an Israeli provider of carrier Ethernet transport systems for metro networks (c.€75mn, 2008), Apertio, a UK data platform and apps provider for telecoms operators (c.€140mn, 2008), and the wireless network equipment division of Motorola (c.€745mn, 2011). Due to harsh competition from other mobile network giants, including Sweden's Ericsson and China's Huawei Technologies and ZTE, the joint venture underwent a restructuring in 2011, cutting 23% of its workforce (17,000 jobs) and narrowing its focus to mobile broadband and related services. Since the restructuring, Nokia Siemens Networks has made a comeback, reporting €820mn operating profit in 2012 (a 145% increase from 2011), primarily driven by its LTE carrier deals in the US, Japan and South Korea, as well as its additional networks deployed in more than 150 countries. Following the acquisition, Nokia Siemens Networks has become a wholly owned subsidiary of Nokia (renamed to NSN - Nokia Solutions and Networks), and while the governance of the company is expected to remain unchanged, NSN is considering a further reduction of 8,500 employees. Through the reunion, Nokia aims to become the last integrated package wireless company in the West, able to offer every element of the mobile chain, from handset to base station to mobile packet core. It is worth noting that this transaction also highlights the unclear path of the global mobile industry: while in the past it was common for the world’s biggest network equipment vendors to also be the biggest mobile phone makers – as is still the case with Asian vendors Huawei, ZTE or Samsung – in recent years, large vendors such as Ericsson, Motorola, Alcatel, Siemens have either sold or spun out their handset divisions. 2 Sourcefire (US NASDAQ:FIRE)
www.sourcefire.com CISCO (US NASDAQ:CSCO) www.cisco.com
Security 1,832 171 10.7x -
Cisco, one of the world's largest enterprise networking and communications technology providers, will acquire Sourcefire, a security software and hardware provider. Founded in 2001, US-based Sourcefire provides government, enterprise and consumer hardware and software for securing IT networks and endpoints. Its FirePOWER security appliance line consists of physical devices connected to (and usually at the entry point of) a network, capable of running Advanced Malware Protection (AMP) software that logs security events and prevents zero-day (previously unidentified) virus incursion. Sourcefire also offers Snort (an open-source intrusion detection software), as well as consumer endpoint security through the Immunet brand. It is currently installed across 2,500 large enterprises and has a sizeable consumer user base through Immunet; Snort has also been downloaded 4mn times since launch. Sourcefire has over 560 employees and had revenues of $223mn (c.€171mn) in 2012, up 35% from 2011 and forecasted to grow 50% year-on-year. Through this acquisition, Cisco aims to cross-sell security to its large enterprise and government client base, which it admits generally do not buy security products from its Ironport subsidiary. Especially attractive is the ability to offer AMP software or AMP-enabled hardware, enabling Cisco to provide insurance against the fact that traditional anti-malware programs increasingly fail against advanced persistent threats (e.g. DDoS strikes) and zero-day viruses. Installing AMP software on Cisco's clients' networks will allow its Security Intelligence Operations (SIO) to update a cloud definition database almost as soon as malware is detected by any Cisco-protected company, and use these definitions to protect other clients. Furthermore, Cisco expects to be able to cross-sell its own products into Sourcefire's customer base. Sourcefire is Cisco's seventh and largest acquisition in 2013, bringing the total reported to c.$3.5bn (c.€2.7bn), as well as its second security acquisition this year (following the acquisition of Cognitive Security for an undisclosed sum in January 2013). We also covered Cisco's acquisition of Ubiquisys for $310mn (c.€238mn) and Joulex $107mn (c.€82mn) in our April and May issues, respectively.
July 2013
Page 29 © Go4Venture Advisers 2013
# Target & Acquirer Target Sector Price (€mn)
Rev. (€mn) P/R
Noteworthy Sellers
3 Harland Financial Solutions (US) www.harlandfinancialsolutions.com Davis + Henderson (Canada TSX:DH) www.dhif.com
Application Software
918 227 4.0x -
Davis + Henderson (D+H), a provider of banking, lending processing and payment software, will acquire Harland Financial Solutions (HFS), a provider of lending and compliance, core banking and channel management software, as well as related services. HFS was founded in 2000, when John H. Harland Company, its original parent, acquired Concentrex (c.€125mn, 2000), a provider of software and services to financial institutions, and combined its existing software businesses with Concentrex’s capabilities. Today, operating as a subsidiary of Harland Clarke Holdings – itself a subsidiary of MacAndrews & Forbes (the holding company with a diversified portfolio of public and private companies, owned by businessman and investor Ronald Perelman) – HFS offers its lending and core banking technology to over 6,000 financial institutions. Its lending platform includes LaserPro®, an automated loan compliance solution, while its core banking platform supports a wide range of customer-related activities, such as customer account openings, payment processing, etc. With 1,350 employees, 16 offices in the US and 3 more in Ireland, Israel and India, and $297mn (c.€227mn) in 2012 revenue, HFS claims that it is the fourth-largest core banking technology company in the US. On D+H’s side, D+H claims to be the largest provider of personal and business checks in Canada, having aggressively broadened its suite of solutions with a number of strategic acquisitions. HFS is expected to provide 5,400 additional US banking customers, bringing D+H's total client base to over 6,200 in North America (after accounting for shared relationships) and contribute high, single-digit earnings growth in 2014, with pro forma 2012 combined revenue of approximately $1.1bn (c.€841mn). This acquisition will also extend D+H's product offering, as it does not currently address core banking functions. This is by far D+H's largest acquisition to date, followed by that of Filogix, a provider of information and transaction technology for the residential mortgages and real estate markets in Canada (c.€170mn, 2006) and Mortgagebot, a provider of web-based mortgage Point-Of-Sale (POS) solutions to banks and credit unions in the US (c.€165mn, 2011). D+H stated that it may also make smaller US “bolt-on” acquisitions in the near future.
4 Digital Insight (US) www.digitalinsight.com Thoma Bravo (US) www.thomabravo.com
Application Software
784 289 2.7x -
Thoma Bravo, a Chicago-based middle-market private equity firm, acquired Digital Insight (previously the Financial Services division of Intuit, a developer of financial and tax preparation software for individuals, professionals and small businesses), to form a stand-alone company that provides digital banking and payment capabilities to financial institutions. Founded in 1995 and originally backed by Menlo Ventures and HarbourVest Partners, Digital Insight floated on NASDAQ in 1999 and remained a public company until its acquisition by Intuit in 2007 for $1.4bn (c.€986mn). The company started as a pioneering Internet banking provider and today has grown to become one of the largest providers of Online Financial Management (OFM) consumer and business solutions, distributed through c.1,800 US financial institutions. Its consumer solutions have 11mn users and include FinanceWorks™ (which transforms a financial institution's website into a financial management hub for consumers, allowing them to manage all financial accounts in one place leveraging connectivity to 16,000 financial institutions), TurboTax for Online Banking™ (according to the company, the only tax preparation software designed to integrate with the institution's Internet Banking platform) and Mobile Banking Solutions (SMS and Consumer Mobile Web Banking). Its business solutions cover a wide range of business banking needs, from financial management to customer service and security offerings. It is also worth noting the success of the company's mobile banking suite, which includes 600 applications in the Apple App Store and Google Play, adopted by more than 4mn customers. In 2012, Digital Insight had 730 employees and $378mn in revenues (c.€290mn). The divestment is part of an ongoing reorganisation by Intuit, following a decline in profitability, through which it intends to refocus on its tax-preparation and small business accounting activities (and as part of which it has also announced plans to sell its Health group). It comes as little surprise as the Financial Services division had consistently underperformed others. From Thoma Bravo’s perspective, this acquisition fits its focus on application and infrastructure software and financial and business services. In software, it has invested in 27 companies that have completed 62 add-on acquisitions to produce total annual pre-tax profits of c.$1bn (c.€765mn).Similarly, it plans to expand Digital Insight's offering for financial institutions, organically and through strategic acquisitions. Thoma Bravo last featured in our newsletter for its €864mn acquisition of Deltek (a US-based provider of enterprise software) in August 2012.
July 2013
Page 30 © Go4Venture Advisers 2013
# Target & Acquirer Target Sector Price (€mn)
Rev. (€mn) P/R
Noteworthy Sellers
5 Host Europe WVS (UK) www.hosteuropegroup.com Cinven (UK) www.cinven.com
Internet Services
511 N/A N/A Montagu Private Equity.
Cinven, a private equity firm, will acquire Host Europe, a cloud host and server colocation provider. Host Europe Group was founded in 1997 and currently provides cloud application hosting, website hosting and server colocation services to SMEs in Europe and North America. It operates via its brands 123-reg, BrandFortress, Domainbox, Domainmonster.com, Heart Internet, Host Europe, RedCoruna and Webfusion, and has five business units: domains, application hosting, cloud hosting, managed hosting and reseller hosting. Host Europe has over one million customers and c.600 employees. It claims to be the largest privately owned hosting company in Europe, with the majority of its revenues coming from the UK and Germany. The company has achieved a CAGR of 16% in revenues over the past four years, while also increasing EBITDA margins. Since Montagu Private Equity financed Host Europe’s €267mn MBO from Oakley Capital in 2010, the company has grown its business through five acquisitions: web hosting providers Heart Internet (c.€25mn, 2011), Dynamic-net (undisclosed amount, 2011) and RedCoruna (undisclosed amount, 2012), domain name registrar and management provider Mesh Digital (including Domainbox and Domainmonster.com, for an undisclosed amount in 2003), and the assets of the virtualisation provider Vanager (€2.4mn, 2010). Host Europe fits Cinven's general acquisition strategy (buyouts of European companies with enterprise values greater than €300mn), and allows it to capture value from the expansion of European cloud hosting services. We have recently covered three cloud hosting acquisitions: Peer 1 Hosting by Cogeco for €68mn and Star by Claranet for €462mn in our November and December 2012 HTI issues, respectively, as well as Nebula by Ratos for €83mn in our March 2013 issue. Cinven believes that Host Europe is well placed to grow with its support. Additional information about this deal can be found in the Headline European VC & PE Backed M&A Transactions section.
Source: Capital IQ; The 451 Group; Go4Venture Advisers Analysis
Key Bold indicates name of Target Italic indicates name of Acquirer P/R – Price / Last 12 Months Revenues E – Estimated
July 2013
Page 31 © Go4Venture Advisers 2013
2.3 - Headline European VC & PE-Backed M&A Transactions
(> £30mn / €35mn / $50mn), includes announced and/or completed deals where price is available
# Target & Acquirer Target Sector
Price (€mn)
LTM Rev.
(€mn) P/R Funding
(€mn) P/F Noteworthy Sellers 1 Host Europe WVS (UK)
www.hosteuropegroup.com Cinven (UK) www.cinven.com
Internet Services
511 N/A N/A 267 1.9x Montagu Private Equity.
2 AlloCiné (France) www.AlloCiné.fr Fimalac (France) www.fimalac.com
Internet Services
67 20 3.3x 120 0.6x Tiger Global Management.
3 Opta Sportsdata (UK) www.optasportsdata.com Perform Group (UK LSE:PER) www.performgroup.co.uk
Internet Services
47 15 3.1x 2 19.2x Albion Ventures.
Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis
Key Bold indicates name of Target P/R – Price / Last 12 Months Revenues Italic indicates name of Acquirer P/F – Price / Total Funding E – Estimated P/F>1x indicates an investment where all investors have made a positive return on their investment. P/F<1x indicates poor returns for some, but early or late investor entrants may still show a positive return on their investment.
July 2013
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# Target & Acquirer Target Sector Price (€mn)
LTM Rev.
(€mn) P/R Funding
(€mn) P/F Noteworthy Sellers
1 Host Europe WVS (UK) www.hosteuropegroup.com Cinven (UK) www.cinven.com
Internet Services
511 N/A N/A 267 1.9x Montagu Private Equity.
Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Advisers Analysis
Host Europe Group (UK), a provider of colocation and web application hosting services, will be acquired by
Cinven (UK) for €511mn. The seller is Montagu Private Equity.
Founded in 1997, UK-based Host Europe Group provides colocation and web
application hosting services to businesses (and particularly Small and Medium
Enterprises (SMEs) in Europe and North America. It operates via its brands
123-reg, BrandFortress, Domainbox, Domainmonster.com, Heart Internet, Host
Europe, RedCoruna and Webfusion, and has five business units: domains,
application hosting, cloud hosting, managed hosting and reseller hosting. The
group has over one million customers and about 600 employees, and claims to be the largest privately
owned hosting company in Europe, with the majority of its revenues from the UK and Germany. The
company has achieved revenue CAGR of 16% over the past four years, while increasing EBITDA margins.
Montagu became involved in 2010 when it financed Host Europe’s €267mn MBO from Oakley Capital. Since
then, it has grown the business through five acquisitions: web hosting providers Heart Internet (c.€25mn,
2011), Dynamic-net (undisclosed amount, 2011) and RedCoruna (undisclosed amount, 2012), domain name
registrar and management provider Mesh Digital (including Domainbox and Domainmonster.com, for an
undisclosed amount in 2003), and the assets of the virtualisation provider Vanager (€2.4mn, 2010).
Founded in 1977, UK-based Cinven is a private equity firm focused on buyouts
of large companies with substantial operations in Europe. It typically invests in
companies with an enterprise value greater than €300mn, requiring an equity
investment of €100mn or more. It focuses on the Business Services, Consumer,
Financial Services, Healthcare, Industrials, and Technology, Media and
Telecommunications sectors, and its portfolio companies employ c.73,000 staff.
Since its founding, it has completed over 103 buyout investments with a combined enterprise value in excess
of €70bn. Cinven currently invests through its €5.3bn fifth fund and has already completed four acquisitions
in 2013, this one being the second largest behind that of provider of ceramic components CeramTec
(c.€1.5bn, June).
Cinven’s acquisition of Host Europe Group is underpinned by the belief that the highly fragmented European
hosting industry will continue to expand rapidly, driven by the growing adoption of cloud computing and
increased web-presence amongst SMEs. It further believes that due to its strong track record, the company
is well placed to continue growing organically and via acquisitions.
Montagu Private Equity (€2.5bn, (2011); AUM €4.7bn), the former buy-out arm of HSBC, is a UK-based
private equity firm that focuses on MBOs of middle market companies. It typically invests in companies worth
€100mn to €1bn, based in Northern Europe (with a focus on the UK, France, Germany and the Nordic
region) and Latin America. Since its founding in 1968, it has invested in over 400 companies.
July 2013
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Target & Acquirer Target Sector
Price (€mn)
LTM Rev.
(€mn) P/R Funding
(€mn) P/F Noteworthy Sellers 2 AlloCiné (France)
www.AlloCiné.fr Fimalac (France) www.fimalac.com
Internet Services
67 20 3.3x 120 0.6x Tiger Global Management.
Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Advisers Analysis
AlloCiné (France), an operator of film information portals, will be acquired by Fimalac (France
ENXTPA:FIM) for €67mn. The seller is Tiger Global Management.
Founded in 1993, France-based AlloCiné operates an interactive website that
provides free information about films (such as reviews, release dates, etc.) and
e-commerce services (i.e. advanced ticket purchasing). Since its founding, the
company has completed five acquisitions. Today, it has operations in France,
the UK (as Screenrush), Germany (as Filmstarts), Spain (as SensaCine),
Russia (as Kinopoisk), Turkey (as Beyazperde) and Brazil (as AdoroCinema).
According to digital analytics company comScore, it is the world’s third largest entertainment information
platform with more than 25mn unique monthly visitors. In 2012, its revenue grew by 150% to €20mn. Tiger
Global Management acquired AlloCiné from management and CITA Gestion for €120mn in 2007.
France-based Fimalac is a holding company currently organised into three
operating segments: financial services, via Fitch Group which has itself two
business lines – data and analytics (Fitch Solutions) and credit ratings (Fitch
Ratings); real estate, via North Colonnade; and other activities, such as facilities
operator Vega and three other 40%-owned associated companies: production
companies Gilbert Coullier and Auguri, as well as hotels and leisure provider
Groupe Lucien Barrière. With respect to digital entertainment, Fimalac operates web portal group Webedia
and woman’s web portal Terrafemina. Fimalac operates internationally with operations in the US, Europe,
Asia and Latin America with c.2,500 employees as of December 2012. The company has completed 10
acquisitions to date, AlloCiné being the third largest behind those of hand tools manufacturer Facom
(€1.5bn,1999) and hotels/leisure company Groupe Lucien Barrière (€188mn, 2011).
The acquisition of AlloCiné will allow Fimalac to form a new group with its web subsidiaries Webedia and
Terrafemina, creating France’s fourth largest digital media business. Outside France, Fimalac would use its
expertise to drive faster growth in the new group, in countries such as Latin America, Germany, Turkey and
Brazil. This sale may be motivated by Tiger’s investment cycle, as it has already held AlloCiné for more than
five years, while the low price suggests an uncompetitive sale process; Tiger was rumoured to have started
the process as far back as March 2012. The price may also have been impacted by the fact that AlloCiné’s
40% stake in Kinopoisk (a Russian counterpart) will be sold separately, though this remains to be confirmed.
Tiger Global Management (€1.2bn (2012); AUM €4.6bn) is a privately owned hedge fund sponsor which also
invests in public and private equity markets. It invests across the globe in various sectors, including IT, real
estate, telecommunications, energy, media and retailing. Its current investments include Facebook, Google,
Apple and Amazon. Tiger Global Management was founded in 2001 and is based in New York, with an
additional office in Beijing, China. It last featured in our bulletin in September 2012 for investing in the
€31.5mn financing round of ivi.ru Media (a video and music streaming service).
July 2013
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# Target & Acquirer Target Sector
Price (€mn)
LTM Rev.
(€mn) P/R Funding
(€mn) P/F Noteworthy Sellers 3 Opta Sportsdata (UK)
www.optasportsdata.com Perform Group (UK LSE:PER) www.performgroup.co.uk
Internet Services
47 15 3.1x 2 19.2x Albion Ventures.
Source: Capital IQ, The 451 Group, VentureSource; Go4Venture Advisers Analysis
Opta Sportsdata (UK), a provider of online live sports data and analysis, will be acquired by Perform
Group (UK LSE:PER) for £40mn ( €47mn). The seller is Albion Ventures.
Founded in 1996, UK-based Opta Sportsdata (Opta) provides online live sports
data and analysis to the media sector and to sports clubs, leagues and
federations. It tracks key player and team performance statistics such as
distance covered, shots taken and defenders beaten. The data and analysis it
provides is used by media companies to highlight trends, as well as by sports
clubs (e.g. Arsenal and PSG), to evaluate individual and team performances.
80% of Opta’s sales come from its media products arm, which supplies data to websites, broadcast feeds
and databases. The other 20% comes from scouting and performance tools sold to professional football
clubs. With additional offices in France, Germany and the US, it has over 300 corporate clients and 600,000
Twitter followers. Its 2013 revenue grew 16% to £12.5mn (c.€15mn) and its EBITDA grew 46% to £1.3mn
(€1.6mn). Albion Ventures has backed Opta since 2008, having invested £2.1mn (€2.5mn) over three
funding rounds.
UK-based Perform commercialises sports content across digital platforms. It
licenses a large portfolio of digital sports rights related to more than 200 sports
leagues and events. It also creates a range of products combining sports,
video, editorial and data content, that are distributed directly to consumers and
to business clients (sports bodies, rights agencies, publishers, etc.). In 2012,
Perform had c.900 employees; its revenue and EBITDA grew 47% and 246% to
£151.6mn (c.€187mn) and £37.5mn (c.€46mn), respectively. It has recently been very acquisitive,
completing 5 deals since 2012, this being the second largest after that of real time sports data provider
RunningBall Holding (€121mn, June 2012).
The acquisition is expected to strengthen Perform’s content distribution offering and its European business,
which has historically been advertising and betting focused with limited distribution revenues from the media
sector. Perform also plans to re-launch Opta as a multi-lingual, multi-platform destination for fans wanting to
dive deep into sports data, complementing its other global football destinations: Goal.com (global football
news) and Soccerway (global football fixtures, scores and form).
Albion Ventures (€58mn (2006); €270mn AUM) is one of the UK’s largest managers of Venture Capital
Trusts (tax efficient, closed-end collective investment schemes listed on the LSE) with seven currently under
management. Created in 2009 by the spin-off of Close Ventures from Close Brothers Group, Albion acts as a
sector-agnostic VC investing £1-10mn (€1-11mn) per company. The last time it featured in our bulletin was
in April for participating in the €8.7mn financing round of DySISmedical (developer of non-invasive imaging
systems for the in-vivo detection of cervical cancer).
July 2013
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List of Acronyms
Financial Terms:
k: used as abbreviation for 1,000 (for example, €1k means €1,000)
mn: million
bn: billion
AUM: Assets Under Management
CAGR: Compound Annual Growth Rate
EBIT: Earnings Before Interest and Tax
EBITDA: Earnings before Interest, Taxes, Depreciation and Amortisation
ECM: Equity Capital Markets
EIS: Enterprise Investment Scheme
EV: Enterprise Value
IPO: Initial Public Offering
LBO: Leveraged Buyout
MBO: Management Buyout
LTM: Last Twelve Months
M&A: Mergers and Acquisitions
P/E: Price to Earnings ratio
P/F: Price to Funding ratio
PE: Private Equity
PIPE: Private Investment in Public Equity
VC: Venture Capital
Business / Technical Terms:
B2B: Business-to-Business
B2C: Business-to-Consumer
BPE: Business Process Excellence
ETS: Enterprise Transactions Systems
BPO: Business Process Outsourcing
CDN: Content Distribution Network
CPI: Cost Per Install
eCPMs: earnings per thousand impressions
ENUM: E.164 Number to URI Mapping
CRM: Customer Relationship Management
July 2013
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CRO: Contract Research Organisation
ICs: Integrated Circuits
IP: Intellectual Property
LTV: LifeTime Value
MCUs: MicroController Units
rAAV: recombinant Adeno-Associated Virus
RF: Radio Frequency
IaaS: Infrastructure-as-a-Service
IMS: Internet Multi-casting Services
PaaS: Platform-as-a-Service
NAS: Network Attached Storage
SaaS: Software-as-a-Service
SMEs: Small and Medium Enterprises
VoIP: Voice over Internet Protocol
Other:
CIS: Commonwealth of Independent States
July 2013
Page 37 © Go4Venture Advisers 2013
Go4Venture Advisers LLP
48 Charles Street +44 (0)20 7529 5400
Berkeley Square [email protected]
London
W1J 5EN
This report was published on August 30, 2013
Disclaimer
This report has been prepared and issued by Go4Venture Advisers LLP who are authorised and regulated by the Financial Conduct Authority.
All information used in the publication of this report, has been compiled from publicly available sources that are believed to be reliable, however no representation, warranty, or undertaking, express or limited is given as to the accuracy or completeness of the information or opinions contained in this report. Opinions contained in this report represent those of Go4Venture Advisers LLP at the time of publication. This research is non-objective. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment. Furthermore, as the information contained in this document is strictly confidential it may not be reproduced or further distributed.
The value of investments and any income generated may go down as well as up. Past performance is not necessarily a guide to future performance. Investors may not get back the amount invested. This publication is not intended to be relied upon in making any specific investment or other decisions. Appropriate independent advice should be obtained before making any such decision.
This report has been compiled by Jean-Michel Deligny, Managing Director – for and on behalf of Go4Venture Advisers.
Copyright: 2013 Go4Venture Advisers. All rights reserved.
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