1. October 2013
Technology / Media / Telecoms / Internet / Healthcare / Cleantech / Materials
Go4Venture Advisers’ European
Venture & Growth Equity Market
Monthly Bulletin
October 2013
Published by Go4Venture Advisers Research, the Equity Research unit of
Go4Venture Advisers LLP.
About Go4Venture Advisers
Providing innovative, fast-growing companies and
their investors with independent corporate finance advice
to help them evaluate, develop and execute growth strategies
Equity Capital Markets (ECM)
 Equity private placements
 Growth equity financings and secondaries
 Pre-IPO advisory
Mergers & Acquisitions (M&A)
 Sellside
 Buyside / Buy and build
 Valuation services
Go4Venture Advisers LLP is authorised and regulated by the
Financial Conduct Authority (FCA).
© Go4Venture Advisers 2013

2. October 2013
Contents
This Month in Brief
2
Investments
1.1 - Headline Transactions Index (HTI)
5
1.2 - Large Transactions Summary
6
1.3 - Large Transactions Profiles
7
M&A Transactions
2.1 - M&A Activity Index
13
2.2 - Top 5 Global TMT M&A Transactions Summary
14
Headline European VC & PE-Backed M&A Transactions:
2.3 - Summary
17
2.4 - Profiles
18
List of Acronyms
21
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 g4vBulletin@go4venture.com.
© Go4Venture Advisers 2013
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3. October 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 $50mn or more.
European Market: Growth Now Slowing Down
Something unusual happened in the Headline Transactions Index (HTI) in October: we had for the first
time in the past 5 years a sharp slowdown in year-on-year investment growth from one month to the
next. Not only was the overall amount down vs. September but we also had far fewer Large HTI
Transactions to write up, partly because a higher than normal number of deals were just below our threshold
of £5mn / €7.5mn / $10mn. On the exit front, October was also extremely uneventful, were it not for
the Supercell transaction valuing the company at $3bn (€2.2bn).
Investment
Looking at the upcoming figures for November (dominated by the $250mn (€183mn) raised by Spotify –
more on that in our next issue), October looks like something of an anomaly but draws attention to two
interesting trends:

The rate of growth in the European Growth Equity and VC market has been now slowing
down for the past three months. Just like we noted an acceleration of the market from summer
2012 on, we now see a deceleration since summer 2013. In a way, we see this as an encouraging
sign of overall discipline in a market, which we have felt was frothy for the past year; and

The market is increasingly dominated by a handful of very large transactions, making the HTI
more susceptible to month-on-month swings. What we call “Landmark Transactions” (> €20mn)
now represent close to 50% of the overall investment amount captured in the HTI (so probably
something like 40% of the total market).
The continuing healthy state of the market is confirmed by a record 8 new funds of all kinds announcing
first closings, including:

Early-Stage Funds – Examples include Project A (Germany) adding €30mn from Axel Springer to the
€50mn already received from Otto Group. And Episode 1, a new UK-based Enterprise Capital Fund
(with 2/3 public matching money) from a group of high-profile British entrepreneurs;

Mainstream VC Funds – For instance Idinvest Digital Fund II (France), which closed with €30mn on
its way to €100mn (in part brought by Lagardère Group);

Later-Stage Funds – Such as SAP Ventures II with €425mn from one limited partner, SAP, focusing
on software technologies worldwide. Or Oakley Capital (UK), with a €195mn first close from its
publicly-listed feeder fund and a target of €500mn. And Vinci Capital – Renaissance Technologies 4
(Switzerland), which had a first closing at €50mn (with a target of €80mn) for investment in Swiss
SMEs; and

© Go4Venture Advisers 2013
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4. October 2013

Thematic Funds – London-based Environmental Technology Fund (ETF) announced the first closing
of its second cleantech fund at €70mn. Ambienta (Italy) also raised its second fund, with a first
closing at c.€150mn, to invest in cleantech assets in Italy, Germany and the UK.
In terms of Large HTI deals, the 6 highlighted in this issue represent quite a balanced spread, from a
country, sector and stage standpoint. It is worth pointing out that 3 of the 6 are Landmark Transactions (a
higher proportion than usual), with Skyscanner as a tremendous flagbearer for the new face of
European venture. Here is a great example of what can be done in Europe extremely capital efficiently (the
previous round was only £2.5mn (€3.5mn)), even in a global space hotly contested by US suppliers, with the
ultimate reward: a marquee investor such as Sequoia Capital joining in.
For those who closely watch European growth equity and venture financing, we know that Europe has quite
a few gems in the making which will transform the European venture landscape.
The challenge is of course to build the next generation, as well as finding new ways to identify and grow
these seeds to their full potential. One such initiative with which we are associated is the Investor Showcase
we are arranging with professional tradeshow organiser ISE in February 2014.
Meet 20 World-Class Companies Active in Smart Buildings, Connected Homes, Digital
Signage and Professional Electronics
On Monday February 3, 2014 in Amsterdam, Go4Venture Advisers will partner with ISE to showcase 20
of the world’s most exciting companies in the space of professional electronic systems. The
companies will be primarily selected from the attendees of Integrated Systems Europe 2014, the world’s
largest electronics tradeshow reserved for professionals: 900 exhibitors, over 45,000 attendees.
Companies wishing to apply to present, as well as financial and strategic investors and other
participants, can register at www.ise.go4venture.com.
Exits
As has now been a common theme in our recent issues, the tech M&A exit front has been flat for the whole
year. October was as dull as any other month except for the Supercell big bang: SoftBank taking 51%
of Supercell, the Finnish gaming wunderkind. This transaction is remarkable in more ways than one, in that it
is:

An outstanding VC exit valuing the company at €2.2bn – this is one of the biggest ever European
VC exits after Skype’s exit to Microsoft and Yandex’s IPO;

A company generating truly extraordinary financial performance: nearly twice as much
revenues in Q1 2013 as in the whole of 2012, with an insane EBIT margin of 60% – all driven by two
games;

A rare case of a European VC exit making it to the Top 5 Global TMT M&A Transactions league
table; and

The only example of a buyer, SoftBank, making it to the Top 5 Global TMT Transactions twice
in one month. This is a reflection of the incredible drive of its founder and CEO, Masayoshi Son,
who recently announced that SoftBank aims to become the world’s largest company as measured by
EBIT, sales or market capitalisation.
© Go4Venture Advisers 2013
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5. October 2013
The only other October European VC / Growth Equity exit paled in comparison: ISIS Private Equity sold
online holiday retailer On the Beach to Inflexion Partners for €86mn. On one hand, very mundane: it could be
seen as yet another lower mid-market private equity player selling to another – how unexciting for tech
people. On the other hand, this is exactly what the tech VC world needs to get better at doing:

Creating more sizeable companies with more predictable outcomes more regularly; and

In order to have the time to build substantial companies, being prepared to offer liquidity
opportunities to earlier shareholders. Of course this is easier to engineer in the stable cash flow
world of late-stage companies, where buyers and sellers can agree on a “reasonable” price. Venture
valuations are much less stable but they are also moving much faster, allowing new investors to take
higher risks on both new and secondary money as a price to pay to get into attractive
transactions. We see, for example, VCs buying out earlier business angels (if only to reduce the
number of shareholders around the table). It is only a matter of time before this happens more
regularly between VCs, say a larger fund buying out a small regional player, or a later-stage fund
creating liquidity for an early-stage VC.
The blurring border between late-stage VCs and lower mid-market PE funds is bringing a new DNA to the
world of European venture – let’s take advantage of it.
Enjoy the reading. Please direct any questions or comments to g4vBulletin@go4venture.com. If you do not
wish to receive future HTI updates from us, please send an email with the title "unsubscribe" to
g4vBulletin@go4venture.com.
The Go4Venture Advisers Team
For more details about the Headline Transactions Index (HTI), please visit our website.
© Go4Venture Advisers 2013
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6. October 2013
1.1 - Headline Transactions Index (HTI)
Go4Venture HTI Index by Deal Value
Value of Transactions per Month (€mn)
800
2010
2011
2012
700
2013
600
500
400
300
200
100
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Go4Venture Advisers Analysis; HTI Database
Go4Venture HTI Index by Cumulative Deal Value
Cumulative Value of Transactions (€mn)
3,500
2010
2011
2012
3,000
2013
2,500
2,000
1,500
1,000
500
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Go4Venture Advisers Analysis; HTI Database
October
Large Transactions
Other Transactions
All Headline Transactions
Of Which:
Landmark Transactions
#
€mn
#
€mn
#
€mn
2012
12
298.6
36
83.7
48
382.4
2013
6
158.1
17
54.0
23
212.1
#
€mn
5
211.5
3
124.0
Year-to-Date
Large Transactions
Other Transactions
All Headline Transactions
Of Which:
Landmark Transactions
#
€mn
#
€mn
#
€mn
2012
97
1,919.9
267
712.9
364
2,632.7
2013
109
2,472.4
293
786.6
402
3,259.0
#
€mn
31
1,140.0
30
1,567.3
Definitions
Large Transactions: > £5mn / €7.5mn / $10mn
Other Transactions: < £5mn / €7.5mn / $10mn
Landmark Transactions: subset of Large Transactions > €20mn / £13mn / $27mn
© Go4Venture Advisers 2013
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7. October 2013
1.2 - Large Transactions Summary
(>£5mn / €7.5mn / $10mn)
#
1
Company
Skyscanner (UK)
www.skyscanner.net
Sector
Internet
Services
Round
B
€mn
59.2e
Description
Operator of a search
engine for flights with
growing activities in hotel
bookings and car rentals.
Developer of proton
exchange membrane fuel
cells.
Investors
Sequoia Capital.
2
Intelligent Energy (UK)
www.intelligent-energy.com
Cleantech
Late
Stage
37.1
3
Funding Circle (UK)
www.fundingcircle.com
Internet
Services
C
27.4
Lending platform that
allows individuals and
institutions to loan money
to small businesses.
Provider of an open
source database and
associated services.
Accel Partners, Index
Ventures, Ribbit Capital,
Union Square Ventures.
4
SkySQL (Finland)
www.skysql.com
Software
B
14.8
5
Exclusive Networks
(France)
www.exclusivenetworks.com
IT Services
&
Distribution
Late
Stage*
12.0
Value-added distributor
specialising in B2B
supply of security,
storage and networking
solutions.
6
Logentries (Ireland)
www.logentries.com
Software
A
7.3
Cloud-based service
provider for collecting and
analysing
machine-generated log
data.
Undisclosed Investors.
California Technology
Ventures, Finnish Industry
Investment, Intel Capital,
Open Ocean Capital, Spintop
Ventures.
Edmond de Rothschild
Investment Partners, Omnes
Capital, SOCADIF.
Floodgate, Frontline
Ventures, Polaris Partners,
RRE Ventures.
Source: Go4Venture Advisers HTI Database
Key
Bold indicates lead investor(s)
* Internal round
e: Estimated
© Go4Venture Advisers 2013
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8. October 2013
#
1
Company
Skyscanner (UK)
www.skyscanner.net
Sector
Internet
Services
Round
B
€mn
59.2e
Description
Operator of a search engine for flights
with growing activities in hotel bookings
and car rentals.
Investors
Sequoia Capital.
e: Estimated
Skyscanner (UK), operator of a search engine for flights with growing activities in hotel
bookings and car rentals, raised an estimated €59mn in a Series B round from new investor
Sequoia Capital. This follows the $5.1mn (€3.5mn) Series A round led by Scottish Equity
Partners (SEP) in November 2007. The size of this round was estimated assuming that Sequoia took a 10%
stake in Skyscanner which, based on the company’s $800mn (€590mn) post-money valuation, translates to
$80mn (€59.2mn). This is in line with the announcement that this was “one of Sequoia’s largest investments
ever” and would represent c.11% of the firm’s 2012 vintage $700mn (€514mn) Capital Growth Fund.
On the surface, an investment and valuation of this magnitude are surprising, given the size of the
company’s previous round. However, Skyscanner has since grown dramatically – between 2008 and 2012
total revenue increased from £2.1mn (€2.7mn) to £33.5mn (€40.9mn), a CAGR of 100%. Over the same
period the company has gone from a small EBIT loss to a £11mn (€13.4mn) profit. The investment also
comes on the back of a year which saw Skyscanner’s greatest percentage year-on-year increase in both
revenue and EBIT, its acquisition of Barcelona-based internet hotel search company Fogg and the opening
of a maiden North American office in Miami. The size of the investment can be further explained through the
confidence of Sequoia’s Chairman (and soon to be Skyscanner board member) Sir Michael Moritz.
According to Sir Michael, Skyscanner is "one of the most attractive tech companies in Europe" in a market
that “over the next decade will expand enormously, accelerated by a proliferation of mobile devices.” Sir
Michael’s presence on Skyscanner’s board is a significant vote of confidence: the Welsh ex-journalist is
remarkably influential for a Brit in America, having held board positions in Google, Kayak and LinkedIn
before stepping up as Chairman of Sequoia.
Skyscanner’s main competitors in the travel search market are Google, which acquired flight-pricing software
company ITA Software (ITA) for $700mn (€571mn) in 2010, and Kayak, acquired last year by online travel
reservation engine Priceline for €1.4bn. In terms of financials Skyscanner is relatively small, reaching a fifth
and a third of Kayak’s 2012 revenue and EBIT, respectively. However, one key advantage Skyscanner has
performance-wise is that it checks for fares on a comprehensive list of budget airlines as well as full-service
carriers, unlike ITA and Kayak which focus mainly on the latter.
This investment will support Skyscanner’s stated expansion strategy of continued growth in North America
(Kayak’s and Google’s territory) and a doubling in workforce (to 500) over the next year.
This deal continues a trend in the online travel sector including Gimv’s and Iris Capital’s €15mn investment in
the French online travel agent Planetveo in June and Phenomen Ventures’ $9mn (€7mn) investment in
Russian flight booking site OneTwoTrip. Acquisitions include Expedia’s December 2012 acquisition of 62%
of Trivago for €479mn and the aforementioned November 2012 acquisition of Kayak by Priceline for €1.4bn.
Sequoia Capital (€170mn (2012); AUM €2.3bn) last featured in our May issue as a seller in Yahoo’s €800mn
acquisition of Tumblr. Founded in 1972, Sequoia is one of the oldest and most successful venture capital
firms, having backed companies such as Apple, Electronic Arts, Google, PayPal and Yahoo. Notably,
Sequoia is a previous investor of Kayak and the online travel agencies Decolar and Via.
Despite this the size and valuation of this round, SEP remains Skyscanner’s largest shareholder, following its
£2.5mn (€3mn) investment in 2007.
© Go4Venture Advisers 2013
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9. October 2013
#
2
Company
Intelligent Energy (UK)
www.intelligent-energy.com
Sector
Cleantech
Round
Late
Stage
€mn
37.1
Description
Developer of proton
exchange membrane fuel
cells.
Investors
Undisclosed
Investors.
Intelligent Energy (UK), a developer of Proton Exchange Membrane (PEM) fuel cells,
raised £31.5mn (€37.1mn) in a Late Stage round led by undisclosed investors. The
money will be used to finance the launch of new divisions and expand its Research &
Development (R&D) capabilities.
Founded in 2001, Intelligent Energy (IE), voted as a technology pioneer at the World Economic Forum in
2006, develops zero emission hydrogen fuel cells based on a proprietary version of PEM technology used to
create clean energy for portable electronic devices, small-scale power production (near point of use) and
vehicles. Its technology, which boasts higher power density and lower cost of fabrication among its
advantages over other fuel cell systems, is protected by a portfolio of some 550 patents covering 50 different
inventions. With more than 300 staff, the company reached revenues of c.£40mn (€50mn) in calendar 2012.
The company clearly described its expansion plans in its 2012 Annual Report, as well as the funding
requirements for their realisation. Following this round, IE is now in the position to proceed with its plans to
launch its consumer electronics and stationary power divisions (the latter initially in India), expand its R&D
activities (including the development of remote asset monitoring capabilities) and further develop its
management risk control systems.
Since its joint venture with Suzuki Motor Corporation – formed in 2012 to develop air-cooled fuel cell systems
– IE has signed partnerships with a number of well-known companies, including telecoms services providers
Cable & Wireless Communications (UK) and Etisalat Nigeria. It is also in advanced negotiations with
prospective clients in India, in particular Indian Oil, India’s largest oil and gas corporation by revenues, and
Microqual, an Indian telecoms infrastructure equipment manufacturer.
According to MarketsandMarkets, the fuel cell technology market is expected to grow from c.$630mn
(€460mn) in 2013 to c.$2.5bn (€1.8bn) by 2018, at a 32% CAGR; underpinning this are a number of relevant
investments and acquisitions over the past years. The European Union, along with the european private
sector, has agreed to invest €1.4bn through to 2020 in research and innovation partnerships for fuel cell and
hydrogen technology. Globally, corporates including GM, Pansonic, Samsung, Siemens, Toshiba and Toyota
have all invested in leading fuel cell technologies such as PEM, molten carbonate and solid oxide. Financial
investors have also been quite active in this sector, most notably with Goldman Sachs, KPCB, Mobius
Ventures and NEA investing c.$1bn (€733mn) over the last decade in solid oxide fuel cell provider Bloom
Energy, which is expected to reach profitability shortly.
Since its launch, IE has raised a total of €132mn over eight rounds. We covered its previous €26.4mn Late
Stage round in our March 2012 Bulletin, as well as its second largest round, a $30mn (€21mn) Series D led
by Yukos Capital and undisclosed investors, in our July 2009 Bulletin. This €37.1mn Late Stage round
remains its largest ever fund-raise. Excluding Yukos Capital (an affiliate of now-defunct Yukos Oil), which
first funded the company along with undisclosed investors, IE’s other known investors including Altima
Partners, F&C Investments, Scottish Enterprise and SSE Venture Capital, all established institutional
investors, have each never participated in more than one round, according to Venture Source.
© Go4Venture Advisers 2013
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10. October 2013
#
3
Company
Funding Circle (UK)
www.fundingcircle.com
Sector
Internet
Services
Round
C
€mn
27.4
Description
Lending platform that allows
individuals and institutions to loan
money to small businesses.
Investors
Accel Partners, Index
Ventures, Ribbit Capital,
Union Square Ventures.
Funding Circle (UK), a lending platform that allows individuals and institutions to
loan money to small businesses, raised $37mn (€27.4mn) in a Series C round
led by Accel Partners with support from fellow new investor Ribbit Capital and participation of existing
investors Index Ventures and Union Square Ventures. The money will be used to expand UK operations
and launch in the US, its second market.
We last saw Funding Circle (founded 2010) in April 2012 when it raised €12.2mn in a Series B round from
Index Ventures and Union Square Ventures to further develop its services, marketing and recruitment.
With over 100 staff the company now plans to expand its operations in the UK to include lending services
specifically for asset finance and real estate financing. In March this year, the company received £20mn
(€23.2mn) from the UK government to invest in SMEs. Funding Circle’s UK lending activity is expected to
increase even further following Vince Cable (UK business secretary) ordering £55m (€65mn) of government
money to be lent to SMEs through it and other lending platforms. The company is also planning to expand
its activity in the US market by merging with San Francisco-based Endurance Lending Network, an online
lender for small and medium businesses, which will rebranded as Funding Circle USA.
The competition in this market has significantly intensified since the mid-2000s, when the first lending
platforms appeared. In the UK there are now more than 10 known platforms including Zopa, the oldest and
largest loans platform (founded in 2005), having issued loans worth a combined c.£400mn (€472mn),
followed by Funding Circle which has lent a total of c.£180mn (€212mn), impressive considering its threeyear history. Others include Ratesetter and recently launched Assetz Capital. In comparison, the US market
is estimated to be much larger, with the two leading players, namely the Lending Club and Prosper, having
issued loans worth c.$1.5bn (€1.1bn) and c.$430mn (€320mn), respectively.
Readers should be familiar with lead investor Accel Partners (€356mn (2013); AUM €5bn), whose current
investment priorities are infrastructure, internet and consumer services, mobile and cloud services / SaaS.
We saw Accel last month investing €13.5mn in a Series B round in Calastone, a UK-based provider of
independent transaction services for the fund management industry. The firm also appeared this month in
our Bulletin as a seller of mobile game developer Supercell to SoftBank for €1.1bn (details in the next
section).
Fellow new investor Ribbit Capital (€73mn (2013)) is a US-based venture capital firm typically investing in
financial services. It last featured in our October 2012 issue when it invested €19.8mn in a Late Stage round
in UK-based Borro, a provider of online pawnbroking services.
Well-known investor Index Ventures (€350mn (2012); AUM €2bn), who also was a seller in SoftBank’s
acquisition of Supercell, featured last month in our Bulletin for a €13.1mn Series B round in SwiftKey, an
alternative keyboard app for Android. It also appeared in our March Bulletin when investing €9.3mn in a
Series B round in German online peer-to-peer lending platform Auxmoney, the same month as it backed
British peer-to-peer foreign currency transfer service TransferWise in a €4.6mn Series A round. Funding
Circle is at least its third 2013 investment in the financial services sector. In keeping with its preference for
consumer internet plays, Union Square Ventures’ (AUM €347mn) investments in this space include
Auxmoney (March) and Lending Club in 2011.
© Go4Venture Advisers 2013
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11. October 2013
#
4
Company
SkySQL (Finland)
www.skysql.com
Sector
Software
Round
B
€mn
14.8
Description
Provider of an open
source database and
associated services.
Investors
California Technology Ventures, Finnish
Industry Investment, Intel Capital, Open
Ocean Capital, Spintop Ventures.
SkySQL (Finland), a provider of an open source database and associated services,
raised $20.0mn (€14.8mn) in a Series B round from new investor Intel Capital, with
support from existing investors California Technology Ventures, Finnish Industry
Investment, Open Ocean Capital and Spintop Ventures. The funds will be used to spur
adoption of MariaDB, the company’s open source Relational DataBase Management System (RDBMS), in
enterprise computing. Funds will also be used to develop MariaDB’s ability to scale.
SkySQL was founded in 2010 by former developers of MySQL, the world’s second most widespread RDBMS
after Oracle (according to DB-Engines). As is common with commercial entities involved in open source,
SkySQL generates revenues by providing technology services related to MariaDB. Its roster of more than
400 clients is spread across 35 countries and includes blue-chip corporates such as Facebook, Google, HP
and Virgin Mobile. The company provides 24/7 support priced per server running MariaDB, as well as
training and consulting services.
MariaDB was first architected outside of SkySQL by open source champion Michael “Monty” Widenius (the
creator of MySQL and backer of Open Ocean Capital), in reaction to Oracle acquiring Sun Microsystems for
$7.4bn (€5.4bn) in April 2009. Sun Microsystems itself had acquired the company developing MySQL for
$1bn (€733mn) in January 2008.
Widenius and his company Monty Program, along with the MariaDB Foundation, created the new RDBMS
out of concerns that an Oracle-controlled MySQL would be poorly developed, become closed source or
licensed restrictively. As a result, MariaDB was built to be interchangeable with MySQL and support more
storage systems while being more flexible, fast and secure. Consequently, it has grown popular among
common Linux distributions such as OpenSUSE and Fedora, and is currently 32nd in the global RDBMS
market, which was worth an estimated $24bn (€18bn) in 2012. In April 2013, SkySQL and Monty Program
merged, reuniting many of the old MySQL team and making SkySQL the lead developer of MariaDB.
Leading the round is well-known Intel Capital (€75mn (2012); AUM €1bn), which as mentioned in September
is very active despite appearing in our Bulletin only three times in 2013. This is also true for open source: the
firm has invested over €350mn in more than 25 open source companies since 2009, its largest investment
being an $85mn (€62mn) round for Joyent, a US-based virtualisation software provider, in January 2012.
Backing SkySQL since its c.$7mn (€5mn) Series A round in April 2012 are California Technology Ventures,
Finnish Industry Investment (€720mn) and Spintop Ventures. California Technology Ventures, featuring for
the first time in our Bulletin, is a West Coast investor based in Pasadena. Specialising in information
technology and life sciences, it invests between $250k-2mn (€183k-1.5mn) in portfolio companies.
State-run Finnish Industry Investment typically backs local technology startups. It also invests in other funds
and non-technology businesses (especially mining), while fellow Nordic investor Spintop Ventures is an
angel group focusing on information technology that invest between SEK 2-15mn (€230k-2mn) per round.
Open Ocean Capital (€60mn) is an investor that typically invests below the threshold we report at.
Considering that it was set up by the founders of MySQL (including Widenius), first as a holding company for
MySQL and then as an investor in open source after MySQL’s acquisition by Sun Microsystems, it is no
surprise that Open Ocean capital seeded SkySQL in September 2010 and has since remained with it.
© Go4Venture Advisers 2013
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12. October 2013
#
5
Company
Exclusive Networks
(France)
www.exclusivenetworks.com
Sector
IT Services
&
Distribution
Round
Late
Stage*
€mn
12.0
Description
Value-added distributor specialising
in B2B supply of security, storage
and networking solutions.
Investors
Edmond de Rothschild
Investment Partners,
Omnes Capital,
SOCADIF.
* Internal Round
Exclusive Network (France), a value-added distributor specialising in B2B
supply of security, storage and networking solutions, raised €12mn in a Late
Stage internal round led by Omnes Capital (investing €6.7mn) with support
from other existing investors Edmond de Rothschild Investment Partners and SOCAFID. This money will
be used to support growth plans. The company simultaneously received €60mn senior debt funding from
Intermediate Capital Group’s 2013 vintage debt fund. Of the debt financing, €25mn is believed to have been
used to refinance existing facilities. Exclusive Networks will use another €5mn to buy out minority
shareholders in some of its subsidiaries, and retain the remaining €30mn for future acquisitions in Asia.
Launched in 1995, France-based Exclusive Networks operates as a value-added distributor of networking,
security and storage software in Europe. The company employs 300 staff, providing services from 20 offices
across Asia, Europe and the Middle East. Of the non-administrative employees, headcount is roughly split
between engineers (providing pre-sales engineering, bid preparation, site surveys and virtual CTO services)
and sales/support staff (providing 24/7 customer support and consultancy services for IT infrastructure and
security integrators). Since its 2010 Leveraged Buyout (LBO), the company has more than tripled its
revenues, reaching €279mn in calendar 2012. Furthermore, its recent acquisition of Secureway (see below
for details) is expected to boost 2013 revenues by €100mn which, together with organic growth, means the
company is on track to reach €400mn in revenues for calendar 2013.
Exclusive Networks has already started to build out Asian operations, acquiring the aforementioned Dubaibased Secureway, a leading value-added distributor of IT security in the Middle East, in November 2013 for
an undisclosed sum. The acquisition sets Exclusive Networks on a path to becoming the largest EMEA
value-added distributor of security, unified communications and infrastructure technologies. On this note, the
company claims it will continue to acquire three companies per year and reach revenues of €1bn by 2018.
Readers may know lead investor Omnes Capital (€180mn (2013), AUM €1.9bn), which last featured in our
July 2013 Bulletin as part of a €16.8mn Series C round in Scality, a fellow French company providing cloud
storage systems. The firm (then Crédit Agricole Private Equity) became involved with Exclusive Networks
when it acquired a 69% stake in a 2010 LBO that valued the company between €30-50mn. Omnes is known
for investing at stages up to mid-cap buyout.
Linked to Omnes, by being 91% owned by Crédit Agricole, is existing investor SOCADIF, also a French
private equity and venture capital firm (albeit a less frequent guest in our Bulletin). It invests between €0.55mn and first invested in the round led by Omnes Capital in 2010.
Also returning is fellow French investor Edmond de Rothschild Investment Partners (€125mn (2012); AUM
€975mn). A 13-time co-investor of Omnes, it last featured in our April 2013 Bulletin for investing in French
developer of ultrasound medical imaging technology SuperSonic Imagine, a €28mn late stage round in which
Omnes also took part. The firm first supported Exclusive Networks as a lead investor in a previous round,
contributing €1mn of a €3mn growth investment in June 2007.
© Go4Venture Advisers 2013
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13. October 2013
#
6
Company
Logentries (Ireland)
www.logentries.com
Sector
Software
Round
A
€mn
7.3
Description
Cloud-based service provider
for collecting and analysing
machine-generated log data.
Investors
Floodgate, Frontline
Ventures, Polaris
Partners, RRE
Ventures.
Logentries (Ireland), a cloud-based service provider for collecting and analysing
machine-generated log data, raised $10mn (€7.3mn) in a Series A round led by
existing investor Polaris Partners, with support from other shareholders Frontline Ventures and RRE
Ventures, as well as new investor Floodgate. The funds will be used to accelerate product development
and commercial deployment, as well as to add c.60 staff.
Founded in 2010, Logentries spun-out from UCD’s Performance Engineering Laboratory after a decade of
joint research with IBM. Its technology collects and analyses enormous quantities of machine data and
produces valuable insights regarding applications’ health and performance, helping companies to track their
logs in real-time and troubleshoot potential issues. With an office in US, its engineering base in Dublin and
an R&D lab in Prague, the company has more than 1,000 paying customers and 10,000 users in 100
countries. Customers include leading Infrastructure-as-a-service (IaaS) providers (e.g. Microsoft Azure),
Platform-as-a-service (PaaS) providers (e.g. Heroku) and other application providers (e.g. Hailo).
The importance of log management technologies in extracting from big data the “little data” that matters was
well demonstrated in a study, where Logentries analysed 22bn log events from c.6,000 Heroku applications.
It concluded that only 0.18% of these logs contained useful information – (i) fatal errors and
(ii) intermittent issues and anomalies in log data (e.g. warnings such as request timeouts) which are more
difficult to track, but if unsolved can still result in business loss and negative user experiences.
Logentries’ easy-to-use capabilities (e.g. visualisation, data pre-analysis and plug-ins) automatically identify
relevant events in real-time (unlike other log management technologies, which require the user to manually
search for issues). In addition, the system enables key information to be dynamically tagged, automatically
routed, and easily shared across teams and computing platforms. Thus, Logentries eliminates the need for
in-house data experts by enabling non-technically-proficient employees to process data, monitor system
performance and troubleshoot potential issues.
Its main competitors include US-based Splunk (c.3,700 customers; €5.7bn market cap) and Sumo Logic
(c.90 customers). According to management, Logentries’ key differentiation is its more user-friendly
experience (making machine data accessible to all users) and its focus on companies other than very large
enterprises (i.e. outside the Fortune 100). As per IDC, the worldwide volume of digital data will grow 45%
annually (to c.8tn gigabytes by 2015, with 90% generated by machines), and the worldwide market for Big
Data technology and services will grow 40% annually (to c.$17bn (€13bn) in 2015).
Through this round, US-based venture capital firm Floodgate (€55mn (2012); AUM €109mn) joins the other
existing investors that provided $1mn (€0.8mn) seed money to Logentries in 2012. Floodgate, co-founded in
2006 by well-known investor Mike Maples, typically invests $150k-$1mn (€115k-€0.8mn) in technology
companies, such as Bigcommerce, Chegg and Twitter.
Frontline Ventures (€20mn (2013)) is a Europe-focused venture capital firm, typically participating in seed
(€100-750k) and Series A (€1-2mn) rounds. It invests in software companies focused on Big Data, Cloud
Services, Internet and Mobile, such as CurrencyFair (platform for exchanging currencies and sending funds).
Lead investor in both Logentries’ funding rounds, Polaris Partners (€275mn (2010); AUM €2.5bn) is one of
the largest venture capital firms globally. Founded in 1996, it has a portfolio of more than 100 companies and
typically invests at the seed and early stages in the Consumer, Healthcare and Technology sectors.
Existing investor RRE Ventures (€169mn (2012); AUM €792mn) is a NYC-based early-stage venture capital
firm, typically investing in Technology companies across the US. To date it has provided over $1bn of
funding to more than 125 companies, including Human Capital Management SaaS provider Taleo (acquired
by Oracle for c.€1.4bn in February 2012).
© Go4Venture Advisers 2013
Page 12
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14. October 2013
2.1 - M&A Activity Index
Disclosed Global TMT M&A Transactions
European Deals 2012 (€mn)
Global Deals 2012 (€mn)
# of Global Deals 2012
500
European Deals 2013 (€mn)
Global Deals 2013 (€mn)
# of Global Deals 2013
30,000
25,000
# of Deals per Month
400
350
20,000
300
250
15,000
200
10,000
150
100
Deal Value per Month (€mn)
450
5,000
50
0
Jan
(1)
Feb
0
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Capital IQ; Go4Venture Advisers Analysis
(1) Includes Dell acquisition by Silver Lake for €22.3bn (2013)
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
20
18
# of Deals per Month
16
4,500
4,000
3,500
14
3,000
12
2,500
10
2,000
8
1,500
6
4
1,000
2
Deal Value per Month (€mn)
>£30mn / €35mn / $50mn
500
0
Jan
Feb
Mar
(1)
Apr
(2)
May
Jun
0
(3)
Jul
Aug
Sep
Oct
Nov
Dec
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)
Disclosed European VC & PE-Backed TMT M&A Transactions (2013)
> £30mn / €35mn / $50mn
Jan
Feb
Mar
Apr
Jun
Jul
Aug
Sep
Oct
Monthly Number #
Value
€mn
Median €mn
1
360
360
3
202
72
3
275
83
4
5
7
3,479 1,746 1,728
157
100
129
3
625
67
6
1,546
236
5
367
66
2
2,286
1,143
Cum.
1
360
360
4
562
65
7
837
85
11
16
23
26
32
37
39
4,315 6,061 7,790 8,414 9,960 10,327 12,613
83
94
94
122
111
100
100
Number #
Value
€mn
Median €mn
May
© Go4Venture Advisers 2013
Nov
Dec
Page 13
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15. October 2013
2.2 - Top 5 Global TMT M&A Transactions Summary
Ranked by Price (€mn) in descending order (includes announced and/or completed deals)
#
1
Target & Acquirer
Samsung Corning Precision
Materials (Korea)
www.scp.samsung.com
Target
Sector
Hardware
Price (€mn)
2,500
Rev.
(€mn)
N/A
P/R
N/A
Noteworthy Sellers
-
Corning (US NYSE:GLW)
www.corning.com
Corning, an advanced materials and electronics glass manufacturer, will acquire Samsung Corning Precision Materials (SCP), an
LCD glass substrate producer. SCP is a Korea-based Joint Venture (JV) set up in 1995 by Corning and Samsung, the electronics
and semiconductor giant: the companies each owned 43% of the JV that would eventually be named SCP with the remainder
being held by a number of outside shareholders. SCP manufactures substrates – planar sheets of materials that support and
protect the electrodes and molecules needed to produce a visible image in flat-screen displays – for flat panel televisions and
mobile phones. Used predominantly by Samsung for its Galaxy range of smartphones and for high resolution large format
displays, SCP's substrates are based on Corning's Gorilla Glass technology which allows them to be both robust and temperature
resistant whilst remaining lightweight. Since its inception, SCP has organically grown its production and research capacity; at time
of acquisition it employed c.4000 people.
Corning, named after the city in New York state where it is headquartered, was founded in 1851. Starting as a general
glassworks, it has produced everything from vacuum tubes for radios to telescope lenses over its history. Having diversified into
related fields, it now produces glass and equipment for the automotive, construction, defence, electronics, life sciences and
telecommunications sectors. Corning employs c.29,000 and reported revenues of $8bn (€6bn) for the last twelve months to 30
September 2013. Additionally, sales have grown at a 14% CAGR since 2009. This is the largest deal the company has done
since its $3.6bn (€2.6bn) acquisition of Optical Technologies, a communications materials supplier, in September 2000.
Acquiring SCP will allow Corning to benefit from the ongoing rise in demand for displays driven by mobile and tablet proliferation.
This will also help to consolidate capital and R&D spending as the glassmaking technology is brought back under one roof.
Furthermore, this cements Corning's relationship with Samsung, which stretches as far back as 1973 when the two companies
partnered to make glass for black and white televisions (and of course continued with the establishment of SCP): Samsung
received convertible shares which equate to a 7.4% holding in Corning for the deal, together with a 10-year supply agreement.
Though there have been no directly comparable deals recently, this acquisition comes amid heavy M&A activity in the electronics
industry which we covered in our September Bulletin.
2
Supercell (Finland) [51%]
www.supercell.net
Application
Software
2,200*
SoftBank (Japan TSE:9984)
www.softbank.com
79
28.0x
Accel Partners, Atomico,
Index Ventures, Initial
Capital, Institutional
Venture Partners.
*Implied enterprise value for 100% of Supercell
SoftBank, a telecoms provider and Japan’s third largest mobile network operator, will acquire 51% of Supercell, a mobile games
developer. Founded in 2010, Finland-based Supercell offers ‘freemium’ (where additional features or levels can be unlocked for a
fee) games for smartphones and tablets. With a portfolio of only two games released in 2012, namely Clash of Clans and Hay
Day, and just over 100 employees, Supercell reached revenues of $108mn (€79mn) in calendar 2012 and $179mn (€136mn) in
Q1 2013 alone, with EBIT of $106mn (€81mn) during the same time period. The company reached revenue peaks of $2.4mn
(€1.8mn) per day with 8.5mn daily active users in April 2013 and saw its valuation quadruple in the past seven months to over
$3bn (€2.2bn), bigger than the publicly traded social gaming giant Zynga which employs over 3,000 people, valued at $2.3bn
(€1.7mn). Supercell will continue to operate independently, maintaining its headquarters in Finland and co-founder Ilkka
Paananen as CEO. In April 2013 the company raised a €100mn Series C round from Atomico, Index Ventures and Institutional
Venture Partners. Accel Partners became involved as a lead investor in a €8.4mn Series B round in May 2011. Initial Capital
invested in a Series A (size undisclosed) round in December 2010.
Founded in 1981, Japan-based SoftBank Corporation (“SoftBank”) is a listed provider of diversified telecoms services such as
mobile network operation, cloud hosting and broadband. An interesting feature of SoftBank is that its CEO, Masayoshi Son, has
an exceptionally long-term strategy and recently announced that SoftBank aims to become the world’s largest company as
measured by EBIT, sales or market capitalisation. With over 24,500 employees the company reached c.¥284bn (€34bn) in
revenues for year ended 30 September 2013, a 41% growth compared to 2012. Readers may be more familiar with SoftBank’s
venture capital arm, SoftBank Capital, which last featured in our September 2012 Bulletin when it invested in France-based
performance advertising specialist Criteo’s €30mn late stage round. Serial acquirer SoftBank has announced six M&A deals in
2013 including one for mobile phone distributor Brightstar, its second deal in October (detailed below).
This deal is in line with SoftBank’s announcement earlier this year of its intent to diversify into gaming when it acquired a
controlling stake (c.58%) in GungHo at the end of March 2013. Please find more details on this deal in section 2.3 (below).
© Go4Venture Advisers 2013
Page 14
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16. October 2013
#
3
Target & Acquirer
Brightstar (US) [57%]
www.brightstarcorp.com
Target Sector
IT Distribution
& Services
Price (€mn)
1,422*
Rev.
(€mn)
5,000
P/R
0.3x
Noteworthy Sellers
Lindsay Goldberg.
SoftBank (Japan TSE:9984)
www.softbank.com
*Implied enterprise value for 100% of Brightstar
SoftBank, a telecoms company, will acquire 57% of Brightstar, a distributor of mobile phones. Founded in 1997, US-based
Brightstar manages distribution and logistics for major mobile network operators including AT&T, T-Mobile and Verizon. Operating
in over 50 countries, Brightstar sources mobile devices including phones and tablets, buying them wholesale and reselling them
to network operators. The company employs c.3,600 and serves over 200 network operators as well as 30,000 independent
retailers. In addition to its ordinary distribution activities it also provides value added logistics services, phone insurance,
replacement services and trade-in management. At acquisition, Brightstar reported an EBITDA of $260mn (€191mn) off revenues
of $7bn (€5bn) for the last twelve months, meaning the company was acquired at less than 0.2x revenues. Brightstar featured by
proxy in our July 2012 Bulletin when its European JV with Tech Data, Brightstar Europe (a supply chain optimisation company),
was acquired for €135mn by Tech Data. Lindsay Goldberg acquired an undisclosed minority stake in the company in 2007.
Japan-based SoftBank provides diversified telecoms services such as mobile network operation, cloud hosting and broadband.
SoftBank primarily focuses on providing internet-enabled mobile subscriptions and is Japan’s third largest mobile network
operator with c.33mn subscribers, close behind KDDI’s c.39mn and approximately half of NTT DoCoMo’s c.62mn. With over
24,500 employees the company has grown sales from ¥2.8tn (€21bn) to ¥3.2tn (€24bn) between 2009 and 2012, experiencing a
5% revenue CAGR. SoftBank is notably acquisitive and announced six M&A transactions in 2013 (with the most recent one of
course being Supercell, detailed above and in the European VC & PE-Backed M&A Trasactions section). Moreover, in October
2012 SoftBank acquired an 80% stake in US mobile network operator Sprint for $37bn (€27bn).
Acquiring Brightstar helps improve the company’s buying scale, allowing it to negotiate better supply deals for its own mobile
network operations (recently boosted by the Sprint acquisition completing). This however, takes into the account that Brightstar
also supplies rivals of Sprint, which will also benefit from the increase in buying scale.
4
Tellabs (US)
www.tellabs.com
Carrier
Infrastructure
811
772
1.1x
-
Marlin Equity Partners (US)
www.marlinequity.com
Marlin, a private equity firm, will acquire a majority stake in Tellabs, a communications hardware provider. US-based Tellabs
manufactures optical transport systems and other equipment for telecoms providers. Founded in 1974, it originally provided
switching equipment for traditional telephone networks. Now, its equipment includes routers, packet-optical transport systems and
passive optical Local Area Network (LAN) gear. Most of the Tellab’s offering is used for backhaul networking: the sections of a
mobile network that connect individual cells to the core fibre optic network. Tellabs has struggled lately against more agile
competitors such as Alcatel-Lucent, Cisco and Huawei, who were faster to move away from traditional switching equipment to
capture a rising market for backhaul driven by the rise in mobile data use. This, and consolidation among telecoms provider
customers such as AT&T, Verizon (Tellab’s largest customer) and Vodafone, has negatively impacted Tellab’s financial
performance: the company has faced an annual 15% decline in revenues since 2009, dropping to $1bn (€772mn) in year ended
28 Dec 2012. In fact, its revenues declined year-on-year (except between 2004-2006) from a peak of $3bn (€2.2bn) in 2000.
Furthermore, it has posted a loss for the past 11 quarters. Having made no acquisitions since November 2010 (Zeugma systems,
a router manufacturer, for an undisclosed sum), the company employs c.2,400 people.
Marlin Equity partners is a US-based private equity firm with $2.6bn (€1.9bn) AUM, founded in 2005. Its investment focus is
growth capital, management buyouts and special situations. It covers most sectors including aerospace and defence, healthcare,
industrials, logistics, media, technology and telecoms. The firm’s latest fund closed at $1.6bn (€1.2bn) in July 2013. It has been
known to adopt a buy-and-build strategy with its portfolio companies: particularly relevant to Tellabs was Marlin’s acquisition of
Sycamore Network’s intelligent optical switch business for $19mn (€14mn) in October 2012. Shortly afterwards in December
2012, Marlin acquired the optical hardware business of Nokia Siemens Networks (whose €3bn acquisition by Nokia we covered in
August 2013) for an undisclosed sum; the assets acquired in the Sycamore deal were then rolled into the business acquired from
Nokia Siemens Networks and renamed “Coriant”.
© Go4Venture Advisers 2013
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17. October 2013
#
5
Target & Acquirer
Virtela (US)
www.virtela.net
Target
Sector
Internet
Services
Price (€mn)
385
NTT Communications (Japan)
www.ntt.com
Rev.
(€mn)
N/A
P/R
N/A
Noteworthy Sellers
New Enterprise
Associates, Newton
Technology Partners,
Norwest Venture Partners,
Palomar Ventures.
NTT Communications, a telecoms provider and operator of Japan’s largest mobile network, will acquire Virtela, a cloud
networking provider. Founded in 2000, US-based Virtela provides two networking platforms: Virtela Virtualized Overlay Network
(VON) and Virtela Enterprise Services Cloud (ESC), which allow enterprises to reduce their network devices whilst improving
connectivity. Based on an open architecture, VON automatically routes network traffic via the most efficient path through Virtela’s
c.1,000 network operator partners across 190 countries, providing its enterprise clients with highly stable and fast virtual
networks. Virtela ESC platform enables the transition of branch office IT and security services to the cloud, delivering 80% cost
savings in upfront capital spent on infrastructure and 30% savings in on-going operating expenses. The company also provides
networks analytics, network optimisation and a range of services related to its products. With over 400 employees, oft-acclaimed
(Gartner April 2013, Stevie Winner 2013, WCA 2012) Virtela serves more than 500 customers worldwide including well-known
brands such as BP, Coca-Cola, FedEx, Google, Honeywell, IBM, Kodak, Paramount, RedHat, Sony and UPS. Norwest Venture
Partners became involved as a lead investor in a $40mn (€29mn) Series A round in April 2000. New Enterprise Associates,
Newton Technology Partners and Palomar Ventures became involved in a $35mn (€26mn) Series B round in April 2001.
Founded in 1999, Japan-based NTT Communications provides fixed-line and mobile telephony, VoIP and broadband internet
services both in Japan and internationally. As mentioned above, it operates the largest mobile network in Japan with c.62mn
subscribers. The company operates as a subsidiary of Nippon Telegraph and Telephone Corporation (NYSE:NTT), one of the
world's largest telecommunication companies by revenues according to Fortune 500. NTT Communications itself, with 8,000
employees, reached revenues of ¥970bn (€7.3bn) in the year ended 30 June 2012, a 5% decline from the previous year.
Acquiring Virtela (which will become a wholly owned subsidiary) will allow NTT Communications to increase revenues from cloud
services to over ¥200bn (€1.5bn) from December 2013 to March 2016 (more than double the figure for 2011-12). This comes at a
time when the company faces falling revenue from voice services. It has been apparent for some time that telecoms companies
are diversifying to offset declining in traditional revenues.
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
© Go4Venture Advisers 2013
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18. October 2013
2.3 - Headline European VC & PE-Backed M&A Transactions
(> £30mn / €35mn / $50mn), includes announced and/or completed deals where price is available
LTM
Target
Price
Rev.
Funding
# Target & Acquirer
Sector
(€mn)
(€mn)
P/R
(€mn)
1 Supercell (Finland) [51%]
Application
2,200*
79
28.0x
100
www.supercell.net
Software
P/F
22.0x
Noteworthy Sellers
Accel Partners,
Atomico, Index
Ventures,
Institutional Venture
Partners.
N/A
ISIS Equity Partners.
SoftBank (Japan)
www.softbank.com
2
*Implied enterprise value for 100% of
Supercell
On the Beach (UK)
www.onthebeach.co.uk
Inflexion Private Equity
Partners (UK)
www.inflexion.com
Internet
Content &
Commerce
86
330
0.3x
N/A
Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis
Key
Bold indicates name of Target
Italic indicates name of Acquirer
E– Estimated
P/R – Price / Last 12 Months Revenues
P/F – Price / Total Funding
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.
© Go4Venture Advisers 2013
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19. October 2013
#
1
Target & Acquirer
Supercell (Finland) [51%]
www.supercell.net
Target Sector
Application
Software
Price
(€mn)
2,200*
LTM Rev.
(€mn)
79
P/R
28.0x
Funding
(€mn)
100
P/F
22.0x
SoftBank (Japan)
www.softbank.com
Noteworthy Sellers
Accel Partners,
Atomico, Index
Ventures,
Institutional Venture
Partners.
*Implied enterprise value for 100%
of Supercell
Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis
Supercell (Finland), a mobile gaming provider, will be 51% acquired by SoftBank (Japan) for an implied
enterprise value of €2.2bn. The sellers are Accel Partners, Atomico, Index Ventures and Institutional
Venture Partners.
Founded in 2010, Finland-based Supercell offers ‘freemium’ (where additional
features or levels can be unlocked for a fee) games for smartphones and
tablets. With a portfolio of only two games released in 2012, namely Clash of
Clans and Hay Day, and just over 100 employees, Supercell reached revenues
of $108mn (€79mn) in calendar 2012 and $179mn (€136mn) in Q1 2013 alone,
with EBIT of $106mn (€81mn) during the same time period. The company
reached revenue peaks of $2.4mn (€1.8mn) per day with 8.5mn daily active users in April 2013 and saw its
valuation quadruple in the past seven months to over $3bn (€2.2bn), bigger than the publicly traded social
gaming giant Zynga which employs over 3,000 people, valued at $2.3bn (€1.7mn). Supercell will continue to
operate independently, maintaining its headquarters in Finland and co-founder Ilkka Paananen as CEO. In
April 2013 the company raised a €100mnSeries C round from Atomico, Index Ventures and Institutional
Venture Partners. Accel Partners became involved as a lead investor in a €8.4mn Series B round in May
2011. Initial Capital invested in a Series A (size undisclosed) round in December 2010.
Founded in 1981, Japan-based SoftBank Corporation (“SoftBank”) is a listed
provider of diversified telecoms services such as mobile network operation,
cloud hosting and broadband. An interesting feature of SoftBank is that its CEO,
Masayoshi Son, has an exceptionally long-term strategy and recently
announced that SoftBank aims to become the world’s largest company as
measured by EBIT, sales or market capitalisation. With over 24,500 employees
the company reached c.¥284bn (€34bn) in revenues year ended 30 September 2013, a 41% growth
compared to 2012. Readers may be more familiar with SoftBank’s venture capital arm, SoftBank Capital,
which last featured in our September 2012 Bulletin when it invested in France-based performance
advertising specialist Criteo’s €30mn late stage round. Serial acquirer SoftBank has announced six M&A
deals in 2013 including one for mobile phone distributor Brightstar (detailed in the previous section).
This deal is in line with SoftBank’s announcement earlier this year of its intent to diversify into gaming when
it acquired a controlling stake (c.58%) in GungHo at the end of March 2013. SoftBank will be able to
leverage its large mobile network to help Supercell overcome its challenges entering and dominating the
lucrative Asian gaming market. In Europe and the US, Supercell mainly focused on iOS, whereas Android is
vital to enter countries such as China and South Korea. Supercell is the only company that SoftBank has
acquired in Europe this year, making an exception from its traditional doctrine of only investing or acquiring
in Asia or the US.
© Go4Venture Advisers 2013
Page 18
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20. October 2013
Accel Partners (€356mn (2013); AUM €5bn) is a global venture capital firm that may be well-known to our
readers for having successful funds both in the US and in Europe. Its current investment priorities are
infrastructure, internet and consumer services, mobile and cloud services / SaaS through its offices in China,
India, UK and the US. It appeared last month in our September 2013 Bulletin when it invested €13.5mn in a
Series B round in UK provider of an independent transaction network and services for the fund management
industry Calastone.
Atomico (€126mn (2010)) is a London-based venture capital founded by Skype co-founder Niklas
Zennström. It primarily invests in growth stage companies in the technology sector geographically located
outside of Silicon Valley. With more than 50 investments over four continents made through its Beijing,
Istanbul, London, São Paulo and Tokyo offices, Atomico is a truly global investor. 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. Atomico last featured in our July 2013 Bulletin, investing
€11.4mn in a Series B round for Bohemian Wrappsody, operator of an online social gift giving programme.
Initial Capital is a London-based early stage and seed investment firm funded by a group of angel investors.
It invests solely in the technology sector and prefers digital and online investments. Though this is the firm’s
first appearance in our Bulletin, one of its key people is Shukri Shammas, founder of gaming companies Glu
Mobile, exited in a $350mn (€257mn) IPO in March 2007, and Playfish, acquired by EA for $400mn
(€293mn) in November 2009.
Index Ventures (€350mn (2012); AUM €2bn) is a global venture capital firm with roots in Geneva and
London; notably the first successful venture capital firm to enter the US from Europe. It typically invests
between €250k-50mn in seed to late stage companies based in Europe. Sector agnostic it has a preference
for life-science and technology where it has built its experience. Index Ventures last featured in our January
2013 Bulletin when it invested €12mn in a late stage internal round for Prescription Eyewear, operator of
eyewear e-tailing sites GlassesDirect, myOptique and SunglassesShop.
Institutional Venture Partners (€733mn (2012), AUM €2.9bn) typically invests between $10-100mn (€773mn) in companies with revenues over $10mn (€7mn) primarily in the US within the internet, digital media,
enterprise IT and mobile communication sectors. The firm has invested in over 300 companies, of which 95
have gone public. It last featured in July 2013 for a €30.6mn investment in Shazam, a music recognition app,
and a €8.5mn investment in Grand Cru, a mobile games developer.
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21. October 2013
#
2
Target & Acquirer
On the Beach (UK)
www.onthebeach.co.uk
Inflexion Private Equity Partners (UK)
www.inflexion.com
Target
Sector
Internet
Content &
Commerce
LTM
Rev.
(€mn)
330
Price
(€mn)
86
P/R
0.3x
Funding
(€mn)
N/A
P/F
N/A
Noteworthy
Sellers
ISIS Equity
Partners.
Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis
On the Beach (UK), an online retailer of holidays, will be acquired by Inflexion Private Equity Partners
(UK) for €86mn in cash in a secondary buyout transaction, where the seller is ISIS Equity Partners.
Founded in 2004, On the Beach is a UK-based online retailer of holidays. It
offers a range of flights and hotels (more than 30,000), as well as packaged
holidays in Africa, Asia, Europe and the US. Although the company was
launched in 2004, its website went live in 2005. Since then it has partnered with
Google, MSN and Yahoo! to promote its website. On the Beach is a member of
the Association of British Travel Agents, a trade body whose members have an
estimated combined revenue of £25bn (€30bn) and carry c.750k passengers each year. Since its last round
of funding six years ago, On the Beach increased sales from £78m (€92mn) to £280mn (€330mn), a CAGR
of 24%, and reached an EBITDA of £11m (€13mn) in year ended 30 June 2013. Like other online travel
agencies, On the Beach achieved growth even against the backdrop of economic recession and travel
disruptions such as the 2010 ash cloud and Arab Spring. ISIS Equity Partners became involved in November
2007 when it invested an undisclosed amount in On the Beach.
Inflexion Private Equity Partners is a UK-based private equity firm investing in
small-to-mid market growth businesses domiciled in the UK. The company
currently manages c.£800mn (€944mn) principally from pension and insurance
funds, fund of funds and family offices. While 49% of its investors are Europebased (18% of which in the UK), 44% are based in North America, 6% in
Australia and 1% in Japan. The company also maintains local teams in Brazil,
China and India to help foster the overseas operations of its portfolio companies. It prefers to invest between
£10-100mn (€12-118mn) in companies with at least £2mn (€2.4mn) in EBITDA and the potential to double
that over 3-5 years. In terms of sectors, it prefers business services, infrastructure, financial services,
healthcare, retail, engineering and TMT.
This acquisition follows Inflexion’s recruiting of Charlie Cannell (former CEO at Cantos, a provider of online
video services) in January 2013 as Digital Director to drive the digital evolution of its portfolio companies.
Furthermore, On the Beach fits within Inflexion’s investment criteria in terms of geography, sector and size.
See earlier in this Bulletin for coverage on Skyscanner’s fundraising for another deal in this sector.
ISIS Equity Partners (€61mn (2013), AUM €1.4bn) is a UK-based private equity firm specialising in profitable
small to mid-cap businesses, based in the UK and valued between £5-100mn (€6-118mn), in which it
typically invests between £2-40mn (€2-50mn). Since 1999, ISIS has made over 100 investments in the
sectors of business services, consumer, energy, environment, financial services and healthcare, as well as
TMT. ISIS also manages five Baronsmead Venture Capital Trusts (VCTs) listed on the LSE. The investment
firm last featured in our February 2013 Bulletin when it sold the remaining 77% of FFastFill, a risk
management SaaS provider, to ION Trading for €94mn (which had previously acquired 23% of the
company).
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22. October 2013
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
CEO: Chief Executive Officer
EMEA: Europe, the Middle East and Africa
ESC: Enterprise Services Cloud
JV: Joint Venture
LAN: Local Area Network
LCD: Liquid Crystal Display
OEM: Original Equipment Manufacturer
IaaS: Infrastructure-as-a-service
PaaS: Platform-as-a-service
SaaS: Software-as-a-Service
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23. October 2013
R&D: Research and Development
RDBMS: Relational DataBase Management System
SEC: Securities and Exchange Commission
LSE: London Stock Exchange
NYSE: New York Stock Exchange
SZE: Shenzhen Stock Exchange
TSE: Tokyo Stock Exchange
TMT: Technology, Media and Technology
VCTs: Venture Capital Trusts
VON: Virtualized Overlay Network
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24. October 2013
Go4Venture Advisers LLP
48 Charles Street
+44 (0)20 7529 5400
Berkeley Square
g4vBulletin@go4venture.com
London
W1J 5EN
This report was published on November 29, 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.
Registered address: 10 Wellington Street, Cambridge, CB1 1HW Incorporation number OC336611
Authorised and Regulated by the Financial Conduct Authority
© Go4Venture Advisers 2013
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