Go4Venture Advisers
European Venture & Growth Equity Market
Monthly Bulletin | November 2014
Technology / Media / Telecoms / Internet / Healthcare / Cleantech / Materials
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Providing innovative, fast-growing companies and their investors
with independent corporate finance advice to help them
evaluate, develop and execute growth strategies
www.go4venture.com
Equity Capital Markets (ECM)
Mergers & Acquisitions (M&A)
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



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Valuation services
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© Go4Venture Advisers 2014
November 2014
Contents
This Month in Brief
2
Investments
1.1 - Headline Transaction Index (HTI)
5
1.2 - Large Transactions Summary
6
1.3 - Large Transactions Profiles
7
M&A Transactions
2.1 - M&A Activity Index
22
2.2 - Top 5 Global TMT M&A Transactions Summary
23
2.3 - Headline European VC & PE-Backed M&A Transactions Summary
24
2.4 - Headline European VC & PE-Backed M&A Transaction Profiles
25
List of Acronyms
31
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 Transaction 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, PitchBook 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 2014
Page 1
November 2014
This Month in Brief
Dear Clients and Friends,
Welcome to the latest edition of the Go4Venture Monthly European Venture & Growth Equity Market
Bulletin, featuring our proprietary Headline Transaction Index (HTI) of investment activity, as well as a
quick summary of VC & PE-backed TMT M&A exits of $50 million or more.
Higher and Higher
Merry Christmas everyone!
In the world of growth equity and venture capital, November is typically a busy month as transactions
are wrapped up ahead of the Christmas season. This year was no exception, with November ending up
some 20% ahead of last year (by both volume and value), and year-to-date figures showing a near
40% value increase and some 20% volume contraction. M&A activity was equally sustained.
Investments
We are getting to a new phase where everybody understands these are frothy market conditions.
Even The Economist took notice: when general business publications pick up the hint, this is as
mainstream as it gets.
In the ‘up-the-ante’ part of the cycle, we are starting to see silly rounds, for silly reasons, with silly
numbers, and of course everybody jumping on the bandwagon:
 Silly numbers – Uber raised another $1.2bn, at a $40bn valuation, following the previous $1.2bn
of six months ago which valued the company at half the price ($17bn). Doubling value in less
than six months establishes a new (and, in our view, dubious) record. Remember that, at the
time of the previous round, the small print revealed a preference guaranteeing new investors a
25% annual return – making the $17bn already rather meaningless. This time, Uber refused to
disclose who the investors were (though it is known Baidu has since added to the round, and a
special mention to Goldman Sachs for peddling a debt portion to its private clients), which is
highly unusual and adds to its status as a “singular company”. All this in an atmosphere of
adoration reminiscent of 1999, when one felt rather stupid to doubt the lasting value of the “New
Economy” (it tanked a year later – even if, in the long run, it indeed changed the world as we
knew it).
© Go4Venture Advisers 2014
Page 2
November 2014


Silly reasons – another example of froth is Stripe’s latest $70mn financing (at double the
valuation of January 2014) just to “err on the side of being really well-capitalised”. Of course, if
a company and its shareholders can get away with capitalising senselessly, they should do it.
But it still is not a great rationale from a capital efficiency standpoint: assuming a likely market
correction, what will the exit be for the new investors other than an exit at a loss?
Jumping on the bandwagon – again, in a movie we have already seen in the late 1990s,
Deloitte announced a £25mn (€30mn) fund to finance its own employees’ startups in order to
keep its young talented employees, who have been increasingly leaving the firm to start up their
own businesses.
What is different this time round, though, is that everybody knows about the impending market
correction. However, common wisdom is that when the burst comes, whenever it happens (we say
around mid-2015), it won’t be that bad. The rationale? Public markets are overvalued, but not by as
much as in 2000 (tech is only on a 23x forward-looking P/E, rather than 100x). In private markets,
valuations may be crazy but at least businesses are real, i.e. with actual revenues, profits and scale.
And many (just like Uber) are marketplaces which are disrupting ‘brick-and-mortar’ competitors and are
inherently more profitable, with wonderful digital scalability. And past purchases like Facebook buying
Instagram for $1bn in 2012 now seem, with hindsight, not that expensive (Instagram has since passed
300mn users, is doubling every year and its (photo) ads sell for 20x that of its parent).
The more this cycle to price absurdity continues, the less we are certain that the contraction will
not be as dramatic as in 2001. Although the over-valuation doesn’t seem as bad as last time, and
more contained to (certain parts of) tech, one of the drivers is excess liquidity in the economy driven by
quantitative easing policies, suggesting that all markets are probably overpriced. And this is in the
context of an awful macro environment, dramatic geopolitical conditions and general indebtedness. For
a rehearsal of how dramatic market changes can be, we only have to look at the sudden fall in oil
prices – in short, a market correction could easily turn into a rout encouraged by systemic weaknesses.
And if we roll back five years (to 2008-09), we know that a 30-40% market correction feels like a trip to
the abyss.
On the plus side, the general optimism is spreading investment beyond just internet and latestage, which have been the two constants of the past five years, and is clearly bringing private equity
funds into the realm of growth investing. If we look at November:
 Internet is of course very present, with niche e-commerce and fintech plays well represented
(three each of our of fourteen Large HTI investments – defined as financings of £5mn / €7.5mn
/ $10mn or more), but we also see three medtech investments and a variety of transactions in
enterprise software, telecom software and cleantech.
 Of the fourteen Large HTI investments, nearly half are led by pre-IPO or private equity
investors, even if most are Series C or late-stage situations.
It is difficult to predict whether these positive developments will survive a market adjustment. One of the
reasons for optimism is that the root cause of the malaise is indebtedness. Only growth will allow value
creation, which will hopefully create a lasting environment where growth stories (including
venture) are seen as the way forward rather than an evil to avoid.
© Go4Venture Advisers 2014
Page 3
November 2014
Exits
November exits were of the ‘grown-up’ type, i.e. mostly for private equity or growth funds rather
than VCs.
As is common with private equity investors (which tend to be more opportunistic rather than sticking to
a theme), the companies concerned represented a variety of business models and sectors – including
ERP, testing software, content and tech-enabled services. In two cases (out of five), the buyer was a
private equity fund intent on using their financial muscle to grow the businesses away from the scrutiny
of public markets. Although still fairly rare, take-privates are becoming more common, as private
equity players are prepared to offer a premium to take control of solid growth companies. Even if it is
not the case here, increasingly (junior) public markets are used (and abused in some cases) to fund
fairly early-stage companies thanks to the tax incentives offered (e.g. AIM tax rules in London). Expect
to see the better small public companies get picked up by private equity funds more often, once these
companies get stuck for one reason or another.
The one venture exit was Definiens, a company started in 1994 with a long history of VC investment
(initially from 3i and TVM Capital). Based on rather deep IP (from a Nobel Prize winning professor)
around image recognition technology, the company found it difficult to find its market fit, initially
pursuing both the medical diagnostic and satellite image analysis segments, before settling for the
healthcare segment only. More recently, the company went one step further – rather than selling
oncology picture analysis tools, it branched out into a more applicative use of its technology, providing
a whole solution linking tissue sample analysis to patient outcomes. In the end, it was acquired by
AstraZeneca, with the specific purpose of using its technology to improve the use of combination
therapies based on a personalised healthcare approach. A classic tale of a platform technology
which can only be monetised through one application expression.
We will be back in January 2015 – wishing all our readers a Happy Festive Season!
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 Team
Where to Meet the Go4Venture
www.go4venture.com/contact


Advisers
Team
in
January
2015
–
see
January 5 - London, UK – Fig-2 Launch at the ICA, supported by Outset
January 20 – London, UK – Oxford Capital Annual Drinks Reception
For more details about the Headline Transactions Index (HTI), please visit our website.
© Go4Venture Advisers 2014
Page 4
November 2014
1.1 Headline Transaction Index (HTI)
Go4Venture HTI Index by Deal Value
2011
2012
2013
2014
Value of Transactions per Month (€mn)
1,000
900
Includes Rocket Internet (€768mn)
800
700
600
500
400
300
200
100
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Go4Venture Advisers HTI Database
Go4Venture HTI Index by Cumulative Deal Value
Cumulative Value of Transactions (€mn)
2011
2012
2013
2014
6,000
5,000
4,000
3,000
2,000
1,000
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2013
2014
Var.
115
154
34%
Source: Go4Venture Advisers HTI Database
November
Large Transactions
#
€mn
Other Transactions
All Headline
Transactions
2013
2014
Var.
6
14
133%
272
331
22%
#
24
21
(13%)
€mn
60
69
15%
#
30
35
17%
332
400
20%
3
6
100%
239
215
(10%)
€mn
Of Which:
Landmark Transactions
Year-to-Date
Large Transactions
#
€mn
Other Transactions
All Headline
Transactions
2,745
4,248
55%
#
317
203
(36%)
€mn
847
651
(23%)
#
432
357
(17%)
3,591
4,899
36%
€mn
Of Which:
#
€mn
Landmark Transactions
#
€mn
33
51
55%
1,806
3,710
105%
Definitions
Large Transactions: > £5mn / €7.5mn / $10mn
Other Transactions: < £5mn / €7.5mn / $10mn
Landmark Transactions: subset of Large Transactions > €20mn / £13mn / $27mn
© Go4Venture Advisers 2014
Page 5
November 2014
1.2 Large Transactions Summary
(>£5mn / €7.5mn / $10mn)
Ranked by Round Size (€mn, including estimates) in Descending Order, then Alphabetically
Sector
Round
€mn
Description
Investors
Powa Technologies (UK)
www.powa.com
Internet
Services
C
64.2
Provider of POS systems,
mobile payments and ecommerce solutions
Wellington Management
2
Prezi (Hungary / US)
www.prezi.com
Software
C
45.7
Provider of SaaS
presentation software
Accel Partners, Spectrum Equity
3
Quanta Fluid Solutions (UK)
www.quantafs.com
Medtech
B
35.3
Developer of a compact
haemodialysis system for
home and clinical self-care
dialysis
ALIAD Ventures, b-to-v Partners,
IMI, NBGI Ventures, Seroba Kernal,
Seventure Partners, Wellington
Partners
4
Finsecur (France)
www.finsecur.com
Hardware
Late
Stage
25.0
Manufacturer of fire safety
and fire detection products
Bpifrance, Edmond de Rothschild
Investment Partners
5
Meninvest (France)
www.meninvest.com
Internet
Services
C
23.2
E-tailer of mens’ apparel,
shoes and accessories
123Venture, bpifrance, Idinvest
Partners, Orkos Capital, Partech
Ventures
6
Trustly (Sweden)
www.trustly.com
Internet
Services
B
23.0
Operator of a payments
platform
Bridgepoint Development Capital
7
LeanWorks (UK)
www.yplanapp.com
Software
B
19.2
Developer of an app for
event booking
General Catalyst, Nokia Growth
Partners, Octopus Investments,
Wellington Partners
8
Finexkap (France)
www.finexkap.com
Internet
Services
A
18.2
Online invoice factoring for
SMEs
Finsight Ventures, GLI Finance
9
Fyndiq (Sweden)
www.fyndiq.se
Internet
Services
A
16.0
Operator of an online
marketplace for retailers to
sell excess inventory and
slow-moving stock
Industrifonden, Northzone
10 Intersec (France)
www.intersec.com
Software
B
16.0
Developer of ‘big data’
software allowing MNOs to
optimise their business,
offer LBS and monitise
user data
CM-CIC Capital Innovation,
Highland Capital Partners,
Innovacom
11 Curetis (Germany)
www.curetis.com
Medtech
B
14.5
Developer of molecular
diagnostic technologies
Aeris Capital, BioMed Partners, CD
Venture, Forbion Capital, HBM
Partners, Life Sciences Partners,
Qiagen, Roche Venture Fund
12 Genomics (UK)
www.genomicsltd.com
Medtech
B
13.0
A developer of
computational and
statistical methods to look
for the genetic causes of
disease
Invesco Perpetual, IP Group,
Lansdowne Partners, University of
Oxford, Woodford Investment
Management, Wylie Family Trust
13 i2O Water (UK)
www.i2owater.com
Cleantech
C
10.1
Developer of technology to
reduce leakage from water
distribution pipes
Naxos Capital, Nemadi Advisors,
Ombu
14 Melijoe (France)
www.melijoe.com
Internet
Services
B
9.0
E-tailer of designer
children’s apparel
Gimv, CM-CIC Capital
#
Company
1
Source: Go4Venture Advisers HTI Database
Key
Bold indicates lead investor(s)
© Go4Venture Advisers 2014
Page 6
November 2014
Powa Technologies
UK | www.powa.com
#
Sector
Round
€mn
Description
Investors
1
Internet
Services
C
64.2
Provider of POS systems, mobile payments and
e-commerce solutions
Wellington Management
Powa Technologies (UK), a provider of Point of Sale (POS) systems, mobile payments and e-commerce solutions,
raised $80.0mn (€64.2mn) in a Series C round from Wellington Management. The money will be used to attract
merchants to its e-commerce platform.
We last saw Powa in August 2013 with a €57mn first institutional round from Wellington Management. The money was
intended for the launch of the company’s smartphone purchasing and payments app PowaTag, as well as for the hire of
just under 500 new employees. At the time, Powa said that it intended to IPO sometime in the next 12-18 months.
Since that time, Powa has pursued a strategy of horizontal integration and now supplies a complete range of ecommerce and payments services. These include PowaTag (a smartphone app which allows consumers to make
purchases by scanning QR codes, taking pictures of products or through single clicks on e-tailers’ electronic catalogues),
PowaPOS (a tablet-based POS system with capacity to accept payments from striped, chip-and-PIN and smart cards)
and PowaWeb (a SaaS platform for operating an online store, which includes Search Engine Optimisation (SEO) and
digital marketing). The firm also collects purchase data, which enables it to provide analytics to its customers.
The most recent development in this horizontal integration story was the acquisition of Hong Kong based mobile
payments company MPayMe in June 2014, which gave Powa access to tens of millions of consumers worldwide. This
all-share deal valued MPayMe at $75mn (a 2.5x revenue multiple).
Over the past three years we have seen a number of e-commerce, mobile payments and POS platform investments.
Examples include iZettle in May 2014 and Paymill in January 2013. There are also numerous examples of venturebacked companies in this space outside of Europe – such as Texan e-commerce platform company Bigcommerce,
Canadian e-commerce platform provider Shopify, and West Coast POS and payments company Square. A number of
blue-chip firms also compete in this space – Apple Pay, Google Wallet and PayPal.
Powa is unusual in that it provides the complete range of services. This is partly a consequence of Powa’s ‘merchant
first’ strategy. From the beginning, Powa focused on catering to the needs of merchants (particularly large, blue-chip
merchants) rather than those of consumers. Although Powa makes its money through charging a commission on each
sale made – the greater of either 10bps or ¢40 – the company’s approach is to increase transaction volume by attracting
more merchants rather than more customers.
Being able to act as a one-stop-shop significantly increases the attractiveness of Powa for merchants. For the same
reason, we may expect to see an expansion in the customer analytics and ‘big data’ services that Powa can provide. To
date, Powa has signed up 970 merchants and claims to be signing up around 150 a month. Existing clients include
Adidas, Carrefour, Nicole Miller and Unilever. According to CEO Dan Wagner, the firm anticipates revenues of “hundreds
of millions of dollars next year and into the billions within two more years”.
Investors
Thanks to the success of his previous ventures, Powa CEO Dan Wagner was able to finance his firm’s initial
development out of his own pocket, from the company’s beginnings in 2007 until its first institutional round in August last
year. As a result, Mr. Wagner still owns 70% of the company. This also explains the size of what is, technically, still only
a Series B round. Powa was already relatively mature at the time of its first institutional investment.
Including a previously undisclosed $21mn (€17mn) extension of its Series A round, this transaction brings total
investment by Wellington Management (AUM €729bn) to about $177mn (€145mn). Whereas last year’s Series A round
valued Powa at around $400mn (€327mn), Powa’s acquisition of MPayMe over the summer required 3% of the Powa’s
stock and valued the firm at $2.5bn (€2.0bn). This acquisition, which demonstrates Powa’s belief in mobile shopping, will
significantly increase its customer base with Pitney Bowes (which currently facilitates 80% of utility bills in the US and
more than half in Europe) and expand its services to food and ticketing. This round is believed to value the company at
around $2.7bn (€2.2bn).
With continued support from Wellington, there is no particular urgency for Powa to list on a public market and Powa has
now said that it envisions an IPO sometime in 2016. This is only the latest in a series of pre-IPO investments by hedge
funds and fund managers, which traditionally invest in public companies post-IPO. Examples include BlackRock, Fidelity
Investments and Tiger Global Management, which have backed companies such as Airbnb and Uber.
© Go4Venture Advisers 2014
Page 7
November 2014
Prezi
Hungary / US | www.prezi.com
#
Sector
Round
€mn
Description
Investors
2
Software
C
45.7
Provider of SaaS presentation software
Accel Partners, Spectrum Equity
Prezi (Hungary / US), a provider of SaaS presentation software, raised $57.0mn (€45.7mn) in a Series C round led by
Spectrum Equity with support from existing investor Accel Partners. The money will be used for marketing.
It is now a quarter of a century since Microsoft released its now ubiquitous PowerPoint presentation software. The
‘multimedia content’ has become whizzier and the ability to use pre-prepared templates has spawned an entire cottage
industry; but the latest version of PowerPoint would be entirely recognisable to Dennis Austin and Thomas Rudkin – the
pair who created PowerPoint at their company Forethought before selling to Microsoft for $14mn (€11.4mn) in 1987.
Despite this, until recently PowerPoint still held 95% of the market. The migration of enterprise software from the desktop to the cloud has produced new market entrants – both VC-backed firms like emaze (backed by FirstTime Venture
Capital; €2.3mn raised to date) and SlideRocket (backed by Azure Capital Partners; €5.7mn raised to date), as well as
offerings from major players such as Apple’s Keynote and Google’s Slides. Built for the web from the start, these
products have a natural advantage when it comes to collaborating on presentations or enforcing version control. HTML5
has also made it easier for new products to achieve platform independence – working on tablets as well as PCs.
Arguably, however, Microsoft has already taken presentations into the SaaS era with Office 365. New products have
begun to chip away at PowerPoint’s market share, but Microsoft still has 90% of the market. Prezi aims to change this.
Set up in 2008 by computer science academic Peter Halácsy and artist and designer Ádám Somlai-Fischer, Prezi was
initially conceived as a service business creating presentations for clients using software that the two had developed. It
wasn’t until they were joined by their third co-founder – Swedish serial entrepreneur Peter Arvai (whose previous
experience included developing mobile newsreaders and hospital performance data aggregator Omvard) – that the firm
reinvented itself as a much more scalable (and investable) SaaS business.
Prezi distinguishes itself by ditching PowerPoint’s sequential slide model, in favour of a large canvas on which all content
resides. Users can zoom in and out – alternating between the big picture and the detail. When Prezi first pitched this
approach at The Next Web conference in Amsterdam in early summer 2009, it was largely ignored; at least until other
startups started using Prezi for their pitches in what must be one of the most convincing demonstrations of market
traction ever. Shortly afterwards Sunstone Capital provided a €1.5mn Series A round.
Determined not to make the same mistake he made with his first two companies, Prezi’s CEO Arvai decided to open a
US office to avoid being overtaken by an American competitor in this key market. Developers are not cheap in Budapest
(salaries are relatively low but payroll taxes are high) but they are cheaper than in San Francisco. The company now
employs 70 people on the West Coast, and 180 in Budapest.
Prezi continues to show market traction, doubling its user base to 50mn over the last year and attracting 55,000 new
users a day. Its software is used at IBM, Lufthansa and Salesforce. However, it still remains to be seen whether Prezi
and its competitors are anything more than PowerPoint in a SaaS wrapper.
So which, if any, of the new SaaS presentation software providers will steal Microsoft’s crown? Prezi shows promise. To
date, the firm has grown entirely by word of mouth. In fact, not only has money not been spent on marketing but, despite
its venture-backing, the firm has prided itself on living within its revenues – buying chairs one at a time when it first
opened a US office and (reputedly) refusing to touch a penny of the $15mn (€12mn) it had previously raised.
This means that at least a significant portion of its user base have decided that it is worth paying the monthly
subscription necessary to keep their presentations private or, with the professional subscription, to use Prezi offline.
Even though it is reputedly easier to use, Prezi does not yet have a completely unique feature such as SlideRocket’s
embedded audience analytics which measure who viewed which slides.
Investors
Founded in 1994, transaction leader Spectrum Equity (€818mn (2014); AUM €3.8bn) is a growth equity investor
operating from offices in Boston and San Francisco. The firm has always focused on the information industry and targets
investments of between €20mn and €82mn. A number of the firm’s portfolio companies, most notably Ancestry.com,
online learning company Lynda.com and SurveyMonkey also have subscription-based business models.
Well known stage-agnostic technology investor Accel Partners (€388mn (2014); AUM €7.8bn) led Prezi’s $14mn
(€11.4mn) Series B round in December 2011 – much earlier in the evolution of software from desktop to cloud. As SaaS
and cloud-services form one of Accel’s four target sectors, the firm has significant expertise with this business model. Its
previous well known investments in this area include BitTorrent, DocuSign, DropBox and Qlikview.
© Go4Venture Advisers 2014
Page 8
November 2014
Quanta Fluid Solutions
UK | www.quantafs.com
#
Sector
Round
€mn
Description
Investors
3
Medtech
B
35.3
Developer of a compact
haemodialysis system for home
and clinical self-care dialysis
ALIAD Ventures, b-to-v Partners, IMI, NBGI Ventures,
Seroba Kernal, Seventure Partners, Wellington
Partners
Quanta Fluid Solutions (UK), developer of a compact haemodialysis system for home and clinical self-care dialysis,
raised $44.0mn (€35.3mn) in a Series B round led by new investor ALIAD Ventures, with support from new investor
Seventure Partners and existing investors b-to-v Partners, IMI, NBGI Ventures, Seroba Kernal and Wellington
Partners. The money will be used to support the clinical introduction and commercial launch of the firm’s new device
SC+.
Fresnius Health Care Group estimates that of the approximately 2.5 million patients receiving regular dialysis treatment
in 2013, about 89% were treated with haemodialysis (as opposed to peritoneal dialysis). The majority were treated in
hospitals or specialised dialysis centres requiring them to attend clinics for four hours, three times a week. According to
MarketsandMarkets, the global dialysis products and services market was worth $61.6bn (€49.4bn) in 2013 and is
expected to reach $83.2bn (€66.7bn) by 2018 (a 6.2% CAGR). Quanta Fluid Solutions is targeting this market by
launching a compact haemodialysis device called SC+ (standing for SelfCare+), suitable for home use and travels.
The key feature of SC+ is its small size. This is achieved by replacing the in-built cleaning equipment of traditional
dialysis machines with disposable cartridges, which along with other key components of the device are protected by 22
patent filings. The machine’s portability is complemented by a touch screen user interface to increase ease-of-use by
patients. Home or primary care dialysis will enable patients to have more frequent and/or longer treatment sessions,
which will improve clinical outcomes and provide them with greater control over their treatment.
The company expects to get the CE mark approval from UK regulators by the end of this year, and will then supply the
machine free-of-charge for trials at several NHS centres. After this soft launch in the UK, the company plans to have a
more extensive launch in selected European markets. In parallel, it is seeking regulatory approval in the US, where it
expects to have the necessary clearances by 2017.
Investors
Making its first appearance in our Bulletin, Quanta Fluid Solutions was spun out from British Engineering firm IMI in
2008. In 2009, it raised $15mn (€11mn) in Series A funding and this round brings total investment to just under $60mn
(€50mn). In addition to the recent funding, there have been some major changes in the senior leadership of the company
in the past 12 months. John Milad, ex-investment partner at NBGI Ventures who formerly served as a Non-Executive
Director to Quanta for four years, was appointed as CEO in January 2014. In August 2014, the firm appointed a new
CFO (Willem Baralt) to help with the transition to commercial operations. These management changes suggest that the
organisation may be preparing for an IPO in the next few years. Indeed the CEO has hinted at this in a recent interview,
where he mentioned that the firm would be looking for a cash injection in 12 to 18 months from the public markets to
fund expansion beyond the UK.
ALIAD Ventures is the VC arm of French engineering firm Air Liquide. The group works in collaboration with the
organisation’s innovation lab / think tank (i-Lab), to identify and gain rapid preferred access to key technologies
developed outside the group. ALIAD typically invests in the digital technologies, electronics, energy transition,
healthcare, information technologies and natural resources management sectors. The other new investor is Francebased VC firm Seventure Partners (€134mn (2014); AUM €612mn), which typically invests in communication and
information technologies, as well as life sciences companies.
Among the existing investors, Wellington Partners (€70mn (2013); AUM €676mn) is a Germany-headquartered VC firm
primarily investing in life sciences and technology companies. Wellington Partners also recently co-invested with another
Quanta investor b-to-v Partners (€30.9mn (2012); AUM €57.3mn) (a Swiss VC firm) in Ayoxxa Biosystems, a developer
of technology for conducting multiplex protein analysis, which we profiled in our July 2014 Bulletin. Part of the larger
NBGI Private Equity group, NBGI Ventures (€71.4mn (2007); AUM €918mn) is a London-based VC firm focused on
medical technology. Seroba Kernel (€78.6mn (2009); AUM €102mn) is a Dublin-based VC firm targeting life sciences
companies in Ireland, the UK and Western Europe.
A FTSE 100 listed company, IMI (LSE:IMI) has been going through a major restructuring process over the past decade,
disposing of various non-core businesses. In October 2013, it sold its beverage dispensing and merchandising division
to Berkshire Hathaway for $1.1bn (€807mn), to focus on its industrial flow-control products and systems business.
© Go4Venture Advisers 2014
Page 9
November 2014
Finsecur
France | www.finsecur.com
#
Sector
Round
€mn
Description
Investors
4
Hardware
Late
Stage
25.0
Manufacturer of fire safety and fire detection
products
bpifrance, Edmond de
Rothschild Investment Partners
Finsecur (France), a manufacturer of fire safety and fire detection products, raised €25.0mn in a Series A round led by
Edmond de Rothschild Investment Partners with support from bpifrance.
Since being founded in 1998, Finsecur has gradually pursued a policy of vertical integration. As a result, the firm can
now supply the entire value chain for fire safety equipment – starting with the initial design and specification, through
manufacture and installation and ending with ongoing maintenance.
Since 2010, this integration has been supported by an M&A programme which has also expanded the firm’s product
range. Finsecur bought smoke removal specialist SIM-Sécurité Incendie Montage in 2011, and installation and
maintenance firms GSP Sphynx Protecvol and Guardian Alarm in 2013. This acquisition programme also helped jump
start Finsecur’s international expansion, which started at roughly the same. Specifically, the firm bought British optical
smoke detector manufacturer TheFireBeam in 2011 and Spanish fire alarm manufacturer Detnov in 2014.
The firm was set up by researchers from the ESPCI (École Supérieure de Physique et de Chimie Industrielles de la ville
de Paris), including ESPCI Honorary Scientific Director Jacques Lewiner, together with serial entrepreneur Christophe
Bonazzi. Not only is ESPCI one of France’s foremost schools of engineering, but it also has a very good reputation for
research – with former staff including Nobel laureates Marie Curie and Pierre-Gilles de Gennes.
Finsecur has maintained this emphasis on R&D throughout its history, dedicating roughly 10% of turnover to R&D and
filing over 120 patents. Unusually for a manufacturer of hardware, the firm has also developed a range of complementary
software. Most recently, Finsecur’s R&D programme has enabled it to develop radio-linked fire detection systems which
are currently undergoing certification.
The firm maintains offices in Belgium, Spain and the UK, and a factory in Nanterre West of Paris. The local government
has been strongly supportive of the firm, particularly when it came to facilitating the relocation of SIM-Sécurité’s
manufacturing to Nanterre.
The firm markets its products through many different channels including specialised distributors, electricians, installers
and civil engineering firms. Finsecur’s products are also white-labelled for OEMs. Selling both B2B and B2C, over the
past decade Finsecur has achieved a revenue CAGR of around 26% and anticipates 2014 turnover in excess of €45mn.
While the firm now aims to generate a third of its revenues from overseas, domestic growth is currently being driven by
recent regulatory changes in France. Specifically, Finsecur is authorised to dismantle a particular type of fire sensor as
mandated by a decree of November 2011. Also, as of March 2015, a new law (ALUR) will require all property owners to
install autonomous smoke detectors and alarms ("DAAF"), a segment where Finsecur is active via its GSB LifeBox
brand.
Investors
The transaction was led by Edmond de Rothschild Investment Partners (€317mn (2014); AUM €5.7bn) – the Parisbased private equity and VC arm of La Compagnie Financière Edmond de Rothschild Banque which was set up in 2002.
Although it is both stage and sector agnostic, Edmond de Rothschild’s has a strong preference for Europe. In principle,
the firm will consider almost any deal structure including venture capital, mezzanine and bridge finance, PIPEs and preIPO investment, public-to-private, as well as a variety of buyouts and buyins.
Edmond de Rothschild’s has a very broad preferred ticket size – €1mn to €20mn for companies with revenues of €5mn
to €300mn and enterprise values ranging from €10mn to €40mn. Its time horizon, however, is a conventional three to
five years. While the firm will not take a controlling stake, it usually seeks a board position in its portfolio companies.
As readers will remember, bpifrance (€327mn (2011); AUM €1.1bn) was formed in 2013 from a combination of existing
French institutions – CDC Entreprises (the PE subsidiary of Caisse des Dépôts), the FSI (investing in fund-of-funds and
direct investments), FSN-PME (backing startups) and OSEO (a state-backed bank which lends to SMEs).
Also stage and sector agnostic, bpifrance invests only in French companies. It made this investment through its ETI
2020 fund. This is a €3bn fund set up late in 2013 to provide long-term support for medium-sized French companies
seeking to grow and expand internationally. The fund invests in deals of not less than €10mn, but again will not take a
controlling stake.
© Go4Venture Advisers 2014
Page 10
November 2014
MenInvest
France | www.meninvest.com
#
Sector
Round
€mn
Description
Investors
5
Internet
Services
C
23.2
E-tailer of mens’ apparel, shoes
and accessories
123Venture, bpifrance, Idinvest Partners, Orkos Capital,
Partech Ventures
MenInvest (France), an e-tailer of male apparel, shoes and accessories operating under a number of brands including
Menlook, raised $29.0mn (€23.2mn) in a Series C round led by Idinvest Partners with support from new investor
bpifrance and existing investors 123Venture, Orkos Capital and Partech Ventures. The money will be used to
accelerate international development, particularly in Asia and the US.
Graduating at the end of the dot-com bubble, Menlook founder and CEO Marc Ménasé joined price comparison site
Kelkoo in 2001 but left almost a year before it was sold to Yahoo! for $670mn (€547mn) in 2004. Whether or not he
retained any stock or options after he left, back then valuations were just beginning to recover and this was serious
money so M. Ménasé will have been aware of the potential of entrepreneurial activity to generate substantial wealth.
By that time, however, Ménasé had already started his own firm – media agency AddviseMedia. Following a merger
early in 2006, the firm changed its name to Nextedia and was sold to Lagardère Active in 2007 for an initial cash
payment of €50mn with additional contingent earn-out payments of up to €50mn. Staying at Nextedia until its NYSEEuronext debut in 2009 gave Ménasé a ring-side seat to watch the development of fashion e-tailing as pioneered by
(primarily French) firms such as Showroomprivée.com, Vente-Privée and Vestiaredecopines.com.
When he set up Menlook late in 2009, from the statistics available to ad agencies Ménasé would have seen that not only
was fashion e-tailing skewed towards women, but there was also latent demand from men. Under a number of online
brands, Menlook operates as an e-tailer of apparel, shoes and accessories for men, and bolsters customer loyalty
through a companion fashion blog – the Menlook Tribune.
Launched in 2011, Menlook maximised what had been learnt from the evolution of fashion e-tailing for women. The firm
operates private sales for members only, a discounted outlet store and – unlike some of the early sites catering to the
female customer – has invested significantly in high-quality customer service from the beginning. The result is that, in
2014, the firm has had 400,000 paying customers spending an average of €210. These came from some 17mn visitors –
a conversion rate of 2.4%. Menlook anticipates revenues of €30mn to €35mn this year and is targeting €100mn in 2017.
In the last two years, Menlook has entered six new markets outside France – Germany, Holland, Italy, Singapore, Spain
and the US. It generates over 60% of its revenues from abroad. The firm has also expanded its range and now sells
more than 400 brands, including three own-label brands.
Of course, to achieve such success and high conversion rates come at a cost. Not only does the firm have to invest in
customer service (including a style hotline) but it also offers free worldwide shipping and 30-day returns. Going forwards,
however, the firm intends to extend its current strategy rather than cut costs. Indeed, the firm plans a 20% increase in
headcount over the next 18 months, has just launched a personal stylist service under the name ‘Georges’ and is about
to open a premium marketplace. It remains to be seen whether the firm’s profits will be as successful as its turnover
growth, but Menlook certainly has ambition and by 2017 wants to be “running the largest men’s store in the world.”
Investors
Menlook is positioning itself as ‘the first independent pure player in men's fashion in Europe’. It does, however, face
competition from venture-backed firms such as Outfittery (which we covered at the start of the year) and a plethora of
smaller firms such as enclothed and The Chapar. Similar non-European firms include Chinese Justyle (backed by
Balderton), the more mature US-based Bonobos (which has raised almost $130mn (€106mn) since it was founded in
2007) and Trunk Club (which was acquired by Nordstrom in July 2014 for €286mn).
E-tailing is highly capital intensive, and this deal will replenish Menlook’s balance sheet following the acquisition of
British competitor Oki-Ni in May 2013 for an undisclosed sum. Oki-Ni now acts as the luxury window for Menlook.
The two new investors in this round – Idinvest Partners (€443mn (2014); AUM €4.1bn) and bpifrance (€327mn (2011);
AUM €1.1bn) (see Finsecur above) are well known. Less well known are existing investors 123Venture (€100mn (2012);
AUM €654mn), Orkos Capital (€95.3mn (2007); AUM €113mn) and Partech Ventures (€106mn (2013); AUM €720mn).
Both based in Paris, 123 and Orkos co-led Menlook’s Series B round in 2012. As a private equity firm specialising in
communications and IT, Orkos has backed over 50 companies since it was set up in 2006. It is unusual in having raised
the only (as far as we are aware) fund dedicated exclusively to robotics earlier this year.
Based in Paris, Berlin and San Francisco, Partech is a growth equity investor targeting consumer internet and IT deals of
up to $10mn (€8.1mn). Partech has expertise in this industry, having led a €10mn Series C round (see our November
2008 issue) for Brands4Friends which was sold to eBay for $200mn (€163mn) in December 2010. Set up in 2001,
123Venture manages a range of tax incentive funds, which include mezzanine, real estate and venture capital.
123Venture invested in Brands4Friends alongside Partech.
© Go4Venture Advisers 2014
Page 11
November 2014
Trustly
Sweden| www.trustly.com
#
Sector
Round
€mn
Description
Investors
6
Internet
Services
B
23.0
Operator of a payments platform
Bridgepoint Development
Capital
Trustly (Sweden), operator of a payment services platform, raised €23.0mn in a Series B round from Bridgepoint
Development Capital. The money will be used to support expansion into other European countries.
Fintech investments have now been popular for some time. Even excluding deals related to Bitcoin, recent examples
that we have covered in our Bulletin include Tradeshift and Zopa in February 2014, Azimo and WorldRemit in March,
The Currency Cloud in April, iZettle in May, Ebury, Kreditech and TransferWise in June, Funding Circle in July, as well
as Spotcap and Traxpay in October. The payment processing industry is of particular interest. According to Bridgepoint,
it is expected to grow from €37bn today to €65bn by 2020 (at a 10% CAGR). This is largely due to structural growth as ecommerce accounts for an increasing proportion of all purchases.
Founded in 2008, Trustly is a Payment Service Provider (PSP) which can facilitate B2B, C2B and P2P transactions.
Rather than having to negotiate and integrate with the systems of every bank separately, merchants can sign a single
agreement giving them access to all of the banks covered by Trustly. Currently, this includes just under 60 banks in eight
European countries. This also reduces development costs as a single API gives access to all of these banks.
With so many banks covered – in Denmark, Finland, Spain and Sweden, all of the major banks are connected to the
firm’s system – Trustly can offer a bank-independent service. While initially licensed by the Swedish authorities, Trustly
can expand anywhere else within the EU in line with the European Payment Services Directive. Each additional country
that Trustly covers makes the firm’s services more attractive to merchants, as it greatly simplifies their cross-border
payments and facilitates access to other European markets.
Another issue that Trustly can help with is the increasing prevalence of mobile payments. With 18% of e-commerce
transactions now made using tablets or smartphones, the fact that Trustly’s platform is not only adapted for mobile
devices but also supports retina-scanning is a significant selling point.
Owing to this popularity, Trustly has so far processed €2.1bn worth of payments for 67mn consumers. Currently, the firm
is processing over seven million payments a year accounting for €1.1bn – a year-on-year growth in excess of 100%.
Trustly has recently made two significant coups in terms of customers. In January, listed e-commerce giant Groupon
(NASDAQ: GRPN) implemented Trustly for direct bank payments. While Trustly has won a number of awards – including
Red Herring’s Top 100 Europe – perhaps the most significant endorsement of Trustly is PayPal Scandinavia entering
into a strategic partnership with the company in June this year, to allow PayPal users to fund their accounts directly from
their bank. While initially the agreement only covers Denmark and Sweden, it has obvious expansion potential.
Investors
Bridgepoint Development Capital (BDC) (€341mn (2009); AUM €11.5bn) is part of the Bridgepoint private equity group.
BDC provides growth equity as well as financing buyouts, typically for businesses with enterprise values of between
€20mn and €150mn. The firm’s preferred investment size is €10mn to €75mn per business.
BDC’s sector remit is very broad and includes consumer and leisure businesses, financial services, healthcare, industrial
businesses, media and technology companies as well as service businesses. Currently, however, the firm limits its
operations to only part of Western Europe – France, the Nordic Region and the UK – although it plans to expand. The
Bridgepoint private equity group as a whole operates from eight offices scattered across the EU.
Since it was set up roughly a decade ago, BDC has taken part in over 50 transactions – many of which involved a
significant component of cross-border execution. Recent exits include the sales of Hallmark Hotels to Topland and IT
infrastructure services business Pulsant (which we covered in our June 2014 issue for its €250mn sale to Oak Hill
Capital Partners). Although details of the Pulsant sale were not disclosed, BDC first backed Hallmark with a £9.4mn
(€12.0mn) investment in 2007 and has said that this exit yielded a 2x return.
© Go4Venture Advisers 2014
Page 12
November 2014
LeanWorks
UK | www.yplanapp.com
#
Sector
Round
€mn
Description
7
Software
B
19.2
Developer of an app for
event booking
Investors
General Catalyst, Nokia Growth Partners, Octopus
Investments, Wellington Partners
LeanWorks (trading as YPlan) (UK), developer of an event booking app, raised $24.0mn (€19.2mn) in a Series B
round co-led by General Catalyst, Octopus Investments and Wellington Partners with support from new investor
Nokia Growth Partners. The money will be used for development associated with a change in the company’s business
model.
Launched in 2012, YPlan is the developer of an app for the $80bn event market. Allowing people to book and pay for
events with a few taps on their phone, and then use the same phone as an electronic ticket, means local events can be
booked at the last minute. Event organisers can thus reduce their spending on box office staff as well as continue selling
until the last minute (possibly at a discount) in order to reduce empty seats and increase profitability.
Now operating in Las Vegas (since May), New York and (since February) San Francisco as well as London, YPlan says
its app has had 1.5mn downloads but has not dicslosed how many of these became repeat users. The percentage
growth figures in the press are almost meaningless without revenue numbers. All we know of these is that, for the year to
December 2013, YPlan’s turnover was less than £5.6mn – the threshold for filing an abbreviated P&L at Companies
House. But given the scope for rapid growth (and indeed contraction) in this industry, this isn’t very meaningful either.
When we last saw YPlan for its €9mn previous round in June 2013, the firm operated a direct sales model where sales
staff negotiated partnership deals with event organisers and took a commission on the tickets sold. Although it did not
have to buy ticket inventory, neither did it charge organisers for listing events. This had the advantage that the range of
events on the platform was curated; YPlan hoped to grow its user base by becoming known as a source of the best last
minute entertainment options in any given city. Indeed, LastMinute.com co-founder Brent Hoberman was an early
investor. Unfortunately, this is a costly way to generate inventory. Sales staff are expensive and a separate sales effort is
needed for every city as users only go to events near them. Because it does not charge for listings, Yplan only recoups
the cost of its sales effort if tickets are actually sold. The adverse cash flow impact is minimal because 90% of bookings
are for events within seven days, but YPlan does assume a significant part of the risk of tickets not selling.
To deal with this, YPlan plans to amend its business model by implementing a self-service portal for event organisers to
list their events. This will enable YPlan to reduce operational costs by shedding sales staff – headcount has already
been cut in New York. This not only makes the whole business much more scalable, but it will also make YPlan
economically viable for smaller events such as pop-ups and niche comedy shows – a classic example of the ‘internet’
giving access to a long tail of potential new customers – a previously un-addressable market.
Increasing both scalability and market size in one fell swoop is a pretty neat trick; but there is a cost. While New York
overheads have fallen, headcount in London (about 50) remains the same as many of these are developers. Indeed, in
the short term, there will be significant development costs – and also risk given the aggressive schedule the firm has
talked about (with initial changes being ready for New Year’s Eve). At the same time as this so-called pivot, the firm
intends to develop more social features such as real-time event reviews and friend co-ordination tools.
The firm also has the option to go after two new revenue streams. It is already improving the analysis of its customer
data in order to provide better recommendations based on location, purchase history and friends. Such data could be
sold to third parties. The firm has also said it will consider syndication of events with, for example, travel portals.
Investors
Without performance figures, we cannot say whether this ‘pivot’ is an attempt to push a loss-making business into the
black or a foresighted strategic move to increase margins, scalability and addressable market size. One might have a
gut feeling that YPlan’s initial business model should be profitable, as Just-Eat (in many ways similar) turned a pre-IPO
profit; however, YPlan has to sell to local businesses not just once, but on an ongoing basis.
While described as a ‘pivot’ in the press, this is more of a course correction than the volte-face of a very young startup
whose first idea has failed. Indeed, the fact that all of the professional investment firms we described in our coverage of
the previous round (General Catalyst (€552mn (2013); AUM €2.5bn), Octopus Investments (€50.6mn (2013); AUM
€6.1bn) and Wellington Partners (€113mn (2014); AUM €676mn)) have returned with a significantly larger commitment
suggests that this really is a strategic move. Wellington has some experience in ‘local commerce’ through its backing of
Hailo.
Nokia Growth Partners (NGP) (€205mn (2013); AUM €572mn), funded solely by Nokia but operating independently, is a
global growth equity investor specialising in mobile (or otherwise connected) businesses. ‘Local commerce’ is one of
NGP’s five target sectors (the others are the connected car, connected enterprise, data analytics and mobile consumer).
After selling its mobile phone business to Microsoft, the technologies on which YPlan depends – mapping, locationbased services and networks – constitute Nokia’s core business. Moreover, NGP’s global reach means it already has
significant experience of investing in this area, having backed no less than eight local commerce companies so far.
© Go4Venture Advisers 2014
Page 13
November 2014
Finexkap
France | www.finexkap.com
#
Sector
Round
€mn
Description
Investors
8
Internet Services
A
18.2
Online invoice factoring for SMEs
Finsight Ventures, GLI Finance
Finexkap (France), an online invoice factoring firm, raised $7.5mn in equity and $15mn in debt in a $22.5mn (€18.2mn)
Series A round led by GLI Finance with support from Finsight Ventures. The equity will be used for marketing and
recruitment. The debt will be used as working capital to buy invoices.
The ‘secret sauce’ that distinguishes Finexkap from other startups providing credit to SMEs is securitisation. We discuss
details below but the takeaway is that, unlike many P2P operations where investors have to choose which loans or debts
to back, Finexkap does all the work and lets investors buy into the payments from a pool of debtors.
Throughout Europe, traditional banks fail to underwrite good credit risks due to legacy IT systems, unreliable
underwriting using criteria which are no longer relevant, poor credit scoring using only a fraction of the relevant data, and
regulatory and capital constraints.
To date, most fintech startups have focused on payments or long-term credit. Relatively little has been done for shortterm credit, which has traditionally been provided through invoice factoring. Currently, this often requires documentation
of the credit history of both client and debtor. Even when available, this takes time to put together, which is no use for
those trying to make payroll on a Friday afternoon.
Finexkap’s co-founders (serial entrepreneurs Cedric Teissier and Arthur de Catheu, who both have private equity
backgrounds) saw this first-hand when running their previous venture (online PE fund marketplace Palico), and set up
Finexkap in 2012 to exploit this gap in the market. Like other fintech startups we have covered, Finexkap has developed
its own proprietary credit-scoring algorithm using ‘big data’ sources of information, statistical analysis and some
behavioural theory. This algorithm scores both the potential client and their debtor and estimates a likely default rate. As
the application is made online, clients can factor their invoices in a matter of hours rather than weeks.
Launched this month, initially the firm will concentrate purely on the French market, where cash flow problems stemming
from unpaid invoices account for 25% of bankruptcies amongst SMEs. While only 3% of French SMEs use factoring
(compared with 10% in the UK for example), at $800bn (€653bn) and growing at 15% annually, France is the second
largest market for invoice receivables in Europe. It is dominated by 14 factoring companies – all of which are subsidiaries
of the major banks – which together purchased over $270bn (€220bn) of invoices in 2013.
In France, however, as in many other jurisdictions, the business of buying non-matured receivables is a regulated credit
activity and requires a license from the French Financial Markets Authority ("AMF"). This provides a significant barrier to
entry, but now that it has such a licence, Finexkap can operate throughout the European Economic Area.
This does not mean that Finexkap is entirely without competition. British online factoring startups MarketInvoice and
Platform Black already factored £190mn (€242mn) and £82mn (€104mn), respectively. Set up in 2011, VC-backed
MarketInvoice has received £6.6mn (€8.4mn) of early-stage funding from Northzone and others. Weighted average
default rates remain in the low single figures of basis points with net yields in excess of 10%, which is attractive with
LIBOR still at historical lows. Both MarketInvoice and Platform Black act as P2P platforms auctioning off short-term
corporate debt. To diversify their risk, investors are encouraged to put up enough money that they can buy multiple
invoices.
Investors
The difference between Finexkap and its British competitors is reflected in the structure of the deal. This is where
securitisation comes in. Unlike MarketInvoice and Platform Black, Finexkap has a wholly owned regulated subsidiary
(Finexkap AM) which holds the invoices and receivables. The $7.5mn (€9.6mn) equity part of this deal went into
Finexkap itself and will be used for marketing etc. The $15mn (€12mn) debt part went into Finexkap AM and will be used
to buy invoices.
What this means is that the cash flows coming in from the invoices can be pooled, repackaged and the receivables sold
on to investors – a process known as securitisation. While this may be somewhat unfamiliar to the sort of private
investors who buy loans on P2P platforms, it is familiar (financial) technology to institutional investors who have long had
Asset Backed Securities (ABS) in their portfolios.
© Go4Venture Advisers 2014
Page 14
November 2014
In the past, securitisation has been used to repackage and sell the cash flows of a wide variety of assets – Residential
Mortgage Backed Securities (RMBS) are the best known, but commercial mortgages, loans and rent payments from pub
chains are all common examples. Of course, after the sub-prime shenanigans of the mid-noughties the securitisation
markets almost closed with issuance dropping by an order-of magnitude. One might think that investors would be
nervous about ABS as an asset class, but those inside the industry are only too aware that the problem was not the
securitisation technology but the way in which it was abused. In fact, not only are there signs of recovery but, highly
unusually, the Bank of England joined forces with the European Central Bank to support this and suggest how to do it.
As in any securitisation, the pooled cash flows are sold to investors as structured notes with varying coupons and
degrees of risk. The first money to come in is allocated to the least risky notes (the senior notes) and attracts the lowest
coupon. Thereafter, money is allocated to successive tranches of notes, which are increasingly risky but with
progressively higher coupons. Finexkap has chosen a particularly simple structure. Roughly 80% of the expected cash
flows are allocated to the senior notes with a floating-rate coupon of 200bps over Euribor. The remaining 20% is
allocated to mezzanine notes at 750bps over Euribor. Additional credit support is available if necessary.
Even with one month Euribor averaging around 0.1% this year, this gives a weighted average coupon in excess of 3% –
not outrageous but one of only a few low-risk investments giving returns better than inflation – which averaged 0.55% in
France this year. Investors could potentially get slightly higher returns on fixed-rate notes but by the time Finexkap
ramps up, central banks are likely to be thinking about (finally) raising interest rates and Finexkap’s Floating-Rate Notes
(FRNs) would be a good hedge.
Of course it is still early days but this could be highly disruptive. As we have seen in Germany, it took a long time for
banks to wake up to the threat from successful P2P lending platforms such as Auxmoney and Kreditech. However,
institutional investors such as pension funds and insurers may find this sort of asset attractive – it is familiar technology
but gives them access to a new type of short-term investment (French institutional investors invest on a three-month
basis) that banks cannot provide. This would be game changing.
Sensibly, Finexkap is not planning to rush into growth. It is vital to monitor the effectiveness of its platform’s algorithm.
When the time comes, however, payment delays in France are now around 50 days and have been consistently
decreasing for the last decade. Finexkap should therefore be able to cycle through half a dozen generations of invoices
a year, meaning it would have securitised €90mn to €100mn. Effectively, the short payment delays give the firm a kind of
operational gearing. Of course, if institutional investors really like this asset class we may see Finexkap again.
For the moment, however, this transaction was led by AIM-listed GLI Finance Limited (AIM: GLIF), formerly known as
the Greenwich Loan Income Fund Limited, which provided $4.1mn (€3.3mn) of the $7.5mn (€6.1mn) in equity giving it a
26% stake in the company. GLI is not a venture investor in any sense of the word; it originates loans for SMEs in the US
and UK. Unlike the majority of the investors which feature in our Bulletin, GLI aims to produce a stable dividend yield for
its shareholders while preserving the long-term net asset value. GLI normally invests in syndicated corporate loans
issued by mid-market companies from a diverse range of sectors. This is a highly unusual transaction for the firm.
GLI was supported by Finsight, a specialist fintech investor based in New York but with portfolio companies all over the
world. Finsight’s partners include former COO and Board Member of LendingClub, John Donovan. To date, the firm has
made 12 investments. The most high-profile of these is P2P lending pioneer Lending Club, which has just listed on the
NYSE in a $5.4bn (€4.4bn) IPO. The fact that a number of other fintech companies are also nearing readiness for a
public listing is a very positive sign for the sector as a whole.
Notwithstanding the rosy market conditions and Finexkap’s structural advantage, there may be a very small cloud on the
horizon. Because financial regulators will not allow banks to use their equity to buy growth, a trade sale might not be
straightforward, leaving investors needing an IPO to exit. If the current VC bubble bursts before Finexkap has grown
sufficiently for an IPO, and the public markets react in their usual irrational way by discounting the value of any VCbacked firm irrespective of its commercial soundness, investors may end up stuck with their investment.
Of course, in the case of Finexkap, if the platform can grow organically it can provide a sufficient volume of receivables
for a series of securitisations, and the business would be a self-sustaining money-printing machine whose profits would
grow and shrink in line with the economic cycle. While this is not the sort of investment most VC firms seek, they might
not object too much to owning such a thing if the rest of the VC landscape looks anything like 2002.
© Go4Venture Advisers 2014
Page 15
November 2014
Fyndiq
Sweden| www.fyndiq.se
#
Sector
Round
€mn
Description
Investors
9
Internet
Services
A
16.0
Operator of an online marketplace for retailers to
sell excess inventory and slow-moving stock
Industrifonden, Northzone
Fyndiq (Sweden), developer and operator of an online marketplace which provides consumers with bargains by
allowing retailers to offload excess inventory, raised SEK150.0mn (€16.0mn) in a Series A round led by Northzone with
support from Industrifonden. The money will be used to enter the British, German and Polish markets.
Major firms which overstock can afford to have outlet stores to offload their excess inventory at discount prices. Smaller
retailers cannot afford to do this, are often stuck with any excess stock and have to write it off as a total loss.
Set up in 2010 by no less than five co-founders, Fyndiq provides an online marketplace for smaller merchants to sell
their overstocked, end-of-life or slow moving inventory. By selling through Fyndiq rather than their own platform,
merchants can offload inventory at a discount without devaluing their own brand.
Fyndiq does not charge a fee for listing items on its platform; it makes its money by charging a 5% commission on items
sold. This attracts a wide range of products onto its platform and the firm has developed a reputation as a marketplace
for bargains. This in turn attracts consumers, and thus lets small merchants reach many more potential customers.
Fyndiq has said that it wants to be ‘an Amazon for bargain products’. However, Amazon already provides retailers with
online shop-fronts and is also pushing its Warehouse Deals — where it sells open-box and damaged-packaging items at
a discount. Fyndiq might argue that it is different to Amazon because it does not have to carry the cost of its own
inventory, but there is also competition from eBay and Alibaba, both of which are expanding their marketplace services
across international borders. One cannot argue with performance, however. Fyndiq has grown from just over 200,000
orders in 2012 to over 450,000 today, with turnover growing at over 120% from €6.2mn in 2012 to €13.8mn in 2013.
Having broken even in November 2013, the firm expects revenues of around €27mn this year. There is a helpful
infographic here. One possible reason Fyndiq might be attractive to merchants who only want to sell small amounts of
overstock on an occasional basis is its fee structure. Amazon charges a lower commission on goods sold, but merchants
pay $80 (€65) a month for using the platform. While eBay shops do not have to pay commission on their sales, they
must pay not only a monthly fee, but also a fixed amount per listing. The same goes for Shopify’s fees.
For this reason, it could be argued that Fyndiq’s European competition is indirect and may not limit its growth. There is
some support for this argument from India’s Snapdeal. Snapdeal also makes its money just from commission with no
listing or monthly fees. While both Amazon and eBay are active thoughout India, Snapdeal had 20mn registered users
as far back as February 2013 and is now India’s largest online marketplace. Snapdeal has just raised $627mn (€549mn)
from Japan’s Softbank, bringing its total investment to $1bn (€0.8bn) this year alone.
Investors
This being a Series A round, one might ask how Fyndiq got so far on just seed money. The answer is that it didn’t. Its
seed funding – provided by former Scandinavian Airlines CEO and now super-Angel Jan Carlzon – came to €4mn.
Readers may still think of transaction leader Northzone (€255mn (2014); AUM €532mn) as an early-stage technology
investor focused on the Nordic countries. Indeed, despite its deals contributing actively to our proprietary Headline
Transaction Index (HTI) ever since we started it in 2003, Northzone’s deals used to often be too small to feature in our
Bulletin. However, Northzone now participates in larger growth equity deals and we have written up several of its recent
transactions. Examples include Avito.ru in May 2012, Trustpilot back in January and iZettle earlier this year in May. The
firm also hit the headlines back in April when it sold portfolio company Jasper Design Automation (which develops
debugging and automated testing solutions) to Cadence (NASDAQ: CDNS) for $170mn (€139mn). Northzone first
backed Jasper in 2004. This does not mean Northzone has stopped making early-stage investments. Recent small deals
include €2mn for FishBrain (a social network for anglers) in July, €2mn for subscription-based concert invitation startup
Jukely in October and €3mn for ad-supported ISP AllUnite. Jukely is a notable example of a European investor backing
a US startup.
Northzone was supported by Industrifonden (AUM €384mn) – a VC backed by the Swedish Government to help
Swedish startups expand internationally. Naturally, Industrifonden prefers minority stakes and Fyndiq’s five co-founders
remain the majority shareholders.
Even if Amazon might not be a direct competitor, it remains a possible trade buyer. It has already made one high-profile
acquisition of a ‘bargain basement e-tailer’ – in 2010 it bought Woot! for $110mn (€90mn). Since the acquisition, Woot!’s
sales have grown c.20% per annum, according to TechCrunch. However, in this time, seven of its key employees
(including its CEO, CFO and CTO) have left. This was attributed to both a downturn in the popularity of flash sales,
leading the original team to want to try new things, as well as some integration pains such as switching over to Amazon’s
fulfilment system (limiting the range of items that could be shipped for price reasons).
© Go4Venture Advisers 2014
Page 16
November 2014
Intersec
France | www.intersec.com
#
Sector
Round
€mn
Description
Investors
10
Software
B
16.0
Developer of ‘big data’ software allowing MNOs to optimise
their business, offer LBS and monetise user data
CM-CIC Capital Innovation,
Highland Capital Partners,
Innovacom
Intersec (France), a developer of software which allows Mobile Network Operators (MNOs) to realise the value of the
data they can collect while running their networks, raised $20.0mn (€16.0mn) in a Series B round led by Highland
Capital Partners with support from existing investors CM-CIC Capital Innovation and Innovacom. The money will be
used to support global growth, particularly in the US with expansion of the firm’s US headquarters in New York.
Founded in 2004, Intersec is the latest in a series of investments we have seen relating to ‘Big Data’. Although it started
out producing monitoring and analysis products for network carriers, over the last five years the firm has transitioned to
focus purely on software with concomitant revenue growth driven by the confluence of m-commerce and big data.
Intersec now makes its money from four products for MNOs and Mobile Virtual Network Operators (MVNOs) who offer
mobile services but do not own the network infrastructure):

Iris™ – a platform which allows operators to offer subscribers timely promotional offers based on their specific
usage patterns and interests (rather than on simple price cuts which are easy to copy)

Igloo – a geolocator which can collect position data for an entire subscriber base in real-time, both passively
(hence not overloading the network) and actively, thus enabling Location Based Services (LBS)

Ignition – a fast and cost-effective messaging platform supporting all common network technologies and
protocols – vital with mobile revenues going down and demand for data services (like messaging) going up

Insighted – software which analyses data from numerous sources to help optimise customer offerings, spot
unusual network activity and monetise user data through, for example, context-based advertising
Intersec’s competitive advantages are largely technical. Its code base is primary C, which is not only faster rather than
interpreted languages like Java, but compiles to more efficient object code than languages like C# hence improving
performance. All development is in-house, but Intersec encourages third-party developers through an open API.
Despite evolving from a telecoms business going back to 2004, the firm’s technical architecture does not depend on
legacy software but instead uses modern tools such as noSQL databases, and the MapReduce design pattern and
implementation for processing ‘Big Data’ in parallel on a server cluster. One benefit Intersec does derive from its history
is that its software has been written with the needs of telecoms operators in mind from the start. This gives a more
efficient result than porting big data solutions from elsewhere and adapting them.
With offices in Abidjan on the Ivory Coast, Dubai, Johannesburg, Madrid, Sao Paolo and Singapore, as well as regional
headquarters in Paris and New York, Intersec maintains a direct sales force. It also sells through a network of partners
which include system integrators, OEMs and agents. Customers include Etisalat, MTS, Orange, SFR and Telefonica.
Investors
Led by global VC firm Highland Capital Partners (HCP) (€327mn (2013); AUM €2.4bn), this deal brings total investment
in Intersec to €22mn. Founded in the 1980s, HCP has grown into a stage-agnostic technology investor investing
throughout China, Europe and North America from its offices in Boston, Geneva, London, Palo Alto and Shanghai. Of
the c. 230 companies that the firm has backed, the best known are Ask Jeeves, Lycos, MapQuest and VistaPrint.
Investing in Europe as Highland Capital Partners Europe since 2007, recent HCP investments that we have covered
include Prescription Eyewear in January 2013, NewVoiceMedia in February 2013, and Outfittery in February 2014. This
is one of the first investments by HCP’s first independent European fund – a €250mn tech growth fund which the firm
closed back in May. The fund targets internet, mobile and software businesses with revenues in the tens of millions,
which are either profitable or soon will be.
CM-CIC Capital Innovation is a Paris-based firm that backs French SMEs from seed stage all the way through to growth
capital – much like HCP Europe. While nominally sector-agnostic, most of the firm’s two dozen portfolio companies are
in e-commerce, hardware, internet services, software or telecoms.
Fellow existing investor Innovacom (€32.3mn (2012); AUM €306mn) is also headquartered in Paris but maintains
additional offices in Aix-en-Provence and Stockholm. Best known for backing Business Objects, Kelkoo and
LastMinute.com, Innovacom seeks out technologies, products and services based on information and communication
technologies. Usually preferring to get involved with a company at its first round of institutional investment, this is
precisely what it did with Intersec, having led the €3mn Series A round in May 2011.
© Go4Venture Advisers 2014
Page 17
November 2014
Curetis
Germany | www.curetis.com
#
Sector
Round
€mn
Description
Investors
11
Medtech
B
14.5
Developer of molecular
diagnostic technologies
Aeris Capital, BioMed Partners, CD Venture, Forbion
Capital, HBM Partners, Life Sciences Partners, Qiagen,
Roche Venture Fund
Curetis (Germany), a developer of molecular diagnostics technologies, raised €14.5mn in a Series B extension from
new investor Qiagen with support from existing investors Aeris Capital, BioMed Partners, CD Venture, Forbion
Capital, HBM Partners, Life Sciences Partners and Roche Venture Fund.
As readers may remember, Curetis has developed a molecular diagnostics platform which automates testing for
infectious diseases. When we last saw Curetis in April 2013, the firm’s Unyvero™ system had been CE-marked in
Europe, and the company raised €12.5mn to support a further clinical trial in the US in order to gain FDA approval for its
Lower Respiratory Tract (LRT) infection diagnostic cartridge. The firm was on the point of expanding its distribution
network beyond the DACH region to both the rest of Europe and the Middle East and North Africa region, as well as
possibly Asia and Latin America.
At least some of this was achieved. In January 2014, the firm signed an agreement with Laboratorios LETI for exclusive
distribution rights in Portugal and Spain. The FDA study in the US is proceeding: in May 2014 Curetis appointed
Professor R. Patel of the Mayo Clinic as Lead Principal Investigator for the firm’s LRT FDA trial, and at the same time, it
announced that it had added six new sites to the trial, (bringing the total to nine).
Aside from commercial progress with its first product, the firm announced that it had completed the development of a
second diagnostic cartridge for its Unyvero platform in March this year. Known as the i60, this platform identifies 114
targets (91 pathogens and 23 resistance markers) common in eight clinical indications and after abdominal, orthopaedic
and soft tissue trauma such as burns and soft tissue infections. Following a 750 cartridge evaluation study, this new
cartridge was awarded CE-IVD status and launched commercially in May this year.
Investors
This round, which brings total investment in Curetis to just under €70mn, is an extension of the €12.5mn round led by
HBM Partners just over eighteen months ago in April 2013. The only new investor in this round is Dutch supplier of
assay and sample technologies Qiagen (NV:QGEN). The strategic value that Qiagen brings can be judged from the fact
that not only did the existing investors agree to extend the round and contribute additional funds themselves on a pro
rata basis, but they waited eighteen months to do so.
Founded in Dusseldorf in 1984, Qiagen also started out in molecular biology and listed on both NASDAQ and the
Deutsche Börse in 1996 and 1997, respectively. Polymerase chain reaction-related diagnostics have been part of the
firm’s product range, which the company has expanded through a combination of in-house R&D and acquisitions. Many
of these products are in the form of automated platforms, which makes Curetis’ Unyvero platform a natural fit.
In 2009, Qiagen acquired DxS – a developer of molecular assays which gave the firm a market leading position in
companion diagnostics (tests which help clinicians determine the right dose or treatment for a patient). The deal was
structured as $95mn (€68mn) in cash with contingent payments of up to $35mn (€21mn). In 2012, when Qiagen had
global sales of $1.3bn (€935mn), it restructured into two business areas – Life Sciences and Molecular Diagnostics.
As well as acquisitions, Qiagen has also made a number of investments in firms similar to Curetis. Recent examples
include $27mn (€19.5mn) invested in March 2014 in New York-based Exosome Diagnostics (a developer of blood-based
molecular diagnostics for oncology) and an undisclosed amount for Drug Response Dx in January 2013 (a developer of
biomarkers for measuring drug response). Qiagen’s internal R&D program, together with its range of acquisitions and
investments, have made the firm’s product range very comprehensive.
All existing investors participated in this extension. Aeris Capital (€42mn (2006); AUM €42mn) is the Switzerland-based
healthcare-focused family office of SAP co-Founder Klaus Tschira. We last saw Aeris Capital in our Bulletin in August
2014, when it contributed to a €20mn late-stage round in mobile advertising firm Smaato. HBM Partners (€124mn
(2005); AUM €615mn), which led the first tranche of this Series B investment in April 2013, is a Switzerland-based
investment firm targeting development, growth and buyout transactions. Based in Germany, CD Venture is a stageagnostic biotech investor. Since it became independent of ABN AMRO in 2006, Dutch life sciences investor Forbion
Capital Partners (€40.9mn (2011); AUM €643mn) has grown its portfolio to 28 biotech and life sciences companies, and
has recently announced the first close of its FCF III fund at €92mn with a target of €150mn to €200mn. It was also part of
the aforementioned investment in Exosome Diagnostics in March 2014. Based in the Netherlands, Life Sciences
Partners (€88mn (2010); AUM €512mn) provides debt and stage-agnostic equity.
© Go4Venture Advisers 2014
Page 18
November 2014
Genomics
UK | www.genomicsltd.com
#
Sector
Round
€mn
Description
Investors
12
Medtech
B
13.0
A developer of computational and
statistical methods to look for the
genetic causes of disease
Invesco Perpetual, IP Group, Lansdowne Partners,
University of Oxford, Woodford Investment Management,
Wylie Family Trust
Genomics (UK), a developer of computational and statistical methods to look for the genetic causes of disease, raised
£10.3mn (€13.0mn) in a Series B round from new investors Invesco Perpetual, Lansdowne Partners and Woodford
Investment Management with support from existing investors the IP Group and the University of Oxford.
Genomics was spun out from the University of Oxford earlier this year, and is the first startup to come out of the
University’s Wellcome Trust Centre for Human Genetics (WTCHG). The research of the WTCHG’s 450 scientists aims to
discover how variations in our genetic make-up can cause either health problems or specific diseases. The company has
built its research into an analytical platform that allows researchers to make maximal use of genetic sequencing data.
Genetic sequencing is now cheap enough that personalised medicine is commercially viable. 23andMe will now
‘sequence your genome’ for less than $100 (€80). By analysing which genetic variations cause which conditions or
diseases, it will be possible to tailor diagnostic and treatment methods. Ultimately, it should also be possible to develop
drugs (based on nucleic acid polymers) to replace one genetic variation with another and thus fix the problem. Human
DNA consists of only four simple molecules (nucleotides) denoted G, C, A and T. However, a single gene – which
codifies either how to make one of the proteins that make up much of the body or whether another gene should be
switched on (expressed) – consists of anywhere between a few thousand and a few million nucleotides. In humans, each
of our 46 chromosomes (23 pairs) contains a length of DNA about six feet long with between 50 and 2,000 genes.
Genetic sequencing can detect a difference in just one of a gene’s nucleotides – a Single Nucleotide Polymorphism
(SNP) – but while SNPs account for roughly 90% of genetic variation, so far we only know a few SNPs which cause
clearly definable clinical problems. Having the ‘wrong’ SNP typically only affects a single protein or biochemical pathway,
and may not do you much harm. Moreover, many diseases involve simultaneous mutations in a number of genes.
Finding new diagnostic tests requires a combination of sophisticated statistics and an understanding of population
genetics, exactly the research background of the WTCHG and Genomics’ co-founders. Furthermore, the company’s
analytical platform aims to provide an efficient way of applying computer power to the problem.
Genomics will also face commercial challenges when monetising its platform. Not only is genetics poorly taught in
medical schools, but there is a certain reticence on the part of healthcare players to pay for it. Commercial tests that are
available – such as those from Assurex and Genomind which help choose the correct psychotropic, ADHD or pain
medication – are often only available privately, which makes it hard to turn a profit. Until genetic testing gains acceptance
amongst healthcare players, a better way to commercialise such research is to partner with drug companies. Finding
genetic variations associated with particular clinical issues may suggest new drug targets. Moreover, selling superior
genomic analysis to pharmaceutical companies as an aid to drug discovery is a much more reliable way of getting paid.
Investors
This round values Genomics at c. £25mn (€31mn). Neither the firm’s Series A round nor the size of grant funding from
the UK’s Department of Health was disclosed, but total investment in Genomics is likely to be comparable with the
WTCHG’s annual income from research grants: £20mn (€25mn) for 450 scientists or c. £44k (€55k) per researcher.
In what must surely be the first example of vertical integration in personalised medicine, all of the new and existing
investors in this round are also investors in DNA-sequencing company and fellow Oxford spin-out Oxford Nanopore (a
frequent guest in our Bulletin). Holding company Invesco Perpetual (AUM €96.3bn) is a subsidiary of global investment
manager Invesco (NYSE:IVZ) which invests in VC funds as well as directly. Fellow new investor Lansdowne Partners
(AUM €6bn) is an Alternative Investment Manager based in London, whose venture investments generally involve
biotech, finance or nanotech. The third new investor is Woodford Investment Management (AUM €10.3bn) – the new
fund of renowned fund manager Neil Woodford, who spent 25 years at Invesco. When Woodford first appeared in our
bulletin with a €10mn investment in July, we were surprised. However, not only has Woodford since backed other nearIPO companies such as Oxford Nanopore in August, but it has also made conventional venture investments such as
PurpleBricks. The fund now stands at over £3bn despite only having been available to investors for four months.
Existing investor the IP Group (LON:IPO), which backed Genomics first round alongside the University, specialises in
the commercialisation of IP from 15 partner universities throughout the UK. AIM-listed since 2003, the firm has a portfolio
of over 90 companies. As a final note, Genomics is chaired by serial entrepreneur David Norwood, a serial entrepreneur
who was one of the original founders of Oxford Nanopore.
© Go4Venture Advisers 2014
Page 19
November 2014
i2O Water
UK | www.i2owater.com
#
Sector
Round
€mn
Description
Investors
13
Cleantech
C
10.1
Developer of technology to reduce leakage from
water distribution pipes
Naxos Capital, Nemadi Advisors,
Ombu
i2O Water (UK), a developer of technology to reduce leakage from water distribution pipes, raised £8.0mn (€10.1mn) in
a Series C round from new investor Ombu and existing investors Naxos Capital and Nemadi Advisors. The money will
be used to expand the firm’s R&D facilities and increase technical support for its network of partners and resellers.
Five years ago, McKinsey forecasted that global demand for water would reach 7tn cubic metres a year by 2030 – 40%
more than is currently available. The global water shortage receives less press coverage than climate change: while
Silicon Valley readers will certainly recall the West Coast drought, they might be surprised to learn that ‘grey and rainy’
Britain also has water problems. Readers elsewhere in Europe may be amused to learn that the British frequently have
restrictions on using hosepipes to water their lawns even after significant rainfall.
Various exotic schemes have been suggested to increase the global water supply, such as towing icebergs from the
Antarctic to the Middle East for example. However, in some cities both globally and in the UK, 40-50% of water is lost
through leakages. In the UK specifically, almost a quarter of national water supply is lost through leaky infrastructure that
th
has seen long-term underinvestment, especially since the privatisation of the water industry in the late 20 century. This
leaves significant room for short-term supply improvement before turning to new water sources.
These factors drove a team of British engineers to set up i2O in 2005 to develop ways of helping utility companies
reduce leakage. Its key offering is a leakage management system that remotely optimises water pressure at various
points along a water transport network. Water pressure is challenging for utilities to manage as it directly drives the rate
of leakage when high, but will impact end-customer service quality if too low. Many networks are still controlled manually
and the operational cost of optimising pressure by hand is prohibitive.
i2O uses intelligent loggers and PRVs (Pressure Release Valves), coupled with patented pressure management
software, to monitor and optimise network pressures based on demand patterns and the operating characteristics of the
network. Average benefits seen by i2O’s customers are a 20% reduction in leakage, energy savings of 20%, a 40%
reduction in burst frequency, an increase in the lifetime of pipes (of five or more years) and a significant reduction in
operating expenses (thanks to the reduced engineering man-hours needed across the network to fix leaks).
Based at the Southampton Science Park on the south coast of England, i2O employs 70 people at offices in Colombia,
Malaysia and Spain. Distributed through a network of resellers and partners, i2O’s technology is now in use by 66 water
companies in 22 countries in Europe, East Asia, Latin America, the Middle East and South Africa. Its 1.9bn installations
save some 235mn litres of water a day – equivalent to the daily needs of Barcelona.
In 2012, the company’s turnover was only £2.7mn (€3.4mn) but growing at c. 30% a year. Moreover, in September this
year i2O signed a deal with US smartmeter company Itron (NASDAQ: ITRI), which will give it access to 8,000 potential
customers in over 100 countries. This is the reason why i2O expects to need more commercial and technical support
staff. While revenues from the firm’s SaaS-based network monitoring software currently account for only a quarter of the
firm’s turnover, i2O expects that software revenues will overtake hardware sales within 3-4 years.
Investors
Bringing total investment in i2O to about €27mn, this deal is also part of a wider reorganisation of the firm’s capitalisation
table (replacing preference shares with ordinary shares) and board (which now has five members instead of nine).
Experienced technology executive Stephen Bold, former Director of Technology at Rolls Royce and Managing Director
of Sharp Laboratories Europe, and previously a Non-Executive Director, now becomes Chairman.
A key departure is one of the company’s three co-founders – Andy Philipps – who was previously a Non-Executive
Director. The other two co-founders – Adam Kingdon and Andrew Burrows – remain CEO and CTO, respectively.
Based in Luxembourg, Naxos Capital (AUM €300mn) is a growth equity investor that backs companies in a broad range
of industries including cleantech, consumer, industrials, mining, renewable energy and wider technology. It prefers
businesses headquartered in either Europe or North America, but is keen to support growth into the growing economies
of Asia and South America. Priding itself on speed of deal execution, Naxos is an evergreen fund with no constraints on
investment concentration or time horizon.
New investor Ombu is an early-stage investor backing energy, water and other industrial companies. While it prefers
transactions in the UK, it will invest elsewhere.
Nemadi Advisors is a UK-based investment advisor for the National Electronic Manufacturer’s Association (NEMA).
NEMA is a multinational trade organisation whose members include 3M and ABB and collectively sell more than €100bn
worth of diversified electronics. Nemadi is managed by Nick Beart, who has a seat on i2O’s board.
© Go4Venture Advisers 2014
Page 20
November 2014
Melijoe
France | www.melijoe.com
#
Sector
Round
€mn
14
Internet
Services
B
9.0
Description
Investors
E-tailer of designer children’s apparel
CM-CIC Capital, Gimv
Melijoe (France), an e-tailer of designer children’s apparel, raised €9.0mn in a Series B round led by Gimv with support
from CM-CIC Capital. The money will be used to expand the company’s product range and support international
expansion.
Via its website, Melijoe provides a range of designer apparel for children – it offers more than 7,000 different products
from c. 120 brands. The company provides its website in six languages and also publishes an in-house fashion
magazine. Its shipping service delivers anywhere in the world within 48 hours, and the company has received more than
100,000 orders since its launch in 2007. Furthermore, its site had c. 8mn unique users in 2014 and the firm had 2013
revenues of €14mn. Notably, more than half of these came from outside France and the firm intends to increase this to
75% in 2015.
As an e-tailer of children’s apparel, Melijoe operates in a highly competitive space. Aside from manufacturers selling
through their own websites and e-tailing behemoths such as Amazon, other alternatives include venture-backed firms
such as Windeln.de (which featured in our February 2013 issue for its €15mn late-stage round). Melijoe differs from the
above by targeting a clientele of cosmopolitan and fashion-savvy mothers with a high level of disposable income, who
wear designer clothes and want the same for their children. The firm offers a range of children’s fashion inspired by adult
runways from brands such as Cacharel, Fendi and Tartine et Chocolat.
Direct competition comes from firms such as Childrens Worldwide Fashion (CWF) (which started as a conventional
retailer and moved upscale in the mid-1990s). As well as department store concessions, CWF now sells under the
Atelier de Courcelles brand (in both physical stores and online) and generates global revenues of €160mn. Competition
also comes from stores such as Monshowroom.com (founded in 2006 but not venture-backed) which sell fashionable
children’s wear alongside high-end adult fashion.
Melijoe marks the third e-tailing investment in this issue of our Bulletin, and the second in fashion. As a mother of five,
Melijoe’s co-founder and CEO (Nathalie Christen-Genty) has a deep understanding of the firm’s customers. Having
worked in various internet-related jobs during the dot-com boom, she also has that badge of honour held by so many
successful entrepreneurs – the failed startup (an online store she set up to sell cow-print interior design products).
Investors
One of Melijoe’s noteworthy competitors is Windeln.de. Following its acquisition of Swiss market-leader Kindertraum.ch
at the end of 2013, Windeln.de is now strongly positioned within the e-tailer fashion space in the DACH region.
Furthermore, following its €15mn Series C round in May 2014, the firm is now planning expansion into non-German
speaking countries.
Gimv (€163mn (2011); AUM €1.8bn) expanded from a Flemish venture firm in the 1990s to become a NYSE Euronext
listed private equity and venture capital firm, investing across Benelux, the DACH countries and France. Having posted
portfolio returns in excess of 20% in 2010 and 2011, in 2012 the firm restructured following a strategic review.
The firm’s current strategy is to back companies across four key sectors – cleantech infrastructure, the consumer of
2020, healthcare, and technology which improves either sustainability or productivity for industry. The firm’s investment
sweetspot is €3mn to €30mn (€0.5mn to €100mn in Belgium) in SMEs with enterprise values of up to €125mn.
This deal continues Gimv’s recent focus on France (and specifically French clothing e-tailers). Recent deals include its
participation in bespoke holiday provider Planetveo’s €15mn June 2013 round and its buyout (for an undisclosed sum) of
a controlling stake in the Wolf Lingerie Group in January 2014. Notably, Gimv’s portfolio company Private Outlet (where
Gimv participated in the company’s September 2010 €9mn Series B round) merged with BrandAlley in May 2014 as part
of a €12mn refinancing (which created a firm with c. €150mn in revenues).
Paris-based CM-CIC Capital (AUM €370mn), which led Melijoe’s €5mn Series A round, backs French SMEs at any
stage from seed to growth capital. Launched in 1990, the firm seeks to invest in the e-commerce, hardware, internet
services, software and telecoms sectors.
© Go4Venture Advisers 2014
Page 21
November 2014
2.1 M&A Activity Index
Disclosed Global TMT M&A Transactions
European Deals 2014 (€mn)
Global Deals 2014 (€mn)
# of Global Deals 2014
600
35,000
500
30,000
25,000
400
20,000
300
15,000
200
10,000
100
5,000
0
Jan
Feb
(1)
Deal Value per Month (€mn)
# of Deals per Month
European Deals 2013 (€mn)
Global Deals 2013 (€mn)
# of Global Deals 2013
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) and WhatsApp acquisition by Facebook for €13.9bn (2014)
Disclosed European VC & PE-Backed TMT M&A Transactions (>£30mn / €35mn / $50mn)
Value of Deals 2014 (€mn)
# of Deals 2014
20
4,500
18
4,000
16
3,500
14
3,000
12
2,500
10
2,000
8
1,500
6
4
1,000
2
500
0
Jan
Feb
0
Apr (1)
Mar
Deal Value per Month (€mn)
# of Deals per Month
Value of Deals 2013 (€mn)
# of Deals 2013
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: The 451 Group; Capital IQ; PitchBook; VentureSource (including transaction value estimates); Go4Venture Advisers Analysis
(1) Includes ista International acquisition by CVC Capital Partners for €3.1bn (2013)
Disclosed European VC & PE-Backed TMT M&A Transactions (2014)
>£30mn / €35mn / $50mn
Monthly
Cumulative
Number #
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
5
4
1
2
3
7
6
1
5
7
6
Value
€mn
1,106
1,140
448
258
906
1,083
1,607
266
1,617
876
1,982
Median
€mn
240
259
448
129
215
129
200
266
150
96
256
41
47
Number #
5
9
10
12
15
22
28
29
34
Value
€mn
1,106
2,246
2,695
2,953
3,859
4,942
6,549
6,815
8,432
Median
€mn
240
39
303
186
228
175
175
195
175
© Go4Venture Advisers 2014
Dec
9,308 11,290
151
163
Page 22
November 2014
2.2 Top 5 Global TMT M&A Transactions Summary
Ranked by Price (€mn, including estimates) in descending order
#
Target
Acquirer
1
Sapient
(US NAS: SAPE)
www.sapient.com
Publicis Groupe
(France XPAR: PUB)
www.publicisgroupe.com
Target Sector
Price
(€mn)
Revenues
(€mn)
P/R
Software
2,947
1,148
2.6x
Sapient, provider of a range of online marketing creation and management software, will be acquired by advertising and public relations
company Publicis Groupe. Publicis has stated that acquiring Sapient is “an integral part of its transformation” from traditional to digital
advertising. It has further cited the company’s “unique combination of marketing, omni-channel commerce and consulting and its depth
of technology” as key motivators.
2
STATS ChipPAC
(Singapore SGX: S24)
www.statchippac.com
Jiangsu Changjiang
Electronics Technology
(China)
www.cj-elec.com
Semiconductor
1,433
1,258
1.1x
STATS ChipPAC, a provider of semiconductor chip packaging and testing, will be acquired by semiconductor chip tester Jiangsu
Changjiang Electronics Technology (JCET). According to WSJ, this deal is the largest Chinese acquisition in the semiconductor space
since privat e equity firm Hua Capital Management’s $1.7bn (€1.4bn) August 2014 acquisition of OmniVision Technologies. A
noteworthy seller is Temasek Holdings (Singapore’s state investment company), which owns an 84% stake in STATS ChipPAC.
3
Advanced Computer Software
Group
(UK AIM: ASW)
www.advancedcomputer
software.com
Vista Equity Partners
(US)
www.vistaequitypartners.com
Software
914
247
3.7x
Advanced Computer Software Group, provider of a range of healthcare and ERP software will be acquired by Vista Equity Partners, a
San Francisco-based private equity firm which focuses on investments in the software sector. Taking ACSG private will allow Vista to
manage the company’s transition to cloud with more flexibility than if ACSG had been public. This is a trend that has been gathering
momentum in the ERP space. With regard to its existing exposure to ERP, Vista acquired enterprise software providers CDC Software
in April 2012 and Consona in August 2012 (which it subsequently merged in August 2012 to form Aptean).
4
Big Fish Games
(US)
www.bigfishgames.com
Churchill Downs
(US NASDAQ: CHDN)
www.churchilldowns
incorporated.com
Software
672
1761
3.8x
Big Fish Games, a provider of freemium mobile gaming applications, will be acquired by Churchill Downs, operator of Churchill Downs
horse racing track in Louisville, Kentucky and its associated flagship race, The Kentucky Derby. As well as operating other horse racing
tracks, Churchill also provides online horse betting services through www.twinspires.com. Churchill has stated that "the acquisition of
Big Fish and our entry into the rapidly growing mobile and online games industry gives us new products, new customers, new
geographies and new sizeable growth opportunities”.
5
Yayoi
(Japan)
www.yayoi-kk.co.jp
ORIX
(Japan TSE: 8591, NYSE: IX)
www.orix.co.jp
Software
554
91
6.1x
Yayoi, an accounting software provider, will be acquired by ORIX, a provider of financial services such as insurance services, lease
financing and lending. ORIX has stated that acquiring Yayoi will enable it to “roll-out services to a new customer base of small
businesses which comprise more than 80% of businesses in Japan.” It will also expand its existing customer base beyond large
corporations and small and medium-sized enterprises and into this segment.
Source: The 451 Group; Capital IQ; PitchBook; Go4Venture Advisers Analysis
Key
P/R – Price / Last 12 Months Revenues
1
2012 Revenues
© Go4Venture Advisers 2014
Page 23
November 2014
2.3 Headline European VC & PE-Backed M&A Transactions
>£30mn / €35mn / $50mn
Ranked by Price (€mn, including estimates) in descending order
#
Target
Acquirer
1
Advanced Computer
Software Group
(UK AIM: ASW)
www.advancedcomputers
oftware.com
Vista Equity Partners
(US)
www.vistaequitypartners.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Software
914
247
3.7x
51
17.9x
Internet
Services
376
N/A
N/A
210
1.8x
Software
295
89
3.3x
N/A
N/A
Noteworthy Sellers: NVM Private Equity, Octopus Investments
2
CAP Automotive
(UK)
business.cap.co.uk
Solera Holding
(US NYSE: SLH)
www.solerainc.com
Noteworthy Sellers: Montagu Private Equity
3
Vizrt
(Norway OB:VIZ)
www.vizrt.com
Nordic Capital
(Sweden)
www.nordiccapital.com
Noteworthy Sellers: Concord Ventures, Coral Group, Fidelity Investments, FSN Capital, Nordea Capital, ODIN Forvaltning, Star
Ventures
4
Perten
(Sweden)
www.perten.com
PerkinElmer
(US NYSE: PKI)
www.perkinelmer.com
Hardware
214
24
8.9x
N/A
N/A
Software
119
N/A
N/A
40
3.0x
Noteworthy Sellers: Valedo Partners
5
Definiens
(Germany)
www.definiens.com
AstraZeneca
(UK LSE: AZN)
www.astrazeneca.com
Noteworthy Sellers: Cipio Partners, Gilde Healthcare Partners, LBBW Venture Capital, TVM Capital, Wellington Ventures
6
CLS Communication
(Switzerland)
www.clscommunication.com
Lionbridge Technologies
(US NASDAQ: LIOX)
www.lionbridge.com
Software
62
75
0.8x
N/A
Noteworthy Sellers: Zurmont Madison
Source: The 451 Group; Capital IQ; PitchBook; Go4Venture Advisers Analysis
Key
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 investment
© Go4Venture Advisers 2014
Page 24
N/A
November 2014
#
Target
Acquirer
1
Advanced Computer Software
Group
(UK AIM: ASW)
www.advancedcomputersoftware.com
Vista Equity Partners
(US)
www.vistaequity
partners.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Software
914
247
3.7x
51
17.9x
Advanced Computer Software Group (UK) (ACSG), a diversified enterprise software provider, will be acquired by
Vista Equity Partners for €914mn. Noteworthy sellers include UK-based private equity and venture capital firms NVM
Private Equity and Octopus Investments. Upon completion of this acquisition, Vista intends to de-list ACSG with
immediate effect. Taking ACSG private will allow Vista to manage the company’s transition to cloud with more flexibility
than if it remained public. This is a trend that has been gathering momentum in the ERP space with recent examples
including UNIT4’s acquisition by Advent in November 2013 and Exact’s acquisition by Apax in October 2014.
Target
Founded in 2008 and headquartered in Portsmouth, UK,
ACSG is a diversified enterprise software provider listed on
the AIM. ACSG operates as three divisions: its Advanced
Health & Care business (15% of revenues) provides
patient management systems to the NHS and private
healthcare companies; its Advanced Business Solutions
business (67% of revenues) provides accounting and HR /
document management software; and its Advanced 365
(18% of revenues) business provides outsourced
application development, cloud computing and SaaS
hosting.
The company has primarily grown through acquisitions,
completing 16 transactions in the last six years. Notably,
this is not founder and CEO Vin Murria’s first buy-and-build
play. Murria was previously CEO of Computer Software
Group, which also grew via acquisitions (funded by
backing from HgCapital) up until its merger with IRIS and
subsequent £500mn (€630mn) sale to private equity firm
Hellman & Friedman in June 2007.
ACSG won Tech Company of the Year at the UK Tech
Awards 2014. It currently has more than 20,000 clients and
c. 2,000 employees across offices in the UK, India, Ireland
and the US. It reported 2014 revenues of £203mn
(€247mn; 68% year-on-year growth) and EBITDA of
£45.3mn (€55mn; c. 22% margin).
Acquirer
Founded in 2000 and headquartered in San Francisco,
US, Vista Equity Partners (€4.6bn (2014); AUM €10.9bn) is
a private equity firm that invests in buyout transactions
between $200mn (€161mn) and $3bn (€2.4bn).
It primarily invests in software-focused and information
services companies. Vista seeks to add value to its
portfolio companies via its consulting arm, Vista Consulting
Group, which focuses on implementing operational and
process improvements.
Vista currently oversees a portfolio of more than 30
companies, which employ more than 28,000 people
worldwide. Notably (with regard to its ERP and healthcare
exposure), it acquired ERP software providers CDC
Software and Consona (which it subsequently merged to
form Aptean) in 2012, and acts as financial sponsor to
Vitera Healthcare Solutions.
It operates solely from the US, with a team of 65 split
across its offices in Austin, Chicago and San Francisco.
Vista last featured in our September 2014 and August
2013 issues for its €3.6bn LBO of US network
infrastructure and Business Intelligence (BI) software
provider TIBCO, and its €601mn acquisition of US fleet
management software provider Omnitracs, respectively.
Noteworthy Sellers
NVM Private Equity (€34mn (2009); AUM €367mn) is a UK-based private equity firm specialising in acquisition financing,
growth equity and MBOs. The firm last featured in our December 2013 issue for its role as a seller in Alaric Systems’
€57mn sale to NCR. Founded in 1984, it typically invests between €2mn and €10mn in UK-based companies across all
sectors. NVM invested in ACSG via its Venture Capital Trusts (VCT) Northern Venture Trust, Northern 2 VCT and
Northern 3 VCT.
Octopus Investments (€152mn (2014); AUM €5.9bn) is a sector-agnostic, UK-based venture capital firm. The firm last
featured in our September 2013 issue for its participation in Calastone’s €13.5mn Series B round. It typically seeks to
invest between £250k (€315k) and £5mn (€6.3mn) per company. Octopus invested in ACSG via its AIM-listed VCTs
Octopus AIM VCT and Octopus AIM VCT 2 in July 2008.
© Go4Venture Advisers 2014
Page 25
November 2014
#
Target
Acquirer
2
CAP Automotive
(UK)
business.cap.co.uk
Solera Holding
(US NYSE:SLH)
www.solerainc.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Internet
Services
376
N/A
N/A
210
1.8x
CAP Automotive (UK), a provider of online vehicle valuation data and software, will be acquired by Solera Holding for
$464mn (€376mn). The seller is UK-based Montagu Private Equity. This acquisition will allow US-based Solera to
combine several recent acquisitions in the risk and asset management space into a single platform, with which it plans to
expand throughout continental Europe. CAP’s portfolio of solutions will enhance Solera’s presence across the vehicle
lifecycle, from purchase to sale to salvage. The acquisition is expected to be immediately Earnings Per Share (EPS)
accretive.
Target
CAP, founded in 1979, is a Leeds, UK-based provider of
various automobile valuation databases. The company has
developed a variety of software tools and services that allow
consumer and trade users to look up the estimated value of
cars and fleets. These are based on both UK Ministry of
Transport (MOT) data and proprietary data gathered from
such sources as enterprise fleets, used car dealerships and
rental agencies.
For private individuals, CAP provides third party valuation
data to car buyers and sellers, for free via its consumer
portal, www.cap.co.uk. Information includes residual value
(determined by make and manufacturing year), as well as
running costs and other data. Users can get valuation
estimates simply by entering the car’s license plate number
and mileage.
For the automotive industry, CAP provides benchmark data
on valuations for individual vehicles and fleets, and was the
first UK company to do so through an online real-time
platform. Its current used car values form a benchmark for
residual values in the leasing industry, while its new vehicle
data system serves a broad variety of e-commerce,
showrooms and asset management systems. CAP
information is also used by vehicle marketing websites and
car sales portals to increase their appeal to consumers (e.g.
by suggesting that certain cars better maintain resale value).
Acquirer
Solera Holding is a US-based company comprising
thirteen brands that provide software and services to the
automotive claims processing industry. Founded in 1966
and headquartered in Texas, the company’s first offering
was Audatex Reuter, the world’s first automated vehicle
repair cost estimation software. Since then, it has grown to
serve over 165k customers in more than 70 countries. Its
primary customers are auto recyclers, collision repair
facilities and servicing businesses, as well as insurance
companies.
Up until its $421mn (€310mn) IPO in 2007, Solera’s
strategic focus had been almost entirely on the automotive
claims industry (which at the time represented 94% of
revenues), providing repair estimation and vehicle
valuation services. By Q3 2014, other businesses including
electronic titling (registration and documentation),
financing, re-underwritings, servicing and vehicle history
data had grown to represent 40% of revenues. This was
primarily achieved through more than 30 acquisitions.
Recently (as mentioned above), Solera has been acquiring
risk and asset management solutions such as The
Sherwood Group’s UK claims-related business, Auto Point
and AutoSoft (for undisclosed amounts) in May 2014, April
2014 and January 2014, respectively.
Montagu Private Equity got involved in May 2012 when it
acquired CAP Automotive for £170mn (€210mn) in a MBO.
Noteworthy Sellers
Montagu Private Equity (€3bn (2011); AUM €5bn), the former buyout 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 France, Germany, the Nordic region and the UK) and Latin America. Since its founding in
1968, it has invested in over 400 companies.
We last saw Montagu in July 2013 when it sold its stake in Host Europe, a provider of colocation and web application
hosting services, to Cinven for €511mn (representing a 1.9x return).
© Go4Venture Advisers 2014
Page 26
November 2014
#
Target
Acquirer
3
Vizrt
(Norway OB:VIZ)
www.vizrt.com
Nordic Capital
(Sweden)
www.nordiccapital.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Software
295
89
3.3x
N/A
N/A
Vizrt (Norway), a provider of digital content production and management software, will be acquired by Nordic Capital
for €295mn in cash. The sellers are investment firms Concord Ventures, Coral Group, Fidelity Investments, FSN
Capital, Nordea Capital, ODIN Forvaltning and Star Ventures. Nordic Capital has no existing exposure to the digital
content production industry. It has cited Vizrt as an innovator in its field, stating that the company’s technology has the
ability to “shape the frontiers of broadcast graphics, video asset management and automation systems”. Upon
completion of this acquisition, Nordic Capital intends to de-list Vizrt with immediate effect.
Target
Founded in 1997 and headquartered in Bergen, Norway,
Vizrt provides a range of digital content production and
management software for the broadcasting industry.
Its offerings include: advertising management software,
broadcast master control systems, live broadcast and
recording systems, real-time sports analysis software,
virtual sets and background creation, weather forecast
production systems, and a further range of real-time 3D
graphics software. The company has garnered significant
traction and counts many of the world’s leading
broadcasters as its customers, including The BBC, CBS,
CCTV, CNN, Fox, ITN and Sky.
The company currently has c. 600 employees across its
offices in Africa, Asia, Europe, the Middle East and the US.
Vizrt listed on the Oslo Stock Exchange, at a valuation of
NOK567mn (€70mn), in May 2005. The company reported
revenues of $122mn (€88.6mn; 5% year-on-year growth)
and EBITDA of $24.7mn (€17.9mn; c. 20% margin) for its
fiscal year ending December 2013.
Acquirer
Founded in 1989 and headquartered in Stockholm,
Sweden, Nordic Capital (€3.8bn (2013); AUM €11.6bn) is a
private equity firm that invests in buyouts of companies
located in German-speaking countries and the Nordic
region, across all sectors. It typically invests between
€40mn and €3bn, and seeks to add value to its portfolio
companies through international expansion, operational
improvements and/or strategic repositioning. The firm has
stated that c. 70% of its total value creation has stemmed
from operational improvements.
Nordic Capital operates in Europe with a team of 73
professionals across offices in Copenhagen, Frankfurt,
Helsinki, Jersey, London, Luxembourg, Oslo and
Stockholm. It manages a portfolio of c. 25 companies. The
firm last featured in our June 2013 issue for its €173mn
sale of Denmark-based IT software and services provider
EG to Denmark-based private equity firm Axcel
Management.
Noteworthy Sellers
Vizrt’s backers come from three regions: Israel, the Nordics and the US.
Concord Ventures (€186mn (2000); AUM €203mn) is an Israel-based venture capital firm specialising in early-stage
investments either within Israel or in companies with founders of Israeli origin, in the hardware, medtech, semiconductor,
software and telecommunications sectors. Fellow Israeli investor Star Ventures (€536mn (2003); AUM €757mn) is a
venture capital firm which primarily invests in the IT sector. Founded in 1992, it also has offices in Germany and the US.
FSN Capital (€610mn (2013); AUM €1.1bn) is a Norway-based private equity firm which invests between €50mn and
€250mn in companies operating in the Nordic region. It specialises in buyout transactions and is active across all
sectors. Nordea Capital (AUM €60mn) is the Finnish Nordea financial services group’s special investment arm. Nordea
has a market cap of c. €42bn and total assets of c. €670bn. ODIN Forvaltning is a Norway-based asset manager.
Coral Group (€378mn (2007); AUM €401mn) is a US-based venture capital firm which invests in technology companies
across all stages. It last featured in our January 2014 Bulletin for its participation in Spanish WiFi hardware provider
Fon’s €10.3mn late-stage round. US-based Fidelity Investments (AUM €320bn) last featured in our November 2012
issue for its participation in Spotify’s €78mn late-stage round. More recently of note, Fidelity was lead investor in taxi-hire
app Uber’s $1.2bn (€1bn) late-stage round in June 2014 (which valued the four-year-old company at $17bn (€13bn)).
© Go4Venture Advisers 2014
Page 27
November 2014
#
Target
Acquirer
4
Perten
(Sweden)
www.perten.com
PerkinElmer
(US NYSE:PKI)
www.perkinelmer.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Hardware
214
24
8.9x
N/A
N/A
Perten (Sweden), a developer of lab and factory technology for the food business, will be acquired by PerkinElmer for
€214mn. The seller is Valedo Partners (a Sweden-based private equity firm). Acquiring Perten will allow PerkinElmer to
further expand into the global food testing market, and access longer-term opportunities in China and other emerging
markets
Target
Sweden-based Perten is a long-time developer of testing
and quality control technology for the food business. Its
offering is focused on the feed, flour, grain and processed
food segments, and is used by farmers, food
manufacturers and scientists to ensure quality and safety.
Founded in 1962 by Swedish cereal chemist Harald
Perten, the company was built around automating the
testing of grain using the Falling Number Method. This
gauges the viscosity of a heated flour-water slurry sample
by measuring the time (or Falling Number) that an object
takes to fall through it. Knowing the viscosity of the sample
allows the tester to determine the levels of alpha-amylase
within it, and consequently determine the level of sprouting
(hence spoilage) within a sample of grain.
Growing organically for c. 50 years, the company has
since built a portfolio of technologies for the food industry,
offering factory, field and lab-based testing equipment
such as food texture analysers, Near InfraRed (NIR)
spectrometers for in-line measurement and moisture
analysers. In September 2010, the company was acquired
from the Perten family by Swedish investor Valedo
Partners in a management buyout (for an undisclosed
valuation), at which point it reported revenue of SEK
250mn (€24mn). Since then, it has acquired TexVol
instruments, a Swedish food technology company offering
volume measurers, but has otherwise grown organically,
more than doubling revenues to c. €50mn.
Acquirer
PerkinElmer is a US-based conglomerate providing
diagnostic, imaging and medical devices. Formed through
a series of mergers between biotechnology, optical design
and other technology companies (including the electro
optics division of GE and Lumen Technologies) throughout
the 20th century, it serves the aerospace, agriculture,
chemicals, cleantech, life sciences and semiconductors
industries. Among its leading products are Amorphous
Silicon (a-Si) Flat Panel X-ray Detectors (FPDs), used
primarily for medicine and veterinary sciences, as well as
industrial testing. Its lab instruments range from various
spectroscopy solutions to digital pathology systems.
PerkinElmer has grown steadily in the years since the
financial crisis, reporting $2.1bn (€1.7bn) revenues in
2013, a 2.4% increase from 2012. Like many large
technology companies, the firm has been quite active in
M&A, acquiring 15 companies in the last five years. Perten
is PerkinElmer’s third largest acquisition in this period,
behind the €410mn purchase of Caliper Life Sciences (a
US lab equipment provider) in November 2011 and the
€160mn purchase of CambridgeSoft (a US healthcare
informatics provider) in March 2011.
Noteworthy Sellers
Appearing for the first time in our Bulletin, Swedish private equity firm Valedo Partners (€235mn (2011); AUM €329mn) is
a sector-agnostic (with the exception of avoiding the property, tobacco and weapons industries) investor based in
Stockholm. Focusing on the Nordics, Valedo will not invest in startups or unprofitable companies, preferring growth-stage
investments in companies with sales of between SEK100mn (€11mn) and SEK500mn (€54mn). Among its better known
investments is Joe & the Juice, a Denmark-based coffee chain with presence in the Nordics and the UK.
© Go4Venture Advisers 2014
Page 28
November 2014
#
Target
Acquirer
5
Definiens
(Germany)
www.definiens.com
AstraZeneca
(UK LSE:AZN)
www.astrazeneca.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Software
119
N/A
N/A
40
3.0x
Definiens (Germany), a provider of image analysis software for use in digital pathology and clinical applications, will be
acquired by AstraZeneca for $150mn (€119mn). The sellers are private equity firms Cipio Partners, Gilde Healthcare
Partners, LBBW Venture Capital, TVM Capital and Wellington Ventures. This acquisition, which is AstraZeneca’s
second deal in a week following its partnership with Johnson & Johnson and Pharmacyclics (which will involve trials of its
drugs together with a blood cancer medicine jointly developed by the US companies), will strengthen its position in
cancer drugs and particularly immune-oncology, by accelerating its cancer research through the identification of
“biomarkers” that will help it match treatments to the genetic profiles of individual patients.
Target
Founded in 1994 by Professor Gerd Binnig (who won the
1986 Nobel Prize in physics for helping develop electron
microscopy, and was one of the original developers of
Object-Based Image Analysis (OBIA)), Definiens is a
Germany-based provider of image analysis software for
use in digital pathology and clinical applications.
Definiens has developed an OBIA-based Cognition
®
Network Technology (so called as it mimics, through
artificial intelligence, how the human brain is thought to
process images). As well as licensing OBIA software,
Definiens offers consulting, outsourced analysis and
training. The company employs 76 staff across its offices
in Germany and the US.
Definiens recently raised €15mn in a late-stage round led
by new investor Wellington Partners and existing investor
Gilde Healthcare, with support from existing investors
Cipio Partners and TVM Capital, which features in our
June 2014 Bulletin.
Acquirer
Founded in 1999 through the merger of pharmaceutical
groups Sweden-based Astra and UK-based Zeneca,
AstraZeneca provides biological and pharmaceutical
products globally.
The company, which is involved in the entire
pharmaceutical value chain from discovery, early and latestage development through to manufacturing and
distribution, primarily operates in three area of healthcare:
Cardiovascular and Metabolic Disease (CVMD), Oncology,
and Respiratory, Inflammation and Autoimmunity (RIA). It
is also active in the Infection, Neuroscience and
Gastrointestinal (ING) disease area.
AstraZeneca employs c.51,500 staff globally, of which 35%
are in Europe, 33% in Asia Pacific and 22% in North
America. It reached revenues of €19.4bn in 2013 (-8%
year-on-year) and EBITDA of €6.2bn (c. 32% margin) for
the same time period.
Noteworthy Sellers
Gilde Healthcare (€150mn (2013); AUM €450mn) invests in therapeutic and medtech companies on both sides of the
Atlantic. It also invests in healthcare services companies, but only in the Benelux region and Germany. For diagnostics
and medical technology, the firm will invest up to €15mn in revenue-generating companies, with a preference for
milestone-driven follow-on funding as part of a syndicate.
LBBW Venture Capital is a Germany-based venture capital firm which invests across all stages (from seed to pre-IPO) in
companies in the industrial technologies, life sciences, software and telecom sectors, based in Austria, Germany and
Switzerland.
TVM Capital (€157mn (2012); AUM €950mn), which backed Definiens as far back as 2000, was originally both a
healthcare and technology investor, so at the time was backing not just potential medical applications but also the firm’s
nascent earth sciences business. Cipio Partners (€137mn (2011); AUM €300mn) is a Germany and Luxembourg-based
secondary fund which typically invests between €2mn and €6mn in cleantech, medtech and TMT businesses based in
Europe, Israel and the US, with over €10mn in revenues.
Wellington Partners (AUM €850mn) is a Germany and UK-based life sciences and technology venture firm. In life
sciences, it invests in early-stage therapeutic companies, and diagnostics and medtech companies at all stages.
Interestingly, for technology investments, one of the areas targeted by the firm is digital media and software, which gave
it an unusual combination of in-house expertise directly relevant to Definiens.
© Go4Venture Advisers 2014
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November 2014
#
Target
Acquirer
6
CLS Communication
(Switzerland)
www.clscommunication.com
Lionbridge Technologies
(US NASDAQ: LIOX)
www.lionbridge.com
Target
Sector
Price
(€mn)
Revenues
(€mn)
P/R
Funding
(€mn)
P/F
Software
62
75
0.8x
N/A
N/A
CLS Communication (Switzerland), provider of a range of technology-enabled language translation services, will be
acquired by Lionbridge Technologies for $77mn (€62mn). The seller is Swiss private equity firm Zurmont Madison.
LionBridge’s CEO (Rory Cowan) has specifically cited CLS’ “highly complementary geographic reach and vertical market
expertise” as motivators. Cowan further stated that “this business combination positions Lionbridge as the clear market
leader in global translation and content solutions worldwide". Adding CLS, which is strong in the financial services and
life sciences segments, will also allow Lionbridge to diversify and decrease its reliance on the technology industry.
Target
Founded in 1997, CLS Communication provides a range of
language translation services. The firm offers writing,
editing and translation services for more than 50
languages (which according to CLS includes all the major
Asian, European and Middle Eastern languages).
Specifically, CLS offers these services for items such as
annual reports, financial reporting and IFRS, marketing
documentation, technical documentation and website
content. CLS’ translation services combine a range of
technology - such as CLS translation memories (storage
and automatic recognition of previously translated texts)
and CLS project hub (a web-based collaboration platform
for document drafting and real-time translation) - with its
c.250 in-house translators and network of more than 2,400
external partners.
The company also operates a terminology department
which helps clients set up their own corporate dictionaries
and organise their linguistic assets. In addition, CLS
provides an automated machine translation web-service
which translates e-mails and other simple texts in seconds.
The company primarily provides its services to companies
within the financial services, legal, life sciences, insurance,
telecommunications and utilities sectors. Headquartered in
Zurich, Switzerland, CLS has operations in 10 other
countries (including China, France, Germany, Hong Kong,
Singapore, Spain, the UK and the US) and had 2014
revenues of €75mn.
Acquirer
Founded in 1996, Lionbridge Technologies is a provider of
application testing, content development and translation
products and services. The company’s application testing
services include crowdsourced-based mobile device, app
and website testing. Its content management services
include engineering services, product documentation and
training support. Finally, its translation services are
focused on translating professional material (such as
company annual reports, product documentation and
websites).
Lionbridge provides these services to offer clients its
stated deliverables of “global brand consistency, local
relevancy and technical usability”. The company currently
offers its services to more than 800 companies.
Headquartered in Massachusetts, US, the company has
an additional 37 offices in countries including Brazil,
Canada, China, Germany, Italy, India, Netherlands,
Singapore, Spain, Thailand and the UK.
In May 2013, US market research company Common
Sense Advisory named Lionbridge the “#1 Language
Service Provider (LSP) in the world”. With c. 5,000
employees, the company has a market capitalisation of
$361mn (€293mn) and reported LTM revenues of $498mn
(€404mn; 1.8% year-on-year growth) and EBITDA of
$28.7mn (€23mn; c. 6% margin), as of November 2014.
Noteworthy Sellers
CLS Communication was acquired by Zurmont Madison in a LBO transaction in July 2009. This transaction, which aimed
to enable CLS to achieve further internationalisation mainly via buy-and-build acquisitions, led to three acquisitions in
Canada, Germany and Scandinavia.
Zurmont Madison (€207mn (2012)) is a Switzerland-based private equity firm, which primarily invests in the construction
industry services, consumer and industrial goods, logistics and services sectors, in companies based in Austria,
Germany and Switzerland. It typically invests in the scenarios of change in shareholder structure, corporate succession,
growth financing, MBO or MBI and spin-off, in companies with revenues between CHF30mn (€25mn) and CHF200mn
(€166mn). The company states that it will not invest in startup or venture projects.
© Go4Venture Advisers 2014
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November 2014
List of Acronyms
Financial Terms
k
used as abbreviation for 1,000 (for example, €1k means €1,000)
mn
million
bn
billion
AUM
Asset Under Management
CEO
Chief Executive Officer
EBIT
Earnings before interest and tax
EBITDA
Earnings before interest, tax, depreciation and amortisation
ECM
Equity Capital Markets
FINMA
Financial Market Supervisory Authority
IPO
Initial Public Offering
JV
Joint Venture
LBO
Leverage Buyout
LLP
Limited Liability Partnership
M&A
Merger and Acquisition
PLC
Public Limited Company
SME
Small-Medium Enterprise
VC
Venture Capital
Business / Technical Terms
ABS
Asset Backed Securities
API
Application Programming Interface
B2B
Business-to-Business
B2C
Business-to-Consumer
BI
Business Intelligence
C2B
Consumer-to-Business
CAGR
Compound Annual Growth Rate
CE
Conformité Européenne
CE-IVD
Conformité Européenne-In Vitro Diagnostics
EPS
Earnings Per Share
ERP
Enterprise Resource Planning
FPD
Flat Panel X-ray Detectors
© Go4Venture Advisers 2014
Page 31
November 2014
FRN
Floating Rate Note
ISP
Internet Service Provider
IT
Information Technology
LBS
Location Based Services
MBI
Management Buy In
MBO
Management Buy Out
MNO
Mobile Network Operator
MVNO
Mobile Virtual Network Operator
NIR
Near InfraRed
OBIA
Object-Based Image Analysis
OEM
Original Equipment Manufacturer
P2P
Peer-to-Peer
PIPE
Private Investment in Public Equity
POS
Point-of-Sale
PSP
Payment Services Provider
QR
Quick Response Code
R&D
Research and Development
RMBS
Residential Mortgage Backed Securities
SaaS
Software-as-a-Service
SEO
Search Engine Optimisation
VCT
Venture Capital Trust
© Go4Venture Advisers 2014
Page 32
November 2014
Go4Venture Advisers LLP
48 Charles Street
+44 (0)20 7529 5400
Berkeley Square
g4vbulletin@go4venture.com
London
W1J 5EN
This report was published on December 23, 2014
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: 2014 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 2014
Page 33