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The Greater Fool Theory
It is only fitting that we are reporting on April, which of course starts with April Fool’s day. As we’ve been reporting for so many months, the bubble is growing and one by one, the dam’s barriers are breaking. More details below. What is disturbing is that now everybody knows – so we’re getting into this silly period where you’re damned if you do (join in at too high valuations), and you’re damned if you don’t (stop playing).
Back To The Future
As we have been reporting for the past months (and indeed years), the continuing increased investment in European venture and growth funding shows no signs of abating. If we look at our HTI in March, we see continuing progress, with value of transactions up nearly 10% compared to the year before, and a whopping doubling on a year-to-date basis (even if nearly half of that increase is due to the Delivery Hero deal in February).
A Market On Fire
The European venture and growth market is going gangbusters. Whichever way one looks at it, the metrics are like nothing seen before: February 2015 is the highest ever on record (in terms of both volume and value of Large HTI deals). Where we usually see a lull (after the January rush to close deals which didn’t quite complete by yearend), this year we see a redoubling of activity. No fewer than three transactions fit in a new category of deals – which we have termed “Mega Deals” – of more than €100mn, compared to three in the whole of last year.
Seemingly Not Stopping
Based on our HTI methodology (which excludes drug development companies and only reports on companies publishing their transactions in major professional publications), the January 2015 Headline Transactions Index (HTI) was up at 2x the level of activity compared to last year. In fact, it was a record month with twelve Landmark deals (≥ €20mn) – the highest number we have ever reported.
2015: The Sky Is The Limit2014 finished on a high, with record fund-raising for December, considerable IPO activity (at least in the US) and sustained M&A activity. And all the signs are that 2015 is starting with a bang – see, for instance, the January announcement of Andreessen Horowitz leading the $58mn funding round for Transferwise (which we will cover in our next issue). At the same time, we continue to notice growing signs of indiscriminate optimism, which will inevitably lead to a re-rating of private investment valuations.
Higher and HigherIn 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.
When the Market Can’t Tell the DifferenceOctober was another record month (+20% ahead of October last year by value, and nearly +40% year-to-date), with sustained activity both in M&A and fund-raising. Clearly Europe is growing as a venture destination (hence why US investors are coming). However, we can also diarise the growing bubble by the excesses it generates. These excesses at the margins of our industry affect the venture market as a whole – and adjustment will no doubt follow.
Finally Crossing the ChasmIn many ways, September was a watershed month. In short, an incredible level of activity both in terms of investment AND exits – both M&As and IPOs (a first in Europe). There is no question that European venture has grown up and is finally acquiring legitimacy with a more evolved ecosystem now able to produce meaningful companies with greater regularity. Paradoxically, all these positive indicators come at a time when we have probably reached the upper part of the investment cycle.
Feeding Frenzy?Summer has come and gone, and we resume work taking stock of the most active August month on record. And all this at a time when the macro environment is turning negative, with geopolitical risk at its highest for some time, emerging economies slowing down, Europe stalling, and the US (and UK) planning to raise interest rates. No wonder some of the investment transactions are starting to raise eyebrows – because contamination is now touching public markets, as exemplified by the Alibaba and Rocket Internet IPOs.
Heading for the Investment SunAs we head back our desks with the strong intention to have a glorious end of the year, here are the numbers for the month of July, which closes the first part of the year. In short, we are ahead of last year and, despite a couple of large late-stage deals in July 2013 (Mobileye’s €306mn and Zalando’s €100mn), we finished year-to-date (YTD) July 2014 at just over 10% more in value and 20% less in volume compared to YTD 2013, showing an average size of HTI transactions grown by 44%.
Heading for Summer Holidays with a SmileThis June edition is the largest Bulletin issue ever, with a record number of large financings (21) and a record number of exits (7). At its mid-point, 2014 has all the makings of a record year.
European Venture: Crossing the ChasmThe trend we were describing in our last Bulletin – fewer, but bigger, later-stage transactions – continued unabated this month. The difference is that we can also report a building momentum behind exits, both on the IPO and M&A fronts, with one >$100 million trade sale (LaFourchette selling to TripAdvisor) featuring in this issue.
European Venture Market Lifted by Late Stage InvestmentsApril is typically a quiet month, squeezed between the announcements of the beginning of the year and those of the summer. April 2014 was no exception but thanks to a great tally of Landmark deals (six transactions of more than €20mn in April compared to one last year – a record), the year-to-date European growth and venture market is 30% up compared to last year.
Full Steam AheadThe correction we welcomed in our last issue has confirmed itself in the last month. Stocks with lofty valuations, including recent IPOs (AO.com, Just Eat, King Digital, etc.) are now well below their intro price. Generally speaking, tech stocks are off their recent peaks.
Another Strong MonthThe start of the year continues to be dominated by superlative action from Silicon Valley, as the US continues to amaze us with: gobsmacking M&A deals; giant fund-raisings with hair-raising valuations; and IPOs which defy common sense.
“A World Without Financial Rules”?What a start to 2014! Not only does the pace of investment seem to be accelerating again, but public markets are kicking in big time and Silicon Valley-style acquisitions are now spreading to Europe. Were it not for the obvious bubble burst around the corner (give or take a year or two), the world of European tech investing would be the perfect place for an investor to be.
2013 Out, 2014 In: The Evidence of a European Venture Market Kicking Into Gear Is MountingWe ended 2013 on a high, at the same time as signs are accumulating that we are moving into the upper part of the investment cycle: as venture market insiders actually temper their enthusiasm for venture investments, public market outsiders are piling in. It is only a question of time before retail investors join the fun.
Ending on a High Note (but Acceleration is Indeed Slowing Down)This Bulletin covers November but, since it is issued in time for the year-end, is also a good opportunity to reflect on the year past. In a way, November illustrates the changes afoot: continuing progression of European venture funding market despite the lack of a substantial exit market.
European Market: Growth Now Slowing DownSomething unusual happened in the Headline Transactions Index (HTI) in October: we had for the first time in the past 5 years a sharp slowdown in year-on-year investment growth from one month to the next.
European Market Ploughing AheadSeptember was another solid month, but with fewer landmark transactions (deals of more than €20 million), resulting in a slightly lower overall investment value.
Despite the Summer Holiday, Another Busy MonthAugust was another busy month. From a financing standpoint, not quite as hectic as last August (but then again July 2013 was an all-time record month)
A Time of Acceleration (and Caution)July 2013 was an awesome month for investment. By contrast M&A activity remained soft, with IPO markets seemingly easing, at least in London
“It’s All Great, Until It’s Not”Data for June again showed a tremendous level of activity, this time both in investments and on the exit front. At the mid-year point cumulative investment is now well ahead of 2012
The Beginning of the Hype?Against a backdrop of gloomy news concerning the VC industry itself, we have been showing a healthy recovery of the venture funding market for the past four years since the trough of 2009, driven by three key factors
April: The Usual Quiet MonthApril tends to be a slow month , between the highs of the first quarter and the rush of June/July before the traditional European summer recess
European Venture – Full Steam AheadThis month is a record month in terms of number and value of Large Headline Transactions Index (HTI) deals (more than £5mn, €7.5mn or $10mn)
European Venture Funding – Alive and WellFebruary proved to be another fruitful month from an investment standpoint, even if the lack of exits is rather unnerving
What is Venture, Really?January was a solid rather than spectacular month on the investment front, with a continuingly tepid exit front
2013: Thinking AheadAs expected, 2012 finished on a high, with total investment up 26% compared to 2011, both in value and by number of transactions
European Investment: Christmas is Coming!Another month, and more progress on the funding landscape, but continuing disappointment on the exit front
Ending the Year on a BangSomething quite remarkable seems to be happening in European venture financing since August: this is now the third month in a row where 2012 data is well ahead of 2011
Europe Venture Financing: Beginning of a Lift-Off?Following an unusually busy August, September proved to be another market high, admittedly on the investment side rather than on the exit front
Who Says Europeans Go on Holiday in August?August was an unusually busy month, both on the financing and M&A fronts
Europe: Reaching Escape Velocity?Some of our readers interpreted last month‟s headline (“Summer Blues Despite Rays of Sunshine”) as a rather pessimistic view of the European venture market
Summer Blues Despite Rays of SunshineThis year many of us have gone on holiday early after six months of hard work but with not so much to show for it, and rightly concerned by what looks like a perfect storm forming: Eurozone in tatters before reconstruction (hopefully) starts, emerging markets slowing down, and the US stuttering through a shallow recovery with a key election on the way
The Beginnings of A Darwinian RenaissanceAfter the wobbles of venture investing in Fall 2011 and the hesitations of early 2012, the market seems to be firming up – just as the macro environment worsens
Eurozone Down – But European VC Holding UpIn these times of extreme macro uncertainty – when politics and economics clash and nobody knows what the outcome might be – we are scrutinising what’s happening to European venture with even more attention
Q1 12: European VC Marching Forward!Welcome to the latest edition of the Go4Venture Monthly European TMT 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
European Ambition – It Is All in the Mind!The European VC exit landscape is still fairly bare, with many deals below the threshold or simply not reported. February is a case in point with the two deals covered being substantial PE – backed exits rather than VC deals
Expanded Focus: TMT, M&AOur Monthly Bulletin has changed its title to Go4Venture Monthly European TMT Private Investments and M&A Transactions Bulletin to better reflect its actual coverage and expanded its content to include M&A exits involving privately funded TMT companies
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- First published on October 4, 2004