Venture Capital Insights 2Q14

Transcription

1 Venture Capital Insights Q Global VC investment landscape Cost to start enterprise and consumer venture-backed companies August

2 Insights development team Bryan Pearce, Global Leader, Entrepreneur Of The Year TM and Global Venture Capital Advisory Group, EY Jeff Grabow, United States, Venture Capital Leader, EY Sandra Feldner Vandergriff, Americas Venture Capital Advisory Group, EY Shanta Kumari, EY Knowledge, EY Aseem Goyal, EY Knowledge, EY Prof. George Foster, Graduate School of Business, Stanford University Dr. Martin Haemmig, Adjunct Professor, Globalization of Venture Capital, CeTIM and former Senior Advisor on Venture Capital, Stanford University (SPRIE) Prof. Steven Kaplan, Graduate School of Business, University of Chicago *All data contained in this is sourced to Dow Jones VentureSource unless otherwise noted. Page Venture Capital Insights Q

3 Venture Capital Insights This edition of Venture Capital Insights analyzes global VC investments and exits from through H. The presentation also provides an overview of the dollars required to scale a company in the enterprise and consumer sectors and current ownership status of those venture-funded companies. Content overview: Global VC investments Global VC exit landscape IPO and M&A VC investment in enterprise and consumer segments by round class. Cost to start up enterprise and consumer venture-backed companies. VC investment in enterprise and consumer segments by geography. Median amount raised and valuations by round class (by year of investment). Median amount raised and valuations by round class (by year of liquidity). Median total equity raised prior to liquidity, valuations and time to liquidity Current ownership status of venture-funded companies Page Venture Capital Insights Q

4 Section : Global VC investment landscape Analysis by geography, hotbed, sectors, stages of development and round classes

5 Section : Global venture capital investment landscape Summary Global VC investment activity Globally, Q recorded the highest quarterly VC investments US$.b since Q levels. Subsequently, VC investments for the first half of reached US$.b, the highest first-half total since. VC investment activity saw significant growth in the dollar amounts invested across all markets. Compared to the Q, the dollar amount invested in Q was up %, with an increase of % in number of rounds. Europe saw the highest increase in dollars raised, up % for Q versus the previous quarter; the US and China saw increases of % and %, respectively, for the same period. The Bay Area continues to account for close to half of the dollar amount invested in the major VC hotbeds: % for Q and % in Q. The top two deals of the quarter were San Francisco-based companies, one of which was a US$.b investment in Uber Technologies Inc., at a post-valuation of US$.b. Consumer services and business and financial services were the two most attractive sectors for Q in value and volume. Companies operating at revenue generation stage continue to attract larger investments, primarily in the later round classes. ForH, median deal values at later round class were at their all-time high for all VC markets, except for China. However, China still recorded the highest median value at this stage, globally. By stage of development, H saw a significant increase in median values across all stages, particularly in the US, Europe and China. Page Venture Capital Insights Q

6 Global venture capital investment After a record first quarter, VC investors continued the positive momentum in Q with a % increase in dollars invested versus Q and % increase over Q Amount invested (US$b),,,,,.., ,......,.,,,,,..,.,, H Q Q,,,,,,, Number of rounds Global VC activity by amount invested and number of rounds Amount invested during Q (US$b) Amount invested during Q (US$b) Number of rounds during the year/qtr Note: Global total includes the US, Europe, Canada, China, Israel (all site) and India only. Amount invested during Q (US$b) Amount invested during Q (US$b) Number of rounds during Q Globally, Q recorded the highest level of quarterly venture capital investments since Q. Subsequently, VC investments for the first half of reached US$.b, the highest first-half total since. Recovery in global VC investment activity saw significant growth recorded in the dollar amounts invested across all markets. Compared to the corresponding quarter last year, the amount invested in Q was up by %, despite a % decline in the number of rounds. The outlook for VC investing remains strong with Q maintaining the growth momentum seen in each of the two previous quarters. The amount invested (US$.b), as well as average round size (US$.m) for Q were the highest seen over the past six years. The first half of has already accounted for % of the total VC investments seen in and % of the total dollars invested in. Page Venture Capital Insights Q

7 Venture capital investment by geography Q recorded the highest quarterly VC dollars invested in the US, Europe and China In the US, VC investing continues to rise in with a % increase seen in VC dollars for Q compared to Q. Compared to Q, the amount invested went up by as much as %, due to some mega investment deals in the consumer services industry. Among the three key global markets, Europe saw the largest increase of % in VC dollars invested for Q, up from the previous quarter. The US and China saw increases of % and %, respectively. China, however. continues to lead in terms of average round size across all global markets. At US$m, it was also the highest average deal amount seen globally since Q levels. US Amount invested (US$b) Median amount invested (US$m) ,,,,,, ,......, H Q Q,,,,,,, Number of rounds Amount invested during Q (US$b) Amount invested during Q (US$b) Amount invested during Q (US$b) Europe China Amount invested (US$b) Amount invested during Q (US$b) Number of rounds during the year/quarter Number of rounds during Q Median amount invested (US$m) Median amount invested (US$m) ,,,,,, H Q Q,,,,, Number of rounds Amount invested (US$b) H Q Q Number of rounds Page Venture Capital Insights Q

8 Venture capital investment by geography Continued recovery in amount invested by VCs was evident across all markets, although number of deals declined in Israel and Canada, compared to Q Canada saw the steepest growth % in the amount of VC investment, compared to Q, followed by India at %. Compared to Q, Israel was the only market that saw a decline in VC investments, both in terms of deals and dollars. Compared to Q, however, the amount invested rose by % on account of recovery in healthcare and information technology (IT) sector. The outlook for VC investmenting in Canada and India is positive, with H investments significantly exceeding H levels. However, Israel has yet to cross halfway mark. Canada Amount invested (US$b) Median amount invested (US$m) H Q Q Number of rounds Amount invested during Q (US$b) Amount invested during Q (US$b) Amount invested during Q (US$b) Amount invested (US$b) Amount invested during Q (US$b) Number of rounds during the year/quarter Number of rounds during Q Israel (all site) India Median amount invested (US$m) H Q Q Number of rounds Amount invested (US$b) Median amount invested (US$m) H Q Q Number of rounds Page Venture Capital Insights Q

9 Venture capital investment by hotbed Beijing was the only non-us destination among the top five VC hotbeds for Q; the Bay Area continues its dominance in attracting the top two deals of the quarter Q Q Top five hotbeds US$.b (% of the total ) Top five hotbeds US$.b (% of the total ) Top five hotbeds US$.b (% of the total ) Top five hotbeds US$.b (% of the total ) Top five hotbeds US$.b (% of the total ) Top five hotbeds (% of the total ) Amount invested (US$m), Bay Area Amount invested (US$m) Bay Area, Amount invested (US$m), Bay Area Amount invested (US$m), Bay Area Amount invested (US$m) Bay Area, Number of rounds New England, S. Calif, New England, New England, NY Metro, S. Calif, New England, NY Metro, NY Metro, New England, NY Metro, NY Metro, S. Calif, Beijing Beijing, UK, Beijing, UK, Shanghai S. Calif Germany UK, Beijing, S. Calif UK France Israel (all site), Israel (all site), UK France Beijing Potomac, Germany, Israel (all site) Shanghai Israel (all site) France, Potomac, Germany Germany Potomac Canada, Canada, France Canada Canada Shanghai, France, Potomac Israel (all site) Illinois Germany Shanghai Canada Bengaluru Shanghai Illinois Bengaluru Illinois Potomac Switzerland Switzerland Illinois Switzerland Illinois Bengaluru Bengaluru Switzerland Bengaluru Switzerland The Bay Area continued to account for close to half of the dollar amount invested in the top major VC hotbeds- -- % in Q and % in Q, up from when it accounted for less than % of the total dollars invested. The top two deals of the quarter were San Francisco-based companies, one of which was a US$.b investment in Uber Technologies Inc., at a post-valuation of US$.b. Increased VC investing in India saw Bengaluru move up three ranks from th, for the first time since. Beijing, the most attractive VC hotbed in the Asia-Pacific region, continues its climb and is now among in the top five. Top five hotbeds by amount invested. Total of major VC hotbeds listed above. *Data on Israel is based on Israel (all site). Page Venture Capital Insights Q

10 Venture capital investment by industry Consumer services and business and financial services were the two hottest sectors in Q Number of rounds H Q Q Business and financial services,,, Consumer goods Consumer services,,, Energy and utilities Healthcare,,, Industrial goods and materials Information technology,,, Amount invested (US$b) H Q Q Business and financial services Consumer goods Consumer services Energy and utilities Healthcare Industrial goods and Materials Information technology Note: There are also some deals for which sector has not been assigned. By number of rounds: The business and financial services sector continues to be ranked first globally. The IT sector in the US was displaced from its number one ranking in Q for the first time since Q. Compared to Q, the increase in deal count was the highest in business and financial services at %, followed by consumer services at %, while the IT sector saw a decline of %. By amount invested: The amount invested in both the business and financial services and consumer services sectors doubled versus the amount invested in Q. Even though there is an increased focus by VC investors on cloud-based and mobile technology types of companies, the consumer services sector saw top three deals of the quarter, with a total investment of US$.b. Page Venture Capital Insights Q

11 Venture capital investment by country Q was the strongest quarter in the US, Europe and China for dollars invested Number of rounds H Q Q US,,,, Europe,,, China Canada Israel India Amount invested (US$b) H Q Q US Europe China Canada Israel India By number of rounds: In Q, the number of rounds in the US and Europe grew marginally when compared to the previous quarter. For the developing economies India and China deal volume increased by % and %, respectively, due to strong deal activity in the consumer services sector. The number rounds in Canada and Israel declined % and % respectively, in Q compared to Q. In Israel, slow deal activity in the consumer services sector, particularly in the consumer information services subsector was behind the decline. In Canada, the information technology sector saw only deals compared to deals in the past quarter. By amount invested: VC activity picked up across all markets in Q, with the US, Europe and China seeing growth of %, % and %, respectively. Even investing in the smaller VC markets grew impressively, with Canada and India showing \% growth each over the last quarter and Israel grew by %. Subsequently, the average deal size also grew across all markets for Q compared to Q. For the largest VC market, the US, average deal size increased by %, and in Europe, it grew by %. India, Israel and Canada also saw big gains in average deal sizes with %, % and %, respectively. Page Venture Capital Insights Q

12 Venture capital investment by round class and stage of development Companies operating at revenue generation stage continued to attract large investments primarily, through later round classes By round class Number of rounds H Q Q Seed round First round Second round Later stage,,,,,,,,, Amount invested (US$b) H Q Q Seed round First round Second round Later stage By stage of development Number of rounds Startup Product development, Generating revenue Profitable Amount invested (US$b), H Q Q,,,,,,, H Q Q Startup Product development Generating revenue Profitable Page Venture Capital Insights Q

13 Median round size by round class In H, median deal values in the later round classes were at their all-time high for all VC markets, except for China. However, China still recorded the highest median deal value at this stage globally Seed round (median round size in US$m) First round (median round size in US$m) During H, the median deal sizes across markets remained at the same levels as seen in, except for Europe and China, which saw the median deal size increase to US$.m each from US$.m and US$.m respectively, in. In India there was no significant change. Amount invested globally (US$b) No. of global deals NS.. NS NS. NS.. NS.. NS H NS Median deal sizes increased in almost all markets in H compared to, indicating that VC investors are beginning to make bigger investments in first round investing. China and Canada were the only two markets that reported a decline in median values, for the same period ,,,,,,, H US Europe China Canada Israel (all site) India Second round (median round size in US$m) Globally, China maintained its lead in H, with a % increase in median deal value compared to. For the same period, the median values increased in the US %, Europe % and India %, the value declined by % and % in Canada and Israel respectively. Amount invested globally (US$b) No. of global deals ,,,,, H Later stage (median round size in US$m) All VC markets saw a significant growth in median deal sizes in H compared to, except for China. The growth was the steepest for Canada, where the median value increased four times. In Israel the median value doubled to US$.m in H from US$.m in. China saw no change in median deal values but had the highest deal value globally, for the same period ,,,,,, H Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

14 Median round size by stage of development Significant increase in median values across stages, particularly for the US, Europe and China Startup (median round size in US$m) In H, activity at the startup stage remained low across many markets except for the US, Europe and Israel. While the median deal size for H remained the same in the US, compared to, it grew by % in Europe and by % in Israel. Amount invested globally (US$b) No. of global deals Product development (median round size in US$m) The three key VC markets the US, Europe and China saw a significant growth in median deal sizes in H compared to the same period last year, indicating investors remain confident in these markets. China saw the largest increase in median value during this period from US$.m to US$.m, followed by Europe at % and the US at % ,,,,,,.. NS NS. NS..... NS NS..... NS.... NS NS H... NS US Europe China Canada Israel (all site) India H.... NS Generating revenue (median round size in US$m) In H, median deal sizes recorded at the generating revenue stage increased in all markets compared to. China saw the highest rate of growth with % and continued to see the highest median value across all markets for the first half of, indicating VC Investors remain positive and are still willing to make large investments in China. Profitable (median round size in US$m) While the median values increased to US$.m each in the US and Europe in H, up from US$.m and US$..m respectively, in, China recorded close to % increase during the same period. India saw a decline from its all-time high median value US$.m in to US$.m in H this deal value was more in line with the levels seen in previous years. Amount invested globally (US$b) No. of global deals ,,,,,,, H NS NS NS..... NS H NS NS. Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

15 Section : Global VC exit landscape IPO and M&A Analysis by geography

16 Section : Global VC exit landscape IPO and M&A Summary Global VC-backed IPOs The first half of showed a positive start for the year, with a.% increase in the total deal count and.% increase in the dollars raised, versus all of. China had a very strong first half, with the number of VC-backed IPOs in H already surpassing the yearly total of, primarily due to the reopening of the Chinese stock exchanges, which had been closed for nearly months. In Europe, the number of VC-backed IPOs in H were more than all of those for : in the US H was only short IPOs to reach entire total for all of. Among the smaller investing markets, Canada was the only country that saw a VC-backed IPO for the first half of. For H, the US dominates in terms of the dollar amounts raised via IPO, followed closely by China. The dollar amounts raised in China, Europe and Canada for H was higher than the yearly total for. IPO activity in all other markets remained low, with Canada recording a single deal worth US$m in H. Global VC-backed M&As The US and Europe continued to dominate the M&A exit landscape in H, with and deals, respectively. In terms of sector activity, information technology accounted for highest number of M&A exits, in the US it accounted for % of the M&A activity, and in Europe it accounted for %. VC-backed M&A activity remained very strong in China in the first half of, with the amount raised via M&A at an all-time high of US$.b. The exit values recorded in the Chinese market during H were.x the yearly total of. Even in the US, the first half of the year had a positive start, with H already reporting % of the total dollars raised compared to the entire year of. Page Venture Capital Insights Q

17 Global VC-backed IPO H showing % increase in total deal count and.% increase in dollars raised compared to all of Number of IPO exits H US Europe China H Canada India Israel China had a very strong first half, with the number of VC-backed IPOs in H already surpassing the yearly total of, primarily due to the reopening of the Chinese stock exchanges after being closed for nearly months. In Europe, the number of VC-backed IPOs in H was more than those reported in. The US had a record first half, only IPOs short of the entire total for all of. Among the smaller markets, Canada was the only country that saw a VC-backed IPO in H. Amount raised through IPO exits (US$m),,,,,,,,,,,, NS NS NS NS NS NS NS NS H US Europe China H Canada India Israel In H, the US continues to dominate in terms of amount raised via PO, followed closely by China. The dollar amount raised in China, Europe and Canada for H was higher than the yearly total for. IPO activity in other markets remains low. Canada recorded a single deal worth US$m in H. Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

18 Global VC-backed M&A The information technology sector accounted for the highest number of M&A exits in the US as well as in Europe Number of M&A exits H US Europe China H Canada India Israel The US and Europe continued to dominate the M&A exit landscape in H, recording and deals, respectively. The proportion of the US companies exiting via M&A increased marginally from.% in to.% in H, and similarly for Europe, which increased from.% to.% for the same period. In terms of sector activity, information technology accounted for the highest number of M&A exits, with % in the US and % in Europe. Amount raised through M&A exits (US$m),,,,,,,,,,,,,,,,,,,,,,,,, H US Europe China H Canada India Israel VC-backed M&A activity still remains very strong in China in the first half of, with the amount raised through M&A remaining at its all-time high of US$.b. The dollar values seen in the Chinese market for H were.x the yearly total of. Even in the US, the first half had a positive start by raising % of the total dollars raised in all of. Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

19 Section : Investment in enterprise and consumer venture-backed companies Analysis by geography round class, median amount raised and pre-money valuation

20 Section : Venture capital investment in enterprise and consumer segments Industry definitions Consumer Enterprise Consumer Services Information Technology Business and Financial Services Healthcare Information Technology Consumer Information Services Media and Content Retailers Travel and Leisure Electronics and Computer Hardware Software Business Support Services Financial Institutions and Services Wholesale Trade and Shipping Medical Software and Information Services Communications and Networking Electronics and Computer Hardware Semiconductors Software Page Venture Capital Insights Q

21 Section : Venture capital investment in enterprise and consumer segments Executive summary enterprise segment In the enterprise segment, a technology company can be started with much less money now than in as indicated by: Lower average investment size at early stage round classes A significant decline in median deal sizes at early rounds, while median deal sizes increased at later stages Median time to exit saw a slight or no change, particularly for M&A exits, across VC markets VC investors looking at an average investment size of US$m at the seed round stage, across VC markets, compared to an investment size of US$-US$m, years ago. Even at the first round class, the average amount invested, particularly in the US and China has declined from US$m to US$m-US$m over the last years. Europe, however, didn t see much change in the average deal size at this stage. Median deal size at early round classes (seed and first rounds) saw a decline of % to more than %, across all VC markets, except for Europe, which saw an increase in median values at both round classes. Median deal size in the later round class saw a significant increase compared to levels seen years ago. The median values increased to close to.x for the US, China and India in H compared to, while it increased to close to x for the remainder of the markets. In most VC markets, the median time to exit via M&A in the recent past has broadly remained at a similar level as seen years ago. China infact saw a significant decline in median time taken from five years in to two years in. A similar trend was recorded across key VC markets for companies exiting through IPO, where a technology company looking to raise funds via IPO continues to take close to years in the US and Europe and nearly three years in China, based on the data for the last years. While VC investors continue to invest in less capital when starting a technology company, deal sizes increase significantly as they scale up through the later investment rounds. Page Venture Capital Insights Q

22 Section : Venture capital investment in enterprise and consumer segments Executive summary consumer segment VC amount invested to build up a technology company in the consumer segment today broadly remains the same, particularly since the period. Average round size largely remained in line with the historical levels Median deal size at seed and first round classes didn t see change much over last five to six years Moreover, median time to liquidity saw a little change, for both M&A and IPO exits, across key VC markets Since, VC investors have continued to invest an average deal size of less than US$.m at the seed round class in the three key VC markets the US, Europe and China. As a result, the average deal size at the first round class remains at the same level for these three markets. While the US and Europe continue to record an average deal size of US$m since until recently except for H, the average values in China stood within the range of US$ US$m, during the same period except for H. While median deal size at the seed round class in the US, has remained in the range of US$.m-US$.m during -H, in Europe, the median value was US$.m, during the same period (except forh). Since, the median deal size at the first round class didn t see much change in the US and Europe. The median values remained in the range of US$m-US$.m in the US and close to US$.m in Europe for the last five years, with an exception of. The median time to liquidity through an IPO in the US remained the same over the last years. In China, however, the median time increased, although marginally close to three years for the period then to five years for -H time frame. Post-, the median time to liquidity by M&A continued to be nearly the same across the three key VC markets the US, Europe and China. These markets continued to record median time of three to five years over the last six years. Unlike the enterprise segment, VC investors need to make almost similar level of investments while starting up a new technology company in the consumer segment. Page Venture Capital Insights Q

23 Section.: Venture capital investment in enterprise and consumer segments Analysis by geography

24 Section.: VC investment in enterprise and consumer segments Summary by geography Enterprise segment For the US and Europe, the average deal sizes have broadly remained the same over the last years. While for the US, it has been close to US$m, except in H, which saw an average of US$m, Europe has seen average deal sizes of US$m over the same time frame. This indicates that the VC investors have been investing similar amounts of money to build technology companies across these two markets since H up until H. Over the last years, China saw higher average values for H-H period, the market had average values of US$m or more, except for H. While the average deal size declined during H-H potentially due to IPO markets being closed for months, in H, it rebounded to US$m to reach the highest level seen over the last years. Smaller markets like Canada and Israel saw a mixed trend in average deal sizes over the last years. However, developing markets such as India, building a technology company primarily in BFSI and the information technology (IT) sub-sectors has become cheaper, as reflected by falling average deal sizes over the same period. After seeing average deal sizes close to US$m for H-H period, India saw a sharp decline, with average deal value dropping down to nearly US$m-US$m for the H-H period, with the exception for H, which saw an average value of US$m. Consumer segment In the consumer segment, building a technology company across the consumer services and IT sub-sectors is the least expensive in Europe as the European market continued to see the lowest average deal size compared to the US and Chinese markets in H. The average deal size in Europe remained below US$m mark for the first half of, although it was the highest seen in the last years at US$m. While the US average deal size remained broadly in line with the historical levels, China saw a huge jump over the last years, largely driven by consumer services sector. The average value in China grew from US$m during H-H time period to US$m since H up until recently, with the exception in, which saw an average deal size of US$m, suggesting VC investors continued to remain optimistic in investing, albeit largely in the later round classes, to build a technology company in the consumer segment in China. In Canada and Israel, the average deal size largely stayed close to US$m for the last years, there are a few exceptions where there may have been a few megadeals that resulted in a skewed deal size in the consumer segment. In India, however, the average values declined from as high as US$m in H to below US$m mark since H, largely driven by the consumer services sub-sector. Page Venture Capital Insights Q

25 Investment in enterprise and consumer venture-backed companies Over the last years, higher number of companies received VC investment in nearly all VC markets, across the two segments Number of unique companies by year of financing event enterprise segment US Europe China Canada Israel (all site) India,,,,,,,,,, H Number of unique companies by year of financing event consumer segment H Page Venture Capital Insights Q

26 Investment in enterprise and consumer venture-backed companies VC investors continue to make larger investments in China across the two segments, particularly post- Number of rounds enterprise segment US Europe China Canada Israel (all site) India,,,,,,,,,, H Amount invested (US$m) enterprise segment Number of rounds consumer segment,,,,,,,,,,,,,,,,,,,,,,,,,,,,, H H Amount invested (US$m) consumer segment,,,,,,,,,,,,,,,,,,,,,,,,,,, H Page Venture Capital Insights Q

27 Investment in enterprise and consumer venture-backed companies While the number of M&A and post-valuations declined for the enterprise segment, it increased for the consumer segment over the past years Number of M&A enterprise segment US Europe China Canada Israel (all site) India H Count of post-valuation enterprise segment Number of M&A consumer segment H H Count of post-valuation consumer segment H Page Venture Capital Insights Q

28 Section.: Venture capital investment in enterprise and consumer segments Analysis by key geographies and round class

29 Section.: Venture capital investment in enterprise and consumer segments Summary by key geographies and round class Enterprise segment Global investment patterns show that a technology company could be started in with lower initial amount invested than in, as evident from lower investment sizes at early rounds. Proportion of seed and first rounds in total deal count increased in the last years, while that of later rounds has decreased. For the seed round, it has doubled from % in H to % in H, while for later stage rounds, it dropped down from % to %, respectively, during the same period. This implies that VC funding activity at early stages has became more frequent in the recent past, compared to that of years ago. In terms of the dollar amount invested, there was a reverse in the investing pattern as the average round size at seed round dropped down from US$.m in H to US$.m in H, and the average round size in later stage rounds surged from US$.m to US$.m. This indicates that the technology companies are now able to start with much less capital than in and scale it up later with much larger deals. Consumer segment The average deal sizes for seed, first and second rounds largely remained in line with the historical levels for the three key VC markets the US, Europe and China indicating VC investors continue to make similar level of dollar investments while building up technology companies in these markets for the past years. While the average values for seed round remained US$m across these three markets, China recorded significantly higher average deal sizes for the first and second rounds when compared to the US and Europe. Since H, the US and Europe saw an average deal size of US$m for the first round and nearly US$m for the second round. For China, the average deal values were close to US$m, with an exception of H H and, US$m US$m for first and second rounds, respectively, for the same period. Across these key markets, the average deal sizes at the later round class has increased significantly over the last years. This suggests that VC investors are increasingly making larger investments to help the technology company scale up with an intent to have a successful exit via IPO or M&A. Page Venture Capital Insights Q

30 Investment in enterprise and consumer segments US Across round classes, only the later round class saw a significant increase in the average round size in H compared to levels, for both segments Seed First Second Later Number of rounds enterprise segment Amount invested (US$m) enterprise segment,,,,,,, H,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, H Number of rounds consumer segment Amount invested (US$m) consumer segment, H,,,,,,,,,,,,,,,,,,,,,, H Page Venture Capital Insights Q

31 Investment in enterprise and consumer segments Europe The consumer segment saw the average deal size increasing to US$m in H from US$m in, while for enterprise, it increased from US$m to US$m Seed First Second Later Number of rounds enterprise segment Amount invested (US$m) enterprise segment,, H,,,,,,,,,, H Number of rounds consumer segment Amount invested (US$m) consumer segment,,,, H,, H Page Venture Capital Insights Q

32 Investment in enterprise and consumer segments China In the recent years, China saw larger investment size at the second round class compared to the levels seen years ago Seed First Second Later Number of rounds enterprise segment Amount invested (US$m) enterprise segment, H,, H Number of rounds consumer segment Amount invested (US$m) consumer segment,,,, H,,,,,,,, H Page Venture Capital Insights Q

33 Investment in seed round Compared to the consumer segment, the proportion of seed rounds in total deal count for the enterprise segment has been consistently higher in the US in last years, except in H US Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Europe Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

34 Investment in seed round Lower round sizes are seen in China and Canada compared to years ago China Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Canada Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Average round size (US$m) Enterprise Consumer H H H H H H H H H H H H H H H H H H H H H Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

35 Venture Capital Insights Q Page Investment in seed round For the consumer segment, India saw a major decline in the average round size since H Israel Average round size (US$m) Enterprise Consumer India Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H H Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer

36 Investment in first round In Europe, while the consumer segment saw a decline in the average round size over the last years, the enterprise segment saw an increase of close to % in H compared to H US Enterprise Consumer,,,,,, Average round size (US$m) ,,,,,,,,,, H H H H H H H H H H H H H H H H H H H H H,,,,,,,, Europe Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

37 Investment in first round China saw wide fluctuations in the size of first round investments which reached their highest level in H but have continued to decline since then China Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Canada Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

38 Investment in first round In the enterprise segment, India recorded significantly high investments in the - period, after which the average round size saw a sharp decline Israel Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer India Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

39 Investment in second round Over the last years, while average round size increased in the US and Europe for the enterprise segment, it decreased in the consumer segment in the two markets US Enterprise Consumer,,,,, Average round size (US$m) ,,,,,,,,,, H H H H H H H H H H H H H H H H H H H H H,,,,,,,,,, Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Europe Enterprise Consumer Average round size (US$m) Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

40 Investment in second round In recent years, the size of second round investments has been the highest in China compared to other geographies, both in the enterprise and consumer segment China Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Canada Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

41 Investment in second round Average round size in Israel rose significantly during H across segments, but remained below the levels seen in H Israel Enterprise Consumer Average round size (US$m) Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer H H H H H H H H H H H H H H H H H H H H H India Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

42 Investment in later stage round In the US, the average round size in the enterprise segment increased steadily since H, while Europe saw wide fluctuations in the same US Enterprise Consumer,,,,,,,, Average round size (US$m) ,,,,,,,,,,,,,,,,,,,,,,,, H H H H H H H H H H H H H H H H H H H H H,,,,,, Europe Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

43 Investment in later stage round China recorded significantly higher average round size, particularly post-, in the consumer segment China Enterprise Consumer,,,,, Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H,,, Canada Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer Average round size (US$m) Enterprise Consumer Note: Chart scales vary for the purpose of clarity. H H H H H H H H H H H H H H H H H H H H H Page Venture Capital Insights Q

44 Investment in later stage round Consumer segment attracted more investments in India compared to the enterprise segment, especially after H Israel Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Amount invested (US$m) enterprise Amount invested (US$m) consumer Number of rounds enterprise Number of rounds consumer India Enterprise Consumer Average round size (US$m) H H H H H H H H H H H H H H H H H H H H H Note: Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

45 Section.: Venture capital investment in enterprise and consumer segments Analysis by median amount raised and pre-money valuations by round class

46 Section.: Median amount raised and pre-money valuations by round class Summary by year of investment Median amount raised In the US, companies are raising lower amounts in seed, first and second rounds compared to years ago, and it is even more notable since. However, in contrast to lower amounts being raised in the earlier stages, higher amounts are being raised in the later stage rounds. In the US, for seed round investments, the median amount raised in the enterprise segment was the highest in and for the past years. Post-, it has consistently remained below the million-dollar mark. For first round investments in the US, median amounts have been in the range of US$.m US$.m for enterprise segment and US$. US$.m for consumer segment. Post, this has come down to US$.m US$.m and US$.m US$.m, for enterprise and consumer segments, respectively. At US$m for the enterprise segment, the median amount raised in H was the highest for the past years. Unlike the US, median amounts in Europe for H were higher than those reported years ago, both in enterprise and consumer segment, across all round classes. In China, first round investments in the enterprise segment saw lower median amounts in H, compared to, while for all other round types the median amount invested saw an increase. Median pre-money valuation Early stage valuations remained largely stable in the US and Europe, while there was a significant increase in valuations reported by Chinese companies during -. In China, first round valuations rose post- and remained at a high during the - period, both in the enterprise and consumer segments. Post-, however, there was a decline, but the median amounts still remained above pre- levels. Later stage investments in the US have been priced significantly high since, as median pre-money valuations rose both in the enterprise and consumer segments. Unlike Europe and China, later stage pre-money valuations in the US since have risen multifold, compared to - levels, as VCs continue to pour more dollars, even for a lower share in the equity. In H, step-ups in the median pre-money valuations from second round were also attractive in the US, with an X step-up seen in the enterprise segment and a X step-up in the consumer segment. Page Venture Capital Insights Q

47 Median amount raised by round class US tech entrepreneurs are raising lower amounts in seed, first and second rounds compared to those reported years ago and have seen a drop beginning in Seed round enterprise segment (US$m) H Seed round consumer segment..... US Europe China Canada Israel (all site) India H First round enterprise segment H First round consumer segment In the US, for seed round investments, the median amount raised in enterprise segment was the highest in and over the last years. Post-, it has remained below the million-dollar mark. In the consumer segment, the median amount raised has been below US$m since. The median amount for H is among the three lowest median amounts reported since. In the US, for first round investments, a significant change is seen post-. From to, median amounts have been in the range of US$.m US$.m for enterprise segment and US$.m US$.m for consumer segment. Post-, this has come down to US$.m US$.m and US$.m US$.m, for enterprise and consumer segments, respectively. Unlike the US, median amounts in Europe during H were higher than those reported years ago, both in enterprise and consumer segment, across round classes. H Note: Data values are insignificant, wherever they have not been depicted in chart. Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

48 Median amount raised by round class Higher median amounts are now seen in the later stage rounds US Europe China Canada Israel (all site) India Second round enterprise segment (US$m) H Second round consumer segment H Later stage round enterprise segment Second round VC investments in the US shrank after In the US, the later stage round was the only round that saw median amounts increase over the last years, in both the enterprise and consumer segments. At US$m, median amount raised in H was the highest in the last years. This suggests technology companies that start with smaller investments initially raise higher investments to scale up through later round classes. In China, first round investments in enterprise segment saw lower median amounts in H compared to, while for all other round types, the median amount saw an increase. H Later stage round consumer segment H Note: Data values are insignificant, wherever they have not been depicted in chart. Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

49 Median pre-money valuation by round class Early stage valuations remained largely stable in the US and Europe, while there was a significant increase in pre-money valuations for Chinese companies during US Europe China Israel (all site) Seed round (US$m) enterprise segment H Seed round (US$m) consumer segment H First round (US$m) enterprise segment H First round (US$m) consumer segment Early stage pre-money valuations have largely remained stable in the US and Europe over the last years, while China saw a significant increase in pre-money valuations during as first and second round investments became more expensive. At the seed round, median pre-money valuations in the enterprise segment in the US did not see much change with values remaining in the range of US$.m to US$.m during last years, except in. In the consumer segment, valuations saw a yearly decline in and. In China, first round valuations rose post and first round VC investments were priced significantly higher during the period, both in the enterprise and consumer segments. Median amounts still declined after but remained above pre- levels. H Note: Data values are insignificant, wherever they have not been depicted in chart. Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

50 Median pre-money valuation by round class Later stage investments in the US have been priced significantly higher since, as median pre-money valuations rose both in the enterprise and consumer segments US Europe China Israel (all site) Second round (US$m) enterprise segment Second round (US$m) consumer segment Later stage round (US$m) enterprise segment Later stage round (US$m) consumer segment H H In the enterprise segment, second round pre-money valuations in China saw a pattern similar to first round, rising significantly during period, while in the US, the increase in valuation became prominent in. In the US, median pre-money valuations rose over the past three years both for the second as well as later stage rounds, and in both the enterprise and consumer segments. Unlike Europe and China, later stage pre-money valuations in the US have risen multifold since, up from the levels, as VCs continue to invest more dollars, even for a lower share of the equity. In H, step-ups in the median pre-money valuations from the second round were also attractive in the US, with an x step-up seen in the enterprise segment and a x step-up in the consumer segment. H H Note: Data values are insignificant, wherever they have not been depicted in chart. Chart scales vary for the purpose of clarity. Page Venture Capital Insights Q

51 Section.: Venture capital investment in enterprise and consumer segments Analysis by median amount raised and pre-money valuations by round class by year of liquidity

52 Section.: Median amount raised and pre-money valuations by round class Summary by year of liquidity Median amount raised In the US, the consumer segment companies that have exited in the recent past raised lower amounts of funding in first and second rounds and higher amounts in late stage rounds compared to levels, while in the enterprise segment, size of VC funding remains relatively consistent for all years across all round classes. Size of first round funding in the consumer segment has seen a consistent decline in the US starting in for companies that exited via IPO. US companies in the consumer segments raised lower-sized second rounds compared to those years ago. For the enterprise companies in the US, however, median round sizes did not show much if any change. Compared to, US companies in the consumer segment raised larger amounts in later stage rounds for liquidity during H, while the enterprise segment saw an opposite trend. Median pre-money valuation Across markets, only the US recorded median pre-money valuations prior to M&A in the enterprise segment at the seed round. Since, the valuations have stayed close to US$m up until for the US, compared to US$m during -. Since, the median pre-money valuations at the first round in the US declined significantly for the consumer segment, particularly for IPO from US$m in to US$m in H. For the enterprise segment it has remained at the same levels US$m US$m for the same period. In the US H, median pre-money valuations prior to IPO at the second round reached its highest levels (US$m) since for the enterprise segment, while other markets continued to record insignificant valuations. The consumer segment, however, recorded an all-time low median valuations in the US (US$m) for the same period. For the later round, H saw the highest pre-money valuations prior to IPO for the enterprise segment over the past years in the US (US$m) and China (US$m). Page Venture Capital Insights Q