Funding Outside VCs What Are The Alternatives?

Funding Outside VCs What Are The Alternatives? Jean-Michel Deligny, Managing Director jmd@go4venture.com 2014 Summer Meeting, Barcelona 17 London Paris New York San Francisco 48 Charles Street Berkeley Square London W1J 5EN T: +44 (0)20 7529 5400 F: +44 (0)20 7529 5401 W: www.go4venture.com

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Venture Is No Longer The Only Option VC Value and Share of Large HTI Deals 1 Venture Capital Investment Value ( mn) Venture Capital as a % of Total Venture Investment Value Key Alternatives to Venture Early stage: crowdfunding and business angels, e.g. 84% 75% 82% 67% Series A/B/C: corporate venturers, e.g. 55% 1,474 1,542 1,571 769 1,142 Late stage: private equity, hedge funds and government 2009 2010 2011 2012 2013 1. Large HTI = VC/PE deals above 7.5mn Source: Go4Venture Advisers HTI Database Page 2

Angel Investment Is Growing Global Value of Investments by Business Angels ( mn) (2009-2013) 3,995 4,744 5,099 5,543 Key Drivers Lower start-up costs (driven by cloud, outsourcing, etc.) Tax Incentives (EIS / SEIS in UK, FCPI / PEA in France ) Greater # of angel networks in Europe (from 334 in 2009 to 468 in 2013) 1,913 Selected Angel Deals (2013-14) 2009 2010 2011 2012 2013 Source: OECD; European Trade Association for Business Angels, Seed Funds, and other Early Stage Market Players; Go4Venture Advisers Analysis Page 3

In Early-Stage, Crowdfunding Activity Is Increasing Global Capital Raised by Crowdfunding Platforms ( mn) (2010-2014F) 7,500 % of Capital Raised (2012) By Region 35% 59% North America Europe Other 2,175 3,900 12% 17% 28% By Category 30% Social Causes Other Business Films Music Environemnt 675 1,050 2010 2011 2012 2013 2014F By Platform Type 13% Rewards-based 15% 43% Donation-based Equity-based 29% Lending-based Source: GoGetFunding; Massolution 2013; Statista Page 4

With 4 Main Types of Platform Emerging % of Total Crowdfunding (2012) Selected Platforms US Europe Reward-based Contributions exchanged for goods or services 43% Donation-based Charitable donations to support social causes and non-profit organisations 29% Equity-based Provision of finance, through syndicate or individual investors, for equity share 15% Lending-based Crowd lends money to be repaid with interest 13% Source: GoGetFunding, Massolution 2013; Statista; Go4Venture Advisers Analysis Page 5

Corporates Are Also Stepping Up Activity CVC 1 Value and Share of European Venture Investments Corporate Venturing Investment Value ( mn) Corporate Venturing as a % of Total Venture Investment Value 5.9% 841 6.3% 1,126 6.7% 1,082 7.8% 462 2011 2012 2013 2014YTD Selected Statistics Corporate participation in global venture funding reached $3bn ( 2.2bn) during Q1 2014 (up 73% from the previous quarter) Average CVC-backed deal sizes were nearly double pure VC-backed deals in Q1 2014 Key Drivers Accumulation of cash on balance sheet while interest rates remain low Outsourcing of innovation (big pharma model) as internal efforts are increasingly acknowledged to have failed 1. CVC = Corporate Venture Capitalists (includes both corporations and corporate VC funds) Source: Go4Venture Advisers LLP; VentureSource; Global Corporate Venturing Page 6

By Value, Investment Remains In Traditional Sectors (1/3) Top 10 European 1 CVCs by Value ( mn) 646 501 394 390 333 256 179 171 235 226 Investment Focus: Traditional 2 (7 of top 10) Internet (3 of top 10) 1. Based on investee company HQ, not investor HQ 2. Includes Hardware, Healthcare, Industrial Technology, Materials, Medical Technology and Semiconductors Source: VentureSource; Global Corporate Venturing; Go4Venture Advisers Analysis Page 7

Example: Healthcare Top 10 European Healthcare CVCs by Value ( mn) 84 94 111 Key Drivers One third of active CVCs are healthcare focused 2 and concentrate capital onto their own sector Healthcare investment waves: pharma (biotech), medtech, not digital healthcare 56 34 48 Selected Investments 28 17 14 13 1. Based on investee company HQ, not investor HQ 2. http://www.fieldfisher.com/publications/2013/09/the-rise-of-corporate-venture-capital#sthash.4e5ueuot.dpbs Source: VentureSource; Global Corporate Venturing; Go4Venture Advisers Analysis Page 8

Example: Internet / Digital Media Top 10 European CVCs by Volume 126 Key Drivers Telecoms companies strategically investing in startups that drive mobile usage (such as gaming and mobile marketing) 51 Retailers getting on the e-commerce bandwagon 36 41 Publishers investing to offset declines in traditional revenues (backing digital media and e-commerce) 20 30 Selected Investments 17 14 14 13 Investment Focus: Traditional 1 (4 of top 10) Internet (6 of top 10) 1. Includes Hardware, Healthcare, Industrial Technology, Materials, Medical Technology and Semiconductors Source: VentureSource; Global Corporate Venturing; Go4Venture Advisers Analysis Page 9

Example: Energy Top 10 European 1 Energy CVCs by Value ( mn) 130 149 381 Key Drivers Utilities investing to keep pace with changes caused by a burgeoning smart grid Energy Companies stepping in to invest in cleantech as VC interest fades following high-profile failures (e.g. Solyndra, Fisker) 66 62 56 Selected Investments 48 36 30 21 1. Based on investee company HQ, not investor HQ Source: VentureSource; Global Corporate Venturing; Go4Venture Advisers Analysis Page 10

In Late Stage, Private Equity Is Becoming Prevalent Share of Large HTI Investments 1 by Value (2009-2014 YTD 30 April) Private Equity Family Offices / Hedge Funds Governments 45% Key Drivers Private Equity: as leverage becomes less readily available, PEs are increasingly moving to growth equity 22% 15% 7% 19% 2% 14% 26% 16% 6% 38% 10% 10% 4% 34% 12% 5% Family Offices and Hedge Funds: direct venture investments are a way to get an inside track on IPOs and high growth companies Governments: Sovereign Funds are increasingly active 2009 2010 2011 2012 2013 2014YTD 2% 1. Large HTI = VC/PE deals above 7.5mn Source: Go4Venture Advisers HTI Database Page 11

Top 10 PE Investors And Selected Investments Top 10 PE Investors in Europe 1 by Value ( mn) (2011-2014 YTD 30 April) Selected Investments (2011-2014 YTD 30 April) 306 306 306 259 238 213 164 158 90 108 1. Based on investee company HQ, not investor HQ 2. The only investment made by BlackRock, Fidelity Investments and Sailing Capital was a 306mn round in MobilEye in 2013 Source: Go4Venture Advisers LLP, VentureSource, Global Corporate Venturing Page 12

Family Offices, Hedge Funds And Government Investors Top 5 Family Offices & Hedge Funds in Europe by Value ( mn) (2011-2014 YTD 30 April 1 ) Selected Investments (2011-2014 YTD 30 April) 363 106 67 67 56 Top 5 Government Investors in Europe by Value ( mn) (2011-2014 YTD 30 April 1 ) 69 95 106 101 154 1. Based on investee company HQ, not investor HQ Source: Go4Venture Advisers LLP, VentureSource, Global Corporate Venturing Page 13

Case Study Summit Partners Overview Key Information: Founded in 1984 US headquarters in Boston, with additional offices in Menlo Park and London Latest Fund: 560mn (2013 vintage); AUM: 11bn Has invested in over 385 companies globally Investment Criteria: Size: $5mn to over c.$500mn Stage: all stages from growth to buyout Sectors: fast-growing products and services (e.g. consumer, education, energy, financial services, industrial), Healthcare / Life sciences and Technology Geographies: all Selected Investments (Ranked Alphabetically) Sweden Belgium US > 20mn, September 2012 Internet Services Provider of online department store with operations in Asia N/A, May 2010 Acquired by Ingenico in January 2013 for an enterprise value of 360mn Financial Services Provider of online financial transaction processing services for businesses in Europe 882mn, Internet Services Provider of on-demand transportation service platform Investment Activity Total Value of Investments ( mn's) 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 60 50 40 30 20 10 0 # of Investments US Singapore 6mn, November 1999 31mn IPO in August 2005, and acquired by IBM in 2010 for 405mn Software Provider of enterprise marketing software 74mn, May 2013 Internet Services Provider of online fashion and beauty retailer in Asia mn's # Source: Go4Venture Advisers LLP, VentureSource, Global Corporate Venturing Page 14

Case Study Companies Which Have Raised From PE Participating PE Investor(s) Date Amount Overview Netherlands Jul 2013 306mn Developer of vision-based driver assistance systems for the automotive industry c. 380mn total investment to date; 1.1bn pre-money valuation IPO filing in March 2014 Other investors participating in this round included Wellington Management and Enterprise Holdings Sweden Nov 2013 185mn Provider of streamed music services both over the web and via smartphone apps c. 400mn total investment to date; 3bn valuation Rumoured IPO in the fall of 2014 2012: 430mn revenue; 60mn losses TCV joined more than 10 existing international investors Germany Jan 2014 65mn Portal that provides centralised ordering from a variety of take-away food suppliers c. 150mn total investment to date As of January 2014, had net annual run-rate revenue of 58mn Insight Venture Partners joined 8 existing European Investors Source: Go4Venture Advisers LLP, VentureSource, Global Corporate Venturing Page 15

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