venture transaction multiples - france 2017 edition · 2018-05-22 · © 2017 avolta partners //...
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Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
Venture Transaction MultiplesFrance 2017 EditionHow Much Is Your Startup Worth ?
#fintech #delivery/logistics
#medtech/biotech
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 2
is the median EV/Sales multiple observed in French venture capital, based on all the fundraising transactions in the hexagon in 2014, 2015and 2016. With 2.00x 1st quartile and 10.37x 3rd quartile.
Venture capital is a game of portfolio returns: each deal is unique and the only fair value is the price that investors are ready to pay for equity stakes. Yet, asthe French market is booming (it became the second behind the UK in Europe) and more specialised funds appear, competition for deals rises and the needfor rationality becomes crucial when it comes to valuation.
After screening 1,481 deals representing €5.2bn value and analysing their private structuration, we do believe there exist consistent EV/Sales ranges perbusiness model. Since VC investors value future FCFF in 5-10 years with an exit strategy, it is no surprise they better value €1 revenue based onmanufacturing models with high gross margin than €1 revenue based on ecommerce models (buy and resell) for example.
Last year, we published our first study on VC transaction multiples, based on FR 2015 deals analysis. The results were well-received by investors, advisors andentrepreneurs: it gave more transparency to the market and outlined the premises of transaction financial comparables applied to startup investments.
We believe generalising the multiples approach in venture capital with comparable transactions EV/Sales contributes to a more efficient ecosystem,assessing the risk and fairly distributing the value between entrepreneurs and investors.
In this edition, we deepened our approach per business model, per focus and over time. We decided to make the report public and free to make our bestefforts in correcting the existing market information asymmetry. It is time for some investors and entrepreneurs to better align to the valuation market.
In this edition, we also produced research notes per key focus and we observed premiums / discounts when analysing EV/Sales. The VC market anticipatesfuture trends in M&A so it is a cyclic and heterogeneous market by nature. For example, investments in artificial intelligence, delivery/logistics and mobility arelikely to be well-valued today since consolidation is expected in these markets within the next 5-10 years. Understanding these trends over time allows tounderstand evolution and disparity in multiples with an analytic approach instead of adopting the unsatisfying tech-bubble speech.
Avolta Partners team, 9/26/2017
4.48x
Avolta PartnersEdito
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 3
Bpifrance Le Hub x PwCOur supports
§ Given our position at the heart of the ecosystem and our strong experience and expertisein venture capital at Bpifrance Le Hub, we aim at creating key partnerships and multiplybusiness opportunities in order to accelerate innovation and growth, particularly byproviding practical and useful tools to the diverse stakeholders involved in the ecosystem.
§ We work on best practices by bringing together startups, corporates and VCs in a taskforce to share their insights on business experiences. We implement the gatheredinformation in practical and ready-to-use tools such as smart contracts or CorporateVenture Capital term sheets, in order to smooth friction and improve collaborationbetween startups and corporates.
§ In this spirit and with the profound ambition to conciliate the traditional economy with theinnovative French ecosystem, Bpifrance Le Hub teamed up with Avolta Partners in orderto promote data-driven knowledge on the venture capital market. A sector still cruellylacking transparency despite the importance of the startup valuation matter.
§ We are proud to make data accessible to all the ecosystem by distributing this study.You will find here the results of Avolta Partners researches and analysis gathered in thesecond edition of their study on “Venture Transaction Multiples”. We’re convinced thatthose findings will participate in reducing the current asymmetry of information ruling theventure capital market.
§ This document will help entrepreneurs get a better and fair idea of the valuation of theirorganization, and corporates not to over-value or undervalue startups. We’re confidentthat it will lead to a better mutual understanding between market players and therefore tonew business opportunities.
PwCBpifrance Le Hub
§ PwC strongly supports business competitiveness in France and buys into the belief thatinnovation and entrepreneurship should be promoted and encouraged nationwide tounveil tomorrow’s leaders.
§ Smart Up is a multidisciplinary PwC offering which aims at accompanying France-basedstartups at each stage of their growth. The approach taken by our teams is aligned withthe specific culture, priorities and entrepreneurial vision that are unique to these newplayers on the French business scene.
§ Our Smart Up teams accompany entrepreneurs throughout the development of theirbusiness, from the drafting of their Articles of Association to their IPO, including theestablishment of shareholders’ agreements, pitch training, preparing the accounts,auditing the financial statements or fundraising, for example. PwC also assists startups todevelop experiences specifically adapted to evolving user demand (connected objects,interfaces, physical spaces, services, etc.) via design thinking and creative collaboration.
§ Smart Up’s credibility is strengthened by its positioning in two separate segments of theecosystem: at the early stage, thanks to its “DIVN” (pronounced “dive-in”) incubator, andby boosting proven model startups (generally internationally) thanks to thePwC Accelerator.
§ Smart Up has built a strong presence in the ecosystem by entering into partnerships,sponsoring events and intellectual contributions. Our support to Avolta Partners study onstartup valuation is a perfect example of these actions, a research which will no doubtprovide valuable and useful insights to the ecosystem’s stakeholders.
premium sponsordistribution partner
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9 business models
§ Subscription: SaaS or more traditional licensing recurring revenue§ Commission: platform debiting a defined cut from its flows§ Performance: built around usage from a recurring user community§ eCommerce: buy and online resale of goods§ Manufacturing: production and resale of goods§ Retail: resale of goods through brick-and-mortar shops§ Audience: traffic-based revenue§ Service: margin between labour cost and service invoice price§ Research: strong R&D focus to keep high barriers to entry
Building a platform for VC corporate finance
Avolta Partners was rated the most active M&A boutique and fundraising specialistin Europe in the Tech Industry (Business Insider, Feb-17). With 45 deals closed in 4years, we chose from the beginning to be pan-European and data-driven. So webuilt Avolta Intelligence, a unique platform to automate processes and scale ourability to help fast-growing tech companies in Europe.
Our platform concatenates European deals in the Tech Industry with information onvaluation, revenues and structuration. We source this private data from our networkof providers, business partners and investors, combining it with unique insights fromour team of analysts.
Avolta Intelligence is used by professional funds, specialised boutiques and startupsto gain knowledge on valuation, competitors investment thesis and dealopportunities.
€5.2bn. 1,481 deals. 1,312 investors.
We monitored 1,481 deals in 2014, 2015 and 2016 in France. When adding a dealto our platform, we categorize startups according to their business model and weassociate multiple tags with specific focuses. For each deal >€1m we then calculateEV/TTM revenue transaction multiples.
Equity Value pre money (EV):Calculated as PPS * NOSH with PPS the price per share voted for capital increase(nominal + premium) and NOSH the number of outstanding shares before issuance.
Trailing Twelve Month (TTM) revenue:Pro temporis revenue calculated as (12-M) * R(N-1) /12 + M * R(N) / 12, with M themonth of the shareholder’s Assembly voting capital increase, R(N) the revenue forthe year of fundraising and R(N-1) the revenue in preceding year.
Data. Data. Data.Methodology
1,481 startup fundraisings monitored
877 fundraisings > to €1m
718 startups with legal information disclosed
454 transaction multiples
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
Global Trends
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
157.2
336.7
213.6 218.6
338.9
455.6
624.7
385.7
549.0463.1
696.4774.0
0
20
40
60
80
100
120
140
160
180
200
0
100
200
300
400
500
600
700
800
900
2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4
6
French venture capital is boomingGlobal Trends
French tech startups booming activity
With more than €5.2bn raised in 1,481 transactions over the past three years, investments have more than doubled in 2016 compared to 2014 (39% CAGR in value). France hasrisen to the second rank in Europe, before Gerrnany and behind the UK.
Amount (€m) No. of deals
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 7
The long journey of an entrepreneurGlobal Trends
Startup lifetime and average waiting period at each stage of funding story
39 months is the average waiting period between creation date and the Series A. Once you have reached this point, the typical time-to-Series B is about 19 months. Beyond thispoint, the access to capital becomes easier for the companies needing additional equity financing.
0
5
10
15
20
25
30
35
0
100
200
300
400
500
600
700
800
0 20 40 60 80 100 120
No. of months
No. of deals
Med. amount raised (€m)
30 more and you are on the road
to become a unicorn
39-months « no man’s land » before
finding your first institutional VC
Just 19 more to see the light at the end of the
tunnel
Median time to Series A
Median time to Series B
Median time to Series C
0.5 0.5 0.5
1.52.0 2.0
5.2 8.0 6.0
5.0
25.0 14.2
0
1
2
3
4
5
6
7
8
9
10
2014 2014 2015 2015 2016 2016 2017
No. of years since creation
2014 2015 2016
Median deal size (€m) Seed Series A Series B Series C+
No. of deals Amount (€m)
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
8
2016
2015
2014
Annual deals distribution by decreasing size
Invested amounts / annual investments
10% deals driving 60% investmentsGlobal Trends
Volume (No.)
Value (€m)
Avg. new money distribution by deal (€m)
2014 2015 2016 Total
Seed 211 225 270 706
Series A 129 198 227 554
Series B 30 51 73 154
Series C 17 10 17 44
Series D+ 7 5 11 23
Total 394 489 598 1 481
Volume (No.)
2014 2015 2016 Total
Seed 149,5 146,9 196,1 492,5
Series A 325,3 558,4 700,1 1 583,7
Series B 177,9 488,2 899,2 1 565,4
Series C 164,3 327,3 281,1 772,7
Series D + 110,0 280,0 402,2 792,2
Total 927,0 1 800,9 2 478,7 5 206,5
Value (€m)
2014 2015 2016 Total
Seed 0,7 0,7 0,7 0,7
Series A 2,5 2,8 3,1 2,9
Series B 5,9 9,6 12,3 10,2
Series C 9,7 32,7 16,5 17,6
Series D + 15,7 56,0 36,6 34,4
Total 2,4 3,7 4,1 3,5
New money (€m) distribution by deal
Investments are concentrating. And it is goodnews for VC returns.
There are an increasing number of articles in pressmentioning large rounds and several analystsblogged about funds consolidation and increase inSeries A/B deal size.
Figures indeed support this hypothesis: theproportion of large rounds is relatively moreimportant YoY.
Venture capital is structurally concentrated: 10%top deals drive 60% investments. And despite thebooming in long tail deals, VCs tend to concentrateinvestments in leader startups to optimise theirlion’s share.
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 9
Focus relative growthGlobal Trends
50
100
150
200
250
300
2014 2015 2016
#B2B-SaaS
Hot tech!
We identified 11 trending tags with highrecurrence. We then indexed the numberof annual deals per focus on 2014 index100. This chart highlights the hottest topicsin VC right now: artificial intelligence,delivery/logistics, fintech, jobbing andtransportation/mobility.
No. of deals 2014 index 100
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
200
2000
1 2 3 4 5 6 7
10
Focus investment patternsGlobal Trends
Trajectories
Number of dealsAverage new money raised (€m)
#fintech
#AI
#ecommerce
#transportation/mobility
#B2B-SaaS
#medtech/bioTech
#delivery/logistics
#cleantech
#jobbing
#adtech
2014
2015
2016
3.5
3800
#edtech
Average TTM revenue (€k)Log scale
#ecommerce: work more, get lessThe avg. TTM revenue has increased from €3.9m to€10.2m, while the avg. new money has decreasedfrom €3.3m to €2.0m.
#adtech: towards consolidationThe avg. TTM revenue has increased from €0.8m to€4.6m, while the avg. new money has increasedfrom €1.2m to €4.4m.
#fintech: the boomerang effectThe avg. TTM revenue has increased from €0.3m to€2.5m, while the avg. new money has firstincreased from €1.8m to €4.4m before decreasingto €3.1m.
#delivery/logistics: chasing winners-take-allThe avg. TTM revenue has increased from €0.8m to€1.7m, while the avg. new money has increasedfrom €1.2m to €3.2m.
#medtech/biotech: in R&D we trustThe avg. TTM revenue has increased from €0.4m to€0.8m, while the avg. new money has increasedfrom €3.9m to €6.2m.
#jobbing: highly-fragmented offerThe avg. TTM revenue has decreased from €4.6mto €0.7m, while the avg. new money has increasedfrom €2.5m to €3.1m.
Consolidate monopolyHedge the risk
All-inSpray & pray
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 11
% annual deals
No. of deals (relative)No. of deals (absolute)
Invested amount (absolute)Invested amount (absolute)
No. of deals
Invested amount (€m) % annual invested amount
242
294331
128 146
240
0
50
100
150
200
250
300
350
2014 2015 2016
65% 67%58%
35% 33%42%
0%10%20%30%40%50%60%70%80%90%100%
2014 2015 2016
504.6
969.2
1 423.9
299.0
543.8
981.7
0200400600800
1 0001 2001 4001 600
2014 2015 2016
63% 64% 59%
37% 36% 41%
0%10%20%30%40%50%60%70%80%90%100%
2014 2015 2016
B2B vs B2CGlobal Trends
B2C rocks!
On average, over the last three years,B2B startups accounted for 63% ofFrench deals and dragged 62% ofamounts raised.
While B2C is still lagging behind, 3-years trends show it is now catchingup, with the B2B/B2C split trending to50%/50%.
To date, considering the number ofdeals, B2B has experienced a 17%CAGR from 2014 to 2016. Meanwhile,B2C increased at a steeper 37%CAGR.
The observation also applies tovolume raised with B2B CAGR of 68%being outranked by vigorous B2C81% CAGR.
B2C momentum is definitely to bestudied in light of the maturation ofpeer-to-peer, on-demand and sharingeconomy-based models whichexperienced a remarkable boomingand powered the thrive of B2C 3.0.
B2C
B2B
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
1,4%41
Bretagne2,1%50
Pays de la Loire
1,6%60
Nouvelle-Aquitaine
8,7%91
Occitanie
2,1%101
Provence-Alpes-Côte d'Azur
0,1%4
Corse
8,4%143
Auvergne-Rhône-Alpes0,1%6
Bourgogne-Franche-Comté
1,7%41
Grand Est7,0%63
Hauts-de-France
0,5%18
Normandie
0,1%3
Réunion island
64,1%866
Île-de-France
0,1%5
Centre-Val de Loire
12
Global Trends
Regional hubs are building up
Since the FrenchTech initiative has been launched in 2013, regional startup ecosystems haveemerged in 14 different metropolis including Île-de-France.
Over the past 3 years, Paris area has kept holding its crushing leading position, concentrating64.1% of the entire volume raised and 58.4% of total deals. Auvergne Rhône-Alpes, PACA, andOccitanie stand out as very active challengers, with a 41.0% CAGR in regard to amounts raised
Frenchtech hubs
% of total amount raised (2014,2015,2016)No. of deals (2014,2015,2016)
Overyear deal breakdown 2014 2015 2016
Auvergne-Rhône-Alpes 40 45 58Bourgogne-Franche-Comté 1 1 4Bretagne 12 17 12Centre-Val de Loire 2 0 3Corse 3 0 1Grand Est 9 9 13Hauts-de-France 17 23 23Île-de-France 225 285 356La Réunion 1 1 1Normandie 4 7 7Nouvelle-Aquitaine 16 23 21Occitanie 22 33 36Pays de la Loire 14 13 23PACA 30 32 39
1st region Île-de-France Île-de-France Île-de-France2nd region Auvergne-R.A. Auvergne-R.A. Auvergne-R.A.3rd region PACA Occitanie PACA4th region Occitanie PACA Occitanie5th region Hauts-de-France Hauts-de-France Hauts-de-France
>50%
<1%
Volume distribution
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
Transaction Multiples
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
Yes! There is financial rationality behind venturetransactions
VC investors value the future FCFF in 5-10 yearswith an exit strategy. The company business modelgives insights on gross margin levels, scalability andpredictability. It is then unsurprising to observecorrelation between BM and EV/TTM revenue.
€1 revenue from commission means €0.9 in grossmargin with scalable GMV.
€1 revenue from subscription means €0.8 in grossmargin with valuable LTV.
€1 revenue from manufacturing means €0.7 ingross margin with promising price differentiation.
€1 revenue from service means €0.4 in grossmargin with un-scalable business.
€1 revenue from performance means €0.5 in grossmargin with both lucrative and hazardous usercommunity.
€1 revenue from ecommerce means €0.5 in grossmargin with costly repeat.
€1 revenue from audience means €0.9 in grossmargin with limited opportunity for growth anddiversification.
14
Transaction MultiplesTech valuation snapshot
Q1 Q3Med.
EV/TTM revenue per business model
3.1x
2.7x
1.2x
4.4x
2.9x
3.3x
2.7x
2.2x
0.8x
1.8x
5.9x
15.8x
5.6x
6.6x
9.3x
14.8x
11.3x
7.6x
18.5x
4.0x
5.5x
18.9x
0.0x 5.0x 10.0x 15.0x 20.0x
#fintech
#transportation/mobility
#B2B-SaaS
#delivery/logistics
#cleantech
#adtech
#jobbing
#AI
#ecommerce
#edtech
#medtech/biotech
4.3
1.1x
1.1x
2.0x
2.3x
0.7x
2.3x
3.4x
2.4x
5.9x
2.3x
15.4x
13.9x
2.6x
10.8x
15.3x
8.4x
0.0x 10.0x 20.0x 30.0x
Subscription
Commission
Performance
eCommerce
Manufacturing
Audience
Research
Retail
Service
43.5x
EV/TTM revenue per focus
4.5x
8.3x
4.6x
1.1x
4.9x
3.3x
1.7x
2.2x
15.7x Median
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
15
36.8 110.7 98.2
20
25 32
0
5
10
15
20
25
30
35
0
20
40
60
80
100
120
140
2014 2015 2016
1.8
Sector median FR median
4.4 3.1
€3.2m
€7.8m
26%€0.5m
10.4x
§ Investment dynamism in #fintech is contrasted: while the number of deals increased YoY,both value (-11%) and average new money (-30%) notably decreased from 2015 to 2016
§ This may be – after 2015 peak – the sign of a relative temperance from investors in the#fintech race, as new players are less likely to be successful in an increasingly-consolidated market
§ Even if the median TTM revenue over the 3-years period stays low at €0.5m, the averagerose from €0.3m in 2014 to €2.5m in 2016, supporting the consolidation thesis
§ Nevertheless, the EV/TTM multiples analysis gives a 10.4x median multiple far superior tothe cross-sector 4.5x median, outlining the still-promising M&A opportunities
§ Subscription models in #fintech benefit from an outstanding valuation premium: they arevalued around 3 times more than overall subscription businesses
Transaction Multiples#fintech
Invested amount (€m) Avg. deal size (€m)
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
#fintech18.89x5.93x
Subscription
0.0x 5.0x 10.0x 15.0x 20.0x 25.0x
Commission
Q1 Q3Med.
BM
BM x Focus
Med.Q1 Q3
25.75x10.37x
16.49x5.55x
# of deals
Most active investors
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Transaction Multiples#AI
Invested amount (€m) Avg. deal size (€m)
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
9.7
65.6 68.310
2528
0
5
10
15
20
25
30
35
0
10
20
30
40
50
60
70
2014 2015 2016
1.0
Sector median
2.6 2.4
€1.0m
€3.8m
27%€0.5m
3.5x
# of deals
8.0x6.0x4.0x2.0x0.0x
#AI
Subscription
5.50x1.77x
§ #AI is booming: investments value increased from €10m in 2014 to €68m in 2016 (fastestgrowing sector) and already €115m (30+ deals) have been raised since Jan-17
§ Investors unsurprisingly occupied this field as unequaled scalability and countless newbusiness applications seem to pave the way for successful exits in the coming years
§ There is a high proportion of pre-revenue deals (48% vs overall 34% in 2016) and themedian TTM revenue is relatively low (€0.5m), highlighting the relative youth of deep techand the importance of IP valuation
§ Paradoxically, deals in #AI are valued on a median 3.5x EV/TTM revenue, slightly belowthe cross-sector median multiple: investors are still cautious and need to acquire furtherexpertise for their due diligence
§ Subscription models valuations in #AI are consistent with overall subscription multiples
FR median
Q1 Q3Med.
Med.Q1 Q3
7.07x2.35x
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
2.0x0.0x 4.0x 6.0x 8.0x
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
17
142.4 112.8133.9
43 4266
0
10
20
30
40
50
60
70
80
0
20
40
60
80
100
120
140
2014 2015 2016
Invested amount (€m) # of dealsAvg. deal size (€m)
3.3
Sector median
#ecommerce
eCommerce
3.99x0.82x
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
2.7 2.0
€1.1m
€4.0m
24%€2.0m
1.5x
Transaction Multiples#ecommerce
Commission
Manufacturing
§ #ecommerce is relatively steady in volume and value (€134m in 2016 for 66 deals), whilethe average new money has been notably decreasing from €3.3m in 2014 to €2.0m
§ In the meantime, the €2.0m median TTM revenue is outstandingly high compared tooverall median and the average has been increasing from €3.9m to €10.2m
§ Investors commit smaller tickets for companies with higher TTM revenue: they typicallyhedge the risk in this mature sector and focus on profitable businesses as M&Aopportunities drastically decreased
§ The median 1.5x EV/TTM revenue is very low compared to the cross-sector medianmultiple as gross margins are relatively small with hard-to-scale revenue model and highfixed costs related to logistics
§ All BM median multiples experience a heavy discount when applied to #ecommerce
FR median
2.17x0.74xQ1 Q3
Med.
Med.Q1 Q3
1.66x 5.90x
0.96x 8.12x
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
10.0x0.0x 20.0x 30.0x
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
18
132.2
297.4
212.4
3436
51
0
10
20
30
40
50
60
0
50
100
150
200
250
300
2014 2015 2016
Invested amount (€m) # of dealsAvg. deal size (€m)
3.9
Sector median
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
8.3 4.2
€2.0m
€6.0m
26%€1.1m
6.5x
Transaction Multiples#transportation/mobil ity
#transportation/mobility
Subscription
18.45x2.24x
Commission
Manufacturing
§ #transportation/mobility is a trending topic: the number of deals rose from 34 in 2014 to51 in 2016, reaching €212.4m in value (the €297m 2015 peak funding was due to€197m Blablacar Series D)
§ The dynamics in mobility are fueled by the shift towards sharing usages, smart-citiesprograms and the continuous technological improvements in real-time fleet management
§ The €1.1m median TTM revenue is relatively high and underlines the attractiveopportunities for rapid monetization in these businesses: specialised investors (Via-ID,PSA, EMV) have accelerated their investment pace and are increasingly seduced byplatform models based on daily usage
§ Consequently, the 6.5x median EV/TTM revenue show a relatively well-valued sector,with a strong premium for commission-based models
FR median
10.52x 32.43x
3.17x0.98xQ1 Q3
Med.
Med.Q1 Q3
3.13x 21.86x
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
8.0x6.0x4.0x2.0x0.0x
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
19
175.1
298.1423.1
97102 131
0
20
40
60
80
100
120
140
050
100150200250300350400450
2014 2015 2016
Invested amount (€m) # of dealsAvg. deal size (€m)
1.8
Sector median
#B2B-SaaS
Subscription
7.58x2.66x
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
2.9 3.2
€1.5m
€4.1m
28%€0.9m
4.7x
Transaction Multiples#B2B-SaaS
§ #B2B-SaaS is a steady growing sector with investments value reaching €423m in 2016for 131 deals, while the average new money has doubled from 2014
§ The €0.9m median revenue follows the general observation with a slightly superiormedian new money: investors are confident in committing high tickets on smallcompanies since B2B and recurring revenue reduce hazards (hypothesis supported bylow multiples dispersion)
§ The #B2B-SaaS EV/TTM revenue median is highly correlated with the subscription BMeven though a little higher and quartiles are less dispersed
§ #B2B-SaaS models are notably well-valued by specialised investors for their recurringrevenue, their easy-to-read key metrics and their scalability, combined with theiranticipated smoothed exit via M&A software integration
FR median
Q1 Q3Med.
Med.Q1 Q3
7.58x2.66x
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
20
15.5
90.7107.214
23
33
0
5
10
15
20
25
30
35
40
0
20
40
60
80
100
120
2014 2015 2016
1.13.9 3.2
€1.1m
€4.9m
29%€0.7m
5.9x
§ #delivery/logistics is booming: investments value increased from €15m in 2014 to €107min 2016 (second fastest growing sector) with 91% CAGR in value, and the average newmoney notably rose from €1.1m to €3.2m
§ Data points out an attempt of consolidation in a still-fragmented market, investors in#delivery/logistics tending to make the bet on winners-take-all
§ The €0.9m median TTM revenue and the €1.1m median new money are in line withgeneral observations while the median EV/TTM revenue significantly exceeds the marketbenchmark: in their chase for winners, investors agree to pay a higher price but 2017should separate the wheat from the chaff
§ Interestingly, the sector was historically focused on B2B and is now shifting towardsB2C, fueled by the remarkable dynamism of on-demand and ultra-flexible offers
Transaction Multiples#delivery/logistics
Invested amount (€m) # of dealsAvg. deal size (€m)
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
#delivery/logistics
Subscription
11.25x3.27x
Commission
Manufacturing
0.0x 5.0x 10.0x 15.0x 20.0x 25.0xSector median FR median
1.91x 7.47x
4.18x 18.05x
34.38x5.94xQ1 Q3
Med.
Med.Q1 Q3
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 21
Research note
Venture Transaction Multiples
§ Investments in #cleantech are rebounding after a deceptive year in 2015, with €163minvested in 55 deals in 2016, while the average new money has slightly evolved from€2.1m to €3.0m in 2016
§ COP 21 major announcements and Mayor projects in smart-cities may have triggered asecond wind to the sector but investors remain cautious in their diversification
§ The median €0.5m TTM revenue shows a fragmented market with important needs forequity funding before generating revenue
§ Manufacturing is with no surprise the predominant business model with multiples in linewith the overall sector figures
§ But the most valued companies in #cleantech are based on performance models (17.8xEV/TTM revenue) with focus in eco-mobility and energy efficiency
Transaction Multiples#cleantech
Investment trend
Median deal analysis
121.1102.3
162.9
57
41
55
0
10
20
30
40
50
60
70
80
020406080
100120140160180
2014 2015 2016
2.1 2.5 3.0
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
€1.3m
€4.2m
27%€0.5m
5.1x
Invested amount (€m) # of dealsAvg. deal size (€m)
#cleantech
Manufacturing
0.0x 5.0x 10.0x 15.0x 20.0x 25.0x
Performance
Sector median FR median
21.95x3.59x
14.77x2.96x
26.77x10.36x
Q1 Q3Med.
Med.Q1 Q3
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 22
Transaction Multiples#jobbing
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
34.8
76.7
67.514
2522
0
5
10
15
20
25
30
0102030405060708090
2014 2015 2016
Invested amount (€m) # of dealsAvg. deal size (€m)
2.5
Sector median
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
3.1 3.1
€1.2m
€3.9m
28%€0.9m
5.3x
§ Investments in #jobbing platforms rose from €35m in 2014 to €68m in 2016, while theaverage new money remained steady around €3m
§ The median €0.9m TTM revenue shows the emergence of a crowded fragmented offer:this analysis being supported by the observed average TTM revenue collapsing from€4.6m in 2014 to €0.7m in 2016
§ Investors have been highly enthusiastic with the transition from brick-and-mortaragencies to on-demand marketplaces with lean cost structure, and they now tend toincrease their risks by investing similar significant ticket in smaller companies
§ Whereas subscription-based models are valued in line with the general BM multiples(4.9x median EV/TTM revenue), commission-based platforms can count on a significantpremium with median 10.7x multiple
15.0x12.0x6.0x0.0x 20.0x
#jobbing
Subscription
9.25x4.37x
Commission
FR median
21.84x7.78x
Q1 Q3Med.
Med.Q1 Q3
5.86x4.02x
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 23
Transaction Multiples#adtech
Investment trendResearch note
Median deal analysis
§ #adtech investments boomed in 2015 with the number of deals increasing from 19 to 40before decreasing to 28 in 2016, while the average new money notably rose from €1.2mto €4.4m over the 3-year period
§ By investing more money on less key players, VCs seem to draw the path towards sectorconsolidation
§ The median TTM revenue follows a clear upward trend going from €0.4m in 2014 to€2.0m in 2016, highlighting the emergence of leading actors
§ The median multiple collapses from a high 3.9x in 2014 to a low 1.7x in 2016 as themarket seems to be mature and offer fewer long-term M&A opportunities
§ #adtech businesses interestingly tend to have a better valuation when opting forperformance as business model (CPC/CPM/CPA)
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
22.7
109.7123.2
19
40
28
05101520253035404550
0
20
40
60
80
100
120
2014 2015 2016
Invested amount (€m) # of dealsAvg. deal size (€m)
2.7 4.4
€1.3m
€4.9m
27%€1.3m
3.3x
Venture Transaction Multiples
#adtech
Subscription
0.0x 2.0x 4.0x 6.0x 8.0x 10.0x
Performance
6.62x1.18x
4.59x1.47x
8.84x2.59x
Q1 Q3Med.
Med.Q1 Q3
Sector median FR median
Most active investors
1.2
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 24
Transaction Multiples#edtech
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
18.4 18.5
77.31922
24
0
5
10
15
20
25
30
0
10
20
30
40
50
60
70
80
2014 2015 2016
Invested amount (€m) # of dealsAvg. deal size (€m)
1.0 0.83.2
€0.8m
€3.0m
29%€0.8m
4.0x
§ #edtech is taking advantage of bullish trends with amounts raised going from steady€18m levels in 2014 and 2015 to a four-fold €77m level in 2016, fueled by high series B
§ In the light of the US #edtech booming, French investors are trying to identify leaders-to-be but still remain pretty skittish
§ The €0.8m median TTM revenue is slightly above the general observation while themedian new money is below general levels also at €0.8m: #edtech startups record highermedian revenues but close relatively smaller rounds
§ Despite comforting subscription models, investors tend to apply a discount to #edtechmultiples, particularly narrowed around the median 3.7x EV/TTM revenue
§ This low-valuation spiral could be broken thanks to successful M&A exits and theemergence of disruptive business models
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
8.0x6.0x4.0x2.0x0.0x
#edtech
Subscription
5.56x2.68x
4.31x2.00x
Q1 Q3Med.
Med.Q1 Q3
Sector median FR median
Most active investors
BM
BM x Focus
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 25
Transaction Multiples#medtech/biotech
New money
Pre money
valuation
DilutionTTM revenue
EV/TMM
145.4192.6
330.937
5053
0
10
20
30
40
50
60
0
50
100
150
200
250
300
350
2014 2015 2016
€2.0m
€10.9m
33%€69k
8.2x
§ #medtech/biotech startups are riding an upward trend: 2016 is a boom year with volumeraised 170% higher than in 2015 (explained by very large series B in Q2)
§ With seed investments slightly reduced in 2016 in comparison to 2015 (-20%) and seriesB+ experiencing a tremendous increase (+252% in volume compared to 2015), investorsseem to focus on more mature companies
§ Research is logically the most frequent business model (54% in number of deals, 71% involume raised) and explains why the #medtech/biotech median TTM revenue is that lowcompared to overall median levels at €0.07m
§ With very high median pre-money valuation and uncommonly low revenue figures, TTMmultiples are very diffuse around the 15x median level
§ When excluding research BM, dispersion is dramatically reduced around the 6.6x median
Invested amount (€m) # of dealsAvg. deal size (€m)
Investment trendResearch note
Median deal analysisVenture Transaction Multiples
#medtech/biotech
Research
0.0x 10.0x 20.0x 30.0x 40.0x 50.0x
All but Research
3.96.2
3.9
11.70x2.64x
43.46x4.30x
Q1 Q3Med.
Med.Q1 Q3
Sector median FR median
Most active investors
BM
BM x Focus
15.82x3.08x
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
Avolta insights
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 27
Audience
Avolta insightsMedian EV/TTM revenue mult iples over t ime per BM
Commission eCommerce
Performance
Retail
Manufacturing Research
Service Subscription
10.76x
1.92x3.68x
0
5
10
15
2014 2015 2016
4.92x6.54x
9.85x
0
5
10
15
2014 2015 2016
1.10x 0.98x 1.41x
0
5
10
15
2014 2015 2016
6.61x 5.68x3.90x
0
5
10
15
2014 2015 2016
9.97x
4.60x 5.64x
0
5
10
15
2014 2015 2016
27.48x
4.30x
35.66x
0
10
20
30
40
2014 2015 2016
1.08x 1.92x
0
5
10
15
2014 2015 2016
5.22x2.13x 1.09x
0
5
10
15
2014 2015 2016
5.44x 4.22x 4.30x
0
5
10
15
2014 2015 2016
Median EV/TTM revenue multiple Median EV/TTM revenue multiple Median EV/TTM revenue multiple
Median EV/TTM revenue multipleMedian EV/TTM revenue multipleMedian EV/TTM revenue multiple
Median EV/TTM revenue multiple Median EV/TTM revenue multiple Median EV/TTM revenue multiple
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 28
§ Commission-based models are particularly well-valued with a 8.26x median multiple (vs4.49x for subscription and 1.14x for ecommerce)
§ EV/TTM revenue multiples are driven up by P2P-focused startups, with an observedmedian 17.79x multiple, as investors tend to value the scalable GMV generated by theseplatforms with little cost structure for the company
§ Among the commission-based startups, #transportation/mobility and #on-demand raisedsignificantly higher amounts of new money for higher TTM revenue, on a higher 12.57xmedian multiple
§ P2P, #transportation/mobility and #on-demand gather similar criteria to maximize thepotential value of revenue for investors: scalability, efficient user acquisition, large userbase and strong repeat business
Avolta insightsFocus on commission models
2
4
6
8
10
12
200 400 600 800 1000
fintechx Commission
GeneralCommission
Median Multiple
Median TTM (€m)
Commission
On-demand/sharing
15.28x3.38x
Transportation/mobility
Transportation/mobility and on-demand snapshot
0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x
ecommercex Commission
On-demandx Commission
Mobilityx Commission
Median multiple per focusResearch note
Commission deal breakdown
4.39x 4.51x
17.79x
3.90x8.19x
17.79x
0.0x
5.0x
10.0x
15.0x
20.0x
#B2B #B2C #P2P
Overall Commission
Median NM (€m)
Marketplacex Commission
Median multiple
Q1 Q3Med.
Focus
Commission x Focus
Med.Q1 Q3
32.43x10.52x
22.01x6.10x
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
y = 1.6638x + 2.1567R² = 0.44428
0
2
4
6
8
10
12
14
16
18
0% 100% 200% 300% 400% 500% 600% 700%
y = 8.8212xR² = 0.46595
-1 000
4 000
9 000
14 000
19 000
24 000
29 000
-200 300 800 1 300 1 800 2 300 2 800 3 300 3 800
29
Avolta insightsA closer look at valuation in #B2B-Saas
MRR x Actual new moneyEV/TTM revenue x annual growth
Actual new money (€k)
MRR at fundraising (€k)
Pre money valuation
EV/TTM revenue
Annual growth
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
The #adtech market is getting mature
After a first year of experimentation in2014, the market went crazy about#adtech in 2015. 40+ deals were madeand EV/TTM revenue multiplesskyrocketed to a high 21.42x. In 2016,investments were slightly superior in value(€123m) but concentrated on lesscompanies.
The clear decrease in valuation multiplesbetween 2014 and 2016, combined withthe average TTM revenue increase,highlights the fact that excitement of thebeginning has given way to a maturemarket shifting from fragmentationtowards consolidation.
Supporting this thesis, the number ofacquisitions in the sector has notablyaccelerated.
6
8
10
0
2
4
6
8
10
2014 2015 2016
€1.2m
€2.7m
€4.4m
€0.8m
€3.9m
€4.6m
3.9x
3.4x
1.7x
0.0
1.0
2.0
3.0
4.0
5.0
2014 2014 2015 2015 2016 2016 2017
30
Towards consolidation in #adtechAvolta insights
Avg. TTM revenue
Avg. new money
Med. EV/TTM revenue No. of M&A deals in #adtech
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
0
20
40
60
80
100
Manufacturing
Research
Commission
#AI
We found 105 deals between 2014 and 2016 with > €1m new money and underlyingbusiness generating < €100k revenue. These “pre revenue” deals can be classified into fourmain categories:
Research: Unsurprisingly, investors are comfortable with committing high tickets intoresearch-based models – especially applied to #medtech/biotech – even after Series A, as IPand patents promise high barriers to entry and profitable future business
Manufacturing: Companies in #industry, #cleantech, #medtech/biotech and #ecommercecan succeed in raising money from investors to prototype their hardware or install their brand(Series A) but need to generate revenue when going to the next equity round: so long time-to-market prototyping better rely on solid IP
Commission: Some companies in #marketplace, #fintech and #on-demand/sharing canraise significant Series A without revenue if demonstrating their need for critical size beforemonetization
#AI: Around 50% deals in #AI are considered as “pre revenue”, outlining both the sectorearly stage and strong investors’ appetite
31
Avolta insights
Series A Series B+
Research note Pre revenue fundraisings
Pre revenue deals in volume (index 100)
#ecommerce #cleantech #fintech #IA #impact #marketplace #adtech #medtech/biotech
#on-demand/sharing
#transportation/mobility
Audience 0 0 0 7 0 0 0 0 0 0Commission 3 3 13 0 0 20 0 0 13 7eCommerce 3 3 0 0 0 3 0 7 0 0IoT 0 0 0 0 0 0 0 0 0 0Manufacturing 10 43 0 7 3 0 0 27 0 3Performance 0 0 3 0 0 7 0 0 3 7Research 0 3 0 0 0 0 0 100 0 0Retail 0 0 0 0 0 0 0 0 0 0Service 0 0 0 0 0 0 0 0 0 3Subscription 3 0 3 7 7 10 13 3 3 3
Amount raised through pre revenue deals (€m)
Seed
Pre revenue deals analysis
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
31%10%
51%
35%
33%
45%
42%
16%
38%
14%
39%
0% 10% 20% 30% 40% 50% 60%
#fintech
#AI
#ecommerce
#transportation/mobility
#B2B-SaaS
#delivery/logistics
#cleantech
#jobbing
#adtech
#education
#medtech/biotech
(new money in press – actual new money) / (actual new money)
32
Avolta insightsNew money bullshit gap
Little white lies are part of the game
We went through fundraising legal documentationof startups and compared the actual equity raisedto the amount declared in the press. We thencomputed the percentage of inflation observed,and called it the “bullshit gap”.
Taking all our focuses into account, figurescommunicated on public media are inflated by32% on average.
Startups are not necessarily to be blamed for that.Amounts communicated in the press do not stickto the pure-equity view and often include non-equity money such as subsidies or debt-likeinstruments.
Alternatively, startups also tend to communicateon full-round amounts even if the fundraising isactually done tranche by tranche and that only apart of it has been effectively secured.
32%
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 33
Avolta insightsHighest valuation per focus
#fintech
#edtech
#transportation/mobility
#delivery/logistics
#cleantech
#medtech/biotech
#adtech
#jobbing#B2B-SaaS
#AI
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 34
y = 3.6342xR² = 0.51153
0
50
100
150
200
250
0 20 40 60 80
y = 4.8086xR² = 0.63697
0
50
100
150
200
0 5 10 15 20 25 30
y = 6.98xR² = -0.2269
0
20
40
60
80
100
0 2 4 6 8
y = 4.577xR² = 0.55122
0
50
100
150
200
0 5 10 15 20 25 30
y = 1.326xR² = 0.66469
05
1015202530
0 5 10 15
y = 0.8898xR² = 0.97497
0
5
10
15
0 5 10 15
y = 2.3969xR² = 0.7198
0
5
10
15
0 1 2 3 4 5 6
Audience
Avolta insightsEV x TTM revenue l inear correlations per BM
Commission eCommerce
Performance
Retail
Manufacturing Research
Service Subscription
y = 8.0846xR² = 0.42588
020406080
100120
0 2 4 6 8
y = 0.8944xR² = 0.74013
0
10
20
30
40
50
0 10 20 30 40 50 60
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Pre money valuation (€m)
TTM revenue (€m)
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 35
#B2B-SaaS
y = 4.3672xR² = 0.61868
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0
Pre money valuation (€m)
TTM revenue (€m)
Avolta insightsEV x TTM revenue l inear correlations per focus
#edtech
y = 3.986xR² = 0.59865
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Pre money valuation (€m)
TTM revenue (€m)
#adtech
y = 1.2308xR² = 0.21387
0.02.04.06.08.0
10.012.014.016.018.020.0
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0
Pre money valuation (€m)
TTM revenue (€m)
#jobbing
y = 4.8076xR² = 0.94982
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0
Pre money valuation (€m)
TTM revenue (€m)
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com 36
Avolta insightsResearch team
Romain MombertJunior Analyst
Lucas PléJunior Analyst
Evan ProuxJunior Analyst
Marianne BeaufilsJunior Analyst
Arthur PorréCo-founder & Managing Partner
Pascal FarrugiaAssociate
Claire CosteSenior Analyst
Baptiste JacobSenior Analyst
Thomas ReygagneHead of Data
Venture Transaction Multiples – France 2017 Edition © 2017 Avolta Partners // www.avoltapartners.com
Disclaimer
The information contained in this report has been produced by Avolta Partners, based on Diane+ data,BODACC legal data and third party information. While Avolta Partners has made every effort to ensure thereliability of the data included in this report, Avolta Partners cannot guarantee the accuracy of the informationcollected and presented. Therefore, the Avolta Partners cannot accept responsibility for any decision made oraction taken based upon this report or the information provided herein.This presentation is for the exclusive use of the people to whom it is addressed and is intended for generalinformation purposes only. It is not intended to constitute legal or other professional advice and should not betreated as such.Appropriate legal advice must be sought before making any decision, taking any action or refraining fromtaking any action in reliance on the information contained in this presentation. does not assume anyresponsibility for any person’s reliance upon the information contained herein.
© Copyright Avolta Partners September 2017
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