ey venture capital insights 4q14

7/24/2019 EY Venture Capital Insights 4Q14

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Venture Capital Insights4Q14

Global VC investment landscape

January 2015


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Page 1 Venture Capital Insights4Q14

Bryan Pearce,Global Leader, Entrepreneur of The YearTMand GlobalVenture Capital Advisory Group, EY

Jeff Grabow,United States, Venture Capital Leader, EY

Sandra Feldner Vandergriff,Venture Capital Advisory Group, EY

Shanta Kumari,EY Knowledge, EY

Vidhi Gupta,EY Knowledge, EY

Insights development team

* All data contained in this is sourced to Dow Jones VentureSource unless otherwise noted.


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Section 1: Global VC investment landscapeAnalysis by geography, hotbed, sectors, stages of development and roundclasses


4/21


Section 1: Global VC investment landscapeSummary

Global VC investment activity: 2014 was a record year in terms of VC investment activity. The year saw US$86.7b invested in 6,507 deals,

hitting the highest annual investment mark since 2000. Strong investment activity was seen in the secondand fourth quarters of 2014, with both quarters recording more than US$20b funding with more than 1,500deals each.

In terms of quarterly VC investment, the average deal size was the highest for 4Q14 (US$16.7m) comparedto the average values in 1Q08, which remained below US$14m.

In 2015, global venture capital-backed deal activity is likely to continue its current upward trend driven by aconsistent pipeline of new IPO listings along with improved investor confidence.

The Bay Area maintained its lead during 2014 with amount invested almost twice the levels seen in 2013.Beijing made a comeback in the top five hotbeds replacing UK, recording a 237% increase in the amountinvested compared to 2013.

The consumer services sector continued to lead the global VC landscape in terms of the amount invested in2014 driven by large-sized funding deals of mobile-based platform companies such as Uber Technologies,Snapchat, Instacart and Flipkart International Private Limited.

Investments at the later stage almost doubled in 2014 compared to the historical levels. A similar trend wasalso seen for investments made in companies operating at generating revenue stage.

VC investors made larger investments in the early stage round classes as noted by the increased mediandeal sizes for most markets in 2014. During the year, the median deal size also increased across all stagesof development, and across all VC geographies, compared to 2013.


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Global venture capital investment2014 was a record year in terms of VC investment activity; the highestsince 2000

Global VC activityby amount invested and number of rounds

2014 closed on a strong note in terms of global VC investment. With US$86.7b funded through 6,507 deals, the year hit the highest annual investment mark in the last 13years. Investment activity was particularly strong in the second and fourth quarters, with both quarters recording over US$20b funding and each with over 1,500 deals forthe quarter.

4Q14 was also the strongest quarter since 3Q00 in terms of quarterly VC investment. The last quarter of 2014 recorded US$26.1b invested in 1,560 deals a 31% increase invalue despite a 4% decline in deal volume compared to 3Q14. Subsequently, the average deal size was the highest during 4Q14 (US$16.7m )compared to the average valuesrecorded since 1Q08 where it remained below US$14m.

The outlook for VC investing and VC-backed companies remains positive as improving economic conditions continue to support the global fundraising environment. In 2015,global VC-backed deal activity is likely to continue its current upward trend driven by a consistent pipeline of new IPO listings along with improved investor and general partnerconfidence.

13.66.8 9.9

13.0 11.2 10.917.6

19.9 26.113.7

8.5 11.8

14.5 13.9 13.5

23.113.8

8.7

9.7

15.511.3 14.5

19.9

10.1

11.4

15.2

13.013.1

14.6

26.1

5,500

4,813

5,458

6,040 6,0856,551 6,507

1,361 1,531 1,550 1,5161,542 1,808

1,560

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

Numberofrounds

Am

ountinvested(US$b)

Amount invested during Q1 (US$b) Amount invested during Q2 (US$b)

Amount invested during Q3 (US$b) Amount invested during Q4 (US$b)

Number of rounds during the year/qtr Number of rounds during Q4

51.1 35.6 46.6

56.0 49.8 53.5 86.7 19.9 26.1

1,620

1,560

Note: Global total includes the US, Europe, Canada, China, Israel (all site) and India only.


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US

Europe

In 2014, VC funding was at its all time high for the three key VC marketsthe US,Europe and Chinacompared to the levels seen globally in 2008. During the year,while investments increased by 47% and 27%, respectively, for the US and Europe,it almost tripled for China compared to 2013. Strong activity in the informationtechnology and consumer services sector drove this increase in China.

VC investment continued to be strong in the US and China during 4Q14 driven byfew mega-deals that were more than US$1b each with Uber and Beijings XiaomiTechnology Co Ltd, leading the top quarterly deals, funding dropped by 29% inEurope, compared to 3Q14 due to slow activity across all industry sectors. Dealvolume did not see much change in any of these markets.

The current trend across the key VC markets suggests VC investing will maintain itsmomentum through 2015. As investor confidence continues to build with improvingmarket conditions and investment returns on upswing, strong levels of investing islikely to be seen in the year to come.

China

Venture capital investment by geography2014 had the highest level of VC investing seen in the US, Europe and China

9.14.7 5.4

8.2 7.8 7.6 12.1 11.2 13.8

8.4

6.3 7.7

9.2 9.68.7

15.09.2

6.16.2

10.8 8.0 9.5

11.26.7

7.69.6

8.2 9.3 9.6

13.83,1002,794

3,204

3,683 3,7853,837 3,682

711848 889 918 932

1,013814

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0

10

20

30

40

50

60

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

Numberofrounds

Amountinvested(US$b)

6.5 5.0 4.3 4.9 4.1 4.1 5.5

Median amount invested (US$m)

5.1 6.8

928 814

2.21.1 1.4

1.9 1.4 1.62.1

3.12.2

1.8

1.11.6

1.8

2.0 2.0

3.1

2.1

1.31.4

1.81.4

2.3

3.11.9

2.3

2.6

2.01.6

2.4

2.2

1,502

1,3141,431 1,379 1,421

1,6361,460

442 452 430374 373

461332

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

NumberofroundsA

mountinvested(US$b)

1.2 0.5 2.41.8 1.2 0.7

2.4 3.06.8

1.8

0.7

1.1 2.0 1.5

1.2

3.41.4

0.8

1.11.8

0.91.5

3.0

0.7

0.9

2.01.7

1.4 1.4

6.8

375335

423465

320

439

740

85 116

128 112 86136

243

0

100

200

300

400

500

600

700

800

0

2

4

6

8

10

12

14

16

18

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

Numberofrounds

Amountinvested(US

$b)

Median amount invested (US$m)Median amount invested (US$m)

2.9 2.1 2.5 2.1 2.0 1.9 2.7 2.7 3.1 6.8 5.3 7.5 10.0 6.5 4.0 9.6 5.0 10.0

337 332 207 243

Amount invested during Q1 (US$b) Amount invested during Q2 (US$b) Amount invested during Q3 (US$b)

Amount invested during Q4 (US$b) Number of rounds during the year/quarter Number of rounds during Q4


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02

Venture capital investment by geographyIndia continued to see a surge of VC activity in 4Q14 driven by consumerservices sector deals

During 4Q14, investment activity remained soft in the smaller VC markets namely,Canada and Israel. For both markets, the funding level in the last quarter of 2014was mostly in line with the levels seen during 2Q14 and 3Q14. This was despite anincrease in deal volume recorded during 4Q14 for both markets24% for Canadaand 7% for Israel compared to the 3Q14.

Even on a yearly basis, the growth in VC activity for Canada and Israel wasrelatively slower compared to other VC markets. During 2014, while Canada saw21% increase in funding, Israel recorded 10% increase over the prior year, with amarginal change in deal volume.

India was an exception, among the smaller markets, where VC investmentscontinued on the upward trajectory in 4Q14 in India, closing the year with US$5.2bthrough a total of 260 deals (highest aggregate value and volume since 2008). Thetwo mega deals of nearly US$700m of consumer services sector-based Flipkart.comand Snapdeal.com in 4Q14 drove 35% increase in investments compared to 3Q14.

0.8

0.2 0.3 0.3 0.3 0.3 0.40.5 0.6

0.6

0.2

0.9

0.7

0.2

0.7 0.5

0.5

0.3

0.20.4

0.3

0.40.5

0.3

0.2

0.5 0.6

0.4

0.4 0.6

292

181

165 185167

201 196

7153 45 41

5362

45

0

50

100

150

200

250

300

350

0

1

2

3

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

N

umberofrounds

Amountinvested(US

$b)

0.20.1

0.20.4

0.20.2 0.2

0.4 0.40.1

0.10.2

0.4

0.2 0.20.4

0.3

0.1

0.4

0.3

0.3 0.3

0.40.2

0.2

0.2

0.1

0.30.4

0.4

110

91 114

142

151186 169

26 24 2328

39

65

47

-50

0

50

100

150

200

0

1

2

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

Numberofrounds

Amountinvested(US$b)

0.2 0.2 0.2 0.4 0.4 0.4 0.5

1.7 2.31.0

0.1 0.20.4 0.3

0.6

0.70.4

0.1 0.2

0.4 0.50.5

1.70.2

0.30.3

0.4 0.40.4

2.3

121

98

121

186

241252 260

2638 35 43

5971

79

0

50

100

150

200

250

300

0

1

2

3

4

5

6

2008 2009 2010 2011 2012 2013 2014 Q3 Q4

N

umberofrounds

Amountinvested(US

$b)

38 47

42 45

68 79

Canada

5.0 4.3 4.9 5.0 2.8 2.3 3.5

Median amount invested (US$m)

5.0 4.4

IndiaMedian amount invested (US$m)

7.3 4.2 6.7 5.0 3.8 4.0 4.5 5.0 4.7

Israel (all site)Median amount invested (US$m)

5.2 4.0 5.3 7.2 4.3 5.0 6.0 6.3 9.0

Amount invested during Q1 (US$b) Amount invested during Q2 (US$b) Amount invested during Q3 (US$b)

Amount invested during Q4 (US$b) Number of rounds during the year/quarter Number of rounds during Q4


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With strong activity in the business and financial services and consumer services sectors, the Bay Area maintained its dominance during 2014 with amount invested, which wasalmost twice the levels seen in 2013 US$24.7b in 2014 compared to US$13.9b in 2013.

During 2014, Beijing made a comeback into the top five hotbeds replacing the UK, recording a 237% increase in the amount invested compared to 2013. During the year, VCinvestors actively invested in the region particularly consumer information services sub-sector with a focus in the shopping facilitator space.

In 4Q14, Beijing was the second-most preferred VC destination after Bay Area, reaching a 120% increase in VC funding when compared to the previous quarter due tosignificant investment activity in the consumer services and information technology sectors. During the current quarter, the hotbed saw a US$1.1b deal in the software sector-based Beijing Xiaomi Technology, which was the largest deal in China and also the second-largest deal of the entire quarter.

Venture capital investment by hotbedBeijing was the second-most preferred VC destination after the Bay Area in 4Q14

Updated

9

59

28

47

66

22

45

50

69

27

65

87

104

122

281

Numberof rounds

104

274

325

388

406

425

588

629

657

757

1,077

1,280

1,326

3,724

5,631

Switzerland

France

Potomac

Canada

Germany

Illinois

Israel (All Site)

Shanghai

UK

Bengaluru

S. California

New England

NY Metro

Beijing

Bay Area

Amount invested(US$m)

Top five hotbeds1

US$13.0b(74% of the total2)

Top five hotbeds1

659(61% of the total2)

113

385

408

414

557

658

880

916

957

1,034

1,480

1,817

2,280

3,274

8,791

Bengaluru

Switzerland

Illinois

Shanghai

Canada

Potomac

Israel (All Site)

Beijing

France

Germany

UK

NY Metro

S. California

New England

Bay Area


Top five hotbeds1US$17.6b(74% of the total2)

2009 4Q14

317

384

756

823

1,184

1,208

1,282

1,637

1,990

2,005

2,851

3,347

3,869

4,019

14,154

Bengaluru

Switzerland

Illinois

Germany

Shanghai

Canada

France

Potomac

Israel (All Site)

UK

Beijing

NY Metro

New England

S. California

Bay Area


Top five hotbeds1


2011

413

497

598

789

1,120

1,164

1,172

1,753

2,038

2,292

2,428

3,256

3,637

3,820

13,917

Switzerland

Illinois

Bengaluru

Shanghai

Canada

France

Potomac

Israel (All Site)

Germany

Beijing

UK

S. California

NY Metro

New England

Bay Area


Top five hotbeds1


2013

547

822

862

1,250

1,358

1,930

2,083

2,248

2,707

2,858

4,082

4,788

5,333

7,713

24,763

Switzerland

Potomac

Illinois

France

Canada

Israel (All Site)

Shanghai

Bengaluru

UK

Germany

S. California

New England

NY Metro

Beijing

Bay Area


Top five hotbeds1


2014

Note:1 Top five hotbeds by amount invested. 2Total of 15 major VC hotbeds listed above.


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Venture capital investment by industryDriven by big ticket deals, consumer services dominated in both value andvolume in 2014

By number of rounds:

In 4Q14, the information technology and the consumer services sectors drove VC activity in deal volume. These two sectors recorded close to 430 deals each, cumulativelyaccounting for 55% of the total VC deals for the quarter.

On a yearly basis however, VC investors preferred to invest in the consumer services sector in 2014 more than in the information technology, which was the leading sector forthe last three years. With 1,690 deals, the consumer services sector led all sectors, closely followed by the business and financial services sector with 1,682 deals.

By amount invested:

Driven by large-sized deals of mobile-based platform companies such as Uber Technologies, Snapchat, Instacart and Flipkart.com, the consumer services sector continued todominate the global VC landscape in terms of the amount invested in 2014. The sector attracted US$29b of investment for the year the highest amount invested in the sectorin the last six years.

The consumer services sector maintained its dominance during 4Q14 with deal value increasing by 46% over the previous quarter. The average deal size surged to US$23.4min 4Q14 from US$16.1m in 3Q14 as the sector continued to attract bigger ticket deals in the current quarter.

1,670253

1,179

240

1,332

186

1,170

Information technology

Industrial goods and materials

Healthcare

Energy and utilities

Consumer services

Consumer goods

Business and financial services2011

1,745

214

1,095

181

1,475

191

1,163

Number of rounds

1,554

145

1,064

121

1,690

226

1,6822012 2013 2014 3Q14 4Q14

362

39

267

35

424

60

426

429

31

236

30

427

40

359

10.4

2.4

12.74.7

13.42.1

9.9



Healthcare


Consumer services

Consumer goods

Business and financial services

2011

11.3

2.1

11.0

2.5

11.7

1.4

9.4

14.7

4.7

14.0

1.7

29.0

1.7

20.2

2012 2013 2014 3Q14 4Q14

2.8

0.7

3.4

0.3

6.8

0.4

5.3

4.0

2.5

3.4

0.6

10.0

0.4

4.8

11.5

2.1

11.7

1.7

12.6

1.5

12.1

1,738

213

1,130

163

1,544

218

1,535

Updated

Amount invested (US$b)

Note: There are also some deals for which sector has not been assigned.


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Venture capital investment by countryIn 2014, VC investing in China and India surged to three times the levels seenin 2013

By number of rounds:

During 2014, the number of deals declined in all markets except for China and India, compared to 2013. China, in particular, saw a huge jump of nearly 70% in the deal volumelargely driven by consumer services sector, the sector saw an influx of 248 in 2014 compared to 111 in 2013 of VC deals from consumer information services sub-sectorin 2014.

In the US, deal volume declined by 12% in 4Q14 compared to the previous quarter, as investors participated in a smaller number of deals in all industry sectors except forinformation technology. Europe also saw a marginal fall of 1% in deal volume, while deal activity increased in all other markets during the same period.

By amount invested:

Investment activity across markets flourished during 2014 as the year recorded the highest investment levels since 2000. In 2014, VC investors seemed particularly interested inthe two emerging marketsIndia and Chinaboth of which saw almost a threefold increase of in funding levels compared to 2013.

The last quarter of 2014 was particularly strong in the US, China and India compared to 3Q14, these markets saw a few megadeals that closed near the end of the quarter. Forother markets, VC investing slowed or remained at a similar level as seen in the previous quarter.

186

185

142

465

1,379

3,683

India

Israel

Canada

China

Europe

US

241

167

151

320

1,421

3,785

252

201

186

439

1,636

3,837

260

196

169

740

1,460

3,682

68

42

38

207

337

928

79

45

47

243

332

814

1.6

2.0

1.2

7.3

7.5

36.4

India

Israel

Canada

China

Europe

US

1.6

1.2

0.9

5.0

6.4

34.6

2.0

1.8

1.1

4.8

8.3

35.5

5.2

1.9

1.4

15.5

10.6

52.1

1.7

0.5

0.4

3.0

3.1

11.2

2.3

0.6

0.4

6.8

2.2

13.8

2011 2012 2013 2014 3Q14 4Q14

2011 2012 2013 2014 3Q14 4Q14

Number of rounds



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Venture capital investment by round class and stage of developmentInvestments at later stage almost doubled in 2014 compared to historical levels; a similar trend was seenfor investments made in companies operating at generating revenue stage

1,647

1,062

2,314

638

Later stage

Second round

First round

Seed round

2011

1,552

999

2,392

768

Number of rounds


2012 2013 2014 3Q14 4Q14

1,541

1,240

2,682

746

1,728

1,343

2,673

455

427

341

685

98

416

323

657

91

28.3

10.8

12.2

0.6

Later stage

Second round

First round

Seed round

2011

26.2

8.3

10.7

0.5

2012 2013 2014 3Q14 4Q14

27.5

11.0

11.1

0.5

48.7

16.3

14.0

0.4

10.2

3.7

3.6

0.1

15.95.1

4.0

0.1

316

3,701

1,450

566

Profitable

Generating revenue

Product development

Startup

2011

233

3,913

1,323

612

Number of rounds


2012 2013 2014 3Q14 4Q14

278

4,451

1,287

532

274

4,822

1,117

292

52

1,222

279

67

5.9

36.7

12.3

1.1

Profitable

Generating revenue

Product development

Startup

2011

3.4

36.6

8.9

0.8

2012 2013 2014 3Q14 4Q14

4.1

39.8

8.9

0.6

9.2

65.3

11.6

0.5

2.3

14.7

2.8

0.1

2.7

19.8

3.5

0.1

By stage of development

By round class

65

1,173

255

67

Updated


12/21


0.8

0.6

0.7

0.8

0.6 0

.7

1.0

0.8

0.6

0.5

0.5

0.3

0.3

0.70

.7

NS

NS

1.0

0.3

0.4

0.9

0.6

NS

0.9

0.9

0.4

0

.1

0.5

0.6

0.6 0

.6 0.7

0.5

0.7

0.6

NS

NS

NS

0.3

0.4

0.2

0.5

0

1

2008 2009 2010 2011 2012 2013 2014

Median round size by round classVC investors made larger investments in the early stage round classes assuggested by increased median deal sizes for most markets in 2014

10.0

8.0

7.7 1

0.0

10.0

10.0

13.0

5.9

4.4

5.3

5.5 7

.3

6.5 7

.68.7

7.3 1

0.0

20.0

19.0 2

2.1

32.5

9.5

5.7 8

.9

7.3 8

.8

4.5

15.0

9.0

5.9

9.8 1

1.0

10.0

8.0

14.9

12.0

11.5

10.8

10.0

8.5 1

0.3

20.2

05

101520253035

2008 2009 2010 2011 2012 2013 2014

8.0

5.0

5.5 6

.05.5 6

.06.5

3.8

2.5 3

.0

2.9

3.3

3.3 4

.0

10.0

8.0

10.0 1

5.0 1

5.4

12.5

18.5

5.1

5.3

5.0 6

.96.0

5.9

4.85

.8

5.0 6

.08.0

5.4

8.8

6.3

10.6

8.0

9.0

7.9

6.1 6

.08.1

0

4

8

12

16

20

2008 2009 2010 2011 2012 2013 2014

4.1

3.5

3.0

3.0

2.8 2

.6 3.1

2.1

1.6 1

.8

1.6

1.5

1.3 1

.6

5.0

4.0

5.0

7.7

3.2

3.0

4.5

4.0

2.8

3.0

3.0

2.0

1.6 2

.2

4.0

2.3

2.0

3.5

3.0

3.0 3

.3

6.0

4.0

3.4 4

.0

3.3

1.6

1.7

0

2

4

6

8

10

2008 2009 2010 2011 2012 2013 2014

Seed round (median round size in US$m)

During 2014, the median deal size at seed round class stage increased in all markets except for Israelwhich saw a marginal decline with median value decreasing from US$0.7m in 2013 to US$0.6m in2014, suggesting investor sentiment remains positive. VC investors preferred to make biggerinvestments in young startups globally.

First round (median round size in US$m)

Investors made larger investments in early stage round classes in 2014, reflected by increasedmedian round size in all VC markets. China saw the strongest growth of 50% in 2014, comparedto 2013, followed by Canada, which saw 38% growth. While the US and Europe growth rate wasalmost 20% each, India and Israel, each showed a marginal growth rate of nearly 10%.

Second round (median round size in US$m)

While the two mature VC marketsUS and Europesaw 8% and 22% increase, respectively in themedian value in 2014, the two emerging economiesChina and Indiarecorded 48% and 35%increase, respectively, over 2013. This reflects investor preference to make bigger investments in theemerging markets in anticipation of earning higher returns. The median value, however, declined by19% and 29% in Canada and Israel respectively.

Later stage (median round size in US$m)

Median deal sizes grew significantly in 2014 compared to 2013, particularly in the smaller VCmarkets. The growth was the steepest in Canada, where the median value increased to almost3.5x during 2014. For India and Israel the median value almost doubled to reach US$20.2m andUS$14.9m in 2014 from US$10.3m and US$8.0m in 2013, respectively.

0.3 0.2 0.3 0.6 0.5 0.5 0.4

340 304 391 638 768 746 455

Amount investedglobally (US$b)

No. of global deals


No. of global deals

13.7 7.9 10.0 12.2 10.7 11.1 14.0

2,211 1,685 1,966 2,314 2,392 2,682 2,673

US Europe China Canada Israel (all site) India

11.4 7.6 8.3 10.8 8.3 11.0 16.3

1,084 1,025 1,054 1,062 999 1,240 1,343

22.2 17.5 24.8 28.3 26.2 27.5 48.7

1,476 1,467 1,676 1,647 1,552 1,541 1,728

Updated

Note: Chart scales vary for the purpose of clarity.


13/21


Median round size by stage of developmentIn 2014, median deal size increased for almost all VC markets, across all stages,compared to 2013

7.0

5.0

5.0 5

.15.0 5

.0 5.9

3.0

2.1

2.4

2.1

2.4

1.9 2

.5

7.3

7.3

8.6 1

0.0

8.0

5.0

10.0

5.5

3.6

5.0

5.0

3.3

2.5 4

.3

6.0

4.4

6.0

9.0

4.8

6.0 7

.0

8.0

5.1

6.4

5.5

4.0 4

.0 4.3

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 2014

8.0

5.0

6.1 9

.1

6.2

5.1

13.0

3.9

2.9 5

.6

3.6

4.0

3.9 5

.67.0

5.7

6.9

20.0

18.5

10.7

10.0

NS 7

.914.6

NS

NS 7

.5 10.0

9.0

NS 8

.59.8

7.0 1

0.4

7.7

7.2 5

.1

5.0 8

.09.2

36.0

60.0

0

10

20

30

40

50

60

70

2008 2009 2010 2011 2012 2013 2014

Startup (median round size in US$m)

In 2014, the median deal size increased compared to 2013 for all VC markets, except for Canada forwhich the median values were did not have enough of a sample size to calculate a median. India andChina saw the highest increase in median values seen in 2014, which were almost triple the size for in2013, in both countries.

Product development (median round size in US$m)

In the US, the median value rebounded in 2014 to reach 2011 levels after seeing a consistentdecline over the past two previous years. Among other markets, China recorded the highestgrowth rate of more than 250% in 2014 compared to 2013. In Europe, Canada and Israel it stoodat 69%, 71% and 12%, respectively. India was the only exception that saw close to an 80%decline in values for the same period.

Generating revenue (median round size in US$m)

Median deal size increased across all VC markets in 2014 compared to 2013. The increase was mostsignificant in China and Canada, where median values almost doubled compared to levels of 2013. AtUS$10m, the median value in China reached its highest level in six years. This is because majority ofthe Chinese companies which received larger/mega investments for the during the year wereoperating at generating revenue stage.

Profitable (median round size in US$m)

On the back of large-sized financing deals, the median values in the US and India increased in2014 compared to 2013, to reach the highest levels ever seen since 2008. The median valuesincreased even for Europe and Canada 42% and 33%, respectively during the same period.China and Israel were the only exceptions that saw median values declining by 7% and 26%,respectively in 2014 over the previous year.


No. of global deals

1.1 0.8 0.9 1.1 0.8 0.6 0.5

370 376 358 566 612 532 292

17.5 11.4 13.0 12.3 8.9 8.9 11.6

1,668 1,427 1,580 1,450 1,323 1,287 1,117


No. of global deals

27.1 19.8 27.1 36.7 36.6 39.8 65.3

3,035 2,698 3,159 3,701 3,913 4,451 4,822

5.4 3.5 5.6 5.9 3.4 4.1 9.2

416 302 359 316 223 278 274

US Europe China Canada Israel (all site) India

Updated

7.0

5.0

4.0 5

.0

3.7

3.3

5.0

2.6

2.1 2

.5

1.9

1.3 1

.72.8

2.7

3.9

5.0

3.0 3

.6

0.8

3.03

.3 4.2

3.0

6.0

2.0

1.5

2.6

4.5

4.0

4.0 4

.4

3.2

4.3 4

.86.3

1.8

8.7

0

.4

3.3

2.2

0.5

012

3456789

10

2008 2009 2010 2011 2012 2013 2014

1.2

1.0

1.0

1.0

0.9

0.8

1.0

0.9

0.8

0.7

0.7

0

.4

0

.3 0.7

7.5

1.9

1.4

1.0

0

.50.6

1.5

N

S 1

.5

1.4

0.9

0

.5

0

.3

N

S

2.5

1.5

1.2 1

.8

0.6 0

.91.0

NS

N

S

6.7

3.0

0

.5

0.2 0

.6

012

345678

2008 2009 2010 2011 2012 2013 2014



14/21


Section 2: Global VC exit landscapeIPO and M&AAnalysis by geography


15/21


Section 2: Global VC exit landscapeIPO and M&ASummary

Global VC-backed IPOs

2014 saw increased IPO activity across all VC markets compared to 2013. In Europe and China, deal volume grew to3x and 4x of levels seen in the previous year, respectively; the US recorded a growth of 42% for the same period.

In 2014, Canada and Israel saw the highest number of IPOs since 2008, while India did not see any change in IPOdeal volume.

The US continued to dominate in terms of dollar amount raised via IPO, followed by China in 2014.

Europe recorded the strongest growth in IPO proceeds more than 600% driven by the IPO exit of Rocket Internet AG,

which raised US$1.8b in the last quarter of 2014.

The smaller VC markets also gained momentum during 2014, with Canada and Israel seeing their highest levels of IPOproceeds in the last six years.

Global VC-backed M&As

The US and Europe continued to see a high numbers of M&A deals in 2014, when compared to 2013, while the numberof deals increased by 19% in Europe, the US saw a marginal increase of 8% during 2014.

For other markets, including China, the number of M&A deals either declined or remained at the similar level comparedto the last year. For China, despite a 17% decline in 2014, M&A deal volume during current year was much higher thanthe yearly totals of 20082012 period.

For the two key VC marketsUS and Chinathe amount raised through VC-backed M&A exits was at its all-time highin 2014 since 2008. Strong M&A activity in the US was lifted by a megadeal with WhatsApp Inc. being acquired byFacebook Inc., resulting in a post M&A valuation of almost US$20.0b. Deals based in the software sector lead to 200%increase in China in 2014 compared to the previous year.


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29

NS

NS

105

NS

2

233

158

NS

532

4

6

20 11

91

NS

7 4

2

24NS

156

504

2008 2009 2010 2011 2012 2013 2014

Canada India Israel

Amount raised through IPO exits (US$m)

In 2014, the US maintained its lead in terms of dollar amount raised via IPO, followed by China. However, Europe recorded the strongest growth in terms IPO proceeds of morethan 600% due to the IPO exit of Rocket Internet AG which raised US$1.8b in the last quarter of 2014. The smaller VC markets also gained momentum during 2014, with Canadaand Israel recording the highest levels of IPO proceeds in the last six years. After a slow activity in the past few years, IPO activity picked up in India during the current yearproceeds grew to US$91m in 2014 from US$11m In 2013 and US$20m recorded in 2012.

Global VC-backed IPOIPO activity grew across markets in 2014 with Europe recording the strongestgrowth compared to the previous year

56

2

90

4 3,1

93

5,2

83 1

1,2

04

8,2

16

9,2

39

36

170

56

4

99

6

49

4

66

94,7

95

63

3 4,4

48

21,9

61

15,7

35

4,7

37

1,9

80 7

,164

2008 2009 2010 2011 2012 2013 2014

US Europe China

2

0 11

11

4

2

0

6

2 2

1

20

2 22

0

2

7

2008 2009 2010 2011 2012 2013 2014

Canada India Israel

88

47 46 50

74

105

123

18 16 1618

55

12

45

141

100

48

15

61

2008 2009 2010 2011 2012 2013 2014

US Europe China

During 2014, IPO activity remained strong in the three key VC marketsthe US, Europe and Chinasupported by improved economic conditions, better investment returns andhigh investor confidence levels. In Europe and China, deal volume grew to 3x and 4x of levels seen in 2013, respectively and the US recorded a growth of 42% for the sameperiod. Canada and Israel recorded the highest number of IPO deals in 2014 since 2008, while India did not see any real change in IPO deal volume.

Number of IPO exits



17/21


2,3

09

1,1

30

1,3

56

2,3

37

2,9

44

2,6

88

579

44 16

7

1,1

58

255

442 7

80

9951

,333

683 1

,002

827

907

1,5

61

963

2008 2009 2010 2011 2012 2013 2014

Canada India Israel

For the two key VC marketsUS and Chinathe amount raised through VC-backed M&A exits was at its all-time high in 2014. A strong M&A activity in the US was driven by amegadeal of WhatsApp Inc., which was acquired by Facebook Inc., with a post M&A valuation of almost US$20.0b, while software sector-based deals drove close a 200%increase in China in 2014 compared to the previous year. India saw an increase of 28% on the back of increased activity in the consumer services and informationtechnology sectors.

Global VC-backed M&AAmount raised through VC-backed M&A exits hits its record high since 2008 in2014 for US and China, since 2008

25,1

89

21,2

21

38,2

27

47,3

59

42,3

58

41,3

04

79,7

52

10,6

74

6

,350

8

,125

11,3

17

5

,975

14,0

29

10,6

85

58

6

63

8

86

9

69

9

28

1

2,105

6

,484

2008 2009 2010 2011 2012 2013 2014

US Europe China

30 29

35

23

3028

22

2 6

17

6

17

1617

2418

21

1819

13 11

2008 2009 2010 2011 2012 2013 2014

Canada India Israel

427 409

563 552473 449

483

224193 208 203

156 152181

8 15 18 10 11 23 19

2008 2009 2010 2011 2012 2013 2014

US Europe China

The US and Europe continued to see a higher number of M&A deals in 2014, across VC markets. Compared to 2013, while the number of deals increased by 19% in Europe, theUS saw a marginal increase of 8% during 2014. For other markets, including China, the number of M&A deals either declined or remained at the similar level as seen in theprevious year. For China, despite a 17% decline during current year, M&A deal volume in 2014 was much higher than the yearly totals of 20082012 period.

Number of M&A exits

Updated

Amount raised through M&A exits (US$m)



18/21


Appendix


19/21


Sector classification

Sector Sub-sector

Business and financial services

Business support services

Construction and civil engineering

Financial institutions and services

Wholesale trade and shipping

Consumer goods

Food and beverage

Household and office goods

Personal goods

Vehicles and parts

Consumer services

Consumer information services

Media and content

Retailers

Travel and leisure


Non-renewable energy

Renewable energy

Utilities

Healthcare

Biopharmaceuticals

Healthcare services

Medical devices and equipment

Medical software and information services


Aerospace and defense

Agriculture and forestryMachinery and industrial goods

Materials and chemicals


Communications and networking

Electronics and computer hardware

Semiconductors

Software


20/21


EYs global venture capital advisory group leadershipnetwork

OperationsSandra Feldner Vandergriff+1 213 977 [email protected]

EMEIA

Demet Ozdemir+90 212 408 [email protected]

Asia-Pacific

Ringo Choi+86 755 2502 [email protected]

Greater ChinaLawrence Lau+862 1222 [email protected]

France and LuxembourgFranck Sebag+33 1 46 93 73 [email protected]

Global LeaderBryan Pearce+1 617 585 [email protected]

Global SGM Leader

Maria Pinelli+44 20 7980 [email protected]

IndiaMayank Rastogi+91 22 6192 0850

[email protected]

IsraelOren Bar-On+97 2 3568 7102

[email protected]

US LeaderJeff Grabow+1 408 947 5607

[email protected]


21/21

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ey venture capital insights 4q14

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