monetization of tech start-ups in emea & cis...total revenue 2016 $1,888m $3,640m total revenue...
TRANSCRIPT
Monetization of Tech Start-ups in EMEA & CIS
May 2017
Sergei Arsenyev
Co-head of GS Russia & CIS
2
Global Leaders Local Leaders
Global vs. Local
Historically, tech companies focused to distinct development strategies:
developing unique tech and taking it global, or using and adjusting existing tech to
become local leaders
Original
Technologies/Content Global Business Model
3
Different Growth Stages Offer Different Funding /
Monetization Opportunities
Seed
Financing
Early Funding
Rounds (A,B)
Sale to
Strategic
Investor
M&A
Debt Financing
IPO
<$10m
>$10m
>$20m
>$50m
>$200m
>$300m
4
The Development of Tinkoff Bank Company Overview
Series A
Date: Oct-2007
Investors:
Size: 10% stake with an option
to increase its stake by 5%
GS role: Investor
Syndicated Loan (incl.
warrants to lenders of 6%
share capital)
Date: Dec-2007
Investors: Institutional
investors,
Size: RUB 1.5bn
(USD61m)
Eurobond Issue
Date: Apr-2011
Investors: Institutional investors
Size: $175m
GS role: Joint Lead Manager and
Bookrunner
Eurobond Issue
Date: Dec-2008
Investors: Institutional
Investors
Size: $70m
Series D
Date: Oct-2012
Investors:
Size: $28m / 15% stake
Eurobond Issue
Date: Sep-2012
Investors: Institutional Investors
Size: $250m
Series C
Date: May-2012
Investors:
Size: $50m / 8% stake
Series B
Date: Sep-2008
Investors:
Size: $40m / 4%
stake
Subordinated Eurobond
Date: Nov-2012
Investors: Institutional Investors
Size: $125m followed by a tap of $75m in Feb-2013
GS role: Joint Lead Manager
IPO
Date: Oct-2013
Investors: 63% Long
Only investors / 37%
Hedge Funds
Size: $1,087m
GS Role: Joint Global
Coordinator and
Bookrunner
NA NA
$100m
NA
$187m
$625m
NA
$1.0bn
NA
$3.2bn
2.2m
180k
49k
2.0m
3.5m
Total Credit Cards Issued, #
5
The Development of Uber Company Overview
Seed
Date:
Aug-2009
Investors: NA
Size: $0.2m
Debt Financing
Date:
Jan-2015
Investors:
Size: $1.6bn
GS role: Investor
Series F
Date:
Jul-2015
Investors:
Size: $1.0bn
Private Equity
Date: Aug-2015,
Feb-2016
Investors:
Size: $300m
Angel
Date: Oct-2010
Investors: NA
Size: $1.25m
NA NA $60m
NA
$3.5bn
$18bn
NA
$51bn
NA
$62.5bn
NA
Series B
Date: Dec-2011
Investors: Jeff Bezos
Size: $37m
GS role: Investor
$41bn
Series G
Date:
Jun-2016
Investors:
Size: $3.5bn
Series A
Date: Feb-2011
Investors: Benchmark,
Alfred Lin, Scott Banister
Size: $11m
Series C
Date: Aug-2013
Investors:
Benchmark
Size: $363m
Debt Financing
Date: Jul-2016
Investors:
Size: $1.15bn
GS role:
Investor
Series E
Date: Feb-2015
Investors: Jack
Abraham
Size: $2.2bn
Series D
Date: Jun-2014
Investors:
Wellington
Size: $1.4bn
4
Countries of operations, #
45
50
64
72
6
Series B
Date: Aug-2009
Investors: Li Ka-
shing,
Size: $50.0m
Series D
Date: Jun-2011
Investors:
Size: $100.0m
Series F
Date: Nov-2013
Investors:
Size: $250m
Convertible Notes
Date: Jan-2016
Size: $500m
GS role:
Bookrunner
The Development of Spotify Company Overview
Series A
Date: Oct-2008
Investors: Li Ka-
shing, Northzone
Size: $21.6m
Series E
Date: Nov-2012
Investors: AF
Square,
Size: $100.0m
GS role: Investor
($50m)
($10m) ($15m)
Series C
Date: Feb-2010
Investors: Sean
Parker
Size: $16.1m
Series G
Date: Jun-2015
Investors:
etc.
Size: $526m
GS role: Investor
and Bookrunner
NA $250m
$300m
$1.0bn
$3.0bn
$4.0bn
$8.5bn
$8.5bn
$8.5bn
Debt Financing
Date: Mar-2016
Investors:
Size: $1.0bn
GS role: Investor
4m
250k
1m
6m
15m
30m
Paying Subscribers, #
7
Comparison of Monetization Strategies
Sale or IPO?
Overview of Private Placement Market
Key Considerations
Maximize Valuation /
Proceeds
Certainty of Transaction
(Level of Investor Interest)
Level of Control /
Ownership
Timing
Engender Further Growth /
Business Development
Limit Disclosure
8
Recent Success Stories in EMEA
Source: Based on publicly disclosed / publicly reported news sources
Insight into the Internet Unicorn Landscape
Current valuation: $8,530m
Latest Funding (Mar-16): $1,000m
Current valuation: $3,110m
Latest Funding (May-17): $421m
Current valuation: $2,300m
Latest Funding (Sep-15): NA
Current valuation: $1,500m
Latest Funding (May-16): $110m
Current valuation: $2,090m
Latest Funding (Dec-16): $89m
Current valuation: $3,000m
Latest Funding (May-07): NA
Current valuation: $2,250m
Latest Funding (Mar-17): $5m
Sale to Ctrip (Nov-16): $1,740m Current valuation: $1,600m
Latest Funding (Sep-16): $24m
Sale to Amazon (Mar-17): $650m Current valuation: $2,800 m
Latest Funding (May-17): $403m
Current valuation: $1,050m
Latest Funding (Jan-17): $100m
Current valuation: $1,030m
Latest Funding (Feb-15): $30m
Current valuation: $1,100m
Latest Funding (May-16): $26m
Current valuation: $1,000m
Latest Funding (Jul-16): $56m
9
Recent Success Stories in EMEA
Source: Based on publicly disclosed / publicly reported news sources
¹ Forbes estimation ² It was rumored that total funding would be up to $200m ³ Financials converted at 57 RUB/USD exchange rate
Insight into the Internet Unicorn Landscape
Current valuation : $2,700m
Sale to Naspers (Oct-15): $1,200m
Current valuation: $1,500m
Latest Funding: NA
Current valuation: $101m
Latest Funding: NA
Current valuation: $700m
Latest Funding (Apr-14): $150m
Current valuation: $210m
Latest Funding: NA
Current valuation: $97m
Latest Funding (Oct-12): $16m
Current valuation : $2,000m
Latest Funding (Nov-16): $100m
10
Private Market Update
Private market sentiment has improved dramatically since the volatility seen throughout
late 2015 and 2016
Note: Includes US and European technology and technology-related private placements >$100mm except where otherwise noted. Data as of 12-May-
2017.
Private Market Update
20
26
45 47
34
23
29
3,500
4,000
4,500
5,000
5,500
6,000
0
10
20
30
40
50
60
1H'14 2H'14 1H'15 2H'15 1H'16 2H'16 2017 YTD
# of Technology Private Placements >$100mm Nasdaq Composite Index
11
Market Leaders Still
Attracting Capital
High Quality Transactions
for Next Wave of
Emerging Companies
Down Rounds /
Increased Investor-
Friendly Structure
Current Fundraising Trends for Private
Technology Companies
1 2 3
While private market volumes slowed in 2016, we have seen activity in
recent months fall into the following categories:
12
The Value of Success is Tremendous …
Source: Venture Source
¹ Excludes Rocket Internet follow-on investment at undisclosed valuation.
Overview of Private Placement Market
Despite increasing period between funding rounds, investors demonstrate solid demand and
ability to pay premium for high growing tech companies
Prior Round(Dec-14)
Last Round(Jul-15)
$5,000
$2,000
Prior Round(Jan-14)
Last Round(Mar-15)
$5,200
$11,367
Prior Round(Nov-13)
Last Round(Jun-15)
$4,250
$8,526
Prior Round(Jan-15)
Last Round(Mar-17)
$2,220
$3,400
13
Sale Down Round Bankruptcies
… However Sustaining Growth Is Becoming
Increasingly Difficult
Latest High Profile Down Rounds, Sales and Bankruptcies
Source: CrunchBase, Tech Crunch, CBInsights, Pitch Book and Wall Street Journal estimates; based on publicly disclosed information only
Note: Only includes Internet companies with a previous private valuation of $100mm or greater. Valuations are listed as post-money.
Insight into the Internet Unicorn Landscape
Previous valuation (May-11): $1.15bn
Latest valuation (Jan-16): $250m
Previous valuation (Feb-13): $431m
Latest valuation (Feb-16): $342m
Previous valuation (Aug-13): $1,150m
Latest valuation (Mar-15): $15m
Previous valuation (Dec-11): $5.37bn
Latest valuation (Feb-13): $1.51bn
Previous valuation (Feb-14): $650m
Latest valuation (Feb-16): $325m
Previous valuation (Sep-14): $3.20bn
Latest valuation (Jan-16): $1.67bn
Previous valuation (Sep-14): $3.20bn
Latest valuation (Jan-16): $1.67bn
Previous valuation (Jul-15): $3.43bn
Latest valuation (Apr-16): $1.13bn
Previous valuation (Nov-11): $2.25bn
Latest valuation (Jun-13): $12m
Previous valuation (May-12): $189m
Latest valuation (May-16): $0m
Previous valuation (Nov-13): $452m
Latest valuation (Sep-15): $15m
Previous valuation (Dec-13): $150m
Latest valuation (Dec-15): $0m
Previous valuation (Nov-14): $2.78bn
Latest valuation (Feb-16): $0m
14
2016 Internet Unicorn Themes More Unicorns Fewer Exits
Insight into the Internet Unicorn Landscape
Funding Environment Robust despite lack of mega deals
Declining pace of Unicorn Additions
The Pace of Unicorn Exits Remains Slow
Interesting Capital Raising Opportunities
1
2
3
4
15
Goldman Sachs Experience in the Sector 2013-2017YTD
¹ 2013-2017YTD deals (Private Placement, Convertible Debt Offering, IPO, FO, ABO, Block Trade, Common Stock Sale, Sale of Controlling Stake). Valuation as at
the date of the deal announcement.
GS acts as an active counterparty for Technology Companies at different levels of development and at
different valuations
<$100m $100–500m $500–1,000m $1.0–2.5bn $2.5–5.0bn $5+bn
Valuation¹
GS Acted as an Investor
16
GS Involvement:
Mar-16: Investor and Placement
Agent for Convertible Notes
issue
Jun-15: Investor and Placement
Agent for Series G funding
Nov-12: Investor for Series E
funding
Select Long-Term Relationships With
Technology Majors
¹ Latest valuation for public companies – Market Cap, for non-public companies – latest rumored valuation. ² Rounds where GS participated as an investor or
bookrunner, financial advisor, placement agent.³ Accumulated amount of funds being raised through the rounds GS participated.
Overview of Private Placement Market
GS maintains long-term relationship with its clients in the tech space through their growth
and development stages
GS Involvement:
Jul-16: Leveraged loan
financing from GS
Jan-15: Convertible Notes
financing from GS clients
Dec-11: Investor for Series B
funding
GS Involvement:
Feb-17: Convertible Debt
Bookrunner
Nov-15: IPO Bookrunner
Oct-14: Placement Agent and
Investor for Series E funding
Apr-14: Debt financing from GS
GS Involvement:
Aug-15: SPO Bookrunner
May-15: SPO Bookrunner
Feb-15: SPO Bookrunner
Apr-14: IPO Bookrunner
GS Involvement:
Apr-16: Advised on sale of
controlling stake to Alibaba
Dec-14: Placement Agent for
series F funding
GS Involvement:
Aug-15: Placement Agent for
Series D funding
Aug-14: Placement Agent for
Series C funding
17
Current Market Cap $5,977m $6,430m
Market Cap 2014 $7,165m $6,365m
Total Revenue 2016 $1,888m $3,640m
Total Revenue 2014 $2,383m $4,036m
2008 Revenue Mix
2016 Revenue Mix
Strategies for Digital Transformation Unlocking Value for Traditional Print Media
Source: Company Filings, GS IBD Estimates
Note: GMG assumes that digital revenue in 2008 grows at the same rate as Trader Digital revenue in Trader Media Group
1 2
Online Offline
11%
89%
14%
86%
68%
32%
67%
33%
18
The Transformation of Schibsted
Revenue Split’ 16A Revenue Split’ 12A Revenue Split’ 08A
Online 40 %
Offline 60 % Online
68%
Offline32%
Online11%
Offline89%
0
2,000
4,000
6,000
8,000
10,000
12,000
1996 1997 1999 2000 2002 2003 2005 2006 2008 2009 2011 2012 2014 2015 2017
MC
ap
, $m
$ 5,968
19
0
2,000
4,000
6,000
8,000
10,000
12,000
1998 1999 2001 2002 2004 2005 2007 2009 2010 2012 2013 2015 2017
MC
ap
, $
m $ 6,430
The Transformation of Axel Springer
Online67%
Offline33%
Online14%
Offline86%
Online37%
Offline63%
Revenue Split’ 16A Revenue Split’ 12A Revenue Split’ 08A
20
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