Leading Venture Capital Investors

Leading Venture Capital Investors

In the chart above, leading venture capital investors are shown. The chart also shows the number of early and late-stage rounds led by the most active lead investors in the venture world in 2019 as a whole. Big accelerator programs like Y Combinator, TechStars and 500 Startups, among others, invest in dozens or hundreds of startups per year. Even though accelerators typically invest a de minimis amount of capital and often co-invest alongside syndicate partners, they’re traditionally listed as the round leaders because they originated the deal.

Between its primary and franchise operations in China and India, Sequoia Capital continues to be one of the most prolific investors on the planet. The firm has been on a fundraising tear, disclosing $3.35 billion in dry powder secured for funds aimed at growth-stage investments in the U.S. as well as venture and growth-stage investments in China.

Most active in Central & Eastern Europe and Southern Europe

active in central and eastern europe and suthern europe
atcive global investors by VC deal count

In the chart above, we show the number of early and late-stage rounds led by the most active lead investors in the venture world in 2019 as a whole. Big accelerator programs like Y Combinator, TechStars and 500 Startups, among others, invest in dozens or hundreds of startups per year. Even though accelerators typically invest a de minimis amount of capital and often co-invest alongside syndicate partners, they’re traditionally listed as the round leaders because they originated the deal.

Between its primary and franchise operations in China and India, Sequoia Capital continues to be one of the most prolific investors on the planet. The firm has been on a fundraising tear, disclosing $3.35 billion in dry powder secured for funds aimed at growth-stage investments in the U.S. as well as venture and growth-stage investments in China.

active venture capital investors in Suthern Europe
active venture capital investors in central and eastern europe

Leading venture capital investors by sector in 2018 were:

500 Startups (124) in software; Alexandria Venture Investments (28) in pharma & biotech; Elevation China Capital (7) and Atlantic Bridge Capital (7) in IT hardware; SOSV (27) and Keiretsu Forum (24) in healthcare devices & supplies; Keiretsu Forum (16), Alumni Ventures (13), F-Prime Capital Partners (13), Plug and Play Tech Center (10) in healthcare services & systems; Shell Ventures (6) in energy.

500 Startups

In the recent 500’s article, the company explained the process of picking the startup investment. In this article, they explained the opportunity assessment as a foundational rule for VC. Moreover, the first thing they would invest in is smaller bets. A cross-functional team is another valuable factor in the investment process.

In other words, it is not enough to have a skilful engineering team without a marketing or project person. Further, it is always best to have a cross-functional team to be successful. Typically, every VC would look for a product that sells and that is solving customers’ problems.

Additionally, the product that the company owns needs to have a scalable solution to go to market. Investment process requires step by step preparation and presentation from a startup looking for investors. Your business needs to have a good understanding of the investment journey. That being said, you need to walk your team through all the stages in the negotiation process.

New Wave of Private Equity Funds in Croatia

New Wave of Private Equity Funds in Croatia

In 2020, there will be five new private equity funds in Croatia coming to the market.

Several market development initiatives are promising to boost the availability of both private equity and venture capital market in Croatia. This year has witnessed the launch of the first Croatian venture capital fund with EUR 42 million available for investing in early stage and startup companies by providing both financing and expertise need to support promising entrepreneurial ideas and develop those in scalable and viable commercial ventures. This year, five new private equity funds are expected to come to the market with total of EUR 235 million.

Mirna Marovic, Director, VentureXchange Ltd. and President of Croatian Private Equity and Venture Capital Association (CVCA)

New wave of Croatian private equity funds coming to the market in 2020

First, we expect two-to-three fund to be supported by the Croatian Growth Investment Programme (CROGIP). EIF is managing the process and is currently contacting due diligence and selecting the private equity fund managers. Under the CROGIP, public investment will be funded by both EIF and HBOR and private equity fund managers will need to also fundraise funds from private investors. The objective of CROGIP is to support Croatian SMEs, small midcap and midcaps, to attract private equity investment to Croatia and to build local capacity by supporting fund managers which focus a significant part of their investments into Croatian companies.

Second, two new funds are expected to become operational at the beginning of 2020 with headquarters in Zagreb, Croatia, including Invera Equity and Feels Good Capital.

Invera Equity set up by IMAP partners (formerly Ascendant Capital Advisors) is expected to be launched in Q1 2020. The fund focus will be regional buy-and-built consolidation opportunities in sectors including food and beverages, manufacturing and industrials, information and communication technologies, services (including healthcare and transportation) and hospitality. The fund will target a diversified portfolio with a typical investment size of EUR 4-12 million. The countries in focus include Croatia, Slovenia, Bosnia & Herzegovina, Serbia and Montenegro.

Feels Good Capital is expected to be launched in Q1 2020 for investing in Croatian and Slovenian companies providing growth capital with the objective to make a measurable impact by contributing to one or more of the 17 United Nations’ sustainable goals and delivering measurable social and/or environmental impact with profitable returns to their investors.

Furthermore, the first fund dedicated to mezzanine investing (Mezzain Croatia) is being launched, focusing on providing mezzanine financing in the form of subordinated debt (mezzanine financing is an otherwise complex financial instrument, positioned below traditional debt instruments and above equity investments ).

Croatian private equity investment in numbers

In 2018, Enterprise Investors made two direct acquisitions in the Croatian market in 2018 investing in Studenac (100% ownership stake) and Pan-Pek (65% ownership stake) with total equity investment in those two transactions exceeding EUR 67,2 million. In April 2019, Mid Europa has made investment in Mlinar for the equity consideration of EUR 75 million. Total private equity investment in the first half of 2019 amounted to EUR 78 million (0,16% of GDP) comprising of 3 venture capital transactions, 1 growth capital transaction and 1 buyout.

The beginning of this year marked a head-wind start to PE investments. Mid Europa Partners, the leading buyout investor focused on the growth markets of Central and Eastern Europe,merged its portfolio company, CMC İletişim ve Çağrı Merkezi Hizmetleri A.Ş. (“CMC”), with Meritus Upravljanje d.o.o. (“M+ Group”), in return for a 30% equity stake in the combined group Doğuş Group of Turkey sold its marinas in Croatia to CVC Capital Partners. Doğuş Group is among the worst affected of Turkish companies from a currency crisis in 2018 because it took on billions of dollars of foreign debt to fund an expansion. It has held loan restructuring talks with banks and announced sales of several key assets to bolster its finances.

The United Group, the largest media and telecommunication business in South-Eastern Europe, has reached a deal on purchasing Tele2 Croatia for 220 million Euros (enterprise value) and it is expected the transaction, will be finished before the end of this year. That is the first transaction since March 2019 when the BC Partners, the international investment company, became the majority owner of the United Group. At the same time, that is one of the largest transaction in South-Eastern Europe ever.

Read more about Startup Ecosystem in South-East Europe.

Recent trends & statistics in European Private Equity

Recent trends & statistics in European Private Equity

European private equity has shown a high return in the most recent trends and statistics. Rising deal value in 2019 capped the strongest five-year stretch in history, while deal count reflected stiff competition and rising asset prices and planning carefully for how they can profit from the downturn. With the global financial crisis fresh in their memories, firms are focusing their diligence much more intently on downside scenarios. They learned valuable lessons during the crisis about what holds up well through the cycle or not, and are adjusting accordingly. Even within a sector like healthcare, widely viewed as recession-resistant, there were subsector differences in performance worth noting. Healthcare support services, for instance, produced multiples of better than two times invested capital

Spotting pockets of opportunity has been a challenge even in the up-cycle. For GPs, finding the right asset at the right price was the biggest constraint on doing deals in 2019. That helps explain why the number of transactions has remained stubbornly flat. The number is bouncing between 3,000 and 4,000 buyouts per year since 2010 according to Bain. Both exit value and volume in 2019 dipped far below the postings of recent years. 900 European PE exits closed for a total of €201.7 billion, though we anticipate these figures to increase as we collect more data.

The rise of bolt-on investments, GP-led secondaries, and long-dated funds has consolidated exit activity. Exit value via IPO hit a nine-year low, as European private equity firms sold a heightened proportion of portfolio companies to strategic. The IT sector accounted for nearly a quarter of the total PE exit value in 2019, its highest annual proportion.

private equity IPO
Source: Pitchbook

Trends in European private equity

According to the PitchBook European PE deal activity in 2019 remained robust. European private equity deal activity records €453.5 billion closed across 3,867 deals, reflecting YoY declines of 2.4% and 3.2%, respectively. The deal value recorded its second-highest reading in our dataset. This was largely propelled by 34.1% YoY growth in the median deal size to a decade peak of €30.8 million.

The near 4.5x growth in European private equity deal value over the past decade point to capital markets graduated closer to the mainstream. Moreover, 2019’s record fundraising year in terms of capital raised. An ever-growing number of institutional investors previously shied away from PE allocations. However, now they see the asset class as fundamental to their portfolios.

European IT deals accounted for €79.0 billion of the total value in 2019, the highest annual figure for the sector. Nearly 60.0% of IT deals occurred in the software space. Further, subsectors of business & productivity, financial, application and network management software accounting for most of the total deal count.

The healthcare subsectors of telehealth, provider services, and payor/payee services could be ones to watch in 2020. A notable deal within this realm in 2019 was the €550.0 million bolt-ons of Belgium-based Armonea. In Q2 by IK Investment Partners via its portfolio company Colisée, a leader in the elderly care industry. The combination will reportedly become the fourth-largest European player in the elderly care segment with approximately €1.0 billion in revenue.

PE deals by sector

European Private Equity Exits

Over the past decade, an increasing proportion of non-European investors are leading or participating in European transactions. In 2019, non-European investors participated in 726 deals worth a combined €125.8 billion. Abu Dhabi Investment Authority, Public Sector Pension Investment Board and Ontario Teachers’ Pension Plan contributed to nearly a quarter of annual transaction value.

Though the absolute volume of these deals declined YoY, their annual proportion of deal volume increased to 23.0%. Seven of the top 10 European private equity deals in 2019 involved at least one non-European investor.

Moreover, 900 European PE exits closed for a total of €201.7 billion in 2019, finishing with the lowest totals in recent years. That being said, we do expect exit activity to increase from reported figures due to reporting and data collection lags. Bolt-on investments have ballooned in the past five years, accounting for 44.0% of overall European PE deal volume.

As the buy-and-build strategy continues to increase, portfolio/platform entities have become larger. Moreover, that has resulted in a dwindling number of total exits as bolt-on acquisitions will exit as part of a larger entity. We see this trend continuing in 2020.

Top five buyout mega-funds

Given the growth of the private markets and their higher return potential vs. public markets. That said, making private equity more accessible to retail investors is gaining importance. Moreover, retail investors are struggling to gain exposure to the small and middle-market companies that have been the bread and butter of private equity. These companies are increasingly turning to private financing to avoid the cost and hassle of being publicly traded.

top five buyout mega-funds to close in 2019 by capital raised

In 2019, a record of €86.4 billion was raised for European PE funds. Although fund count increased just over 10% YoY, 2019’s 89 closed vehicles represented the second-lowest annual figure in over a decade. Additionally, capital continues to flow into larger funds. This is evidenced by the average buyout fund size rising by 21.4% to new record of €1.3 billion in 2019. Further on, eclipsing €1.0 billion for the second year in a row. Much of the increase in capital raised is also attributable to the rise in the number of funds closed in the €1 billion-€5 billion brackets.

Buyout funds have continued to account for the majority of European PE capital raised. That said, over €74.3 billion was raised across 61 funds in 2019, reflecting YoY increases of 25.7% and 5.2%, respectively. Moreover, the €12.0 billion raised across 27 growth equity vehicles in 2019 caught our eye up substantially from the €4.4 billion raised across 16 funds in 2018. The fund type gained significant traction in 2019, likely given the potential for lower valuations and less competition. Additionally, a larger and more differentiated pool of targets compared with buyouts.

Opportunity for New retail PE investors

Individuals are missing out on the opportunity to invest in fast-growing start-ups with the potential to generate big returns. That said, companies stay private longer. Now, as a growing number of traditionally public companies go private, it makes more sense than ever to push the door open for retail PE investors. Around 15% to 20% of Blackstone’s annual fund-raising already comes from retail investors, and this is likely just the start. Moreover, PE firms continue to rely on IPOs less and less as a liquidity option. To sum up, 2019 saw 29 entities exit to public markets for €20.4 billion in total exit value (on a pre-money valuation basis). Additionally, registering the lowest IPO value and volume figures since 2012.

Permira gathered €1.5 billion in commitments for its debut growth fund in 2019, Permira Growth Opportunities Fund I. The fund marks a departure from the firm’s typical control buyout and credit strategies. Furthermore, CVC also closed on €1.4 billion in commitments on its second growth fund in 2019, CVC Growth Partners II. Additionally, Paris-based Keensight Capital raised €1.0 billion for Keensight Capital V, achieving a sharp 2.2x step-up from its 2014 vintage predecessor, Keensight Capital IV. Despite the steep increase in fund size, the firm’s strategy will remain the same, targeting Western European companies in the healthcare and IT sectors. Moreover, they generate between €15.0 million and €250.0 million in revenue, which are profitable and have been growing north of 10% per year.

Leading Private Equity Investors

Leading Private Equity Investors

 

In this article, we will emphasize the leading private equity investors in Southern Europe and Eastern Europe. Many of those transactions have occurred in the commercial products and commercial services sectors. Moreover, Audax is working to build out its portfolio of under-the-radar middle-market businesses. That said, this is little known to the wider public. Among the platforms the firm has been conducting add-ons with this year are Colony Hardware, which distributes tools to job sites. Furthermore, these include Imperial Dade, which sells disposable foodservice products and janitorial supplies; and Reedy Industries, provider of HVAC services.

 

 

 

Most notable this year has been HarbourVest’s stake in Hub International. Moreover, that is a global insurance brokerage that Hellman & Friedman acquired a majority interest in at a $4.4 billion valuation in 2013. Last year, Altas Partners bought into Hub at a $10 billion-plus valuation. In yet another instance of the insurance industry attracting heavy add-on attention, Hub has completed 18 platform acquisitions. According to PitchBook data, in the US in 2019, making for a significant portion of HarbourVest’s activity.

 

 

 

Genstar Capital has been busy backing add-ons in the insurance space That said, a trend that indicates just how active some private equity firms have been in attempting to consolidate the industry. The most acquisitive insurance company in Genstar’s portfolio is Alera Group It is a provider of various insurance, employee benefits, and other services that the firm helped create in 2017. Already this year, it’s sealed 10 separate takeovers, per PitchBook data.

 

 

 

Most Active in Central & Eastern Europe and Southern Europe

 

 

 

Mercer Advisors, another Genstar portfolio company, has also had a busy year, conducting more than a half-dozen add-ons of its own. Over the summer, reports emerged that Genstar was seeking a sale of the company. Later, in September, the firm and co-investor Lovell Minnick Partners sold a portion of their stake in Mercer to Oak Hill Capital as part of a recapitalization.

 

 

 

Leading private equity investors are according to Pitchbook; Ardian and high on the list Investindustrial.

 

 

 

most active in central and eastern europe

 

 

 

most active in southern europe

 

 

 

Breaking down their deals even further, the most active firms tended to invest largely in B2B and IT deals Moreover, accounting for 160 of these firms’ 251 total deals or nearly 64% of deals, as indicated by the pie chart. This is a small step up from private equity as a whole, which invested 58% in the two sectore.

 

Read more about venture capital investors, in our recent blog post on leading venture capital investors.