Global M&A advisory firm Magister Advisors has issued its half annual survey of VC funds with tech investments in Europe, and one of the things it has noticed is a shift towards enabling web sites with eCommerce.
There has been $2.2 billion of significant investment, where the investment round was greater than $10 million during the last 18 months, and nine in ten tech VCs said they intend to ramp up European investments in the second half of 2013. After an explosion in internet-related investment activity in Europe in 2012, activity in 1H 2013 fell temporarily by about 33% against the same period last year.
Of deals that were $10 million and above, the average investment value was around $29 million, about the same as a year earlier. The total value of meaningful investments in technology businesses in Europe since the beginning of 2007 now amounts to $13.5 billion, said Magister and of that Internet-related investments make up $4.9 billion, around a third, which is quite strange since 11 years earlier it was internet investments that caused the big dotcom bust, but what seems to be happening here is a wholesale reshaping of European retail towards e-commerce.
During the last two years, 31% more has been invested in Internet companies than in hardware and software companies combined.
Magister director Victor Basta said, ‘For more than a decade retailers have been pointing to incremental percentage increases in the value of ecommerce transactions, complacently predicting a gradual and unthreatening shift. In 2013 we see the emergence of a category of companies that are providing consumers with an unprecedented opportunity to redefine their shopping behavior. Regular commerce will not exist in five years’ time. Virtually everything will be multi-channel – and choice will be completely in the hands of the shopper.’
Key Internet segments that saw the largest number of investments last year were the consumer web (24 investments), ecommerce (14 investments) and Ad-Tech (7 investments).
Only two $10m plus investments in Europe last year were connected with social networking and only two were in gaming, suggesting that the social land grab is effectively over and the leaders will simply acquire any software features they need. Gaming, once a VC favorite, is now far less predictable Magister says, adding that the task for games entrepreneurs is to understand when they should sell. But you’d expect an M&A specialist to say that, wouldn’t you.
Basta says quite clearly that VCs still have appetite for similar deals and the current first half slow-down is not the bubble actually bursting and he says that the strong IPO market in the US will drive international tech M&A in 6-12 months’ time.
He also says that we should expect to see at least 25 privately-owned European technology companies with a valuation of $1 billion or more in the next 5-10 years, up from around 11 today, a list which includes Badoo (consumer web), Rovio (games), Kaspersky (security), Criteo (ad-tech), Klarna (payments), Trivago (online travel) and Spotify.