The acquisitions of Supercell, Playtika and Trivago drove the numbers up, but non-VC backed exits also had a stellar year.
European VCs certainly have reasons to be cheerful, says Dealroom, after revealing that VC backed company exits in Europe exceeded €37 billion in 2016.
Supercell’s acquisition by Tencent, at €9.38 billion, was the largest, followed by Playtika’s sale to Giant Interactive Group (€48 billion), and Trivago’s €3.6bn IPO. Edinburgh based Skyscanner’s sale to Chinese travel firm C-Trip flew the flag for Britain, placing fifth overall – the deal was worth €1.7bn.
Balanced against this undeniably good performance, which was comfortably larger than 2015 (€23.58bn value across all deals), and squeezed past 2014’s figure of €34,1bn, was the quite staggering performance of non-VC backed exits and IPO’s which blew away the €40.3bn achieved in 2015 and €17.5bn in 2014, to exceed €109.3 billion.
That figure certainly takes some explaining – the €42.88 billion acquisition of NXP Semiconductors by Qualcomm helped, as did the ARM / Softbank deal, which contributed €28.89 billion – it’s all about the chips, folks – which are the building blocks of the smartphones we all know and love.
Back to the VCs – IPO were plentiful – 16 compared to 14 in 2015 and just 9 in 2014, but those 9 included Rocket Internet, King and Zalando, who raised €18bn between them – in 2016 Trivago was the largest IPO, but “only” raised €3.68b.
Acquisitions, it seems, are where it was at in 2016 – €31.1bn in total – across 240 companies.
Great news, says Dealroom, but actually not enough; in order for VC’s to be making profits of 2x return on their money, 2017 will have to produce €35 billion’s worth of exits / IPOs.
It makes your head spin, doesn’t it? Best to concentrate on the day job of building game-changing companies. And speaking of games, this is the sector you want to be if capital efficiency and huge returns are your thing. The sector outperformed all others last year, with a capital efficiency ratio, according to Dealroom, of 29.5x. The next best, Fashion, can only muster 4.7x.
It’s tough at the top! The biggest hitting VC firms, by the way, are Index Ventures, followed by Insight Venture Partners, followed by Accel Partners.
All together now…”you got to know, when to run, know when to hold ‘em…!!”