The Future World of Enterprise Finance

Transcription

1 The Future World of Enterprise Finance Hermann Hauser London 13th October 2015

2 State of the Market Positives IPOs are back and delivering visibility and returns to VC investors This pushes up M&A exit valuations which are also improving Exits are getting larger and more widely spread Consumer internet and life sciences both strong Pricing still attractive Particularly compared to US valuations Seed and Early Stage Funding becoming abundant, the opportunity/challenge has moved to the later stage financings 2

3 2014* - A stable year in a maturing industry 41.5 Bn Raised 39 Bn Invested Source: EVCA / PEREP_Analytics; * preliminary #

4 Overview - Fundraising * - for Europe in EUR billion 54,395, ,603, ,530, ,063, ,281, ,052, ,433, ,268, ,797, ,434, ,441, ,923, ,174, ,089, ,570, ,612, ,434, , ,293, ,833, ,404, ,729, ,697, ,209, ,193, ,875, ,608, ,654, ,913, ,579, * Source: EVCA / PEREP_Analytics; * preliminary Venture Capital Buyout Growth Other Total 4

5 IPO Activity Increases in 2014 Europe lags the US by ~ 1 quarter but is improving 40 IPOs Per Quarter, US and Europe European IPO's US IPO's 5 Source : Venture Source

6 Tech M&A Value has increased 2.5x since the crisis 6 Source : BAML

7 Median Amount Raised Prior to M&A Increases in 2014 Multiples on invested cash have risen dramatically AUD26 Medium Amount Paid in M&A vs Median Amount Raised prior to M&A AUD80 AUD21 AUD16 AUD11 5x >5 x AUD60 AUD40 AUD5 AUD0 >5x 1x Q1-Q3/2014 AUD20 AUD0 Median Equity Riased ($m) Prior to M&A Median Amount Paid ($m) 7 Source : Venture Source

8 Europe is home to many global leaders and billion $ companies European tech companies reaching ~USD 1bn valuations Source: Holtzbrinck Ventures, EIF 8

9 European $100m+ exits continuing in 2014 M&A IPO Source:, EIF 9

10 Median Pre-money Valuations by Round Class (All Industries) US and Europe Limited supply of investment capital leads to lower pricing (~40% of US level) at all stages Median Pre-money valuations: EU as a % of US Median Pre-money valuations: US vs EU 2013 USD USD75 130% 98% USD50 41 US EU 65% USD % 0% USD Later Second First Seed Later First Second Seed 10 Source: Venture Source

11 Europe provides less later stage/growth capital than the US because the potential to IPO gives confidence to later stage investor and is more fragile in Europe (Investment by Stage US vs. Europe, Q to Q3 2014) 11 Source: VentureSource

12 State of the Market Challenges European Fund Raising still flat and lengthy EIF and other national government LPs essential but still 40% of commitments. Need to attract private investors back to our sector Performance Incentives Regulation IPOs possible in Europe, but below 500m liquidity is poor many choosing to go to the US if they can 12

13 European VC Fundraising Off to a Slow Start in 2014 EUROPE: FUNDRAISING Commitments to European Funds (based on multiple closings) US ~32bn = 6 years of EU ~4.4bn 13

14 US $B EVCA Venture Capital Forum, Berlin November 2014 US experience shows that VC Commitments are cyclical and lag public market performance by ~1 year because LPs gain confidence from recent public market performance/realisations Committed Capital to US VC $B NASDAQ Close at Year end F Fund raising should keep on improving into next year 14 Source: Venture Source/Yahoo Finance

15 % of FTSE All Share EVCA Venture Capital Forum, Berlin November 2014 Changes in FTSE All Share Composition Small Cap has declined from >6% of the market to 2% of the market We need to work on making small cap IPOs more viable and attractive in Europe 100% Breakdown of FTSE All Share ( ) 75% 50% FTSE Small Cap FTSE 250 FTSE % 0% Source: ONS and FT October 11 th 2013

16 State of the Market : Fund of Funds initiative within Horizon 2020, aiming to attract international capital to EU VC IPO task force with FESE chaired by MEP, Philip De Backer aiming to improve IPO as an exit alternative IPO VC backed index to show out-performance of VC backed companies Sector task forces designing heatmaps of our successes for which we thank you all 16

17 Future Crowd funding Business angles E-commerce Healthcare Machine learning AI: Artificial Intelligence

18 Machine Learning NOT 0s and 1s but P for Probability NOT deterministic but STATISTICAL NOT programming but TEACHING NEEDS Big Data NEEDS (Human) Goals Genie Problem 18

19 Can computers think? 6th Wave: Internet of Things + AI Turing Test 19 Slide 35

20 AI Movies 20

21 AI Risks Success in creating AI would be the biggest event in human history. Unfortunately, it might also be the last, unless we learn how to avoid the risks. Hope we re not just the biological boot loader for digital superintelligence. Unfortunately, that is increasingly probable. 21

22 What is missing? Common sense Correct Predictions Creativity Human values Making breakfast 22

23 Superintelligence Better than human intelligence Possible by 2050 Machine learning GPT 25 and LAST? How can we ensure that AGI embodies human values? Potential threat to > 50% of jobs 23