Dealroom provides the most comprehensive dataset covering Europe, tracking over 5,900 investment rounds in 2018. StartupDelta works in partnership with Dealroom with the Finder tool which helps feed data into reports such as this.
Of course with the report being about Europe, the Netherlands was displayed heavily. I boiled down the report into key insights:
- Seed investments are too difficult to track
- Exits are at an all-time high
- The Netherlands has a growth equity problem
- European Industry Vertical VC trends are Dutch Industry Vertical VC trends*
Reporting on seed/pre-seed deals
One of the first points of data shared is the number of rounds under €3 million in Europe, with a dramatic dip for €0– €1M rounds from over 2,000 to nearly 1,000 and a small yet significant dip for €1M- €2M rounds from around 800 to 600.
The significant dip is explained by Dealroom due to reporting lag, meaning that seed rounds are typically going undisclosed for up to 24 months if reported at all. For example, the number of seed rounds(<$1M) reported in the US in 2015 was first stated as 3,990, but two years later, this number had reached 5,680. This highlights an issue we also experience within the Dutch Startup Ecosystem.
A challenge also noted by StartupDelta’s Data Lead Dennis Huisman, who heard similar stories at the BAND — Research Conference 2019 which brought together Business Angel Networks:
Business Angel investments are sensitive private information. At the moment, we only find out about these kinds of investments in NL years after they have taken place; when large professional investors get on board and information must be disclosed by the startup on past investments.
The key challenge is that venture capital investment data is all self-reported. This means frequently seed rounds are only reported once the company feels it's relevant to share e.g Series A funding round or product launch. Dealroom in a previous article noted that:
Distinguishing pre-seed from seed is especially relevant in this context. The reporting lag is most severe in pre-seed: more than half of all pre-seed rounds are reported only much later (or never, we must unfortunately realise).
The reason this is a problem is that it makes mapping the entire landscape difficult. This ends up giving you an incomplete overview of the full health of the ecosystem from the seed stage to exit. Although viewing the number of series A rounds is a good sign, it’s also key to understand the number of rounds right at the beginning of the investment cycle to see how many startups are being given the chance to succeed. The problem is also twofold as most seed/pre-seed comes from national investors, which is especially important to monitor so you can see the health of business angel networks.
The solutions to fixing this problem are built around fiscal stimuli which make the disclosure of the investment public whilst adding an incentive, establishing strong angel networks that track group data and having strong relationships between ecosystem players that free the sharing of data. Each is important pillars to address the shortcoming in transparency.
Europe’s Most Invested Verticals v Netherlands
Part two of the report dives into trends, of which two areas are of particular interest. Firstly the total amount invested per vertical and secondly the most trending industry verticals based on the increase in investment from 2017 to 2018.
The top three most invested verticals for 2018 in Europe were Health (€5.9B) Fintech (€5.4B) and Enterprise software (€5.3B). For the Netherlands, the top three were Health (€175M), Fintech (€133M) and Energy (€81.8M) with Enterprise Software coming 5th with €77.3M. So it's interesting to note the correlation between the Netherlands and the rest of Europe in terms of popular industries.
Top contributing investments for Health in the Netherlands included Xenikos (€30M, Series B), Mimetas ($29M, Series B) and Lava Therapeutics (€16M, Early VC). For Fintech funding in the Netherlands was heavily led by BitFury ($80M, Late VC), Ohpen (€25M, Series C) and Digital Insurance Group (€15M, Early VC).
For the trending industry verticals, the Netherlands was also pretty well aligned. The top three for Europe in terms of absolute increases from 2017 to 2018 were Transportation (€1.1B), Travel (€0.5B) and Robotics (€0.4B) and for the Netherlands, the top three was Transportation (€26.8M), Fintech (€22M — thanks to Bitfury’s $80M) and Travel (€14.8M). Robotics, however, did fall behind massively with a decrease of €1.5 million and with only a total of €5.5M.
Transportation which was 1st both nationally and Europe wide was led by Dott (€20M, Seed), Greenflux (€11M, Series B) and Etergo (€10M, Early VC). Travel which came in 2nd for Europe and 3rd for the Netherlands was led by Tiqets ($22M, Series B), Bidroom (€15M, Growth Equity) and Roadmap (€4M, Series A).
It’s good to see Dutch companies aligned with global trends and emerging industries. The connection between European VC investment trends and Dutch investment trends shows that Dutch companies are creating solutions to problems in industries VC’s deem interesting enough to put significant new funds into. There is still work to be done however with the total values contributing only small amounts to the European totals plus the lack of investment in emerging areas such as Robotics.
Exiting the Report
Going from early investments to trending investments, the final section covers what most Startups are looking for: “The Exit”. The Netherlands had a great year for exits last year with 2018 bringing $17B, the biggest year by far with the closest being 2016 with around €7B. The Netherlands managed to beat Germany, France and Spain combined, as displayed below. The number of exits above >€50M also increase to its highest point dating back to 2013 with 10.
Two startups led the steep increase for the Netherlands with Adyen who’s exit value was $7.8B and Elastic with $2.5B. On the table below you can also see from the €32B exit value for Sweden (the only European country above NL apart from the UK), $29.5B came from one company Spotify. The conclusion is at the end of the investment cycle Dutch startups are doing well compared to the rest of Europe for the first time. With the more exits over €50M than ever and an impressive total exit value.
The challenge now for the ecosystem is maintaining this high level of exit value through keeping a healthy level of VC funding at the growth capital stage (Series A, B, and C…) to keep startups funded and on their path to a successful exit. This can be seen to be an upcoming challenge for the Dutch Startup Ecosystem with total funding down in the Netherlands and top startups being funded less than previous years (dating back to 2014).