THE DUTCH PRIVATE EQUITY AND VENTURE CAPITAL MARKET IN 2014 ENTERPRISING CAPITAL APRIL 2015

Transcription

1 THE DUTCH PRIVATE EQUITY AND VENTURE CAPITAL MARKET IN 2014 ENTERPRISING CAPITAL APRIL 2015

2 ABOUT THIS PUBLICATION METHODOLOGY The Nederlandse Vereniging van Participatiemaatschappijen (NVP) continuesly survery all and activity in the Netherlands. This is done in close cooperation with the European Venture Capital Association (EVCA) and her PEREP_Analytics platform. This pan-european platform is used by over twenty European and associations. Data are collected through a survey and reliable public sources and cover about 95% of the industry and market activity, both members and non-members of the NVP. Private equity and firms only submit realized investments. The NVP would not have been able to present this report without the help of the Corporate Finance team of PwC Advisory. Every year, as for the past fifteen years, they invest significant resources in assisting us with collecting, auditing and presenting statistics about and in the Netherlands. The NVP would like to thank them for making the high quality of the data presented here possible. MARKET VERSUS INDUSTRY ANALYSIS This publication distinguishes between activity by and firms based in the Netherlands (industry analysis) and activity in Dutch portfolio companies by foreign or domestic and firms (market analysis). The main body of the text always refers to market analysis, highlighted parts to industry analysis. ENTERPRISING CAPITAL THE DUTCH PRIVATE EQUITY AND VENTURE CAPITAL MARKET IN 2014 APRIL 2015 EQUITY VALUES VERSUS TRANSACTION VALUES The numbers in this publication refer to the equity investments by and funds, except where transaction values are specifically mentioned. Other publications often also include bank or other leveraged financing and therefore arrive at different numbers. RESTATEMENTS Constantly more accurate data becomes available, and the methodology used is further refined. Therefore every year restatements about previous years are made. These unfortunately cause discrepancies with numbers presented in previous publications of Enterprising Capital. Want to know more? Additional data is available at nvp.nl! Voor de Nederlandse versie bezoekt u nvp.nl of neemt u contact met ons op

3 Chapter Enterprising Capital The Dutch and market in 2014 Chapter PRIVATE EQUITY AND VENTURE CAPITAL AND THE DUTCH ECONOMY ,529 companies received funding from a or firm 20 billion was invested in these companies by a or firm 9.5 billion of that came from foreign investors 1,104 companies received either buyout (466), growth (455), or replacement capital (129) or a rescue/turnaround investment (91) 15 billion invested to facilitate buyouts 1, billion young businesses received funding of invested in young businesses 1, in numbers 350,000 companies in portfolio 85 BILLION aggregate turnover 14% of the GDP employees in the Netherlands BILLION of capital under management of Dutch and firms

4 Contents Enterprising Capital The Dutch and market in 2014 Chapter Inhoud CONTENTS SUMMARY AND CONCLUSIONS 6 1 GENERAL MARKET DEVELOPMENTS 8 2 DEVELOPMENTS PER FINANCING PHASE 18 3 DEVELOPMENTS PER SECTOR 26 4 OUTLOOK 30 GLOSSARY 32 Want to know more? Additional data is available at nvp.nl! Voor de Nederlandse versie bezoekt u nvp.nl of neemt u contact met ons op 4

5 Summary Enterprising Capital The Dutch and market in 2014 Samenvatting en conclusies SUMMARY DUTCH BUSINESSES ATTRACT MORE INVESTMENTS, SUCCESSFUL FUNDRAISING DUTCH PRIVATE EQUITY AND VENTURE CAPITAL FIRMS Investments of and firms rose in 2014 to 3.1 billion from 2.4 billion in This amount was invested in 386 Dutch companies, from just 331 businesses in A total of 1.4 billion of new funds was raised, compared to 804 million in Private equity and firms divested 187 Dutch portfolio companies, whereas the number of divestments in 2013 was 146. The amount divested (at cost) was 2 billion, compared to 1.9 billion in RISE IN NUMBER OF INVESTMENTS IN START-UPS. HIGHEST RECORDED FUNDRAISING VENTURE CAPITAL In 2014, 226 Dutch businesses received financing through a venture capital fund 1 for 169 million in total. In 2013, 192 businesses attracted 195 million. Notably, 53% of the number of investments in 2014 were done by Regional Development Funds (RDFs), RDFs invested in 120 businesses. Throughout the entire market, a trend towards more smaller financing for start-ups appears discernible. Remarkable is the high amount new funds managed to raise. A total of 533 million was raised in 2014, a figure that is more than double the amount of the previous year and the highest number ever recorded in the Dutch market 2. MOST INVESTMENTS IN SMES, BIGGEST INVESTMENTS BY INTERNATIONAL PLAYERS Dutch and venture capital firms have made considerably more bigger transactions of 10 to 50 million. International players also made multiple large investments of hundreds of millions of euros. This can be interpreted as that international players have continuing interest in investing in Dutch businesses. However, in 89% of the investments, the amount invested is less than 5 million equity. Examples of such investments are investments in SMEs with EBITDA of about 2.5 million. RECOVERY OF ECONOMY TRANSLATES INTO HIGHER DEMAND FOR CAPITAL OF PRIVATE EQUITY FIRMS. PRE-CRISIS CLIMATE HAS NOT YET RETURNED The investment volume has again grown compared to previous years, and the total amount of investments is the highest recorded since However, 2014 did not show signs of an economic bubble developing. Unlike the pre-crisis economic climate, 2014 seems to show valuable recovery in the Netherlands from past years, contrary to some foreign markets for and that showed increased and high activity in valuations and transactions. Dutch and firms had around billion of capital under management 3 in BIG INVESTMENTS IN GROWTH CAPITAL IN DUTCH BUSINESSES In 2014 a total of 353 million was invested in 65 Dutch businesses specifically intended as growth capital, whereas growth capital totaled just 194 million in 66 businesses in This change can largely be explained by bigger international players that made large growth investments in Dutch businesses. 1 Seed, start, and later stage venture 2 Venture capital fundraising is recorded since 2007 via the PEREP_Analytics system 3 Includes significant co-investment mandates 6 7

6 Chapter 1 Enterprising Capital The Dutch and market in 2014 Chapter 1 GENERAL MARKET DEVELOPMENTS 1 MORE LARGE INVESTMENTS AND CONTINUED FOREIGN INTEREST Private equity and firms invested 3.1 billion in 386 Dutch businesses. In 2013, these numbers were 2.4 billion and 331 businesses. With that, the total amount of investments of and firms in Dutch businesses increased with almost 30%. The increase is caused by a number of fairly large investments in Dutch companies and growth of smaller and medium sized buyouts in The larger Dutch and firms got more active in investments of 10 million and above in their traditional sweet spot, compared to previous years (see industry analysis). Where in 2013 a total of 1.9 billion (at cost 4 ) of investments were sold or in any other way divested, in 2014, this number rose to 2 billion. Private equity and venture capital firms divested of a total of 187 companies in 2014, compared to 146 companies in Almost half of the investments are follow-up investments. 1.5 billion for 198 companies in 2014 Detailed figures on the scope of investments, by type of investor, at nvp.nl Dutch and firms divested 193 companies for a total of 1.1 billion in resulted in 142 companies for a total of 995 million in divestments. Remarkably many Dutch and firms sold their shares in companies to other firms in comparison to previous years. Dutch and firms are mainly active in their home country. In 2014, 85% of the investments and 85% of the amount of investments was in the Netherlands. SME REMAINS THE GREATER PART, MORE LARGER (FOLLOW-ON) INVESTMENTS IN SMALLER BUSINESSES Historically speaking, every year more than 80% of the number of investments in Dutch businesses by private equity and funds are smaller than 5 million equity. With 89%, 2014 is no exception. Typically, investments of up to 5 million are provided to start-ups or fast-growing SME businesses. Also, a total of 32 buyouts were facilitated in the Netherlands with less than 5 million, compared to 27 buyouts in Noteworthy is the fact that medium sized businesses received relatively more financing of between 5 and 50 million in 2014, of which large follow-on investments made up a remarkable fair part. INDUSTRY ANALYSIS domestic and foreign businesses received 1.9 billion of financing from Dutch private equity and firms in In 2013, financing totaled 1 billion for 352 businesses. This increase can be mainly accounted to more investments in the upper-smes segment and above by Dutch and funds. More data on Dutch PE and VC firms (industry analysis) at nvp.nl POSITIVE DEVELOPMENT FUNDRAISING 1.4 billion of new funds were raised by Dutch and firms in 2014, an increase of more than 75% compared to A remarkable fact as there were relatively few larger funds actively looking for new investors. This means that relatively many smaller firms succesfully raised capital from investors. 4 Reliable data on transaction values of the disinvestments of the entire market are not available 8 9

7 Chapter 1 Enterprising Capital The Dutch and market in 2014 Chapter 1 VENTURE CAPITAL FUNDRAISING EXCEPTIONAL Venture capital fundraising increased significantly. Whereas 210 million 5 was raised in 2013, a total of 533 million was raised in Fundraising more than doubled and the highest amount ever was raised by Dutch venture capitalists 6. A development which can be called very positive. Remarkable is the high amount family offices entrusted to Dutch and funds, 350 million. This is the highest amount ever observed with the current PEREP_Analytics platform, active since This increase can be explained by the further professionalization of this group of investors, combined with the fact that other investment categories paid less returns the past years. Private equity and firms that are part of a bigger organization (so called captives, e.g. of a bank) raised 310 from their mothers. Banks play a modest role nowadays in fundraising for independent and firms. Spin-offs of these captives of banks being the exemption. Of the funds raised, 70% originates from the Netherlands. The rest of Europe accounts to 23%, and outside Europe accounts to 5% (rest is unknown). TRANSACTION VALUES FOR BUYOUTS REACH RECORD AMOUNT When debt and capital from other investors but and firms 7 is also included, a total of 6 billion of buyouts was financed at Dutch companies. This is a significant increase in comparison to 2013 when this was 4.9 billion and is the highest amount recorded since the boom years of 2007 ( 15.7 billion) and 2008 ( 6.6 billion). Strong increase fundraising Dutch More specific numbers about captives at nvp.nl More on the geographical origin of funds raised by Dutch PE and VC firms at nvp.nl 5 Restatement of aforementioned number 6 Fundraising of 2007 lowered Look for different publications about performance at nvp.nl STABLE SALE OF COMPANIES Private equity and venture capital firms divested 2 billion (at cost) from 187 Dutch companies in More than in 2013 when this was 1.9 billion from 146 companies. The average holding period for a or fund of a portfolio company is between five to seven years, depending on the phase of the company. Because divestments are valued at cost in this report, divestment values give an insight about investment values of previous years at most. More important therefore is it to look at the number of companies that were exited. For certain portfolio companies the public stock markets were again an interesting method to attract extra capital, or for the ist to exit the company. This is especially true for the life sciences sector, and to a lesser extent the tech sector. The existence of a substantial group of specialized investors determines the attractiveness of this method. A total of 125 million had to be written off from a total of 44 Dutch companies by a or venture capital fund in In 2013 this was 80 million from 29 companies. This is mainly caused by a few larger write-offs, and many more smaller write-offs of start-ups. This should come as no surprise given the high failure rate of start-ups in general. When taking into account the write-offs, at least 1.75 billion was returned to investors in 2014 by and firms. As in many cases significant shareholder value was created, much more was returned in reality. SIGNIFICANT REGIONAL SPREAD OF INVESTMENTS Looking at how and investments are spread throughout the country, a significant regional bias becomes visible. This is especially the case for venture capital investments. RDFs play an important role in channeling investments to certain regions to decrease this bias, notwithstanding that certain reservations have to be made, e.g. companies that are headquartered in one region but with operations throughout the country. 7 E.g. co-investments of institutional investors. It is not always clear whether this is debt or equity 10 11

8 Chapter 1 Enterprising Capital The Dutch and market in 2014 Chapter Investments and divestments in billion (market analysis) 1.3 Investments and divestments in number of companies (market analysis) Investments Divestments Investments Divestments Note: Divestments valued at cost 1.2 Investments and divestments by Dutch and firms in billion (industry analysis) 1.4 Number of investments split by investment size (market analysis) 3,0 Size of investment to 1 million % % % % % 2,5 1 to 5 million 65 22% 79 24% 65 21% 93 28% 92 24% 5 to 10 million 20 7% 19 6% 24 8% 18 5% 21 5% 2,0 10 to 25 million 14 5% 20 6% 16 5% 21 6% 26 7% 25 to 50 million 13 4% 13 4% 10 3% 5 2% 6 2% 1,5 50 to 100 million 5 2% 8 2% 2 1% 2 1% 5 1% > 100 million 4 1% 7 2% 1 0% 4 1% 4 1% 1,0 Total ,5 Note: The total number of investments is greater than the total of companies invested in. This is because it is possible to have multiple investments per year in one company 0, Investments Divestments Note: Divestments valued at cost 12 13

9 Chapter 1 Enterprising Capital The Dutch and market in 2014 Chapter Sources of Funds Raised (industry analysis) 1.7 Transaction values buyouts and number of transactions in million (market analysis) x million Academic institutions 2 0% 0 0% 0 0% 2 0% ,977 Banks % 33 3% 22 3% % Capital markets 0 0% 0 0% 0 0% 0 0% Corporate investors 77 3% 27 2% 15 2% 52 4% Endowments and foundations 57 3% 1 0% 0 0% 3 0% ,909 1,771 Family offices % % % % Fund of funds % % % 103 7% ,260 Government agencies 136 6% % % % Insurance companies 92 4% 95 8% 30 4% 72 5% , 513 Other asset managers 64 3% 71 6% 36 4% 71 5% Pension funds % 119 9% 49 6% % Private individuals 71 3% 103 8% 40 5% 85 6% Sovereign wealth funds % 0 0% 21 3% 0 0% Unclassified 91 4% 32 3% 38 5% 60 4% Total 2,257 1, ,402 < 50 million million million > 250 million 2008 = 6, = 15, Allocation of funds raised (industry analysis) 1.8 Methods of divestment (market analysis) x million Early-Stage 39 4% 27 2% 48 2% 24 2% 21 3% 118 8% Later Stage Venture 54 5% 0 0% 86 4% 87 7% 9 1% 28 2% Balanced* 101 9% 80 7% 2 0% 79 6% % % Total Venture % 107 9% 136 6% % % % Growth Capital 2 0% 35 3% % 0 0% 98 12% 6 0% Buyouts % % % % % % Generalist** % % % % % % Total raised 1, % 1, % 2, % 1, % % 1, % * Venture capital funds focused on both early stage and development with no particular concentration on either ** Funds with either a stated focus of investing in all stages of investment, or funds with a broad area of investment activity x 1,000 / number of companies Divestment by Trade Sale* 1, Divestment by Public Offering Divestment by Flotation (IPO) Sale of Quoted Equity Divestment by Write-Off Repayment of Silent Partnership Repayment of Preference Shares/Loans Sale to Another Private Equity House Sale to Financial Institution Sale to Management (Buy-back) Divestment by Other Means Unknown Total 2, , , , * Usually sale to strategic buyers 14 15

10 Chapter 1 Enterprising Capital The Dutch and market in 2014 Chapter 1 REGIONAL SPREAD OF INVESTMENTS Noord-Holland Friesland Metropolitan area Amsterdam Groningen Drenthe Flevoland Overijssel Gelderland Utrecht Zuid-Holland Zeeland Noord-Brabant Partnership Eindhoven Area Limburg Unknown number of companies invested amount number of companies invested amount number of companies invested amount Numbers for the provinces of Noord-Holland, Flevoland and Noord-Brabant exclude the Amsterdam Metropolitan Region and Samenwerkingsverband Regio Eindhoven (Eindhoven Regional Partnership). Private equity includes buyout, growth, rescue/turnaround and replacement capital.

11 Chapter 2 Enterprising Capital The Dutch and market in 2014 Chapter 2 DEVELOPMENTS PER FINANCING PHASE 2 A company has different financing needs during its diffe rent phases of development. Private equity and firms can play a role in every phase. In the early stage there are different forms of (e.g. seed, early and later stage venture) and later on there can be for instance a (management) buyout or growth financing. Private equity can also play a role in financing the turnaround or rescue of a company. HIGHER AMOUNT FOR BUYOUTS In 2014 a total of 2.5 billion was used to finance buyouts in 70 Dutch companies. This is a significant increase from 2013 when this was 1.9 billion in 53 companies. Of note is the considerable increase in the number of smaller buyouts, to 15 million. From 35 companies in 2013, to 54 in Especially Dutch firms, but also foreign firms, were more active in Entrepreneurs also seem to be more aware of the opportunities can offer them. The traditional case of a founder who hopes to sell his business close to retirement has made way for a younger entrepreneur who is looking to advance his company to a next phase, and actively seeks out private equity to help achieve that. 73% of buyouts less than 15 million Look for Corporate Venture Capital numbers at nvp.nl An overview of all RDFs can be found through the search engine at nvp.nl STABLE DEVELOPMENT OF VENTURE CAPITAL INVESTMENTS A total of 169 million was invested by firms in 226 Dutch companies, whereas this was 195 million in 192 companies in Corporate is a small but still growing niche of. The Regional Development Funds (RDFs) on the other hand play an important role in financing Dutch start-ups. Their aim is to enhance a local economic infrastructure and they have a public body as shareholder. In general they do not compete with regular or firms. For instance, they aim to invest smaller amounts in more high risk companies, and they are generally not allowed to participate in later, larger, investment rounds. In 2014 they invested in 151 companies, of which 120 companies received a form of venture capital. RDFs invested a total of 67 million in Of this, 48 million was (28% of the total) but represented 53% of the total number of companies in which was invested. RESCUE/TURNAROUND AS A SPECIALISED NICHE In 2014 a total of 9 Dutch companies received a rescue/turnaround investment worth 18 million in total. This was 49 million for 10 companies in The number of rescue/turnaround investments has been relatively constant since 2007, although the amount invested for rescue/turnaround in 2014 was the lowest since LARGE GROWTH INVESTMENTS In 2014 a total of 353 million was invested in 65 companies specifically as a growth investment. In 2013 this was 194 million in 66 companies. These are mature companies that are unable to finance their growth ambitions with debt alone. Private equity growth investments usually mainly consist of equity and a minority share in the company is obtained. The past year showed a number of larger growth investments in Dutch tech companies

12 Chapter 2 Enterprising Capital The Dutch and market in 2014 Chapter 2 DUTCH VENTURE CAPITALISTS RAISE RECORD AMOUNT The fundraising strongly increased in Whereas in 2013 a total of 210 million was raised, in 2014 this was 533 million. This more than doubling of fundraising is probably attributable to the Dutch Venture Initiative (DVI), the flywheel effect it had on the rest of the market and one new fund funded by a large Dutch pension fund. The DVI is a fund of funds of the Ministry of Economics Affairs and the European Investment Fund (EIF) of 150 million that invests in Dutch later stage venture and growth funds. Next to that, investors from the United States also seem to be more interested in Dutch life sciences funds in particular. Of note is the high level of deinstitutionalization in fundraising compared to fundraising for buyout funds. To maintain and expand the present infrastructure of Dutch and growth funds, institutional investors are needed. It is therefore to be hoped that initiatives like the DVI help to foster an end to this trend of deinstitutionalization. GOOD FUNDRAISING FOR A DIVERSE GROUP OF DUTCH BUYOUT FUNDS Dutch firms raised a total of 680 million of new funds specifically for buyouts in In 2013 this was 287 million. It is remarkable that such a high amount could be raised since none of the larger firms were marketing new funds in that period. This means that a wide selection of smaller Dutch firms had ample possibilities to successfully raise funds. Especially smaller retail investors seem to be interested to invest in and in the end in Dutch SMEs, either directly or through fund structures. Fundraising for Dutch Growth funds was 6 million in Look for previous years at nvp.nl Look for information about follow-on investments, and syndication of investments at nvp.nl VENTURE CAPITAL DIVESTMENTS In 2014 firms divested a total of 85 start-ups for a total amount (at cost) of 77 million. In 2013 this was 98 million out of 58 companies. For start-ups it becomes relatively early apparent whether a business model will be successful or not, hence the relatively high number of write-offs. A good sign are the high numbers of sales to strategic buyers and sales to other houses. This means that there is a chain of investors, where each investor has the opportunity to assist in a particular phase of a company. BUYOUT DIVESTMENTS In 2014 a total of 1.9 billion (at cost) was divested of 102 Dutch companies that received a buyout investment in the past. In 2013 this was 1.8 billion and 89 companies. Noteworthy for this segment is that a relatively large number of companies was bought by another firm. This reinforces that notion that also in the buyout segment there is a chain of financing in which each firm specializes in its particular phase. LARGE FOLLOW-ON INVESTMENTS In 2014 a total of 1.5 billion went to 196 companies that had previously received a or investment. In 2013, 149 companies received about the same amount invested. Follow-on investments can be so-called add-ons, but more often they are staggered investments as is very common in. Next to that it could also be a refinancing of a more mature company. 8 Adjustment of previous number 20 21

13 Chapter 2 Enterprising Capital The Dutch and market in 2014 Chapter Investments per financing phase by invested amount in million (market analysis) 2.3 Investments per financing phase by number of companies (market analysis) Seed Start-up Later Stage Venture Growth Rescue/ Turnaround Buyout 0 Seed Start-up Later Stage Venture Growth Rescue/ Turnaround Replacementcapital Replacementcapital Buyout Sources of Dutch funds Sources of Dutch buyout funds x million Academic institutions 0 0% 0 0% 0 0% 2 0% Banks 0 0% 3 1% 1 0% 24 5% Capital markets 0 0% 0 0% 0 0% 0 0% Corporate investors 64 47% 27 14% 15 7% 42 8% Endowments and foundations 0 0% 1 0% 0 0% 3 1% Family offices 20 15% 26 14% 25 12% 49 9% Fund of funds 0 0% 0 0% 56 27% 15 3% Government agencies 32 24% 46 24% 79 38% % Insurance companies 0 0% 65 34% 0 0% 29 5% Other asset managers 0 0% 0 0% 3 1% 11 2% Pension funds 0 0% 0 0% 0 0% % Private individuals 6 4% 13 7% 24 11% 39 7% Sovereign wealth funds 0 0% 0 0% 0 0% 0 0% Unclassified 13 10% 10 5% 7 3% 20 4% Total % % % % x million Academic institutions 2 0% 0 0% 0 0% 0 0% Banks % 30 3% 0 0% % Capital markets 0 0% 0 0% 0 0% 0 0% Corporate investors 0 0% 0 0% 0 0% 10 2% Endowments and foundations 52 3% 0 0% 0 0% 0 0% Family offices 10 1% 15 2% 38 13% % Fund of funds % % 69 24% 88 13% Government agencies 0 0% % 5 2% 63 9% Insurance companies 92 6% 30 3% 30 11% 43 6% Other asset managers 27 2% 71 8% 33 12% 60 9% Pension funds % % 45 16% 24 4% Private individuals 56 4% 91 10% 16 6% 25 4% Sovereign wealth funds % 0 0% 21 7% 0 0% Unclassified 68 4% 22 3% 30 11% 40 6% Total 1, % % % % 22 23

14 Chapter 2 Enterprising Capital The Dutch and market in 2014 Chapter Investments per financing phase, excluding investments by Regional Development Funds (market analysis) 2.6 Methods of divestment Dutch companies by funds (market-analysis) x 1, Seed 3,890 0% 1,503 0% 4,693 0% 2,431 0% Start-up 94,377 3% 74,341 5% 105,052 4% 76,812 2% Later Stage Venture 57,348 2% 87,.641 6% 56,309 2% 41,867 1% Total Venture 155,616 5% 163,485 11% 166,054 7% 121,110 4% Growth 443,429 15% 221,246 15% 181,296 7% 340,617 11% Rescue/ Turnaround 19,748 1% 62,120 4% 83,694 3% 17,026 1% Replacement Capital 43,286 1% 46,684 3% 32,623 1% 48,699 2% Buyout 2,208,224 73% 855,389 57% 1,860,473 75% 2,531,699 80% Total Investments 3,025, % 1,512, % 2,490, % 3,180, % Number of companies Seed 7 3% 3 1% 4 1% 14 4% Start-up 40 15% 46 17% 53 18% 67 20% Later Stage Venture 26 10% 27 10% 31 11% 25 7% Total Venture 72 26% 75 27% 88 31% % Growth 54 20% 48 17% 42 15% 46 13% Rescue/ Turnaround 8 3% 8 3% 6 2% 4 1% Replacement Capital 9 3% 14 5% 12 4% 14 4% Buyout 56 21% 55 20% 51 18% 67 20% Total Companies % % % % x 1, Seed 1,362 3% 738 2% 2,111 4% 1,714 3% Start-up 12,686 32% 11,444 37% 21,958 47% 43,497 65% Later Stage Venture 734 2% 5,205 17% 4,948 11% 2,938 4% Total Venture 14,782 37% 17,388 56% 29,017 62% 48,148 72% Growth 17,890 45% 9,516 31% 13,084 28% 12,319 18% Rescue/ Turnaround 2,985 7% 3,655 12% 3,055 7% 522 1% Replacement Capital 0 0% 0 0% 345 1% 2,454 4% Buyout 4,353 11% 400 1% 1,487 3% 3,226 5% Total Investments 40, % 30, % 46, % 66, % Number of companies Seed 7 6% 3 3% 9 7% 4 3% Start-up 65 52% 68 58% 83 61% % Later Stage Venture 5 4% 16 14% 12 9% 14 9% Total Venture 77 61% 87 74% % % Growth 37 29% 22 19% 24 18% 19 13% Rescue/ Turnaround 7 6% 6 5% 5 4% 5 3% Replacement Capital 0 0% 0 0% 2 1% 4 3% Buyout 5 4% 2 2% 2 1% 3 2% Total Companies % % % % 2.7 Investments per financing phase by investments by Regional Development Funds (market analysis) 2.8 Methods of divestment Dutch companies by buyout funds (market-analysis) x 1000 / number of companies Divestment by Trade Sale* Divestment by Public Offering Divestment by Flotation (IPO) Sale of Quoted Equity Divestment by Write-Off Repayment of Silent Partnership Repayment of Preference Shares/Loans Sale to Another Private Equity House Sale to Financial Institution Sale to Management (Buy-back) Divestment by Other Means Unknown Total x 1000 / number of companies Divestment by Trade Sale* 1, Divestment by Public Offering Divestment by Flotation (IPO) Sale of Quoted Equity Divestment by Write-Off Repayment of Silent Partnership Repayment of Preference Shares/Loans Sale to Another Private Equity House Sale to Financial Institution Sale to Management (Buy-back) Divestment by Other Means Unknown Total 2, , , , * Usually sale to strategic buyers * Usually sale to strategic buyers 24 25

15 Chapter 3 Enterprising Capital The Dutch and market in 2014 Chapter 3 DEVELOPMENTS PER SECTOR 3 VENTURE CAPITAL INTERESTED IN LIFE SCIENCES AND COMPUTER AND CONSUMER ELECTRONICS In 2014, venture capitalists invested a total of 92 million in the life sciences sector. This amount represents 55% of the total amount of investments. In 2013, this was 96 million, 49% of the total amount. Together with the computer and consumer electronics sector, these are sectors which ists traditionally invest in most. 360 million 116 million 1,880 million million 330 million 64 BUYOUTS MAINLY IN SECTORS BUSINESS AND INDUSTRIAL PRODUCTS, COMPUTER AND CONSUMER ELECTRONICS In 2014, 925 million of buyouts can be accounted to the sector computer and consumer electronics, 31% of the total amount of investments. The previous year, in 2013, this amount was 89 million, only 4% of the total amount. This indicates that the sectors in which is invested by the buyout segment varies heavily by year. PRIVATE EQUITY AND VENTURE CAPITAL FIRMS TAKE THEIR SHARE IN HIGH AND CLEANTECH In 2014, 26% of the investments ( 201 million) were in 98 businesses. This is a change when compared to 2013 when 182 million was invested in 85 businesses. Investments in cleantech businesses changed even more significantly, as investments of 37 million in 23 cleantech businesses in 2013 rose to 118 million in 29 cleantech businesses in More figures on high and cleantech at nvp.nl million 4 million million Chemical products and agriculture Business and industrial products and services Consumer goods, services and retail Energy and environment Financial services (incl. real estate) ICT Life sciences Other 1 Number of companies 26 27

16 Chapter 3 Enterprising Capital The Dutch and market in 2014 Chapter Venture capital investments per sector (market analysis) 3.2 Buyouts investments per sector (market analysis) X 1, Chemical products and agriculture , , , Agriculture , , Chemicals and materials , , Business and industrial products and services 4, , , , Business and industrial products 2, , , , Business and industrial services 1, , ,610 8 Consumer goods, services and retail 3, , , , Consumer goods and retail 3, , , , Consumer services: other , Energy and environment 7, , , , Financial services (incl. real estate) 0 0 3, Financial services Real estate 0 0 3, IT 35, , , , Communications 10, , , , Computer and consumer electronics 25, , , , Life sciences 117, , , , Other , , Construction , Transportation , Unknown Total 170, , , , X 1, Chemical products and agriculture 328, , , , Agriculture 15, , , , Chemicals and materials 313, , , ,000 1 Business and industrial products and services 833, , , , Business and industrial products 502, , , , Business and industrial services 331, , , , Consumer goods, services and retail 1,166, , , , Consumer goods and retail 819, , , , Consumer services: other 347, , , ,690 7 Energy and environment 66, , , , Financial services (incl. real estate) 30, , , , Financial services 30, , , , Real estate IT 119, , , ,840, Communications 98, , , , Computer and consumer electronics 20, , , , Life sciences 88, , , , Other 106, , , , Construction 100, , , Transportation 3, , , , Unknown 2, , , Total 2,739, ,199, ,176, ,956,

17 Chapter 4 Enterprising Capital The Dutch and market in 2014 Chapter 4 OUTLOOK 4 PRIVATE EQUITY AND VENTURE CAPITAL FIRMS HELP TO CAPITALISE ON OPTIMISM The Dutch economy seems to have found an upward trend after a long period of harsh recovery. Dutch businesses see opportunities and private equity and firms are excellent partners to achieve these ambitions. Larger, international private equity and firms remain interested in investing in promising Dutch businesses when we look at both buyouts in bigger Dutch companies, as well as in promising start-ups. It looks as though in 2015 a lot of investments will be made by bigger international players in the spin-offs of larger Dutch conglomerates. The vital role these investors play in guiding these companies to full independence is important to remind ourselves of. Dutch SMEs are traditionally mostly supplied with risk capital by the Dutch and players, and also these companies look set to grow again. Private equity and has helped ambitious SMEs professionalize, internationalize and expand for over thirty years, and 2015 has the potential to be a memorable year. Past year s numbers have shown us the extremely positive influence of the Dutch Venture Initiative (DVI), a fund of funds for Dutch later stage venture and growth funds instigated by the Ministry of Economic Affairs and the European Investment Fund (EIF). Fundraising for this group of investors had become increasingly troublesome, especially from institutional investors. The DVI gave a very important boost to the fundraising, and there are clear signs of a positive flywheel effect for the whole market amongst other investors. For now this ensures the continuation of the current Dutch venture capital infrastructure. As the DVI is fully invested at the moment, care should be taken not to lose the momentum that was gained in Institutional investors should take more notion of the idea of investing in Dutch start-ups through funds. Because still too often ambitious start-ups move abroad, are bought up too soon or disappear altogether due to insufficient availability of financing. In the Netherlands almost everybody benefits from private equity and. Be it because they are one of the 350,000 people directly employed by a company with a or shareholder, or indirectly because they are one of the millions of people whose pension fund invests in the asset class. This way private equity and firms have created value, unbeknownst to many, for over thirty years. Maybe 2015 is the year to be a bit more outspoken about that. Philip Houben Chair NVP 30 31

18 Chapter 4 Enterprising Capital GLOSSARY BUYOUT Financing of a takeover whereby part of the stock is bought by present management (management buyout, MBO), or new management (buy-in, MBI). CAPTIVE (FUND) Private equity or venture capital firm part of a larger enterprise or institution, for instance a bank, insurer or multinational. For funding a captive is dependent upon its parent. DIVESTMENT Sale or partial loss of a portfolio company through various ways. EVCA European Private Equity & Venture Capital Association. EXIT Synonymous to divestment but usually excludes write-offs. FINANCING PHASE Part of the cycle a company is in when it receives an investment. For instance seed, start-up, later stage venture, growth or turnaround. FUND IN FUNDS Is an investor that attracts funds from other investors and invests in and funds, not directly in portfolio companies. GROWTH FINANCING Investment aimed at expanding production and sales, usually for companies with a certain maturity to distinguish from later stage venture. PRIVATE EQUITY FIRM Investments firms that invest in mature non-listed companies. SECONDARY BUYOUT The portfolio company is both bought and sold by a different private equity firm. SEED INVESTMENT Financing of ideas and initial research before there is an actual company. SOVEREIGN WEALTH FUND Institutional investor owned by a state. START-UP INVESTMENT Financing for product development and initial marketing of a young company. REGIONAL DEVELOPMENT FUND Regionale Ontwikellingsmaatschappijen (ROMs) are entities with a government as a limited partner and are aimed at stimulating a local economy. RESCUE/TURNAROUND INVESTMENT Financing a company that is making a loss with the aim of restructuring it to regain its profitability. REPLACEMENT CAPITAL When one investor swaps stock with another investor without additional money put into a portfolio company. VENTURE CAPITAL Investments firms that invest in immature non-listed companies CONFIDENTIALITY AND FURTHER DATA More detailed data are available at nvp.nl for academics and others. These are aggregated statistics not traceable to any individual firms and or companies. NVP, PEREP_ANALYTICS and PwC maintain the highest standards with regards to the confidentiality of the gathered data. CREDITS/DISCLAIMER 2015 NVP Free use, collection and distribution of this work is, with proper attribution, allowed. The attribution must in no way suggest that NVP endorses you or your use of this work. The information contained in this report has been produced by NVP, based on PEREP_Analytics data and third party information. While NVP has made every effort to ensure the reliability of the data included in this report, NVP cannot guarantee the accuracy of the information collected and presented. Therefore, NVP cannot accept responsibility for any decision made or action taken based upon this report or the information provided herein. Nederlandse Vereniging van Participatiemaatschappijen Noordhollandstraat AS Amsterdam T 31 (020) E info@nvp.nl W ISSN: Graphic design: LOTS OF / concept & ontwerp lots-of.nl

19 THE DUTCH PRIVATE EQUITY AND VENTURE CAPITAL MARKET IN 2014 ENTERPRISING CAPITAL APRIL 2015