Berlin Startup Funding Report Q3 2015

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I’m back with my Berlin Startup Funding Q3 Report, and I’m super excited to debut a new report format! I partnered with the wonderful Videopath team to create the above interactive video. If you are looking to improve your engagement and up the ante on content marketing – check them out.

Berlin Startup Funding Announcements

In Q3, 40 startups announced funding rounds and only half disclosed actual numbers. Total funding was significantly lower than the previous two quarters at $232M raised, compared to $461M in Q2 and a staggering $869M in Q1.

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The primary reason is a single mega-round (HelloFresh) rather than the multiple mega-rounds of previous quarters. Investment by funding stages has remained consistent. 52% of Q3 funding rounds were seed rounds, in line with 48% for Q1 and 53% in Q2.  This trend differs from the pattern in the rest of the world, where seed funding deals have steadily declined. The average seed round amount has also remained constant. In Q1/Q2 the average Berlin seed round was $1M  and in Q3 we saw that number increase slightly.

Series A deals have held steady over the last three quarters, at 25% of total funding, but the average amount declined. In Q1/Q2 of this year, the average Series A round was $10.8M. This quarter, 70% of startups that reported raising a Series A round disclosed a figure, for an average of $6.5M. Later stage deals declined in both Q2 and Q3, as have average later stage funding amounts. The average D+ size round in Q1 and Q2 was $132M, whereas in Q3 we only saw one D+ round for $84.7M.

There are two other rounds worth noting that I did not include. In early July, Bloomberg reported that Berlin-based Auto1Group raised a $100M round earlier in the year, for a $1B valuation. This will be included in my 2015 year-end report, but was not cited in the Q3 numbers, since the round took place in the previous quarter. Zencap, a fintech company, announced that Victoria Park Capital will invest up to €230M in loans originated by Zencap over a three year period under an exclusive agreement. This figure was also left out since it is a partnership, rather than a traditional investment, but kudos to Zencap. Following this announcement, Zencap was acquired by Funding Circle in October.

top ten chart

Top Funding Rounds

The only startup to raise a mega-round was Rocket Internet’s HelloFresh which reported a $84.7M Series F round in September in preparation for their IPO. At the end of October HelloFresh announced plans to go public on the Frankfurt Stock Exchange. A week later, the IPO was pulled. The Financial Times cited investor scepticism over the company’s €2.6B valuation. For an in-depth look at HelloFresh’s operating metrics, check out this post.

SavingGlobal, the fintech company, raised at $22M Series B round led led by Palo Alto-based Ribbit Capital and London’s Index Ventures.

Babbel, the language learning app, announced a $22M Series C round led by Scottish Equity Partners (SEP) and supported by existing investors Reed Elsevier Ventures, Nokia Growth Partners (NGP), and VC Fonds Technology Berlin managed by IBB Bet.

Lesara, an ecommerce company raised a $16.73M Series B round led by Northzone. Vorwerk Ventures is on board as co-investor, while existing investor Mangrove Capital also participated in this round.

Moviepilot, an entertainment-focused website built around reader contributions, announced a $16M Series B round led by French publishing group Webedia.

Vaniday, Rocket Internet’s beauty e-commerce company, raised a $15.97M Series A from Rocket and others.

GoButler, an SMS concierge service, raised a $8M Series A round led byGeneral Catalyst Partners. Lakestar, Rocket Internet’s Global Founders Capital, Slow Ventures, BoxGroup, Ashton Kutcher and Guy Oseary’s Sound Ventures, and Cherry Ventures also joined.  *A note about GoButler – company was started in Berlin by former Rocket guys. According to their website they have offices in Berlin and NY. They are listed in Crunchbase as NY, but I included them.

Conichi, a travel startup, secured a $7.9M seed round from Hotel portal HRS.

HomeToGo, a travel ecommerce company, raised a $6.7M Series A led by DN Capital, and Acton Capital Partners.

Zeotap, the self described world’s most trusted platform for actionable premium data from telecom operators, announced a $6.4M Series A from Capnamic Ventures, Iris Capital, and angels.

Other rounds that did not make the list due to withholding the actual amount include Book A Tiger, the cleaning service. They announced a seven-digit round from current investor Avala Capital. Ekomi, the feedback company, announced an undisclosed investment from Goldman Sachs prompting IPO speculation. Goldman has also invested in FoodPanda and Mister Spex this year.

Now for the fun stuff… Other standouts included a seed round for UnderCovers, an app for couples who like to try out new things in bed. Crowd favorite, Dubsmash, the messaging and lip syncing app made popular by Jimmy Fallon raised a $5.5M Series A led by Index Ventures. Other investors to join the round include Lowercase Capital, ENIAC Ventures, Sunstone Capital, Raine Ventures and King Digital Entertainment CEO Riccardo Zacconi.

Exciting VC News

In Q3, several VCs, including a few Berlin based firms, also made fundraising announcements.

Gruenderszene reported in July that Earlybird Capital announced plans to raise a sixth round of at least €150M.

WirtschaftsWoche reported that Rocket Internet has plans to raise a $1.1B round for late-stage startups creatively called the Rocket Internet Growth Fund.

Q3 also saw interesting international investments. Fred Wilson of Union Square Ventures published a blog post about European Startups. He notes that over the last six years, roughly 25% of Union Square Ventures investments have been in Europe, but this year his team has made nine investments to date (a few have not yet been announced) and four of them have been in Europe (45%).

Despite the lackluster quarter in terms of sheer numbers, 2015 has been an insanely good year. We have less than one month left of Q4, but the figures already look promising. Thus far, we have Get Your Guide with 50M in a Series C round, Adjust with a Series D of 17M, Reyaler and Nestpick raising a $11M series A, respectively, and crowd fav Clue picking up a $7M Series A round.
For more about which startups raised rounds in Q3 and a look ahead (as we are two months into Q4), check out the video above.

Berlin Startup Funding: First Half of 2015 Sees Higher Investment Than All Of 2014

At the end of Q2 Berlin startups reported over $460M USD in funding, bringing the total capital raised in the first half of the year to $1.33B, easily surpassing the $1.1B raised in 2014.

For comparison, 2014 investment was 140% over 2013, and the numbers just keep growing. This has cemented Berlin’s status as a top tech hub outside of the US. In fact, during Q1, Berlin outraised London by $184M. I have not yet seen a London Q2 funding analysis.

Berlin Startup Funding 2014 vs 2015

In the last quarter, we saw slightly fewer reported rounds than Q1 (43 vs 49), and slightly smaller rounds across seed and venture deals, though still significantly higher totals than 2014. On the other hand, Q2 also brought interesting international investors, plus a highly publicized acquisition of 6wunderkinder, an IPO announcement, and a great deal of future IPO speculation. Let’s recap the highlights of Q2 Berlin startup funding and look at companies to watch during the second half of the year:

Q2 Berlin Funding Roundup

As in previous quarters, Ecommerce (37%), followed by software startups (18.6%), are receiving the most funding. Fintech, which I predicted would grow this year, accounted for 11% of all investments, as did Mobile. Edtech and Green/Energy companies accounts for 4.7% each. We saw one investment in biotech and one in gaming.

Average Funding Round Berlin Startup
Average funding for Q2 2015, dropped slightly (less mega-rounds than in Q1) but 2015 average funding for every size of round continues to be higher than 2014, with the exception of seed rounds which are neck and neck at about $1M.

 Berlin Startups Top Ten Funding Rounds Q2

The ten startups that raised the most funding in Q2 include some of the usual suspects: Home24, Rocket Internet’s answer to Ikea, announced Series D funding of $131M. UK investment firm Baillie Gifford led the round with an investment of $98.5M, securing about 9.55% of the shares in Home24. $32.8M were invested by existing shareholders including Rocket Internet SE.

In June, Delivery Hero announced a $110M investment from pre-IPO investors which valued the company at $3.1B. I wrote about this extensively, and why they should IPO in the US on TechCrunch last month.

Foodpanda, Rocket Internet’s food delivery marketplace, announced a $100M funding round  led by Goldman Sachs. Existing investors, including Rocket Internet, also participated. Foodpanda has raised over $310M since its launch in 2012.

Lendico, Rocket Internet’s P2P Lending Service, raised $21.9M from Rocket Internet, Access Industries, HV Holtzbrinck Ventures and a new investor.

Berlin’s photo marketplace EyeEm announced an $18M investment led by Thiel’s New York-based Valar Ventures. EyeEm’s previous investors Earlybird Ventures, Passion Capital, Wellington Partners, Atlantic Labs and Open Ocean Capital, also participated in the round.

Smava, a peer-to-peer lending platform, raised $16M led by Phenomen Ventures, along with current investors Earlybird and Neuhaus Partners.

Atheneum Partners reported a $10.8M round led by Vogel Business Media, who paid approximately $7M for one-third of the company. They were joined by Jens Odewald who acquired  2% of the outstanding shares.

Number26, the third Fintech company to make the top ten list this quarter raised a $10.6M Series A round led by Peter Thiel’s Valar Ventures, Swiss entrepreneur Daniel S. Aegerter, and previous investors Earlybird and Redalpine.

Omeicos Therapeutics, a biopharmaceutical company developing first-in-class small molecule therapeutics, announced a $6.57M Series A round. Participating in the round were Vesalius Biocapital, VC Fonds Technologie Berlin, Hightech Gruenderfonds, and KfW Group.

Thermondo, which sells heaters and has developed software that displays every step in the installation process, announced a $6.4M Series B round. Rocket Internet and Holtzbrinck Venture are joining as new investors, together with previous investors Grey Crop, IBB Beteiligungsgesellschaft, and the power company E.ON.

US Investors of Interest

With higher rounds, we are seeing more American investors entering the Berlin startup scene.

I’m most excited about the interest from Peter Thiel and Goldman Sachs. If you’ve read this blog before, you know that I cite Mr. Thiel’s talks in Berlin as insightful observations of our ecosystem needs. In 2013, he shared that Berlin needed some big exits to establish itself as viable on the international stage. A year later Rocket and Zalando lived up to that prediction by successfully going public on the Frankfurt Stock Exchange. In 2014, on a book tour, he told the Financial Times  that investors prefer to invest in London companies because people “just work harder . . . They just work less hard in Berlin.” Europe, he said, was a “slacker with low expectations”. Thiel has invested in two London startups (Transferwise and Deepmind) and  appears to have changed his mind about underachieving Berlin. In Q2, his Valar Ventures invested $10M into EyeEm’s $18M round and led a $10.6M investment round for Berlin’s Number26.

Goldman Sachs has been heavily investing in startups for years. Between 2009 and 2013, Goldman participated in 63 disclosed investment deals worth nearly $4B, Inc.com reports. Goldman Sachs is interesting for Berlin because the bank prefers late-stage (large) investments, which everyone can agree are difficult to find here. So far this year, Goldman Sachs led a $40M funding round for Mister Spex and also FoodPanda’s $110M round in Q2. These higher, later stage rounds just might be a game changer for the Berlin ecosystem. I look forward to reporting still more Berlin investments from them in future posts.

The Acquisition of 6Wunderkinder

While there were several acquisitions in Q2, Microsoft’s purchase of 6Wunderkinder was definitely the most exciting from a press standpoint. The Wall Street Journal reported the deal in the range between $100M and $200M.

Why is this one so special? This is neither the largest nor the most surprising acquisition we’ve seen. Several recent exits hovered in the hundreds of millions of dollars territory, including Sociomantic’s $200M exit to dunnhumby Ltd. and Quandoo’s $219M acquisition by Japan’s Recruit Holdings. 6Wunderkinder was one of the first Berlin startups to attract US press, talent, and investor attention. It was Sequoia Capital’s first (and as far as I know only) Berlin investment, and was picked up by the NYT, the WSJ, and Bloomberg. They acquisition helps to discredit Thiel’s slacker portrayal of Berlin and install our city on the radar of even more serious international players.

Other acquisitions worth noting include ProSiebenSat.1’s purchase of Adtech startup RapidApe and Rocket Internet’s acquisition of Classpass clone Somuchmore. The terms of both deals remain undisclosed.

An Announced IPO and then a No Go

One positive effect of finishing this quarter’s report a bit late: Yesterday, Berlin’s sole pending startup IPO was cancelled.

In June, German Startups Group began pre-marketing a $79M Frankfurt Entry Standard IPO. The main comparison was Rocket Internet, although German Startups is considerably smaller. The company aimed for $79M in primary proceeds, which would be used to purchase equity in start-ups. There was a greenshoe provision, size yet to be decided, which will be a combination of primary and secondary from shareholders. The deal is Reg S and was expected to follow a two-plus-two schedule, with the lack of a US roadshow offering greater flexibility for accelerating. A two-plus-two approach would have put the beginning of roadshows at around July 1 and pricing at around July 15.

Reuters reports that GSG places the blame on market volatility. “In light of this environment, the management sees no chance of listing the company on the stock exchange at a fair price and generating the desired oversubscription.”

Stay tuned for an entire post on the topic tomorrow.

Where to Watch in Q3

In addition to Delivery Hero’s announcement of a pre-IPO round, Bloomberg reported that HelloFresh, a food delivery startup backed by Rocket Internet SE and Insight Venture Partners, is considering an initial public offering this year.

Investments, companies, funders, volatility. All are growing including the forecast for even bigger deals and strong investment winds blowing toward the other side of the Atlantic.

We’ve already set records in the first half of the year. Look for the next two quarters to quicken the pace.

 

Berlin Startup Girl in Forbes!

Berlin Startup Girl in Forbes! Earlier this month I sat down with Amy Guttman of Forbes to talk about the status of the Berlin startup ecosystem. We spoke a lot about how the funding has grown, how exits like Microsoft’s acquisition of 6Wunderkinder is a game changer, and why Berlin is an attractive city to build your own startup (other than just being cheap).

Check out the full article: Why Investors Are Keeping A Close Eye On Berlin For Startup Success

Kalie Moore Forbes

 

A Blazing Q1: Berlin Startups Raise Over $800M in 2015 Q1

Berlin is unstoppable.

Earlier this year, I reported that Berlin startups raised $1.1B in 2014. Of course, the actual amount is likely much higher as Germans aren’t particularly forthcoming about their numbers. Well, loyal readers, I’ve crunched the numbers and am pleased to report that in 2015 Q1 alone, Berlin startups reported raising over $800M, a stellar start to 2015. With several large deals only three weeks into Q2 (EyeEm $18M, Fintech companies Smava $16M and Number26 $10M, and MyLorry $10.7M), I’d predict that Berlin beats last year’s $1.1B raised by the end of this quarter.

A note about the data: I relied heavily on Mattermark, CB Insights, and Crunchbase, and cross-referenced their reports with local news sources including Venture Village, Gruenderszene, and the amazing newsletter TechBerlin. If you notice anything I’ve missed, shoot me an email at kalie@kaliemoore.com. All of the charts were prepared by my friends at datapine.

Now, let’s dive in.

Berlin Startup 2015 Funding Disclosure

The first quarter of 2015 saw nearly double the number of investments of Q1 2014. Last year, 27 Berlin based startups reported raising rounds, compared to 49 this year. More companies also disclosed their funding amounts (28).

Berlin Startups Getting Funded

As expected in Berlin, Ecommerce is the big winner among the different industry types. Last year, however, Ecommerce and Software funding were nearly tied. Of the companies that raised funds in Q1 2015, twenty were Ecommerce companies (including 9 or the top ten biggest rounds), ten were Software, Edtech accounted for five, Adtech and Fintech three each, Medtech and Mobile two each, and one each for Gaming, Green, Security, and one that I marked Other (PopUp Berlin – I love the concept!)

Berlin Funding Breakdown

24 companies received seed funding, 10 received Series A, and 7 received Series B. There was one company that received Series C, one more for Series D, three for Series E and above, and three that I listed as Unknown based upon conflicting or incomplete information.

Average Funding By Round Berlin Q1 2015

This data is not perfect, but we need to start somewhere. The Average Amount by Funding Round has increased significantly in the seed stage. The average seed round for all of 2014 was $970K; that amount increased to $1.2M in Q1 2015. (Note that only 10 out of 24 companies that raised a seed round disclosed numbers). Eight out of the ten companies that reported Series A released numbers, averaging $14.5M with one serious outlier – Glispa at $77M. Only four companies that raised Series B reported exact numbers, and there was one slight outlier – Helpling at $47M. Only one company, Auctionata, raised Series C, which cannot be considered a valid sample. All three D+ rounds were disclosed, bringing the average to $146.2M.

Berlin Startup Average Funding Amount

While the information is not definitive due to sample size and outliers, it is worth noting that the numbers in each category are significantly higher than in 2014. Let’s see if the trend continues.

Top Ten Funding Rounds Berlin Q1

Once again, Delivery Hero remains #1 on the Top 10 list. Rocket Internet acquired a 30% stake in Delivery Hero (a rival to #3, FoodPanda) as part of its new Global Online Takeaway Group. The Delivery Hero stake is valued at $586M. A disclaimer: I included Rocket Internet’s $568M investment in Delivery Hero in this calculation. Rocket paid $309M for new Delivery Hero shares, and another $259M for a stake sold by existing investors, according to CEO Niklas Oestberg, as reported by Bloomberg.

HelloFresh, another Rocket Internet company, comes in at Top Funding Round #2 with a $126M round.

Another food Ecommerce company from Rocket rounds out the #3 spot. Rocket invested $1.1M in Foodpanda. Essentially it is the same as Delivery Hero, but in emerging markets.

Glispa, an Adtech startup that has bootstrapped until this point secured a $77 million investment (75% stake) from Market Tech Holdings, a UK-based business.

Helpling, yet another Rocket Venture, closed a $45 million Series B round led by Lakestar, Kite Ventures, Lukasz Gadowski and Rocket Internet, only four months after raising a $17M Series A.

Auctionata, a startup that streams online live auctions for fine art and collectibles, announced that it raised $45 million in a Series C round.

Mister Spex, an eyewear Ecommerce shop, has picked up a new $40 million round in funding led by U.S. investment bank Goldman Sachs.

Carmudi, a Rocket car classifieds company, raised $25M to strengthen its operations in Asia and Latin America.

Outfittery, the fashion for men startup, has raised a $20M financing round. The investment was lead by Spotify investor Northzone.

Lamudi, Rocket Internet’s real estate network, has raised $18M in investment to grow operations in Asia and Latin America.

Takeaways? Should have invested in food delivery startups and Rocket is killing it.

There were several acquisitions, which I will write about next week, but there is one I should mention now since it is biggest exit I’ve heard of since Sociomantic’s exit almost exactly a year ago. Quandoo, an OpenTable clone, was acquired by Japan’s Recruit in a deal worth $219M.

Capital attracts more capital and more talent and the cycle shows every sign of continuing. Along with money, Berlin companies are raising interest as their impact is felt everywhere, in Europe and beyond.

 

2014 Berlin Startup Funding Infographic

Berlin Startup Funding Infographic

It should come as no surprise that this blog is a labor of love, rather than revenue.

I support my lifestyle by managing data-driven marketing and international PR for some of the coolest Berlin startups around. In partnership with datapine, a data visualization SaaS startup, I produced a 2014 Q1-Q4 Funding Analysis of the Berlin Startup Scene. For a comprehensive look at which industries and startups received the most funding, and a list of all Berlin acquisitions, check out the original post. All graphs were created instantly using the datapine tool – I highly recommend it.

The data from that post (which was sourced from CB Insights and cross referenced with press releases, and publications including TechCrunch, Gruenderszene, etc.) was used to create this killer 2014 Berlin Startup Funding Infographic designed by the amazing Irene Ramirez. The below commentary on the Berlin Startup Scene in 2014, and where I think we are headed, is strictly my own opinion.

It was almost exactly a year ago that I attended the Hy! Summit where Peter Thiel, when asked about the Berlin ecosystem, noted that Berlin is missing one extraordinarily big success. In February of 2014 Berlin still needed a couple of unicorns and a serious exit or two to be taken seriously.

In 2014, Berlin startups raised a combined $1.1 billion in 2014, a 140% increase compared with 2013. We got our unicorn (Delivery Hero was valued at $1B in August 2014, and that number doubled to $2B last week as Rocket Internet paid $568 million for a 30% holding) and saw the two largest IPOs in Germany in the last seven years with Rocket Internet and Zalando.

This $1.1B is an extremely conservative number, I believe the actual amount raised by Berlin startups is much, much higher. Of the 134 startups that announced funding, only 77 disclosed the amount. Of the seven Series D rounds only five reported on actual numbers. When you look at the five reporting the median Series D+ was $85,000,000 and the mean was $126,600,000, so it is safe to assume we are missing some pretty big numbers.

Also, only 134 Berlin startups even reported funding. In my personal network I can name dozens of startups I know received funding last year and never issued a press release. Germans seem to be much more secretive than their entrepreneur counterparts in California (a topic I could write a novel about).

Instead of providing commentary on the different funding announcements by industry or type, I’m going to offer a few highlights that I found to be interesting in 2014.

A Straight Up Fairy Tale

There’s nothing I love more than a good bootstrapping story. Sociomantic seemingly came out of nowhere and secured a $200M exit without raising a dime from venture capitalists.

Female Founders Raised Some Serious Cash

A 2012 report called The Startup Revolution: The Global Rise of Startup Ecosystems and How They Compare used data collected from more than 50,000 startups and, with its proprietary benchmarking method, ranked ecosystems based on numerous factors. Of the European cities ranked, Berlin had the lowest percentage of female entrepreneurs with a mere 3%, compared to 7%  in Paris and 9% in London. In contrast, Santiago, New York City and Toronto had the highest percentage of female entrepreneur with 20%, 18%, and 18% respectively. While Berlin, like everywhere else in the world, isn’t even close to being equal, 3% still didn’t feel accurate. It was really great to see companies with women founders raise serious cash like Outfittery’s €13M funding round. Other startups that raised rounds in 2014 with a female founder include Amorelie, Career Foundry, Clue App, Kisura, Bloomy Days, Edition F, Junique, and RetentionGrid, among others. On a side note, they are currently collecting data for the 2015 Startup Ecosystem Report. If you are a founder of a Berlin startup, please fill out the survey here.

FinTech Comes Out of Left Field

While London is known as the FinTech capital, ten Berlin FinTech startups raised money in 2014. Let’s hope this trend continues since banking in Germany is a constant nightmare. There is reason to hope that it will: HitFox recently announced a “FinLeap” project and plans to start four to six FinTech companies every year.

We Had Our IPO’s and our Unicorn, Let’s Move On

Rocket and Zalando IPO’d to much fanfare, saw their numbers drop about 30%, and have currently recovered (which doesn’t seem to get any media attention). We have our unicorn with Delivery Hero. Can Berlin be taken seriously now?

A Look at 2015

Despite all the doom and gloom bubble predictions, I’m excited for 2015. We are starting to see the dividends from successful companies pay off in terms of angel investments (for example see Delivery Hero’s Claude Ritters investments on AngelList and Thilo Tom Hardt of Mister Spex’s early stage investment site). I also see more cross-industry collaboration than ever before – stay tuned for a future post.

Are you interested in data driven analyses as part of your content marketing strategy? I’m available for new projects. Check out my CV on the About Kalie page of this site and shoot me an email at kalie@kaliemoore.com.