20160417-高盛-Views_from_the_Valley_-_public_vs._private_multiples,_and_more_unicorn_M_A_19页_309kb

Americas: Technology Summary

Core Content

This report provides an analysis of venture capital (VC) trends in the software and internet sectors in the first quarter of 2016 (1Q16). It highlights the performance of VC funding, private and public multiples, unicorn additions and exits, and the evolution of funding rounds.

Main Points

VC Funding Trends

• VC investment in private and emerging companies in the US stabilized at $12.1bn in 1Q16, showing a 1% increase from the previous quarter after two consecutive quarters of declines.
• The year-over-year (YoY) decline was -11%, indicating a slowdown in the overall VC market.
• The last time quarterly VC investment levels were above $10bn was in 2001, with a notable drop in 2015 (28% qoq decline in 4Q15).
• Software companies received $5.1bn or 42% of total US VC funding in 1Q16, continuing a trend that peaked at 46% in 1Q14.

Private vs. Public Multiples

• The median price/sales multiple for software/internet VC deals declined for the second straight quarter but remained at a 3.6 turn premium over public multiples, the largest premium since 2012.
• The gap between private and public multiples was $3.6x in 1Q16, showing a continued preference for private valuations in the sector.
• Public company multiples have been contracting, with the lowest level since 2012.

Unicorn Activity

• The WSJ Billion Dollar Startup Club saw 4 new additions in 1Q16, the lowest since its inception in January 2014.
• The total value of the club increased by $28.7bn or 6% to $535.9bn.
• Unicorn exits in 1Q16 were both acquisitions, continuing a trend where 58% of unicorn exits since 2015 have been via M&A, compared to 25% in 2014.
• IPOs for unicorns were non-existent in 1Q16, indicating a shift in exit strategies.

Funding Rounds

• 7 companies that appeared in the past four installments of the "Learning the Alphabet" section have since attained unicorn status.
• Lyft and Snapchat accounted for $1.7bn or 80% of the $2.1bn in funding for Social/Platform Software in 1Q16.
• Anaplan and ForeScout were the first funding rounds for these companies at $1bn+ valuations.
• Business/Productivity Software received the second-highest funding, with Domo and Apttus leading the way.

Exit Valuations

• 44% of unicorn IPOs currently have a market cap below their last private valuation.
• 30% of M&A exits were also below the prior private valuation.
• M&A exits have shown better performance in terms of valuation compared to IPOs, with 7 out of 10 M&A exits being at or above the last private valuation, versus 56% of IPOs.

Key Information

• 1Q16 VC Funding: $12.1bn, up 1% qoq, down 11% yoy.

• Software Funding Share: 42% of total US VC funding.

• Private vs. Public Multiples: Median private price/sales multiple was 3.6x, a record high.

• Unicorn Additions: Only 4 new unicorns added in 1Q16, the lowest since 2014.

• Unicorn Exits: 2 exits via acquisition, with 58% of exits since 2015 being M&A.

• Top Funded Companies in 1Q16:

  • Social/Platform Software: Lyft ($1,000mn), Snapchat ($713mn)
  • Business/Productivity Software: Domo ($131mn), Apttus ($90mn)
  • Network Management Software: ForeScout ($76mn), Pindrop Security ($75mn)
  • Application Software: BloomReach ($56mn), Atom Tickets ($50mn)
  • Database Software: Mesosphere ($74mn), Looker ($48mn)

• Notable M&A Exits in 1Q16:

  • Legendary Entertainment acquired by Wanda Group for $3.5bn
  • Jasper Technologies acquired by Cisco for $1.4bn

Appendix Highlights

• The Appendix includes a detailed breakdown of the WSJ Billion Dollar Startup Club members by region and industry.
• A complete list of industry definitions used in the report is provided.
• Disclosure Appendix includes important information about potential conflicts of interest and other regulatory disclosures.

Conclusion

The first quarter of 2016 marked a period of stabilization in VC funding, with a notable preference for private valuations over public ones. The unicorn market showed signs of slowing growth, with fewer new additions and a shift towards M&A exits. Companies such as Lyft, Snapchat, Anaplan, and ForeScout were key players in the funding landscape, with large rounds driving the sector's performance.