The Rise Of FinTechs in Belgium - Study

VC & Fintech in Belgium

With 50+ deals closed in 5 years, Avolta Partners has proven to be the most active M&A boutique in Europe in the Tech industry. As a result, our team has learned how to maximise the value of a deal – both valuation and legal conditions – thanks to a proven methodology and hard-nosed negotiations.

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Fintech Belgium asbl/vzw is the Federation, non-profit organisation, by and for FinTechs in Belgium. Created in 2015, it is the first and biggest community of Fintechers in Belgium gathering financial professionals, startup entrepreneurs and investors, who are interested in discovering and discussing disruptive business models and new technology for the financial services industry.

Our 3 main missions are: - To be a platform for dialogue with regulators and other parties - To actively and tangibly promote the Fintech sector in Belgium and Belgian Fintechs abroad - To share the experience within and outside the community. >> www.fintechbelgium.be

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On October 22nd at BOZAR in Brussels, we will organise the 3rd edition of our annual FinTech Belgium Summit the largest FinTech conference in Belgium. Come and join all the Belgian FinTech influencers and discuss how FinTechs are now BEYOND THE HYPE and have evolved into unavoidable players. Discover all the latest trends touching the financial industry: Payments, Open Banking/APIs, Cross-Industry diversification, Blockchain, AI and Machine learning, ...

Fintech Belgium Summit is a unique opportunity to: - Network with 750+ professionals from the financial world - Be inspired and learn from +60 speakers - Discover 16 rising FinTech Startups and Scale-ups during their investors pitch - Explore 800m2 of pure FinTech expo hall >> www.fintechsummit.be

€514m raised in 3 years 400,0

The Belgian Venture Capital (VC) market is steadily increasing year over year, from €135m in 350,0 2015 up to €206m in 2017, i.e. X1.53 in 2 years.

61 55

And the second driver is the increase in market150,0 maturity: the avg. fundraising outstandingly raising 100,0 from €2.5m in 2015 up to €3.5m in 2017.

50,0

59 3.5

300,0

The increase is first explained by the growing number of opportunities within the Belgian250,0 ecosystem: from 55 VC rounds in 2015 up to 59 in 200,0 2017.

70,0

2.8 2.5

30,0 20,0

56,7

92,0

# of deals

3 biggest deals (€m)

Other deals (€m)

VC in Belgium - 10/10/18

10,0 0,0

30,1

-10,0

104,9

115,3

114,0

-20,0 -30,0

2015 Avg. deal size (€m)

50,0 40,0

0,0

2.5

60,0

2016

2017

45% invested in Series B+

Number of deals

2017 10 64,5

The number of Series B+ rounds is increasing over time.

Notably there were 2 Series C in 2017: Collibra (€45.5m) and NGData (€19m).

28

10

2 4 24 86,85

10 5

Amount invested (€m)

10

28,4

2015

26,55

Amount invested (€m)

30,06 32

45,2

The Belgian VC market is maturing: Series B+ growing from 34% of the market up to 45% in just 2 years.

5 3 Number of deals

5

20

2016

Number of deals

59,65 8

20,85 8 34

50 1 5

62,63

8 21 38,85 VC in Belgium - 10/10/18

Amount invested (€m)

8

Seed

Series B

Series A

Series C

Yet, investors should maintain their efforts in financing early-stage ventures as they are cohorts for future growth opportunities

€100m+ valuation for Series C SERIES C

Pre-money valuation (€m)

(median figures)

128

Pre-money valuation: €111.4m New money: €24.3m Dilution: 20% Time to raise: 111 months

64

32

SERIES B (median figures)

SEED

16

(median figures) 8

SERIES A

Pre-money valuation: €1.8m New money: €0.7m Dilution: 24% Time to raise: 36 months

4

Pre-money valuation: €19.7m New money: €8.8m Dilution: 27% Time to raise: 88 months

(median figures) Pre-money valuation: €5.8m New money: €3.2m Dilution: 29% Time to raise: 56 months

2

Median new money

1 0

20

40

60

80

100

120

140

Time to raise money (in months)

VC in Belgium - 10/10/18

52% investments from abroad

International vs. domestic investors

52%

International investors finance the majority of the VC Belgian market as they participate in Series B+ when domestic funds lack of resources

Number of deals Amount invested

24% 76%

Avg. deal size (â‚Źm)

25

Domestic investors

Amount invested (â‚Źm)

International investors

48% GBR+IRL 20

Battery Ventures Dawn Capital New Science Ventures Hummingbird Ventures ICONIQ Capital Index Ventures Insight Ventures

USA

Other

15

NLD

LUX

10

CHE

International investors distribution 40% Number of deals

10%

Amount invested

9%

FRA

USA

5

BEL

9%

GBR+IRL

5% 0 2

4

8

16

32

64

128

FRA

256 # of deals

VC in Belgium - 10/10/18

LUX

25%

NLD

Others

CHE

73% investments are from VCs

VC vs. non-VC investors

27%

Most investments come from VCs, yet public funds still represent 12% of the market (e.g. the Belgian Federal Investment Fund)

Number of deals Amount invested

47% 53%

12,0 Avg. deal size (â‚Źm)

VC investors

Amount invested (â‚Źm)

Non-VC investors

73% 10,0 VC

Non-VC investors distribution

8,0 Public funds

5%2% 3%

6,0

24% Number of deals

Corporates / CVC

Amount invested

4,0 Cap Dev

Business Angels Corporates / CVC

Others BEL

2,0

44%

23%

Crowdfunding

Public funds

0,0 6

12

24

48

96

Crowdfunding

192 # of deals

VC in Belgium - 10/10/18

Business Angels

Others

Cap Dev

Where smart money is going The most active investors are Belgian funds, often specialised in Seed rounds.

1 1

8

2

7

1 5

5 3

5 4

6

4

3 2

1

Seed

If we look at the investments made by the 30 most active investors (“smart money�), we can observe #IoT #deeptech and #fintech as trending sectors.

Series A

VC in Belgium - 10/10/18

2 3

1 1

11 3

4 3

1

Series B

3

1 5

3 1

Series C

10

9 7

6 3 1

1

Investments from the most 30 active investors in Belgium (2015-17)

B2B-SaaS rocks! #HR

4 1

12

#security/privacy

6

#proptech

6

#transportation/mobility

5

2

#drone

6

1

#3D-viz #food/beverage #communication

4 12 6

11

#industry/manufacturing

11

#energy

10

#IoT

11

20 3

1

1

#deeptech

9

3

3

5

2 18

1

2 11

#ERP

5

11

1 2

25

#ERP

14

7

4

#work

3

6

6

25

#deeptech

11

22

#fintech

#B2B2C

#B2C

3 #P2P

4

1 2

5

#energy

5

#industry/manufacturing #CRM

6 5

2 1 #food/beverage

Commission

1 #3D-viz

3

4

#drone

111

4

#transportation/mobility

1

5

#proptech

1

5

#security/privacy

4 Subscription

#communication

4

4

#Public

#IoT

10

But the main model by far is the B2B SaaS framework, that represents 69% of the market.

3

#marketing

16

20

#marketing

#health

21

We observe a lot of manufacturing models in health, energy, IoT, and industry. And some consumeroriented commission models in fintech, foodtech, marketing, and HR.

2

#work

VC in Belgium - 10/10/18

3

#fintech

7

10

#B2B

1

9

#CRM

#health

We have selected the 18 most recurrent sector out of our analysis. A large number of fintech, deeptech, health and ERP software startups received funding, followed by IoT, energy and 3D-viz.

18

1 #HR

Manufacturing

Service

Research

Which sector is booming?

Avg. New money (â‚Źm)

25,6

Bull market #ERP

#deeptech

Matured sector

#3D-viz

12,8

#CRM #energy

6,4 #food/beverage

3,2

#work

#drone

#health

#IoT

#proptech #fintech

#marketing

#industry/manufacturing

1,6 #transportation/mobility

#security/privacy

0,8

Nascent market

0,4

Bear market

#communication #HR

# of rounds

0,2 10

20

30

40

50

60

70

80

90

Time to raise money (in months)

VC in Belgium - 10/10/18

Time to raise money The sectors that are taking off rapidly are fintech, health & deeptech. They appear as champions as startups tend to raise higher amounts and faster than in other sectors (e.g. The Glue, Playpass, Qover, etc.)

New money (â‚Źm)

64,0 32,0 16,0

Champion

8,0

Late Growth

4,0 2,0 1,0 6,0

12,0

24,0

48,0

96,0

192,0 Time to raise (month)

0,5 0,3 0,1

Actual New money

0,1 0,0

Early Growth

VC in Belgium - 10/10/18

Seed

Series A

Series B

Series C

Slow Growth

Transaction multiples We analysed the median VC round in Belgium to give insights on valuation multiple with:

Median key figures for a VC round New money €1.2m

EV/TTM

Pre money valuation

11.3x

€2.5m

§

EqV Pre-money = the equity value pre-fundraising i.e. # of shares before capital increase * PPS

§

TTM Rev. = Trailing Twelve Months Revenue, i.e. pro temporis revenue at the date of fundraising

We excluded the deals with TTM Rev. < €200k to have more consistent data.

Median figures rely on > 800 valuation multiples for France and < 50 for Belgium. This is mainly due to the lack of turnover publication in Belgium.

TTM revenue

Dilution

€1.1m

30%

EqV pre-money / TTM Rev. Manufacturing

18,8

Subscription

12,1

#health

Commission

11,9

#fintech

Median figures (Belgium 2015-17) Median figures (France 2015-17)

VC in Belgium - 10/10/18

#deeptech

37,0

17,1

23,6

LETâ&#x20AC;&#x2122;S ZOOM ON FINTECH!

The Belgian #Fintech Mapping

Payment solutions

@avoltapartners @fintechbe @DataBe

Financing & investment solutions

Infrastructure & Enabling Technologies

Blockchain & crypto

VC in Belgium - 10/10/18

Neobank & insurtech

€55m+ raised in 3 years 50

25

21

45

20 40

# of fundraising rounds 35 30

15

9

25

9 8,4

5

20

Biggest round (€m) Other rounds (€m)

15 10 5

5,5 5,1

0

19,4 9,9

6,7

0

-5

-10 2015

VC in Belgium - 10/10/18

10

2016

2017

The rise of fintechs

Fintechs in Belgium are at the beginning of their ascent. All fundraisings in recent years have been completed for Seed and Series A rounds.

69% of fintech rounds were first-time startup fundraisings.

SERIES A: 46%

VC in Belgium - 10/10/18

SEED : 56%

36% of start-ups that raised funds in Seed raised funds in Series A within three years.

Dilution: the cost of money Some founders drastically dilute their capital to obtain funds, the highest dilution recorded being 66.7%.

41,4%

These levels of dilution highlights the investors will to hedge their risk in the young Belgian VC market.

34,5%

17,2%

6,9%

Low dilution (0 – 20%)

VC in Belgium - 10/10/18

Average dilution (20 – 40%)

High dilution (40 – 60%)

Very high dilution (60 – 100%)

Subscription or commission?

All the start-ups studied have either set up a subscription or commission business model.

10,00% 15,00%

Website

There is a high proportion of Saas, which facilitates the implementation of subscription models, followed by websites. Regarding the commission system, it is fairly well distributed among the three channels.

0,00% 15,00% Application

45,00% 15,00%

Saas

Subscription

VC in Belgium - 10/10/18

Commission

From Fintech to fintechs Fintechs in Belgium are quite diversified across industries: from payment methods to blockchain solutions.

35,7% The most important service is infrastructure & enabling technologies, which often takes the form of ERP. The payment is mainly represented by apps.

3,6%

Crowdfunding

VC in Belgium - 10/10/18

3,6%

Insurance

7,1%

Law & administration

25,0% 17,9%

7,1%

Deeptech

Analytics & Dashboard

Payment

Infrastructure & Enabling Technologies

B2B rocks!

B2B2C 14,3%

The vast majority of fintech products and services aim at businesses. This trend is explained by the large number of fintech SaaS, notably supplying analytics and dashboard tools.

B2C 10,7%

P2P 7,1%

Few fintechs are aimed directly at consumers, although some are successful: Tricount and Spred are among the bestknown peer-to-peer platforms

B2B 67,9%

VC in Belgium - 10/10/18

Investors: funds origin Business angels are very active in the Belgian VC scene, taking significant stakes in both Seed and Series A (example: Xpenditure - 5.7m raised by BAs)

72% Belgium

Business Angels; 46,7%

16% Swizerland Funds; 43,3%

8% Public; 10%

28% investments come from abroad, specially from Switezerland, the US and France

United States

4% France

VC in Belgium - 10/10/18

Investors: funds origin Crowdfunding is quite popular to raise funds: as an example, Spreds (formerly MyMicroInvest) raised â&#x201A;Ź1.6 million through its online community.

Among the most significant investors, we find once again business angels, such as the Belgians Toon Coppens, Lorenz Bogaert, Jonas Dhaenens or Bart Swanson.

Belgian venture funds such as Pamica or Volta Venture are also active in supporting startups for < â&#x201A;Ź3m fundraisings

Finally, foreign investors such as Index Ventures or Polytech Ecosystem Venture support growth dynamic.

VC in Belgium - 10/10/18

Fintech rounds valuations

60,7%

The majority of the start-ups considered are valued < €5m. All fundraisings are Seed or Series A rounds, which explains these figures.

On average, fintechs in Belgium have a post money valuation of €7.2m, with most valued players being Ibanfirst (€23.8m), Anytime (€23.5m), Spreds (€23.1m) and Qover (€23.5m).

17,9%

Early stage (<5m)

VC in Belgium - 10/10/18

Early growth (5m-15m)

21,4%

Growth (>15m)

Funds raised (€m)

Time to raise money Champions

Late growth

16,00

Ibanfirst €8.4m

8,00

Qover €5.5m 4,00

The Glue €5.0m

Anytime €4,4m

Silverfin €4,5m

Rydoo €5,1m

2,00

1,00 0 0,50

10

Early stage

20

30

40

50

60

70

Slow growers

0,25 Time-to-raise since creation (in months)

VC in Belgium - 10/10/18

See you on October 22nd @BOZAR in Brussels For the the 3rd edition of FinTech Belgium Summit !