Atomico's Need-to-Know, 28 June 2017 - Essential Information for Founders and VCs

1. 28 June 2017
1
Atomico Need-to-Know

2. This is a regularly-updated collection of things we (@atomico)
found interesting and important in tech and VC land, but that
didn’t necessarily get the attention they deserve. We think of
them as our hidden little gems. We’ll add to the collection over
time, so bookmark the page and keep coming back for updates
or to dig into the archive.
Lovingly put together by @twehmeier & @stephen2206
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3. 3
What do you need to know?
Why does it matter?
Key questions
Source: http://www.cnbc.com/2017/06/16/amazon-is-buying-whole-foods-in-a-deal-valued-at-13-point-7-billion.html
● Amazon acquires Whole Foods for $13.7bn cash
● US and European supermarket shares slid as Amazon made its
ambitions in the sector clear
● Speculative commentary include Amazon will look to bring it’s
checkout-less tech to WFM, or that they will use the stores as satellite
DCs for the broader Amazon range
● Going the other way, B&M incumbent Walmart acquired Bonobos, the
fashion retailer which began as online only. $300m valuation. Follows
their Jet acq
● Earlier this year, Ali acquired an Asian mall operator for $2.6bn
● Largest Amazon acq by far (next largest was Zappos at $1.2bn), shows
that Amazon is serious about
● Came same day as rumours circled of Amazon making a $9bn bid for
Slack, later rumours were that they would be investing in the new
round. Shows the breadth of Amazon’s ambitions
Amazon acquires Whole Foods for $13.7bn
● As Amazon shows it’s willing to tackle even the most challenging
categories, how can other categories and ecomm companies defend
themselves?

4. ● What is the trend for European Dual Companies and is “moving HQ” abroad
more superficial or truly a change in operational focus?
● What implications does Brexit have on dual companies?
● International expansion materially impacts European scaleups’ ability to raise
capital based on data from this report, with Dual Companies raising +30%
more capital than pure domestic players
● Expansion to international countries is seen as more attractive given access to
capital, improved exit opportunities, and increased addressable market size
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What do you need to know?
Why does it matter?
Key questions
● “Dual Companies” are startups formed in Europe that move their HQ abroad,
while maintaining a strong operational presence (e.g. R&D) in their home
country
● According to a recent report released by Mind the Bridge, Dual Companies
represent approximately only 14% of European scaleups, start-ups that have
raised $1M+ with at least one round of funding after 2010
● Dual companies are more common in smaller countries or less mature startup
ecosystems (only 10% of scaleups in Germany vs. 31% in Ireland)
● Only ~6% of European scaleups have relocated their HQ to the valley and ~2%
to another European country, with the UK as the top destination
Dual Companies are a small portion of startup ecosystem
Source: Mind the Bridge Report European Dual Companies: Scaleup Migration?
More mature ecosystems see lower % of dual companies
Silicon Valley, NYC, and London are top destinations

5. ● Given high concentration of AI investment by the US and China, how are
European corporates positioned to take advantage of AI advancements?
● Do tech or non-tech companies have the infrastructure and human capital in
place to be able to effectively deploy AI-based solutions?
● With a greater push for AI adoption what potential barriers exist due to
government regulation?
● Supports thesis of continued technological disruption of legacy players in a
wide variety of industries and a potential opportunity for AI startups to be
acquired by non-tech companies to bolster tech-enable operations
● From the early adoption of AI by high tech, automotive, and financial services
into core processes a positive ROI business case is emerging which suggests
that more companies and sectors may push for faster adoption or run the risk
of being left behind
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What do you need to know?
Why does it matter?
Key questions
● A recent McKinsey Global Institute report on AI claims that the ecosystem is
now at a turning point with the ability for AI to deliver “real value” to companies
through improved processes and user experiences
● AI investment continues to boom representing $26-39B in 2016, 3x higher than
the dollars invested in 2013; majority of investment by large tech corporates
(Amazon, Baidu, Google, etc.) for internal R&D
● AI adoption outside of the tech sector remains at an early, experimental stage
but appears to be approaching an inflection point; geographically AI investment
is very concentrated in the US (66%) and China (17%)
McKinsey report suggests AI is at an inflection point
Source: McKinsey Global Institute Report Artificial Intelligence: The Next Digital Frontier?

6. 6
What do you need to know?
Why does it matter?
Key questions
500 Startups report on corporates and startups
Source: https://drive.google.com/file/d/0B9PiZAhmo47oUkpxeTZmWHhRRjg/view
2016 report: http://cdn2.hubspot.net/hubfs/698640/500CORPORATIONS_-_How_do_the_Worlds_Biggest_Companies_Deal_with_the_Startup_Revolution_-_Feb_2016.pdf?t=1498187424469
Where are corps finding startups?
How are corps working with startups?
● Report surveyed 100+ corporate innovation professionals, across
industries from CPG, healthcare, retail, finance; largely US/Eu
● Finds that <25% of pilots with startups scale into solutions to be taken
to market
● Problems faced by corps working with startups include being slow to
act, and lack of organisational alignment (startups having multiple
touchpoints across too many departments)
● How do we best take advantage of corporates’ desire to learn more
about tech ecosystem?
● Report shows that corporates are trying hard to work with emerging
tech companies but few are executing well
● Suggests need to work with more startups and take a portfolio
approach given standard high failure rates

7. ● In the context of a push for deregulation (esp. In the US), can progressive regulation
actually serve as an effective means by which to attract investment and advance tech
progress locally?
● Will the big promises made be kept and will timelines be met?
● How aggressively will we see the implementation of strategies to create regulatory
sandboxes/neutral zones as sources of competitive advantage and international
● Regulation is widely perceived to a slow-moving beast that moves out of sync with the
speed of technological progress. Indeed, US regulators have supposedly been thrashing
out plans for the regulation of drones for as long as 10 years.
● Regulation is increasingly emerging as a new front in global competition between
nations/regions, as they seek to put in place incentives to steal a march in the
deployment of and investment into new technology, such as autonomous vehicles,
drones and AI
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What do you need to know?
Why does it matter?
Key questions
● The last two weeks have seen a spate of announcements by countries/regions on plans
to put in place accelerated timelines to support the development and commercial
deployment of new technologies, such as drones and AVs.
● The European Union hopes to have standardized drone rules in two years (by 2019),
including a new European air traffic control systems for safe operation of autonomous
drones. The motivation is “to position Europe as a world leader for emerging drone
technology”
● Elsewhere, Latvia has made moves to position itself as an attractive destination of for
self-driving cars, by investing in a public-private partnership to create dedictaed testing
grounds for AVs. In Estonia, meanwhile, it has already passed rules to allow autonomous
cars on roads, if a driver is present, and recently passed legislation for
● Meanwhile, Theresa May’s Queen’s Speech contained plans to introduce a new
‘automated and electric vehicle bill’ to “ensure the next wave of self-driving technology is
invented, designed and operated safely in the UK”. Plans incl. Mandartory EV charging
points, compulsory inclusion of AVs in motor insurance, a £200M investment into AVs.
Regulation: growing tech battleground between countries
Source: Recode, The Economist, Bloomberg

8. General News In Brief
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Companies What happened?
Snap
Snap ($20.3B market cap) acquired social mapping app Zenly (iOS, Android) for $250M to $350M last month, according to TechCrunch; similar to Snapchat’s Snap
Maps, Zenly lets users locate friends on a map; Zenly will continue as standalone app; raised more than $35M to date
JD.com / Farfetch
E-commerce firm Farfetch raises $397M from JD.com; the London-based company offers high-end fashion across several markets; CEO Richard Liu joins the
board; raised more than $700M to date
Uber
Travis Kalanick resigns as Uber CEO; Kalanick initially took a leave of absence last week; sources for The New York Times claim several shareholders wrote a joint
letter to Kalanick, demanding his resignation
Vice
Vice Media raises $450M at roughly $5.7B post-valuation from TPG; will facilitate the launch of Vice Studios, which will produce original multi-screen content; the
company is considering subscription content; co-founder Shane Smith hints that the company is heading toward an IPO; raised about $1.4B to date
Magic Leap
Magic Leap founder Rony Abovitz says the company is currently manufacturing production units and that a launch is not too far away; no specifics on a timeframe
or price; Abovitz cautions that production software and hardware still need to pass quality and other tests
Delivery Hero
Food delivery service Delivery Hero aims to raise as much as $1.1B with IPO; seeks $4.9B valuation; the Berlin-based firm has set a guide price of $24.60 to
$28.50 per share; expected to go public on the Frankfurt Stock Exchange at the end of the month. $388m net revs in 2016 to give a ~12x LTM multiple, in line with
JustEat (12.1x), Takeaway.com (13.1x), but a significant premium to GrubHub (7.0x)
Blue Apron
Meal kit firm Blue Apron aims to raise as much as $586.5M upon IPO; the firm is offering 30M shares with a guide price of $15 to $17 each; may offer an additional
34.5M shares if demand is high enough
Slack
Slack is raising $500M at a $5B post-valuation, Recode reports; sources say Slack now earns $1B in revenue, though it's still not profitable; they also say the
company has received no formal acquisition offers, though Microsoft, Google, Salesforce and Amazon have expressed interest; has raised more than $500M to
date
British Business Bank
Seemingly in response to issues flagged by UK venture funds re EIF funding, the UK Chancellor’s ‘Mansion House’ speech mentioned plans to bring forward “some
of the £400M additional investment” announced in late 2016. It is also raising the maximum limit that can be allocated to venture funds from 33% to 50%, an
effective uplift of 50% (absolute value of that uplift TBC)

9. Portfolio Company News In Brief
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Portfolio Company What happened?
Knewton
Cerego, the SF-based personalised learning technology, has raised $33M in new funding. Details of the round are scant, but represents one of largest rounds into
an adaptive learning company. Cerego is targeting both sales to academic learning institutions, as well as to businesses that want to bring adaptivity, interactivity
and measurability to corporate training materials.
Klarna Both Klarna and Adyen announced they’ve been awarded full banking licences to operate across Europe.
Lilium
At last week’s Paris Air Show, Eviation Aircraft unveiled a prototype of an all-electric aircraft with a range of 600 miles/965 KM able to carry 6-9 passengers + 2 crew.
The company appears to want to offer transportation via an on-demand service. The launch is important as a catalyst for new battery and recharging technology.
The company is working on “power analytic algorithms” to provide best-in-class energy density and utilization. Energy density target, per Elon Musk, is 400 Wh/Kg
(today’s Tesla’s at ca. 250-300 Wh/kg).
OnTruck
The Russian trucking marketplace, Deliver (FKA as iCanDeliver) raised $8M in a new round led by Inventure (investor in Gett). Claims 59,000 registered drivers.
Company says it’s processing about a thousand applications per day. The average order on the platform is ~$500. Company is operating in Russia for now, but has
stated plans to launch across Europe.
Stripe
Stripe launches in six new markets, including Germany, Switzerland, and the Netherlands; also announced a new payments routing infrastructure for Stripe Connect
in its European markets; already launched in the US; Connect provides backend infrastructure for marketplaces; the update adds "many to many" payments and
fund holding (for milestone-based payouts).
Ofo
China-based bike-sharing company Mobike launches subsidiary in Japan; previously, service was limited to China and Singapore; recently announced plans to
launch in the UK by the end of June, and to eventually expand across Europe; raised $600M earlier this month.
Rovio
The Information reported Tencent had approached Rovio with a $3bn offer (untrue). Unclear how they sourced the story, but obviously there are large number of
parties involved in liquidity (IPO) discussions.
ChemistDirect / Pharmacy2U
Swiss-based online pharmacy (for prescription & non-prescription items, B2C + B2B), Zur Rose, is planning to IPO to fund German expansion. The company plans
to raise around $238M and with the book said to be oversubscribed. The indicated price range of CHF12-14 values the business at between $805-855M, or
0.89x-0.97x LTM revenue of CHF880M ($908M). Company is just about EBITDA positive $2.2M (0.24% EBITDA margin). Trading to commence on 6 July.

10. M&A Wrap Up
Acquiror Target Target desc. Amt Comments
Amazon Whole Foods Upscale supermarket chain $13.7B
Acquisition supports continued disruption of food retail; Whole Foods had been under pressure from activist
investor; Alibaba has been pursuing similar strategy in China
CVC Etraveli Online travel agency (Sweden) €508M
CVC plans to expand the services focusing on Central Europe and Asia; questions loom over strategy given
Google Flights imminent entrance into European market and heavy usage of online price comparison tools (e.g.
Skyscanner)
BrideClick Mode Media
Consumer social platform for curated content
discovery
n/a
Mode Media previously shut down in Sep. ‘16 after achieving >$1B valuation and top 10 ranking for digital
publishers in the US; BrideClick plans to relaunch business under Glam Inc. and expand content offerings
Snap Zenly Friends and family geo tracking app $250-350M
Powering new “Snap Map” feature for location-sharing and location-based content discovery; Zenly rumored to
initially have rejected the deal and are expected to operate somewhat autonomously; represents continued feature
battle with Instagram
Walmart Bonobos Mens’ clothing brand sold exclusively online $310M
Deal finally closed after widely rumored since April; supports continued transformation into an ecommerce giant to
compete with Amazon but also represents acquisition of a prominent retail brand; interesting to see how Bonobo’s
high-end customer base reacts
Airbnb Trooly Background check and authentication platform n/a
Airbnb is attempting to improve security of its guests and hosts as well as decrease disintermediation and keep
more users on the platform; Airbnb has been utilizing service since 2015 but has now brought it in-house
Marlin Equity Partners Tangoe Telecom expense management $260M
Marlin Equity Partners completed the take-private of Tangoe, Inc. (OTCPK: TNGO); plans to combine with existing
portfolio company, Asentinel, to create market leader in telecom expense management
Apollo CareerBuilder Career recruitment portal
Not disclosed,
but >$600M
CareerBuilder acquired by Apollo Global Management for undisclosed amount; current owners, various media
companies (Tribune/Tegna), will retain minority ownership; appears to represent continued trend of job sites
struggling to translate user growth to revenue. Implied valuations of $615-650M based on expected returns shared
by Tribune/Tegna
Daimler/Mytaxi Clever Taxi Ride hailing app owned by Daimler n/a
Daimler subsidiary Mytaxi continues to expand internationally and is now buying its Romanian competitor, Clever
Taxi; appears to support pan-European strategy vs. Uber
ProSiebenSat.1
Jochen
Schweizer
Online coupons for outdoor adventures €108M
ProSiebenSat.1 acquired Jochen Schweizer to combine with similar company already in its portfolio; acquisition
announced day after sale of Etraveli to CVC
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11. Notable Peer Investments
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Geo Amt ($m) Series Investors Company Desc
Scalable Capital Germany 33 B BlackRock Full-service online wealth manager
SnapCar France 11 A AutoBinck Group, Europcar Ondemand chauffeured car service
Soldo UK 11 A Accel Multi-user spending account app
Attensi Norway 6 n/a Viking Venture 3D gamified simulations for employee training
Now Healthcare Group UK 5 A Medicash Digital healthcare services
Blockchain UK 40 B Lakestar, GV Software platform for digital assets and global bitcoin wallet
AimBrain UK 5 A BGF Ventures Mobile-focused biometric authentication platform
Monkimun Spain 4 Seed 500 Startups, Bessemer Game-based language learning platform
MyTutor UK 4 A Mobeus Equity Partners Marketplace for university student tutors
Cosmo Tech France 3 n/a Aster Capital, BNP Paribas Decision management software
TrueLayer UK 3 A Anthemis Group Fintech developer platform that provides access to bank APIs
Allthings Technologies Switzerland 3 n/a Creathor Vetnure Prop-tech communication and service platform
Mobike China 600 E Tencent, Sequoia, Hillhouse App-based bike sharing service
Freshly US 77 C Nestle Ready-made meal delivery

12. Firm Fund Fund Size Notes (if any)
NEA XVI $3.3B
Surprising raise given firm's current fund was raised less than two years ago; represents an
additional $350M over the last fund
SAIF Partners VI $350M Hong Kong-based Private Equity and VC fund; fund raised to focus on Indian market
Iris Capital IV $280M
Paris-based private equity and venture capital firm; new IrisNext fund focused on digital
transformation opportunities mainly in France and Germany
Morado Venture Partners III $75M Palo Alto-based
Generator Ventures I $51M Seed-stage fund focused on tech for the ‘grey dollar’, i.e. aging pop
Fundraising
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