25 June 2013

Dexplora funding round helps software sector to remain popular with angels

As the end of H1 2013 approaches, we are starting to get a better idea of how things are shaping up in the business angels market. Globally, the second quarter of this year has already surpassed Q1 in terms of value, according to Zephyr, the M&A database published by Bureau van Dijk. So far, investment of EUR 1,057 million (compared to EUR 900 million in Q1) has been recorded across 298 deals, which actually represents a slight decline by volume on the 322 transactions carried out in Q1. Of the 298 deals recorded, 69 with a combined value of EUR 79 million targeted companies in Western Europe. This is a slight drop in terms of both volume and value on the 70 worth EUR 81 million realised in the first three months of 2013, but there is just over a week until the end of June, so results could still draw level or even surpass their previous showing.

In June there were nine European angel deals valued at between EUR 50,000 and EUR 9 million, with the highest valued transaction of the month involving UK-based mobile event booking application developer LeanWorks receiving a first round of investment from General Catalyst Partners, Wellington Partners and Octopus Investments, while individual angels including Kevin Colleran and Shakil Khan also took part. LeanWorks said it would use the proceeds for its international expansion.

It is worth noting that one of the month’s top deals involved a Swedish target. Malmö-headquartered Dexplora secured EUR 920,000 through a round of seed funding from Creandum Advisor and DN Capital, as well as twelve angel investors including John Taysom, Chris Perret and Adrian McDermott. Dexplora has developed GetSalesDone, a mobile application designed to add, edit and sync data and tasks between Salesforce.com and the user’s iPhone, and also offers tools to help companies minimise reporting effort while ensuring data quality. The business was founded in 2012 by Mikael Tellhed, Alfred Gunnarsson, Andreas Pålsson, and Hampus Jakobsson, who previously established the Astonishing Tribe, which went on to provide user interface services to a customer base including Google Android before being purchased by Research in Motion and getting involved in the design process for the Blackberry 10 operating system. Proceeds of the funding round will be used to launch the GetSalesDone app in both the UK and US markets while also expanding the firm’s product offering and introducing additional enterprise support software.

Unsurprisingly, the software sector has proven very popular with angel investors globally over the years, and Q2 2013 has proven to be no exception. EUR 145 million was invested across 73 deals worldwide in the industry, representing the best result since the second quarter of 2012, when 62 deals also worth EUR 145 million occurred. In terms of value these two periods were well ahead of almost all others from Q1 2006 on, but Q4 2012 and Q1 2013 did come reasonably close with dealmaking worth EUR 135 million and EUR 134 million, respectively. Of the EUR 145 million injected into software businesses so far in the period from 1st April to date, there were 24 deals worth EUR 26 million targeting European companies.

Other European software firms to have received angel funding in Q2, besides the previously mentioned LeanWorks round, were French weather detection applications developer Netatmo, which brought in EUR 5 million from Iris Capital Management, CDC Entreprises and Pascal Cagni. Proceeds will be used to continue developing new software while expanding the group’s distribution channels and territories. Another UK company followed not far behind; the third highest value deal involved cloud infrastructure software company Flexiant bringing in almost EUR 4 million from unnamed angel investors.

According to Zephyr, the industry’s largest European angel investment deal by value since the beginning of 2006 was a March 2011 first round of funding for Finnish mobile games developer Rovio in which it secured EUR 30 million from Accel Management, Atomico and angel fund Felicis Ventures. Rovio is best known for its Angry Birds franchise, which notched up its one billionth download in May last year and was actually downloaded 8 million times on Christmas day, according to Forbes. The addictive game has resulted in the creation of a number of spin-off series and a range of clothing, soft drinks and merchandise, even going as far as to inspire an Angry Birds Land theme park, which opened in Finland in April 2012. The investors took a 15 per cent share of the business as a result of the investment, with funds to be utilised to support the company’s strategic expansion.

As things stand, business angel activity in Europe looks to be experiencing a number of peaks and troughs in terms of value, with June looking likely to be down slightly on May’s results (June to date: EUR 26 million; May: EUR 34 million). This month looks to have suffered from a lack of transactions, with only 12 having been recorded so far, a 52 per cent drop on May’s showing of 25. However, this could suggest deal values are climbing, and there is still time for a few large deals to change things before the end of the month.

© Zephyr