28 October 2013

German eye-tracking system developer kicks off angel fundraising for Q4

Western Europe’s varying angel investment fortunes throughout 2013 continued in Q3, according to data from Zephyr, the M&A database published by Bureau van Dijk. The third quarter of the year declined on the previous three months in terms of both volume and value. In total there were 78 angel investment transactions worth a combined EUR 99 million. This represents a 20 per cent drop by deal numbers and 24 per cent by aggregate values. The decrease means the region failed to build on any momentum it built up in the second quarter of the year, when both volume and value increased, resulting in 98 transactions with a combined value of EUR 131 million. Q4 has barely gotten underway, and so it is much too early to predict how things may shape up at the end of 2013.

In the first three weeks of the quarter there were a total of nine European angel deals worth an aggregate EUR 4 million. Of these transactions, six had disclosed values ranging from EUR 100,000 to EUR 1 million. The top deal by consideration involved French website and application database search software developer Algolia, which brought in seed funding of just over EUR 1 million from Alven Capital, Point Nine Management, Index Venture Management, and individual angels including Thibaud Elziere, Ilan Abehassera, Gilles Samoun and Thomas Sarlandie. The company said proceeds would be used to continue the ongoing development of its technology, which has already been touted by big names among its customer base, including San Francisco-based SocialCam, which has developed a social video application for iPhone and Android. Second place was taken by social media back-up tool developer Social Safe, which secured EUR 740,000 from a number of undisclosed UK-based angels, as well as existing backer Marco Sodi and Microsoft researcher Gordon Bell.

A notable transaction is ranked fifth during the month so far. Germany-headquartered WhiteMatter Labs, which trades as EyeQuant and is engaged in the development of a predictive eye-tracking system, received EUR 500,000 through a round led by Ballpark Ventures and also included Robin McIlvenny and other unnamed individuals. The company, which is based in Osnabrück, is producing technology designed to analyse web pages in order to track the views of their visitors. It plans to utilise proceeds of the funding round to expand the services it offers in the mobile sector. Founded in 2009, EyeQuant was developed and patented in cooperation with brain researchers at the California Institute of Technology, the University of Southern California and the University of Osnabrück. It claims to be the only service of its kind which delivers accurate results and is backed by extensive research.

Unsurprisingly, the software sector has proven popular with angel investors since the beginning of 2006, with a few very large investments taking place across the industry. According to Zephyr, the top ranked software deal involving angel investment by value since January 2006 involved Rovio Mobile, the Finnish mobile games developer best known as the creator of the Angry Birds franchise, which secured just over EUR 30 million in a round co-led by Accel Partners and Atomico Ventures in March 2011. At the time, the firm said proceeds would be used to support its strategic expansion, with chief executive and co-founder Mikael Hed stating that the group has given itself the unenviable task of creating more successful games and apps on the scale of Angry Birds. This would be no mean feat given that the app has been downloaded more than 1,000 million times to date.

The rest of the top ten is taken up mainly by UK-based targets, although there were investments in Finnish online sales and marketing platform operator Kiosked and French weather detection app developer Netatmo. More notable was Belgian intuitive television software company Right Brain Interface, which received EUR 6 million in July this year from Limburgse Reconversie Maatschappij, ParticipatieMaatschappij Vlaanderen, Capricorn Venture Partners, Diepensteyn and Pamica, as well as Bart van Coppenolle, Philip Vandormael and undisclosed employees and their friends and families. The proceeds were earmarked for the development and commercialisation of Right Brain Interface’s Bhaalu video recording product.

In conclusion, Q3 2013 was a disappointing one for angel investment in Western Europe, with declines recorded on the previous quarter, although values still trumped those of Q4 2012 and Q1 2013. It remains too early to say how the final three months of this year will pan out, but a number of deals have already been recorded, even though October is just three weeks old. However, it is worth bearing in mind that of the EUR 4 million invested so far, over a quarter of this amount is attributable to the Algolia transaction.

© Zephyr