Silverpeak advises multi-modal urban transport platform Trafi on Series B financing

Silverpeak, the technology investment bank, acted as the exclusive financial advisor to Trafi, the Vilnius and London based multi-modal urban transport platform, on its financing round led by Sumitomo Corporation and Aioi Nissay Dowa Insurance. The two Japanese corporates were joined by existing investors Octopus and the European Bank for Reconstruction and Development (EBRD).

Founded in 2007, Trafi is a technology platform for mobility. Their holistic technology suite enables partners to offer multi-modal transit services and systematically optimize cities., Trafi works with cities such as Berlin, Zurich and Munich, and with leading companies like Lyft, Google, Apple, Gojek and the Volkswagen Group.

David Ford, Managing Director at Silverpeak, said, “Trafi clearly is a leader in multi-modal mobility and its technology is chosen by the most demanding clients. Martynas and the Trafi team continued to execute on their plan even in the current environment, which provided the comfort to the investors to get the transaction done.”

Silverpeak was appointed due to its expertise in the Mobility sector, to advise the company on its financing strategy, aimed at capturing the growth in demand for multi-modal enabling technologies. We approached a range of financial and strategic counterparties who have strong interest in Mobility investment and then managed the transaction to closing.

Pietro Strada, a Managing Partner at Silverpeak, said, “It’s been a pleasure working with Martynas and helping them on this next step in their journey. They’ve built an amazing platform and we’re excited to follow their progress over the coming years.”

This is Silverpeak’s fourth deal in the Mobility sector in the last two years.

UK cross-border Software & IT Services (SITS) deals dwindle

Cross-border M&A activity plummets in Q2 but strategic deals complete
Although Q2 transaction numbers collapsed, as many transactions were initially frozen or terminated entirely, Silverpeak has seen activity in the market begin to rebound with a number of highly strategic transactions announced in June. The SITS market, in particular, has been seen as robust and a beneficiary of any long-term impact of COVID-19, as reflected by the share prices of SITS businesses recovering strongly in the public markets and already returning to pre-COVID-19 levels.

Strategic M&A transactions remain resilient
Despite the fall in M&A activity, completed transactions in Q2 appear to be those with strong underlying strategic rationale. Perhaps the most notable transaction in UK SITS was the acquisition of London-based Eggplant, by NYSE-listed Keysight Technologies, in a deal valued at $330m. Keysight is seeking to build out a testing software portfolio of high-quality recurring revenue, to complement its existing testing hardware business. The transaction is rumoured to have taken place at a valuation of c. 10x Eggplant’s 2019 revenues.

IPOs surprisingly robust
Despite a fairly poor volume of European IPOs in 2019, there has since been an uptick in the first half of 2020. The highlight in the European SITS market was the $200m+ IPO of Pexip, a video conferencing service and Zoom competitor that could only be described as a “COVID-19 beneficiary”. While the remainder of 2020 remains uncertain, with the highly unpleasant combination of winter flu and COVID-19 resurgence on the horizon, there continues to be a stream of announcements of major upcoming SITS IPOs – especially in the US.

IndustryViews Corporate Activity Q2 2020 270720

COVID-19 triggers a significant market decline

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

This quarter, we’ve also created a COVID-19 index, analysing its impact on the Enterprise Value of various sub-sectors within our data set.

Report highlights

  • The unprecedented COVID-19 pandemic has resulted in a U-turn of last quarter’s growing revenue multiples, which has also amplified the decline of EBITDA multiples across all categories. Europe, UK Small & Mid and US Vertical revenue multiples have all sunk to pre-2015 levels.
  • US Horizontal revenue multiples have fallen dramatically since their immense growth of 22% last quarter. But, for the first time since mid-2017, US Horizontal EBITDA multiples are now higher than US SaaS multiples, despite having a 3% lower median EBITDA margin.
  • US SaaS revenue multiples have crashed by 28%, to a similar level to Q2 2017, despite only a 1% decline in forecast revenue. In practice, most revenue guidance has been suspended. The multiples fall was amplified for EBITDA multiples, where they now lie at 23.7x, plummeting 40% since last quarter.
  • Proportionate falls in revenue multiples have been greatest in the US. However, reduction in forecast growth is greatest for UK Small & Mid and Europe, both reducing by 1/3 to c.10%.

Silverpeak Benchmark Report Q1_2020

Revenue growth forecast doubles from Q3 to Q4 for UK and European software

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Starting this quarter, we have included a snapshot on European software M&A.

Report highlights

  • US SaaS revenue multiples were predicted to continue their descent from Q3, however, they rebounded from a 7.7x trough to end the quarter at 8.2x. Contrastingly, EBITDA multiples have continued to fall, reaching a low of 35.6x in H2 2019 from their H1 peak of 44.0x.
  • US Horizontal revenue multiples have done a U-turn since last quarter’s 11% fall; increasing 22.3% to 6.9x.
  • UK Small & Mid EBITDA multiples have shot up 3.3x to 19.6x. They look on course to match their historical peak of 22.0x in H2 2018. Furthermore, their median forecast annual revenue growth has doubled since last quarter, showing positive signs for these companies, despite the recent political events surrounding Brexit.
  • European revenue multiples were the only ones to fall in Q4. However, they have had the strongest growth in EBITDA margin (+4.9%) out of all the categories.

Silverpeak Benchmark Report Q4_2019

Applied AI Leadership Dinner – 26 November 2019

On the evening of 26th November, Silverpeak hosted a Leadership Dinner for Applied AI businesses in association with Spectrum, the retained executive search and HR consulting firm for the technology sector, and Wiggin, the technology law firm.

We brought together 19 peers from artificial intelligence organisations, at founder, CEO and Chairman level, for a ‘Chatham House rule’ discussion on the rapidly evolving developing AI landscape during a private dinner in central London.

This dinner was the second AI themed dinner we’ve co-hosted. The previous dinner took place 2 years previously, and it was interesting to see how AI thinking has matured during that time.

In particular, the core discussion theme has moved on from AI acceptance then, to ‘safe’ (ethically sound) AI today.

The conversation also explored how safe AI could be demonstrated and proven, and, conversely, also explored how properly adopted AI eliminates the conscious or unconscious bias in systems and processes that currently exist.

The discussion began with a brief talk from Pietro Strada from Silverpeak, which served to highlight the availability of capital for European growth companies, but also the predominance of the US and of China in AI funding, and included breakdown of the companies between ‘light’, ‘medium’ and ‘heavy’ in AI intensity.

Seminar: Optimising Exits for European Technology companies

Silverpeak, in association with international law firm Bird & Bird, today hosted a joint seminar Optimising exits for European Technology companies.

Terry Walby, Thoughtonomy CEO spoke about his recent exit experience and Tom Wrenn, ECI Partners, gave a viewpoint from the Private Equity Industry in the final panel session.

Presentations from the event are now available to download.

Silverpeak_Bird&Bird_seminar_Nov19

Tech Tour Mobility Summit 2019: Investment in European mobility companies is accelerating in 2019

Silverpeak were delighted to sponsor the inaugural Tech Tour Mobility Summit 2019 in Munich last week.

With 70+investors and corporates and 30 pre-selected Scale-ups in six Mobility tech tracks, the event enabled attendees to deep dive into the future of Mobility.

Pietro Strada, Silverpeak Managing Partner, spoke on the financing environment for growth capital (B and C rounds) where data shows that the investment in European mobility companies is accelerating in 2019 in terms of both number of deals and invested amount.

Silverpeak_The State of the Market for Series B & C Rounds in European Tech Companies_November 2019

“There are many different players who want to be at the forefront of mobility the sector: some are entirely new entrants, some have to complement their traditional revenues as they come under threat. We expect to see significant investment activity and consolidation over the next few years” said Pietro, “We know this space very well having recently advised Oxbotica, the autonomous vehicle software company, and Ticketer, the public bus ticketing and fleet management company.”

David Ford, Director, who moderated the ‘Smart Mobility’ session, said, “The urban transport sector is on the cusp of great change, thanks to a confluence of new technologies. From self-driving cars, to Mobility-as-a-Service (MaaS), to shared mobility and convenience apps – the potential is truly extraordinary.”

Last month Silverpeak updated its research report “The Future of Urban Transport”.

Autonomous vehicles, shared mobility, and Mobility as a Service – the future of the urban transport market is already here.

 

Silverpeak advises Virtual Clarity on strategic acquisition by DXC Technology Company

Silverpeak, the technology investment bank, acted as the exclusive financial advisor to Virtual Clarity, the leading cloud transformation consultancy, on its sale to DXC Technology Company (NYSE: DXC). This follows DXC’s strategic investment in Virtual Clarity in 2017 on which Silverpeak was also lead adviser.

Virtual Clarity is Silverpeak’s 7th transaction in the last 6 months.

Founded in 2008, Virtual Clarity is based largely in the U.K. and U.S. The company is comprised of a blend of enterprise IT insiders and hands-on experts with deep knowledge of modern tools, techniques and key industries – including Financial Services, Health Care, Manufacturing, and Telecommunications.

The acquisition of Virtual Clarity aims to further position DXC as a leading provider of IT Modernization services for applications and infrastructure. This builds on DXC’s acquisition earlier this year of Luxoft as clients increasingly are seeking industry-specific application development and innovation as part of their IT modernization approach.

Silverpeak worked with the Virtual Clarity board as adviser on their journey to a strategic realisation. We approached global strategic buyers and PE growth investors. Having secured multiple Tier 1 offers, we managed the process to a tight completion timetable.

Paddy MccGwire, Managing Partner at Silverpeak leading the deal added “We are delighted to have advised Steve on this fourth transaction. Steve and his team at Virtual Clarity have built a great business and will be able to accelerate its impact to leave a footprint in the sand, reporting directly to the DXC CEO.”

Steve Peskin, CEO and founder of Virtual Clarity said, “This is my fourth transaction with Paddy and his team, starting 20 years ago. He has always outperformed but this time Paddy, Matteo and their team absolutely nailed it. From first offer to completion in 50 days, and from LOI in only 19 business days, was always going to be a monumental task but they pulled it off masterfully with calming humour, great expertise and advice and nerves of steel. Bravo! ”

Autonomous vehicles, shared mobility, and Mobility as a Service – the future of the urban transport market is already here.

The urban transport sector is on the cusp of great change, thanks to a confluence of new technologies. From self-driving cars, to Mobility-as-a-Service (MaaS), to shared mobility and convenience apps – the potential is truly extraordinary.

Download report

“MaaS is the concept of being able to use mobility tools to buy a number of different trips on a variety of transport modes, but in one place,” says Pietro Strada, managing partner at Silverpeak. “You could leave home in a taxi, then jump on a tube, take a train then finish your journey with another taxi. That’s four separate trips, in four different vehicles, which you pay for four different times”.

“But with MaaS, you would simply pay once for the entire journey.”

With this technology starting to get deployed in major cities, there is a very clear need for more investment, innovation and regulation in the urban transport market.

The world is becoming increasingly urbanised. In 1970, just 30 per cent of the population lived in urban areas. This figure had risen to 54 per cent by 2014, and the UN estimates that a massive 66 per cent of the world’s population will live in cities and urbanised areas by 2050.

Meanwhile, concerns around air pollution are growing, emphasising the need for clean technology in densely populated areas. According to the World Health Organisation, 90 per cent of people living in cities are not breathing clean air, and we know that transportation emissions are responsible for more than a quarter of all greenhouse gases.

We are also more connected now than ever before, thanks largely to the advent of affordable mobile technology. There are five billion mobile phone users in the world today – that’s 68 per cent of the total population. By 2023, it has been predicted that one billion of these mobile users will have a 5G subscription, which would allow them to connect to the internet anytime, anywhere.

As a result of these developments, the urban transport market is primed for disruption. This could come in many different forms, from MaaS; to the advent of autonomous driving; to the wide adoption of shared mobility services.

Silverpeak has analysed data on financings and acquisitions in this market, and it has concluded that the next few years will see a sustained level of investments and M&A activity.

1. Mobility as a Service (MaaS)

At its core, MaaS is a mobility distribution model which brings together multiple services in one place, allowing the user to streamline their journeys by planning and booking trips via a single platform.

Across Europe, a number of integrated mobility services are being rolled out, from UbiGo in Sweden, to Qixxit in Germany, and Whim in Finland. Also, car manufacturer Daimler has gotten in on the act, with its Moovel ride-booking service, which is currently being tested in the U.S. and Europe.

There is still some way to go before MaaS becomes mainstream, but the early signs are promising.

“We’ve done a number of deals in different areas of what we are now calling the mobility sector,” says David Ford, director at Silverpeak. “It’s relatively new right now but we think there’s a lot more activity that’s going to go on.”

Transit information providers have raised hundreds of millions of dollars in investment over the past ten years, underlining the enormous value embedded in these services. Germany’s GoEuro, for instance, has raised $296m since it was founded in 2012. It provides a multi-modal search tool that compares and combines rail, car, bus, train and aeroplane routes and prices

In some cases, transit information providers have already started to take the first steps towards becoming fully-fledged MaaS providers. Public transport tracking app CityMapper is using the travel data it gathers from millions of user-planned journeys to run an on-demand, shared rides service in city areas that the data has shown to be underserved by existing transport links.

While these developments are still very much in their infancy, there is a clear first-mover advantage to be won, both in the UK and across Europe.

“There is a lot of activity in the MaaS space,” says Matteo Pozzi, director at Silverpeak. “Many companies are raising significant capital to position for the dramatic anticipated growth in revenues.”

2. Autonomous vehicles

Mass-market self-driving cars have yet to become a reality, but some huge strides have been made in the area of autonomous vehicles.

At Oxbotica – an Oxford University-based firm which is run by professors from the Oxford Robotics Institute – self-driving software is already being used in cars, trucks, forklifts, pods, shuttles, mining and construction vehicles.

“Their technology is amazing – world class,” says Paddy MccGwire, managing partner at Silverpeak. “Last year, they were approached by a huge international car company and another tier one supplier, but they found that these deals would never get to completion. They realised they needed somebody to help them get from A to B, so we started to work with them in March 2018, and five months later we completed a £14m funding round.”

Since then, Silverpeak have helped them raise another round in July 2019, which will be used to accelerate Oxbotica’s growth plans in the coming years. And while we are still a few years away from self-driving commutes, MccGwire points out that on private turf such as airports or docks, this technology can be rolled out far more quickly.

“For instance, one airport found that they could cut the number of vehicles air-side by a third if they were autonomous,” says MccGwire. “And that’s everything from the bus to bring people to baggage handling, to the tug that pushes aeroplanes. So, it’s exciting and there are quite a lot of different benefits for what vehicle automation can do.”

3. Shared mobility

Ride-hailing apps already take up plenty of space on the average smartphone, and the shared mobility market is only just getting started.

Since the Uber and Lyft IPOs, in the ride-hailing sector alone, nearly $70bn (£57bn) has been raised between the top 4 companies: the American players Uber and Lyft as well as their Asian rivals Didi and Grab. Meanwhile, established brands such as GM and Toyota have begun investing in new car-sharing technologies from the likes of Turo and Getaround, with a view to expanding their business model to become service providers as well as vehicle manufacturers.

According to Silverpeak’s research, 2019 investments in ride-hailing, car sharing, and carpooling services rose to an all-time high of $21.7bn. These figures reflect a demographic shift in how transport is viewed in urban areas.

“Millennials in particular live more in cities and buy fewer vehicles,” explains Strada. “They are more likely to rent a vehicle, use a rideshare scheme or take public transport and that’s threatening the business model of the automotive OEMs.”

In fact, in preparation for the “death of car ownership”, BMW and Daimler have pooled their mobility assets into five new joint ventures (now three) to give them additional scale and create vertical mobility powerhouses focused on urban areas.

Scooter sharing and bike sharing schemes have also been gaining traction in the investment community lately. Over the last five years, approximately $9.4bn has been invested into bike and scooter sharing or rental schemes. China is very much in the lead on this trend, with the top three Chinese players raising a significant proportion of the combined fundraising in the market.

Uber, Didi and Lyft have already acquired some of the most promising bike-sharing and scooter-sharing innovators, in a clear indication that urban transport is going green. However, without regulation, this has led to unfavourable unit economics due to a large proportion of bikes and scooters getting damaged, resulting in players such as Ofo verging on bankruptcy.

“Car ownership in urban areas is going to die sooner than outside of urban areas where people need their own vehicles,” adds Strada. “We’re still tens of years away, but once the trend becomes mainstream it’s obviously too late to take a position. You want to be prepared and starting much earlier than that.”

“There are a lot of different players who want to get into the mobility sector for a lot of different reasons and hence, there’s likely to be a lot of consolidation and activity in this space.”

Chinese market dynamics and the future of urban transport

China is a market that is experiencing its own dynamics and in some areas is leading. As well as taking the lead on bike-sharing and scooter-sharing innovation, China is poised to become a global leader in the autonomous car market. Since 2015, China has spent at least $24bn more than the US on 5G technology – an essential component for autonomous vehicle manufacturing. Both Alibaba and Baidu are in the advanced stages of testing self-driving cars, and Alibaba is even looking into the creation of ‘smart roads’ which feed data to cars as they travel.

“China is investing in a lot of AI at the moment,” says Strada. “But there is not a lot of transparency in China. It’s hard to discern what is being done for political purposes and what is being done for economic value.”

Having said this, Strada believes that everyone can learn from China’s commitment to innovation in the urban transport space. And one thing is certain – the urban transport landscape is changing fast.

“We expect that over the next five to ten years, there is going to be sustained activity in investment acquisition in the automotive sector where the traditional players will either have to team up with technology companies that provide a piece of the new infrastructure or they will face competition from new entrants who have completely different business models,” says Strada.

“There is so much change happening in this growing area. Players cannot afford to stand still.”

Tech Tour Deep Tech Summit 2019: Fundraising booming to record highs

Silverpeak were delighted to sponsor the Tech Tour Deep Tech Summit in London, which saw the convergence of 150+ participants including corporates, fund investors, investment bankers, thought-leaders and over 35 CEOs/Founders.

This year’s Summit covered a range of breakthrough technologies including autonomous systems, robotics, AI, IoT, cyber-security, big-data, blockchain, 3D printing, space, hardware and electronics, and other IP-driven solutions enabling digital transformation across multiple industries.

Paddy MccGwire, Managing Partner, Silverpeak gave a keynote to investors  on “The Deep Tech Investment Landscape.”

20191015_DeepTech_Summit_FINAL

Pietro Strada, Managing Partner, Silverpeak and Shawn Atkinson, Partner, Orrick, spoke at the CEO workshops on “Later Stage Fundraising and Deal-Making for Deep-Tech Companies.”