The year got off to a quick start with Intel Capital and Google Ventures leading the way with investments.
Google Ventures, the corporate venturing unit of the internet company Google, carried on its strong 2013 performance, making 21 investments and one exit in the first quarter of 2014.
Google bought Nest Labs, a technology company that has created a learning thermostat for home use, for $3.2bn. This acquisition secured an exit for Google Ventures which had led an $80m funding round in January 2013.
Notable investments for Google Ventures in the first quarter of this year included participation in Cloudera’s $160m round, and reinvestment in US-based online security system developer Shape Security in their $40m series C financing round.
Google Ventures’ general partner, Karim Faris, speaking about the Cloudera investment, said: “We see broad demand from enterprises that want a flexible approach to handling large amounts of data, and we expect this market to continue to grow rapidly.”
Cloudera, a company that develops and distributes Hadoop, an open-source system that powers online data processing engines, also gained a further $740m in funding from Intel in one of the biggest investments in the first quarter.
Overall Intel Capital, the corporate venturing and strategic investment unit of semiconductor chip-maker Intel, made 18 investments. This included a reinvestment in Snapdeal, India’s largest online marketplace. Intel took part in Snapdeal’s $133.8m series D founding round led by existing investor eBay.
Norwest Venture Partners made 11 investments in the first quarter, including reinvestment in Quikr India’s $90m series F round. Quikr is an online classified advert website and, as with Snapdeal, eBay was also an investor.
In total eBay made three investments in the first quarter. In addition to the two above, it participated in Volta Industries’ $1.88m seed round. Volta designs, installs and maintains electric vehicle charging stations in Hawaii and California.
Cisco Systems made seven investments, including participation in MuleSoft’s $50m funding round. MuleSoft is a US-based integration platform that connects software as-a-service and enterprise applications. SAP Ventures also invested in this round to bring its first-quarter reported investment count to five.
It should be noted that one of SAP Ventures’ other investments, US-based virtual computing company Nutanix, was conducted in the fourth quarter of 2013 but was not reported until this year. This also applies to GE Ventures’ deal with Ornim, giving GE Ventures a reported investment of three in the first quarter of 2014.
Nokia Growth Partners and Salesforce both made strong starts to the year with six investments a piece. Nokia invested in Quikr India along with Norwest Venture Partners and participated in the $47m series E round for Kaltura, a US-based open-source video platform with SAP Ventures.
David Hartwig, managing director at SAP Ventures, said: “SAP Ventures is excited to be joining forces with Kaltura. Video is the way that most people prefer to consume information, which means video infrastructure is an essential element not only for media businesses, but also educational institutions and enterprises.”
Salesforce invested for the first time in the business management platform Domo through its $125m series C financing round led by TPG Growth. Salesforce also reinvested in DocuSign, an electronic signature platform, in its $85m equity round, joined by other corporate venturing firms such as Google Ventures and SAP Ventures.
Chinese e-commerce company Alibaba, which operates the world’s largest online marketplace for China trade, made five investments in the first quarter. Fosun, another China-based company, made four investments, including leading the $21.5m series B Joyme.com deal.
Siemens Venture Capital, Tencent and Gree Ventures each made four investments in the first quarter. Tencent reinvested in Didi Dache, a Chinese taxi booking app, inits $100m series C round, having invested $15m in May last year. Siemens Venture Capital participated in a $60m series D financing round led by Japan-based conglomerate Mitsui for US-based sustainable energy and chemical producer Lanzatech.
A notable exit in the first quarter was Maker Studios, a talent-first media company that is home to many YouTube celebrities and stars. Maker Studios was acquired by Walt Disney for $500m, providing an exit for Northgate Capital, which had invested in the $26m series C round in September 2013.
A10 Networks had its initial public offering (IPO) in the first quarter – Mutsui Ventures, the corporate venturing arm of the Japan-based conglomerate, divested $28.3m of shares. The offering consisted of 12.5 million shares priced at $15 each. Stock sold by shareholders in the company made up 3.5 million of the allotment, with Mitsui Ventures selling almost 1.9 million shares. Mitsui made four investments during the quarter.
Location and sector
Corporate venturing activity took place in at least 30 countries during the first quarter. As with last year, the US was home to more deals than the rest of the world put together with a count of 146. Other countries with a larger number of deals included China (21), India (16), the UK (11) and Germany (10).
The focus of various locations for investment varied, with the IT and health sectors dominant in the US, a wide variety of sectors in China and India, while Germany and the UK had more of a focus on IT.
While China may have less than 15% of the investment volume of the US, it made up for that in total value of investment. China’s total disclosed investment for the first quarter of the year comes to $1.3bn.
Overall the IT sector featured the highest number of investments in the first quarter with nearly a third of all investments (79 of 252) worth $3.7bn. The consumer (37 investments), health (41) and media (40) sectors battled for second place with around 16% of the investment count each. While the consumer, health and media sectors may have had roughly the same number of investments, the value invested varies. Media leads the way with nearly $1.7bn of investment. The consumer sector gained $805m while the health sector secured $640m.
Rounds
Of the 252 deals tracked by Global Corporate Venturing in the first quarter of 2014 where the round was identified and disclosed, 30% of them took place in either series A (13%) or series B (17%). Series B led the way with 43 investments followed by 34 series A investments.
Of the top 10 corporate venturing investors, Google Ventures was most active in series A investment with five deals. IDG Ventures, where disclosed, looked to be focusing on series B investment and Intel Capital on series B and C rounds.
Series D rounds involved 17 companies, 6.7% of the total 252 investments. This was almost mirrored by investment in series E and beyond, which had 18 investments,7% of the total.
From the deals tracked by Global Corporate Venturing in the first quarter, where the round size was disclosed, the largest round size was series C, with $1.06bn of investment.
The value of other rounds was series A $325m, series B $1.02bn, series D $998m, and series E and beyond $836m.
Top investments
The top investment in the first quarter of 2014 was a $900m round of equity funding in US-based Hadoop software developer Cloudera. Intel Capital invested $740 min this round for an 18% stake. Other investors include Google Ventures, MSD Capital and investment firm T Rowe Price. This round saw total funding for Cloudera break the $1bn mark.
Top exits
The top exit in the first quarter of 2014 was US virtual reality system developer Oculus VR, which was acquired by Facebook for $2bn. Exiting investors include Formation 8, which invested in both the series A and B rounds. Other investors exiting included private equity firm Matrix Partners and venture capital firms Spark Capital, Founders Fund, Big Ventures and Andreessen Horowitz.
Top corporate-backedindependent funds
The largest corporate-backed venture capital fund raised in the first quarter of 2014 was Heureka II, a European internet fund managed by Acton Capital Partners. With a size of at least $200m, like Heureka I it will focus on Europe. Anchor investors include the European Investment Fund and the media group Hubert Burda Media.
The second-largest corporate-backed venture capital fund raised was IDG Ventures India. The company did not disclose the final amount raised but targets were above $159m. This was the second fund for IDG Ventures. Its first fund has been invested in series A to C funding rounds for companies looking to grow into a global market.
Top sole corporate funds
Three funds shared the first-quarter top spot for direct corporate funds. Cisco’s latest fund, IBM’s Watson Group and Siemens’ Industry of the Future fund all came in at $100m. Cisco’s fund will invest in start-ups developing technology to advance the “internet of everything”, IBM plans to support entrepreneurs developing Watson-powered apps, and Siemens is helping young start-ups that could “change the landscape of manufacturing and industrial automation”.