AAA Value of media rounds drops dramatically

Value of media rounds drops dramatically

Over the past decade, media has been among the sectors most disrupted by the mass adoption of new technologies.

Though not completely a thing of the past, newspapers, magazines and books have largely gone digital, while subscription streaming services have practically replaced CDs, DVDs and even TV channels.

Supercompetitors Google and Facebook dominate digital advertising, which has taken over from traditional Madison Avenue advertising executives, while games have become multiplayer freemium online entertainment. Disruption has been overpowering in this sector, with the combination of internet-connected gadgets that cater to consumers’ convenience and consumers becoming content creators and providers forcing a significant paradigm shift.

The impact of the ongoing Covid-19 pandemic and the near-worldwide lockdown has been “mixed”, according to an analysis by the World Economic Forum (WEF). “The cancellation of flagship global events, such as the Tokyo Olympics, will disrupt programming, advertising, sponsorship deals and promotional events. According to the New York Times, in 1980, when the United States boycotted the Moscow Olympics, broadcaster NBC lost $34m despite having insurance.”

The WEF analysis, however, also points out the pandemic has driven up demand for content and entertainment: “On a more positive note, the increase in consumption due to self-isolation and quarantine has boosted demand for media. After China implemented nationwide isolation measures, average weekly downloads of apps during the first two weeks of February jumped by 40% compared with the average for the whole of 2019, according to the Financial Times. In the same month, weekly game downloads on Apple devices had increased by 80% compared to 2019.”

A report, “Perspectives from the Global Entertainment & Media Outlook 2018–2022”, by auditing and consulting firm PwC expects positive revenue growth in the media and entertainment industry, which it considers to be in the middle of what it dubs a “third wave of convergence”, brought about by the confluence of technological and other forces. The main drivers the report identifies are connectivity (which supports an ever-expanding supply and diversity of content, experiences and applications), the shift of consumers’ attention to mobile devices, the growing need for new and more revenue streams in media companies, the need for personalisation of offerings to cater to customers’ demands and the rise of social media and other platforms.

The report also states: “The effects of this third wave are likely to last longer and be more constructive, especially given the maturity and continued growth of digital markets. The result is that many players, regardless of their heritage of core competencies, will have to compete in several realms at once: content, access, distribution, global footprint expansion, technology, user experience, customer intimacy and monetisation.”

By far the biggest challenge for media companies in this competitive landscape is monetisation. According to a Deloitte survey, cited by the WEF, only 16% of consumers in developed markets like Germany, UK and the US pay for news and 44% pay for entertainment. However, the longer-term outlook for entertainment is more optimistic, given that 61% of young people (age 16-34) pay for entertainment, compared with 22% of people over the age of 55 who pay for entertainment. According to the WEF: “Globally, the proportion of people willing to pay in the future is 53% for news and 70% for entertainment. Furthermore, two of the most dynamic global economies – China and India – show reasons for optimism. In China, 25% pay for news and 59% have at least one paid video or sport service, numbers may be explained by the greater prevalence of pay-per-use models in the country.”

While the prospects for monetisation in entertainment are quite encouraging, the situation with news content is more complicated. The WEF reports that low-income groups are generally less likely to pay for news services, which implies the emergence of paid-for media may lead to information inequalities. There appears to be a perception among consumers that governments have a greater responsibility to fund access to news versus entertainment.

In this new landscape of the media sector, tech “supercompetitors” play a defining role in shaping its future. The PwC report explain the role they have played in recent times by having effectively become “walled savannahs”, in which consumers can roam freely without feeling unduly restricted in terms of choice and scope.” The report also explains: “Today, this type of business is exemplified by companies such as Amazon and Tencent that combine content, commerce and communications with massive financial resources – attributes that enable them to expand globally in a world that is balanced between Eastern and Western behemoths.”

However, the report also notes increased competition from big tech firms may drive even further consolidation among traditional players in an attempt to make new supercompetitors, citing the decision of Time Warner to sell itself to AT&T, Disney’s decision to purchase 21st Century Fox and Comcast’s effort to disrupt it by launching a bid to buy Sky TV.

Looking ahead, there are plenty of technologies that are likely to continue to shape trends for the media sector. The one that immediately comes to mind is video streaming – not only because so many consumers resort to it in lockdown. The market is estimated at $38.56bn by Allied Market Research and expected to reach $149.34bn by 2026, growing at a CAGR of 18.3% from 2019 to 2026.

The need for personalisation of content is likely to further the use of artificial intelligence (AI), which has been applied to improve business operations and to custom tailor offering across many industries. As analyst Gaurav Mishra explains: “Leveraging AI makes the process of creating new content more efficient for businesses, publications and online creators. Creation of new ads, movie trailers can be done, with AI streamlining all pre and post-production processes. Big data and machine learning are two other technologies aiding AI in its mission of bringing enterprises closer to customers.”

In the Far East, the use of AI in media has already accelerated – the China-based Xinhua News Agency launched the world’s first AI-powered news anchor in 2018. According to a report by the Reuters Institute for the Study of Journalism, citing a survey of almost 200 top editors, CEOs and digital leaders, nearly three-quarters of global media players are already employing some sort of AI technology.

Advertising used to be called the life blood of the media industry and it still occupies a central and connecting role with other sectors. However, advertising has not remained untouched by profound disruption, with the rise of digital advertising and marketing. Alphabet and Facebook have around 60% market share of digital revenue, according to various estimates.

The short-term prospects for advertising are not particularly good. It is clear that we are now headed for a downturn as a result of the Covid-19 crisis, which could only mean severe reductions of marketing budgets of companies and lower revenues for advertising players while the downturn lasts. However, some expect that digital advertising (that is Alphabet and Facebook) will be considerably less affected because it tends to be more effective in reaching a target audience. With this outlook in mind, it is not unreasonable to continue seeing interest in adtech-related businesses by corporate venturers.

An area with truly great potential in the medium term for both advertising and entertainment is virtual and augmented reality (VR and AR) content and tech.

The rollout of 5G connectivity technology is expected to boost its adoption. A report on VR and AR devices by global analyst company CCS Insight concludes that, despite the wide range of applications for VR tech, gaming is still the primary reason for sales of VR devices and this is unlikely to change. Even though it is a budding sub-sector of the media industry, it is one with a promising potential. VR can be employed in a wide range of entertainment applications from 3D games to setting up virtual galleries, theatres and museums.

The broader gaming space is one area characterised by growth, in the short and long run, driven mostly by rise in mobile gaming. According to the most recent Global Video Games Industry (March 2020), the global video gaming industry is poised to reach over $173.4bn by the year 2025 with mobile games expected to bring in healthy gains adding significant momentum to global growth. Low-cost internet access and penetration of mobile devices has enabled mobile games to grow in popularity.

Within gaming, eSports has become an inseparable part of the industry. Multiplayer video-game competitions have been invigorating for the bottom lines of game publishers and marketers. According to 2020 Media & Entertainment Industry Outlook report by Deloitte, the global eSports market is expected to grow: “Deloitte’s most recent Digital Media Trends Survey revealed that professional gaming events are gaining serious traction, with 40 percent of gamers watching eSports events at least once a week. By 2020, the global eSports market is expected to generate $1.5bn in annual revenues, primarily from sponsorships and advertising to an estimated global audience of 600 million fans. Marketers bestowed more than 600 brand sponsorships on eSport titles and events in 2017 alone.”

The year in review

For the period between April 2019 and March 2020, we reported 466 venturing rounds involving corporate investors from the media sector. Many (144) took place in the US, while 112 were hosted in Japan, 43 in India and 38 in China.

Many of those commitments (136) went to emerging enterprises from the same sector (mostly games and gaming, digital marketing and advertising as well as audio and video content). The remainder went into companies developing other technologies in synergies with media sector incumbents: 80 deals in the IT sector (artificial intelligence, cybersecurity and big data), 78 in business services (mostly edtech, travel tech and HR tech), 56 in financial services (payment tech, insurance and other) and 52 in consumer (e-commerce, fashion and apparel and physical consumer goods).

Media corporates’ co-investments range from virtual reality and video streaming technology (Tyffon, iFlix) through sports analysis (Run.Edge), meditation apps (Headspace), online insurance (JustInCase) and blockchain platforms (Dapper Labs) to healthcare IT (Aver Informatics, Welmo) and even alcoholic beverages (Clear).

On a calendar year-on-year basis, total capital raised in corporate-backed rounds went down from $14.84bn in 2018 to $9.62bn in 2019, representing a 34% decrease. The deal count, however, grew by 24% from 369 deals in 2018 to 459 tracked by the end of 2019.

The leading corporate investors from the media sector in terms of largest number of deals were media groups Bertelsmann, gaming company Akatsuki and media company Comcast. The list of media corporates committing capital in the largest rounds was headed by publisher Georg von Holtzbrinck, along with online content aggregator Bytedance and Bertelsmann.

The most active corporate venture investors in emerging media businesses were internet company Tencent, Sports Tech Tokyo – the accelerator funded by marketing group Dentsu and venture capital firm Scrum Ventures – and social media company Snap.

The emerging media businesses in the portfolios of corporate venturers came from video streaming (iFlix), sports (The Athletic, WCS Sports), games and gaming (Niantic Lab, Drivetime) and news content (Dot.LA, Ucaidao ) through digital marketing (From Scratch, Neura) to audio tools (Landr).

Overall, corporate investments in emerging media-focused enterprises went up from 192 rounds in 2018 to 216 by the end of 2019, suggesting a 12.5% increase. Estimated total dollars in those rounds, however, went down by 69% from $11.59bn in 2018 to $3.65bn last year, suggesting valuations of emerging media enterprises may be have been dropping before the Covid-19 crisis.

Deals

Corporates from the media sector invested in large multimillion-dollar rounds, raised mostly by enterprises from the transport, media and consumer sectors. None of the top 10 deals stood above the $1bn mark.

FlixMobility, a Germany-based travel services provider backed by automotive manufacturer Daimler, scored a series F round sized at €500m ($561m). Growth equity firms TCV and Permira co-led the round, which also featured media firm Holtzbrinck Ventures and European Investment Bank. Founded in 2013, FlixMobility operates inexpensive long-distance travel services – a coach service called FlixBus and a railway offering called FlixTrain. The company will use the cash to launch additional services, including ridesharing platform FlixCar. FlixMobility also hopes to strengthen its market position in the US, enter South American and Asian markets and expand FlixTrain into more EU member states.

China-based electric vehicle developer Lixiang completed a $530m series C round featuring a $30m investment by Bytedance. The round was led by Wang Xing, chief executive of local services provider Meituan Dianping, who invested almost $300m. Lixiang founder and CEO Li Xiang committed nearly $100m to the round, which reportedly valued it at approximately $2.9bn. Formerly known as Chehejia and then CHJ Automotive, Lixiang is developing a hybrid electric sports utility vehicle known as Lixiang One. The company had received almost 10,000 pre-orders for the vehicle.

Livestreaming platform developer Kuaishou led a $434m series F round for China-based question-and-answer service Zhihu. Internet groups Baidu and Tencent also contributed along with private equity firm Capital Today. It reportedly valued the company at almost $3.5bn. Founded in 2011, Zhihu runs an online platform where users can source answers from an online community made up of some 220 million registered users. The company also hosts forums, an online publishing service and livestreamed sessions from verified experts and business partners. It sells online education products but still generates most of its revenue from advertising. The series F proceeds will help Zhihu expand its ecosystem, with help from Baidu and Kuaishou, while it continues to develop its technology.

Cox Automotive, the transport-focused division of media, automotive and telecoms group Cox Enterprises, invested $350m in US-based electric off-road vehicle developer Rivian. The cash was provided reportedly at a $3.5bn valuation. Rivian is working on plug-in electric trucks and sports utility vehicles (SUVs) that will be capable of a 400-mile range from a single charge. It has three development centres across the US and UK in addition to a production plant, and has scheduled the release of its first two vehicles for late 2020.

US-based vehicle-sharing platform Turo picked up $250m in series E capital from internet and media holding group IAC, pushing the company’s valuation beyond $1bn. The series E money will be put towards business growth and customer experience as the company hopes to tap into IAC’s expertise to become a globally recognised brand. Originally known as RelayRides, Turo operates an online marketplace for users to lease their cars to others for short periods of time. The service, which has grown to nearly 400,000 vehicles and some 10 million users, is available in more than 5,500 cities across the US, Canada, Germany and the UK.

Diversified holding company Exor paid $200m for an 8.87% stake in Via Transportation, the US-based mobility services and software provider, also backed by media group Hearst. The investment came as part of a larger series E round of undisclosed size also featuring oil and gas supplier Shell, property manager Mori Building and Hearst Ventures, Hearst’s corporate venturing arm. New investor Macquarie Capital and existing backers Pitango, 83North, Ervington Investments, Planven Ventures, Broadscale Group and RiverPark Ventures filled out the round. Via provides a range of on-demand or pre-scheduled urban mobility services covering ordinary urban and rural transport to specialised services across more than 20 countries. Its algorithm optimises transport for maximum efficiency and can be incorporated into existing transport management systems.

China-based sports commentary platform Hupu Sports Shanghai Media received RMB1.26bn ($182m) in pre-initial public offering funding from ByteDance. The deal gave ByteDance, the owner of short video app TikTok and aggregated news app Toutiao, a 30% stake in Hupu, making it the single largest shareholder in the business. Founded in 2004, Hupu operates a sports commentary and news portal as well as an app that delivers near real-time text updates about the American NBA basketball league and an online sports apparel marketplace called Shihuo. ByteDance and Hupu will share their respective content and aim to connect users of each other’s platforms. Hupu expects the partnership will enable it to access additional sports-related intellectual property.

Vinted, a Lithuania-based operator of an e-commerce platform for used fashion items, secured €128m ($141m) in funding from investors including media company Hubert Burda. The round was led by VC firm Lightspeed Venture Partners and also featured Sprints Capital, Insight Partners and Accel, while Burda took part through its Burda Principal Investments unit. The round valued the company at approximately $1.1bn. Vinted runs an online platform with more than 25 million registered users that allows them to list, sell and buy second-hand clothing. It has a presence in 11 European countries including Germany, the UK, France and Spain, and in the US.

Media and e-commerce group Naspers led a $125m funding round for India-based social commerce marketplace Meesho that included social media operator Facebook. Growth equity firm SAIF Partners, VC firms Sequoia Capital, Shunwei Capital, RPS Ventures and Venture Highway also contributed to the round along with private investor Arun Sarin. Meesho has built an online platform where businesses can link up with a network of 2 million independent resellers who can distribute their products to their social circle. It has resellers in 700 Indian towns and cities and will use the cash to expand further into rural areas.

Nigeria-based mobile payment and services platform developer OPay secured $120m in a series B round that included local services platform Meituan Dianping. SoftBank Ventures Asia and Bertelsmann Asia Investments, vehicles for telecoms firm SoftBank and Bertelsmann, also invested, as did Gaorong Capital, Source Code Capital, Redpoint Ventures, IDG Capital, Sequoia China and GSR Ventures. OPay’s mobile platform enables users to pay bills, send and receive money in addition to accessing on-demand services such as transport, food or grocery delivery. It was spun off from browser and content delivery software provider Opera in 2018. Opera, whose web browser is among the most popular in Africa, has added offerings including motorcycle-based ride hailing app ORide, food delivery service OFood and small business advertising platform OLeads to an ecosystem centred on OPay.

There were other interesting deals in emerging media-focused businesses that received financial backing from corporate investors from the same and other sectors.

US-based online publishing and e-commerce group Automattic raised $300m in series D funding from Salesforce Ventures, enterprise software producer Salesforce’s corporate venturing arm, at a reported $3bn valuation. Automattic is best known for its blogging and content management platform WordPress but also oversees WordPress-affiliated offerings such as open-source e-commerce tool WooCommerce and cybersecurity and site management product Jetpack. Salesforce’s investment will be used to strengthen the overall ecosystem for WordPress, which Automattic claims powers more than 34% of all websites.

Diversified US-based entertainment producer Skydance Media received $275m in funding from investors including entertainment studio CJ Entertainment and Merchandising and Tencent. Investment firm RedBird Capital Partners led the round while the Ellison family, which contains Skydance founder and chief executive David Ellison and his sister Megan, the founder and CEO of film producer Annapurna Pictures, also participated. It valued Skydance at $2.3bn. Founded in 2010, Skydance produces film and television, with its motion picture output including True Grit and entries in the Mission Impossible, Star Trek and Terminator franchises. Its TV shows include Grace and Frankie and Altered Carbon and are mostly concentrated on streaming platforms.

US-based marketing data analytics platform AppsFlyer picked up $210m in a series D round, featuring Deutsche Telekom Capital Partners, the corporate venturing arm of telecoms firm Deutsche Telekom. General Atlantic led the round, which also included investment bank Goldman Sachs’s Growth division as well as Qumra Capital, Pitango Venture Capital and Magma Venture Partners. AppsFlyer has created a platform that offers comprehensive measurement and analytics tools for marketing teams to more precisely target customers, while respecting users’ privacy. The company serves more than 12,000 clients, such as retailer Macy’s and broadcaster HBO. It has not revealed what it intends to do with the funding, but the round comes on the heels of a fivefold increase in annual recurring revenue.

Foursquare, the US-based location intelligence platform developer backed by property developer Simon, internet group Naver and media company O’Reilly, secured $150m from merchant bank Raine Group. Founded in 2009, Foursquare has a mobile app that provides users with personalised search recommendations based on their location, browsing history and previous “check in” locations. It also offers Swarm, an app that allows users to share their locations and “check ins” with friends and family. In addition to its consumer-facing apps, Foursquare has also developed Attribution, a product that enables brands to track the impact of digital campaigns based on in-store customer visits.

Roblox, the US-based operator of an online immersive entertainment platform, secured $150m in a series G round featuring Tencent, at a $4bn valuation. VC firm Andreessen Horowitz’s Late Stage Venture fund led the round, which included Temasek, Altos Ventures, Meritech Capital and Tiger Global Management. The company is also opening a tender offer for up to $350m of secondary share sales. Founded as DynaBlocks in 2004, Roblox has built an online platform with 115 million monthly active users who can use it to create virtual worlds and massively multiplayer online games which others can enter or play.

China-based advertising space operator XinChao Media Group raised almost RMB1bn ($142m in a funding round led by e-commerce firm JD.com. XinChao’s service enables companies and brands to place adverts on LED screens fitted in more than 700,000 lifts across more than 1,000 cities in China. The deal is intended to help JD.com expand its offline marketing efforts.

Israel-based content creation tool provider Lightricks collected $135m in a series C round featuring ClalTech, the local investment subsidiary of diversified conglomerate Access Industries. Investment bank Goldman Sachs led the round through its growth equity arm, Private Capital Investing, while private equity and VC firm Insight Partners also contributed. The funding was secured at a $1bn valuation. Founded in 2013, Lightricks has created seven subscription-based photo and video editing apps including its flagship offering, Facetune, which relies on AI technologies to let users edit, enhance and touch up selfies.

China-based online comic art repository Kuaikan Manhua raised $125m from Tencent, according to a company statement published on Tencent’s WeChat platform. Founded in 2014, Kuaikan Manhua is a mobile platform with more than 200 million registered users that allows comic artists to upload original work that can be paid for by its users and viewed through the app. The company’s service has 40 million monthly active users, 50% of whom were born after 2000, and has been boosted by the increase in online fan fiction in recent years. Its content has also expanded to areas like visual games, painting and handwriting exhibition.

India-based online video streaming platform MX Player secured approximately $111m in a series A round led by Tencent. Times Internet, the digital-focused subsidiary of media conglomerate Bennett Coleman & Co, contributed to the round having purchased a majority stake in MX Player for $140m in June 2018. The series A round reportedly valued it at $500m post-money. MX Player originally launched as a video player enabling South Korean users to watch locally stored files on mobile device, but it has evolved into a streaming service with original and licensed films, TV shows, web series and music videos. The content is available in 10 Indian languages as well as English, and the service runs solely on advertising revenue. It has attracted 175 million active users in India, its largest market, and more than 280 million users worldwide.

Exits

Corporate venturers from the media sector completed 50 exits between April 2019 and March 2019 – 41 acquisitions, five initial public offerings (IPOs) and four mergers. On year-to-year basis, the number of exits increased in 2019 to 54, up 50% from 36 the previous year. However, the total estimated capital in these transactions stood at $13.96bn, having dropped 59% from the $33.7bn in 2018.

US-based on-demand ride service Uber, which counts with a range of corporate investors as backers including media group Axel Springer, raised $8.1bn when it went public on the New York Stock Exchange. Carmakers Daimler and Toyota, SoftBank and media company Bennett Coleman & Co were among also among the corporate backers. Uber issued 180 million shares, priced at $45 each, near the bottom of the $44 to $50 range it had set.  Even though Uber’s IPO was the largest since Alibaba floated in 2014, it was considered by many a disappointment. It valued Uber at $82.4bn on the first day of trading but, subsequently, its share price went down to $41, thus leaving it with a total market capitalisation of around $69bn. Founded in 2009, Uber runs an app-based on-demand ride service spanning 63 countries in addition to food delivery and last-mile delivery services. Its core ride hailing service boasts 91 million monthly active users and UberEats 15 million.

Cloudflare, the US-based cloud services provider backed by corporates software producer Microsoft, internet companies Alphabet and Baidu and semiconductor and chip maker Qualcomm, went public in a $525m IPO. The offering consisted of 35 million shares issued on the New York Stock Exchange priced at $15 each. The company increased the IPO’s range from $10-$12 to $12-$14 but floated above its range. Cloudflare offers a range of services for web property operators that helps them increase performance of their sites, host video content and protect themselves from cyber-threats. It had made a $36.8m net loss from $129m in revenue over the first six months of 2019.

Media group Fox Corporation agreed to buy US-based online streaming service Tubi for approximately $440m in a cash deal that will allow film studios Metro-Goldwyn-Mayer and Lionsgate to exit. The transaction may eventually reach $490m when factoring in deferred considerations and unvested options. Formally incorporated as AdRise, Tubi runs an online film and television streaming platform that is free but has advertising that cannot be skipped. It increased its monthly active users from 20 million in June to 25 million by December.

UCloud Information Technology, a China-based cloud services provider backed by Bertelsmann, secured RMB1.94bn ($284m) IPO on Shanghai Stock Exchange’s Star Market. The company issued 58.5 million shares priced at approximately $4.84 each, valuing it at about $2bn, and its share price increased to $10.60 on the first day of trading. The company reportedly selected Star Market for its flotation as it is the only bourse in mainland China that enables companies to go public with a dual-class share structure, enabling founders to retain a majority of the voting rights. Founded in 2012, UCloud operates 32 data centres across 25 countries and territories in Asia, Europe and the US. It focuses on products such as cloud storage, data analytics and cybersecurity tools and serves clients primarily in the internet, e-commerce, manufacturing, gaming and financial industries.

Broadband communications and video services provider Altice USA agreed to acquire one of its portfolio companies, US-based entertainment network Cheddar, for $200m. Cheddar operates two online television channels: Cheddar Business, which focuses on technology and the innovation ecosystem, and Cheddar News, which broadcasts general news stories. The network is accessible through online streaming platforms such as DirecTV Now, Hulu, YouTube TV, Snapchat, Facebook, Twitter, Twitch and Amazon, and through more than half of smart televisions in the US. The company also operates CheddarU, a network of some 1,600 television screens in gyms, cafeterias and the student unions of 600 university campuses. Its subsidiaries include RateMyProfessors, an online portal where students can review their lecturers.

Fastly, the US-based content delivery technology provider backed by media group O’Reilly and telecoms companies Deutsche Telekom and Swisscom, floated in a $180m IPO. The offering consisted of almost 11.3 million shares priced at the top of its $14 to $16 range, valuing it at about $1.45bn. The company was listed on the New York Stock Exchange and its shares closed at $23.99 after their first day of trading. Founded in 2011, Fastly is the developer of a cloud-based content delivery network with added security features such as web application firewalls and tools to combat distributed denial of service attacks. The company increased its revenue from $105m to almost $145m in 2018 while cutting net losses slightly from $32.5m to $30.9m. It is considering using $47.5m of the IPO proceeds to meet debt obligations.

Television streaming box provider Roku agreed to acquire Dataxu, the US-based operator of a programmatic video ad buying platform, in a $150m deal that will allow broadcaster Sky to exit. The transaction will involve a combination of cash and shares but marked a significant fall in value from the touted $1bn valuation at which Dataxu had last raised money in 2016. The company has developed automated demand-side video advertising buying software that allows ads to be managed across television and over-the-top video platforms. The product includes media planning options specialised for each type of video and data science tools.

China-based property rental marketplace Danke Apartment, which counts Bertelsmann, co-working space provider UCommune and financial services provider Ant Financial as investors, floated, securing almost $130m in its IPO. The offering consisted of 9.6 million American depositary shares (ADSs) on the New York stock Exchange, each representing 10 ordinary shares, priced at $13.50 each. The price was below the IPO’s $14.50 to $16.50 range and the number of ADSs was cut from 10.6 million. Danke operates what it refers to as a co-living platform, running an online platform where users can rent apartments across 13 Chinese cities that it sources from their owners and renovates to a fixed standard. The company, which is listed under the name Phoenix Tree, made a $352m net loss in the first nine months of 2019 despite growing revenue significantly from $374m to $699m over the same period.

US-based mobile commerce platforms Letgo and OfferUp agreed to merge in a deal fuelled by a $120m funding round led by classified listings operator OLX Group. The group a subsidiary of e-commerce and media group Naspers’ internet assets division, Prosus, is an existing investor in Letgo and will take a 40% stake in the merged business. The $120m round included existing OfferUp investors including VC firm Andreessen Horowitz and private equity firm Warburg Pincus. Founded in 2015, Letgo operates an online platform that enables users to buy and sell goods to each other.

Streamlabs, a US-based live streaming software producer backed by record label Universal Music Group, agreed to an acquisition by computer peripherals vendor Logitech International for up to $118m. Logitech will pay $89m in cash, with an additional $29m in stock subject to revenue growth targets for Streamlabs. Founded in 2014, Streamlabs has created an all-in-one software for desktop and mobile that allows users to easily manage live streams across third-party platforms such as Twitch, YouTube and Facebook, monetise content and engage and grow audiences.

Global Corporate Venturing also reported several exits of emerging media-related enterprises that involved corporate investors from different sectors.

Pinterest, the US-based social media platform backed by e-commerce firm Rakuten, raised $1.43bn when it floated on the New York Stock Exchange. The company priced 75 million shares at $19, above the $15 to $17 range it had set, giving it a reported market cap of $12.6bn. Founded in 2009, Pinterest runs an online platform with more than 250 million monthly active users where people can post and share images they like with each other. It initially concentrated on building user numbers but has ramped up advertising revenue in recent years. The offering came after Pinterest generated almost $756m in revenue in 2018 while more than halving its net loss to $63m.

Douyu, a China-based video game livestreaming platform operator backed by Tencent, priced its shares at the low end of its range at $11.50 to raise $775m in its IPO. The company issued 44.9 million new ADSs, in addition to 22.5 million of existing stock sold by existing shareholders. This meant $517m was raised by Douyu itself and the remainder went to exiting shareholders. Douyu had hoped to price ADSs at up to $14 and raise as much as $944m in proceeds. The company had also initially hoped to list on the New York Stock Exchange but delayed and then altered those plans amid economic tensions between the US and China. Founded in 2014, Douyu operates a livestreaming platform for online games and eSports events. The company has attracted more than 159 million active users. The proceeds will be used to offer additional premium eSports content, expand into additional genres, drive research and development efforts and bolster marketing activities.

US-based advertising technology developer Vungle, which counts Alphabet and telecoms company Verizon as backers, agreed to be acquired by private equity firm Blackstone in a reported all-cash transaction, sized at $750m. GV, the early-stage corporate venturing subsidiary of Alphabet previously known as Google Ventures, backed the company’s series A and series B rounds in 2013-14. AOL Ventures, the defunct corporate venturing unit of mass media group Verizon’s AOL unit, had also participated in the series B round. Founded in 2011, Vungle helps developers place video advertisements in their apps. It has developed a suite of digital tools that help developers monetise their mobile apps via advertising campaigns based on customer data. The company claims its technology accounts for over 4 billion video views a month.

US-based video conferencing technology provider Zoom Video Communications went public a $751m initial public offering in which mobile chipmaker Qualcomm sold $30.6m worth of shares. The offering comprised approximately 9.9 million shares being issued by Zoom on the Nasdaq Global Select Market and almost 11 million shares being sold by its shareholders. It floated at $36.00 per share, above the IPO’s $33 to $35 range, reportedly valuing the company at about $9bn. Salesforce Ventures, the corporate venturing vehicle for enterprise software provider Salesforce, agreed to buy a further $100m of shares through a private placement. Zoom provides software that helps enterprise users communicate and collaborate with each other through video or voice chat. The company had more than doubled revenue to $330m in 2018 while improving a $3.8m net loss to a $7.6m net profit.

Video streaming platform Vimeo agreed to acquire Israel-based video-editing app developer Magisto, for an amount reported to be about $200m. Mobile chipmaker Qualcomm, storage technology producer SanDisk as well as internet company Mail.ru were among the backers of the company. Founded in 2009, Magisto has built a video editing platform that relies on AI to generate short films by automatically selecting clips from a user’s photos and videos. Users choose the editing style for the video and can enhance it by selecting music and visual effects. The platform, which has some 90 million users, is available in the form of both a mobile app and an online desktop tool, and it also offers a template library where individuals and enterprise clients can customise pre-prepared videos.

China-based social marketing services provider Ruhnn secured $125m in an IPO on the Nasdaq Global Select Market that qualified as an exit for e-commerce group Alibaba. The company issued 10 million ADSs, each representing five ordinary shares, priced at $12.50 each, in the middle of the IPO’s $11.50 to $13.50 range. The IPO valued it at $413m and social media company Weibo bought $8m of shares in the offering. Founded in 2016 as Hanyi E-Commerce, Ruhnn oversees a network of social media influencers with a combined 148 million followers, providing training and connecting them to commercial partners for marketing opportunities. The company will use the IPO cash for strategic investments as it looks to expand its monetisation options, in addition to signing up new influencers and enhancing its technology capabilities.

Work management software producer Upland Software purchased Kapost, a US-based content operations platform backed by enterprise software provider Salesforce, for $45m. The transaction consisted of $45m in cash and another $5m to be paid subject to indemnification claims. Founded in 2010, Kapost offers software that helps companies to plan, produce, personalise and send marketing content sent to customers, and analyse it once it has been distributed. The company will be rebranded to Upland Kapost and will become part of Upland’s enterprise sales enablement and customer experience management offering.

Funds

Between April 2019 and March 2020, corporate venturers and investing in the media sector secured over $1.52bn in capital via 18 funding initiatives, which included nine VC funds, five new CVC units, three accelerators and one incubator.

On a calendar year-to-year basis, the number of funding initiatives in the media sector went down slightly to a total of 21 in 2019 versus 23 in 2018 and 35 in 2017. The total estimated capital also decreased: it stood at $1.65bn by the end of last year, down 28% from the $2.29bn in 2018.

China-based internet and gaming group Beijing Kunlun Technolog established a RMB3bn ($424m) VC fund with investment manager Beijing Huayu Tianhong. The two are the cornerstone investors for Kunlun (Beijing) Internet Intelligent Industry Investment Fund and will each provide RMB1bn. A Kunlun subsidiary known as Xinyu Shijie Wuji Investment Management is chipping in RMB10m and will be general partner for the vehicle. Founded in 2008, Kunlun specialises in mobile and web browser-based games but its subsidiaries include Opera, the mobile browser it acquired in 2016. The company bought gay hook-up app Grindr the same year and agreed a $608m deal to sell it earlier this month, representing a four-times return. The fund is targeting developers of internet and artificial intelligence technology but Kunlun has not disclosed details of its geographical focus, how much it will invest per deal or at which stage.

DTCP, the investment arm of Germany-based telecoms firm Deutsche Telekom formerly known as Deutsche Telekom Capital Partners, secured external investors for a $350m fund. The corporate launched the first fund in 2014 as a successor to T-Venture, its CVC arm since 1998, supplying $140m to take the total provided by Deutsche Telekom across various funds to $620m at the time. South Korea-based telecoms firm SK Telecom and optical systems producer Zeiss are limited partners (LPs) in the new fund, as are private equity firm HarbourVest Partners and investment manager Neuberger Berman. The new fund will invest at growth stage, providing $5m to $50m in funding to enterprise software developers operating in areas like 5G technology, the internet of things, cloud and network infrastructure, artificial intelligence, cybersecurity and marketing. It will also back other funds.

UK-based investment firm Ahren Innovation Capital closed its inaugural vehicle at more than £200m ($253m) from LPs including consumer goods conglomerate Unilever, insurance firm Aviva and broadcaster Sky. The LP list also featured diversified holding group Wittington Investments, undisclosed US families, and individual investors including André Desmarais, Carlos Rodriguez-Pastor and the eight scientists who co-founded the vehicle. Founded in 2017, Ahren Innovation Capital focuses on technologies covering the human brain and artificial intelligence, genetics and biotechnology, space and robotics, and energy and environmental technologies. The firm both invests in and helps build companies, offering access to the expertise of its founding science partners. It is in particular seeking out opportunities that take a multidisciplinary approach to tackle challenges.

DG Daiwa Ventures, the VC fund formed by internet company Digital Garage and investment bank Daiwa Securities, launched a ¥20bn ($188m) investment fund. The DG Lab Fund II will target companies across the world that are developing next-generation technologies and will work with DG Lab, the fund’s open innovation research and development unit, on selecting portfolio companies. The fund’s main areas of interest are blockchain, artificial intelligence, virtual and augmented reality, security and health-based biotechnology. The capital allocation is expected to last 10 years. Digital Garage and Daiwa are DG Lab Fund II’s general partners while 10 to 20 limited partners that already include telecoms firm KDDI, e-commerce company Kakaku, insurer Sompo Japan Nipponkoa and financial services firm Sumitomo Mitsui Trust.

US-based CVC firm Bloomberg Beta closed its third fund at $75m, again capitalised solely by media group Bloomberg. Bloomberg Beta launched in 2013 with a $75m first fund to invest in companies broadly focused on the future of work. Its creation followed the departure of the team at Bloomberg Ventures, the corporate’s incubator subsidiary. The firm doubled its capital under management in 2016 by establishing a $75m second fund, with the capital again coming from Bloomberg. Roy Bharat has run the fund with partners Karin Klein and James Cham since its inception.  Bloomberg Beta typically invests between $500,000 and $1m in early-stage companies, targeting stakes sized at approximately 10%. While its definition of the future of work is broad, the firm will not invest in financial technology developers as it is “too close to home” for Bloomberg.

India-based VC firm 3one4 Capital closed a Rs 4bn ($56.6m) growth-stage fund Continuum I with capital from LPs including diversified conglomerate Sojitz. The cornerstone investor in Continuum I is Emory Investment Management, the endowment fund for Emory University, which invested alongside Sojitz. Investment firms Catamaran Ventures and Infina Finance are also among the LPs. Founded in 2015, 3one4 Capital targets media, deep technology, education, healthcare, enterprise automation and financial technology developers. The fund will concentrate on post-series B investments, supplying between $3m and $5m per deal. The firm has also formed a Rs 450m ($6.4m) early-stage vehicle dubbed Rising I with commitments from undisclosed backers that had also invested in its previous funds. It will back pre-seed and seed-staged startups, providing Rs 5m and Rs 35m for each transaction.

Diversified Philippines-based conglomerate JG Summit Holdings launched a $50m corporate venturing fund dubbed JG Digital Equity Ventures (JG DEV). The fund will invest in startups located in Southeast Asia that can link up to JG Summit’s existing businesses, and is exploring opportunities in the new media, consumer, data, logistics, financial services and digital health sectors. JG DEV will provide between $1m and $10m in funding per company and intends to invest at series A and B stage. Its portfolio companies already include consumer data platform developer Snapcart, online loan provider Cashalo and retail technology producer Growsari. The unit’s other key figures are chief operating officer Ian Estrada, chief technology officer Caesar Morata and chief financial officer Mara Utzurrum.

Fuji Startup Ventures (FSV), the corporate venturing arm of Japan-based media group Fuji Media, launched a second vehicle sized at ¥5bn ($45.8m). Founded in 2013, FSV targets advertisement, AI, e-commerce, education, entertainment and IoT technology developers. Its $16m first fund concentrated on early-stage internet and mobile-focused companies. The second will have a similar focus but will not limit its investments to specific sectors, expanding to cover areas including medical and financial technologies. The vehicle will participate in mid and later-stage deals in Japan and elsewhere over the next decade, in a bid to drive strategic alliances on behalf of the corporate. FSV has disclosed 16 investments out of its initial fund including bilingual education app developer SmartEducation and 3D printing technology provider Kabaku. Kabaku is among its exits, along with classified advertising platform Jimoty and online technology news portal The Bridge.

Singapore-based VC fund Play Ventures closed a fund at $40m having raised money from LPs including game developer Rovio. Play Ventures invests in game and game service developers in Asia, Europe or North America at early-stage, providing between $500,000 and $1m per first investment and following on if necessary. It intends to participate in six to eight rounds each year and has an office in Finland where Rovio is based. Rovio, the developer best known for mobile game Angry Birds, provided $3m of capital for the fund. It had initially targeted a $30m close but has lifted that amount due to the level of interest from LPs, which include Anton Gauffin, CEO of social game publisher Huuuge Games. The Rovio investment came three months after the firm launched with a commitment of undisclosed size by Modern Times Group, the investment holding company formed out of the entertainment holdings of investment firm Kinnevik, which increased the fund’s size to $22.4m.

Israel-based VC fund Remagine Ventures raised $35m in capital from LPs including mobile marketing technology producer Adways and media groups Axel Springer and ProSiebenSat.1. Merchant bank and investment firm American Liontree also contributed to the fund, adding to $4m provided by media company Sky in September 2018. Remagine concentrates on entertainment technology developers and tends to invest at seed and pre-seed stage. It has built up a six-strong portfolio that includes digital sports media platform Minute Media and visual-search system developer Syte. In addition, Remagine’s website also lists communication platform developer Freenet, outdoor advertising firm Stroer and advertising agency FutureTV as partners.

University backing

Over the past years, we reported commitments to university spinouts in the media sector in our sister publication, Global University Venturing. By the end of 2019, there were eight rounds raised by university spinouts, broadly at the same level as the 11 registered in the previous year. The level of estimated total capital deployed in 2019 stood at $55m, down from $64m figure in 2018.

SmartNews, a Japan-based curated news app developer co-founded by a University of Tokyo researcher, received $28m in series E capital led by mail, courier and logistics services provider Japan Post. The round valued SmartNews at $1.1bn. Japan Post invested through its corporate venturing subsidiary Japan Post Capital. SmartNews has built a news aggregation platform that uses machine learning technology to source articles from publications, such as Associated Press, and deliver personalised feeds. The app forwards readers to the original article, rather than mirroring content. The app has been downloaded more than 40 million times to date and reportedly has 20 million active users.

Soci, a US-based brand reputation management software publisher backed by Stanford University’s Daper Fund, closed a $15m series C round co-led by venture firms Vertical Venture Partners and Grayhawk Capital. Growth equity firm Ankona Capital also co-led the round, which was rounded off by VC firm Blossom Street Ventures. Founded in 2012, Soci provides software that gives large retail brands oversight of how multiple local branches communicate with customers on social media networks and other websites. The product is pitched as helping clients protect their brand at a national level, reducing the danger of individual stores straying off message. Soci will invest a share of the proceeds to develop additional products, with a continued focus on enterprise brand management.

People

Mike Martin, senior investment manager at UK-based media group Sky’s corporate venturing unit, Sky Ventures, was promoted to head of investments. Sky Ventures falls under Comcast Ventures after the UK parent company was acquired and the team was rejigged with James McClurg being promoted from head of investments to director, investments and partnerships. Martin had started at Sky Ventures as an investment manager in 2013 and over the past six years his deals have included Drone Racing League, Caavo, Molotov, TRX, FuboTV, InCrowd Sports, DataXu, TV4 Entertainment, Whistle Sports, Pluto.TV, Sharethrough and Roku, with exits for Elemental Technologies (acquired by Amazon), 1Mainstream (bought by Cisco) and Beamly (sold to Coty).

Comcast Ventures, Comcast’s CVC subsidiary, added three new principals to its team. The new members include Fatima Husain, who was product head for accommodation booking platform Airbnb, and Adam Spivack, formerly a senior director of trading and yield at Comcast’s advertising subsidiary, FreeWheel Media. Sheena Jindal was the third hire, having spent short lengths of time at Advance Venture Partners, the corporate venturing affiliate of media group Advance Publications, and VC firm Bessemer Venture Partners following 18 months as manager of strategy and operations at commerce software producer Symphony Commerce.

Brian Rothenberg, formerly vice-president of growth for event ticketing and technology platform developer Eventbrite, joined US-based VC firm Defy Partners as a partner. Rothenberg joined Eventbrite in 2013 and oversaw global revenue, managing various departments such as finance, marketing and engineering. He had a six-month stint as chief marketing officer prior to taking the VP position. Defy Partners focuses on series A deals with a ticket size of $3m to $10m and its portfolio companies include developers of logistics, internet-of-things and fintech software. Rothenberg had previously been an angel investor and scouted deals for VC firm Sequoia Capital.

Gree Ventures, the corporate venturing arm of Japan-based digital media company Gree, has reached the first close of a fund called Strive III which it intends to close at ¥15bn ($137m). General partners Yusuke Amano and Tatsuo Tsutsumi were named to run the fund with Singapore-based partner Nikhil Kapur. Its LPs include Gree as well as financial services firm Mizuho Bank and its corporate venturing unit Mizuho Capital, and state-backed entity SME Support Japan. Strive III is the unit’s third fund, and will provide early-stage funding for business-to-business technology developers. It has already invested in Japan-based identity confirmation platform provider Trustdock and India-based education management app developer Classplus.

Daulins Emilio, formerly Brazil-based director of investments at Bertelsmann, became managing director of Bertelsmann Brazil Investments (BBI) and head of Bertelsmann Brazil’s Corporate Centre. The appointment came as the unit’s former managing director Marc Puškarić left to join Bertelsmann’s RTL Croatia division as chief executive. Emilio first joined the corporate as manager of strategy and M&A in 2012, when Bertelsmann launched the Corporate Centre and BBI in São Paulo to focus on education and digital media. Emilio took up a role as director of business development role in late 2012 before becoming to director of investments two and a half years later, having also joined the supervisory boards of its subsidiaries – corporate training provider Afferolab and book publisher Companhia das Letras.

Jacob Smilovitz, director of M&A and investments for media company The New York Times Company, was promoted to executive director of corporate development and financial planning and analysis (FP&A). Smilovitz has held a range of strategy and development posts at New York Times since he joined in 2014, and was promoted to director of M&A and investments in February 2017 after overseeing its $30m acquisition of product review platform The Wirecutter in late 2016. In his new role, Smilovitz will manage the company’s corporate venturing investments and merger and acquisition deals. He will also sit on the corporate-level FP&A team, managing New York Times’ yearly budget, three-year strategic plans and financial planning.

Julia Ognieva, founder of social network operator Facebook’s first in-house startup initiative, joined financial services platform Intuit to manage external partnerships for its Quickbooks application. Ognieva commented: “I will be focused on few deep integrations with the Quickbooks platform, to solve for small businesses and self-employed customers of Quickbooks.” The move came after she spent more than five years as a strategic product partnerships, platform and augmented reality executive for Facebook, setting up LDN_LAB in November 2018 as an in-house startup program at the company’s UK office.

The first LDN_LAB supported seven startups that intend to use deep technology, such as artificial intelligence, augmented reality, blockchain, machine learning, natural language processing, to impact society positively. The seven participants in question were Synthesised, Sereley, Vault, Curvestone, Hello Lamp Post, Eastine and CoGrammar.

The GCV Analytics definition of the media sector encompasses audio and video content, games, gaming and eSports, social media networks and instant messaging services, print and online publishing, sports entertainment and gambling, virtual and augmented reality content and other media products and services.

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