The week after the Consumer Electronics Show (CES) in the US might be expected to have a hangover-type of feeling about it but the deals being done will create the technology and business models that will affect future shows.
And while CES naturally focuses on the type of tech you want to buy – see the Verge and Fortune for nice reviews of last week’s show – people’s lives will be fundamentally affected by a broader wave of innovation around health, energy and communication (the macro areas in the concluding part of our 2016 outlook series published last week).
Many of these deals will be big but when the smart people look at an area there is often something there.
So, UK-based digital health application Babylon Health’s $25m series A round was a good size and led by highly-regarded Sweden-listed Investment AB Kinnevik but its other investors caught the eye, primarily its existing advisers, Demis Hassabis and Mustafa Suleyman, founders of Deepmind, the artificial intelligence (AI) group bought by Google for $500m.
Even if peer WebMD reportedly mulls an exit, Babylon is looking beyond video doctor appointments to how AI to help patients pre-screen health conditions.
And nature might be part of this beyond Hassabis’ prior investment in Just Mayo maker Hampton Creek. Rhythm Superfoods, a US-based provider of organic and non-genetically modified plant-based snacks, this week raised $3m in its series C round from 301, the corporate venturing unit of New York-listed foods company General Mills, and CircleUp Growth Fund.
Part of the focus is because linking deep learning with nature offers phenomenal testing and validation points.
This week, Lodo Therapeutics closed it’s $17m A round with investment from corporations AbbVie, Eli Lilly, Wuxi PharmaTech, Pfizer, IBM and Johnson & Johnson.
That’s a big group even before you add in Alexandria Venture Investments, Arch Venture Partners, Harris & Harris Group, Innovate NY Fund, The Partnership Fund for New York City and Bill & Melinda Gates Foundation, which also participated in the round.
Their interest: co-founder Sean Brady, head of The Rockefeller University’s Laboratory of Genetically Encoded Small Molecules, who said: “More than half of all small molecule drugs for cancer, infections and Type 2 diabetes today are derived from natural products, representing significant promise of this approach for patients. Our genome-based, culture-independent approach exploits the power of microbial evolution to identify therapeutically valuable natural products.”
Another university success story in fundraising was Tmunity Therapeutics, which raised $10m from Penn Medicine, the academic medical centre of the University of Pennsylvania, and Lilly Asia Ventures, the regional corporate venturing unit of Eli Lilly.
But the biggest rounds often indicate the most excitement and gene editing company Illumina is continuing to spend big in launching spinouts, according to my colleague Rob Lavine, by co-leading (and majority-owning) a $100m series A round for cancer screening startup Grail. The round came less than six months after similarly large series A rounds for Helix and Kallyope.
Outside of health, tech to watch in energy included Pearl Electric, a power transmission equipment supplier that raised cash from investors including China General Nuclear Power and Hongta Tobacco. Founded in 1958, Pearl Electric supplies power transformation and transmission equipment. It has more than 600 employees and its factory space stretches over 80,000 square metres.
Crossing the line between energy and transportation disruption was General Motors, which this month invested $500m in ride-sharing app Lyft as part of a $1bn round and showed off its electric car, the Chevrolet Bolt, at CES.
Tech guru Ben Thompson at Stratechery said: “For my money the most interesting news of last week came from a most surprising source: General Motors….
“Perhaps it was the company in question, or simply the timing, but it reinforced the sense that fundamental change is coming to the world of transportation.
“What is interesting, though, is that while change is certainly coming, it is coming on multiple axes: The Lyft news is about the secular shift from individually owned-and-operated automobiles to transportation-as-a-service, while the Chevrolet Bolt is about how the cars themselves are made. Meanwhile, Google, Uber, Tesla, and others are working on obviating the need for a driver at all. To put it another way, when it comes to questioning the future of transportation, the ‘What?’, ‘How?’, and ‘Where?’ are all in play.”
Few if any private companies have attracted more corporate venturing investors than ride-sharing peer Uber, and its Uber China subsidiary has attracted two more in HNA Group and Guangzhou Automobile, both joining existing backer China Life Insurance for a funding round that valued the subsidiary at $7bn pre-money. That valuation would hypothetically put Uber China in the top 20 most valuable venture-backed companies in the world, and its parent company is still to close on a round that would value it at more than $60bn, about GM’s valuation.
Beyond energy, the wider tech world had a long list of deals for disruptive companies and what’s not to like about a company founded in a barn – take that HP with your garage founding story. Business planning and modelling software producer Anaplan became the second UK-founded company (the other being Skyscanner after its $192m round) this week to achieve unicorn status, raising $90m in series E funding at a $1bn+ valuation.
Useful tech helping make things easier will always find a good home with investors and so Kymeta picked up $62m in a Liberty Global-backed D round for the smart antenna manufacturer.
Savioke, a US-based developer of autonomous robots for the services industry, also raised $15m in its A round led by Intel Capital, and joined by EDBI, Google’s GV and Northern Light Venture Capital among others.
Cross-country dealmaking continues to flourish and while Baidu has been an active investor in its home country of China but it now appears to be looking further afield and has entered talks to invest in three India-based online services companies – Zomato, Big Basket and Bookmyshow – as it prepares to enter the country.
Lavine noted: “Baidu has already shown it is unafraid to invest heavily if need be, and it wouldn’t be surprising to see it take hefty stakes when it does eventually pull the trigger.”
Separately, Shopclues, another Indian e-commerce site, raised nearly $150m at a reported valuation of $1.1bn from Singapore state-owned GIC, which led the round, and return backers Tiger Global and Nexus Venture Partners.
Elsewhere, in China, the online lending sector continues to go from strength to strength, as peer-to-peer lending startup Duanrong raises $59m in its series B round.
But for things to buy and lend money for requires products that spark an interest, hence CES. And a deal waiting to happen is for a new type of metal glue being made in the lab at US-based Northeastern University.