February was a period of relatively sustained corporate venturing investment activity, despite many in the venture capital community warning deal activity will slow down as concerns rise about the valuations paid to invest in high-growth start-ups over the past few years.
We tracked 132 deals in the month (see monthly deal activity chart). While this would be the month with the lowest deal activity since September 2014, it is not much below many of the months during the past year and a half, but it is significantly above most months in 2014 as well as previous years. In addition, some February deals will not come to light until later.
Intriguingly, there has been limited retrenchment in the size of earlier-stage rounds. Corporate-backed seed rounds to series C rounds we have tracked during 2016 have been up in median size against deals in 2015. However, at later stage the size of rounds is decreasing (see median size analysis graph).
The most active corporate during the month was holding company Alphabet, which invests through its two venturing units Google Capital and GV. This matches trends in recent years, uring which it has regularly been one of the most active investors.
The most active corporate partner among venture firms was Arch Venture Partners, which invested alongside US-based healthcare company Johnson & Johnson, US-based asset manager Fidelity, China-based healthcare company Wuxi Pharmatech, real estate company Alexandria and healthcare company Pfizer.
The biggest exit of the month was the sale of Ravello Systems, a US-based virtualisation software developer, to Oracle for $500m. Ravello had raised $54m in venture funding, including $28m in a January 2015 series C round co-led by corporate venturing units Qualcomm Ventures and SanDisk Ventures.
The 10 big deals
The largest deal was the $793.5m series C round raised by US-based augmented reality technology developer Magic Leap, in a deal led by e-commerce firm Alibaba. Internet technology provider Google, mobile semiconductor maker Qualcomm, which took part through its Qualcomm Ventures unit, film studio Legendary Entertainment, and media and entertainment company Warner Bros also invested in the round. The company, now valued at $4.5bn according to Wired, is gearing up for the release of its first product.
The next biggest deal was Oscar Health Insurance, a US-based insurance provider backed by conglomerate Alphabet’s Google Capital, securing $400m in a round led by financial services firm Fidelity Investments valuing Oscar at $2.7bn.
In the third-largest investment, United Arab Emirates-based online marketplace Souq.com closed a AED1bn ($272m) round featuring media and e-commerce group Naspers, which invested alongside Tiger Global Management, Standard Chartered Private Equity, the World Bank-run International Finance Corporation, Baillie Gifford and undisclosed “regional and tech-focused financial institutions”. Bloomberg reported earlier this month that Souq was raising funding at a valuation of more than $1bn but the company has not confirmed that figure.
Naspers also invested $250m in India-based online travel booking platform Ibibo Group. Incubated by Naspers in 2007, Ibibo has used a series of acquisitions to build a diversified travel booking service that encompasses bus, hotel and flight booking as well as ride sharing and vehicle tracking.
China Merchants Bank led a $102m round for Boqii.com, a social network and e-commerce platform for pet owners.
China-based cybersecurity app provider Mobi Magic raised $100m in a round co-led by internet and cybersecurity company Qihoo360 Technology and VC fund Frees Fund, China News Services reported. Mobi Magic, which was founded in 2013, develops security apps for the Android operating system which provide anti-virus protection, memory usage optimisation and cleaning. It had reportedly accumulated 300 million global users by the end of 2015.
Telstra Ventures, the corporate venturing arm of telecoms group Telstra, invested in China-based cloud-storage service provider Qiniu as part of a $100m series D round, according to The Australian. The round included Harvest Global Investments and China Broadband Capital. Telstra Ventures’ share was “not too far away from” the $5m to $10m it typically invests, Telstra Ventures managing director Matthew Koertge told the Australian.
China-based courier service Tian Tian Express raised RMB600m ($92m) in what it has called a series A round, backed by home appliance manufacturer Qingdao Haier, China Money Network reported. CICC Qianhai Development Fund, a joint venture between investment bank China International Capital Corp and Shenzhen Municipal Government agency Qianhai Financial Holdings, led the round, according to Chinese state news agency Xinhua.
UK-based drug developer Mission Therapeutics raised £60m ($86m) in a series C round backed by investors including pharmaceutical firms Roche, Pfizer and GlaxoSmithKline. The three corporates invested through their respective corporate venturing units Roche Venture Fund, Pfizer Venture Investments and SR One.
Insurance firm Axa paid €75m ($83m) for an 8% stake in Africa Internet Group (AIG), a collection of Africa-based e-commerce assets overseen by holding company Rocket Internet. AIG incorporates several Africa-based services from Rocket Internet portfolio companies, such as ride-hailing service Easy Taxi, classified listings sites Carmudi, Vendito and Lamudi, jobs listing platform Everjobs, food delivery service Hellofood, hotel booking platform Jovago and e-commerce platforms Kaymu and Zando. Axa is making the investment as part of a strategic alliance with Jumia, a Nigeria-based e-commerce platform founded in 2012 which now operates in 11 African countries, and which is AIG’s largest business.
