There were 168 corporate-backed deals in January, down from the 199 funding rounds in the same month last year. Investment value, however, increased by 108% to $12.66bn, compared with $6.09bn in January 2017. On a month-on-month basis, the deal count in the first month of this year fell from the 185 rounds worth $13.61bn in December.
The US hosted the largest number of corporate-backed deals, 83, while China was second with 24, India third with 10 and the UK fourth with eight.
The leading corporate investors by number of deals were diversified technology conglomerate Alphabet, internet company Tencent as well as chip and semiconductor manufacturer Intel. In terms of involvement in the largest deals, e-commerce company Alibaba topped the ranking, along with telecoms firm SoftBank and Tencent.
GCV Analytics reported 20 corporate-backed funding initiatives in January, including VC funds, new venturing units, incubators, accelerators and other. This figure implies an increase over December, which registered only 16 such initiatives. The estimated raised capital in those initiatives stood at $1.92bn, up from the estimated $855m in December.
Deals
Emerging businesses from the health, IT, services and consumers sectors raised the largest number of rounds in the first month of 2018. The most active corporate venturers were from the IT, financial services and consumer sectors.
Alibaba bought $3bn worth of shares in China-based bicycle rental platform Ofo from investor Allen Zhu. Alibaba acquired the shares at a $10bn valuation, according to Chengxiao, though the stake was probably held by GSR Ventures, the venture capital firm that backed Ofo at series A, B and C stage. Founded in 2014, Ofo runs an app-based bicycle rental platform that had 200 million registered users worldwide at the end of 2017. It has 10 million bikes in service across 250 cities spanning 22 countries.
Tencent was reported to be set to lead a $1bn funding round for China-based social media app Kuaishou, valued it at $18bn. The round’s other investors include venture capital firm Sequoia Capital China. Kuaishou runs a mobile app that enables users to upload and share photos and videos, and livestream videos to followers, who can reward them with virtual gifts. The company has 100 million active users but aims to triple that figure in 2018.
Ping An Healthcare Management, the medical data collection and analysis subsidiary of China-based insurance provider Ping An Insurance, raised almost $1bn in funding in a round co-led by the SoftBank Vision Fund, which supplied $400m, alongside fellow lead investor financial services firm SBI Holdings, which provided $450m. The deal valued Ping An Healthcare Management at $8.8bn. Established in 2016, Ping An Healthcare Management has developed a platform for public medical insurance services and hospitals to manage various aspects of healthcare, such as social health insurance, drug distribution and medical treatment.
The SoftBank Vision Fund led an $865m series D round for US-based construction services platform Katerra. China-based contract manufacturer Foxconn also participated. Katerra has created a construction services business that includes architecture and interior design, engineering, the supply and construction of building materials and the construction itself.
Ziroom, a China-based operator of an accommodation rental services platform, secured RMB4bn ($621m) in a series A round featuring Tencent. The round reportedly valued the company at $3.1bn. Founded in 2011 by Homelink, the real estate agency also known as Lianjia, Ziroom was spun off in 2016. It leases apartments from owners, renovates them and rents them to tenants.
China-headquartered ride-hailing platform Didi Chuxing acquired a majority stake in Brazil-based counterpart and portfolio company 99 for $600m. According to the New York Times, Didi Chuxing previously owned 30% of 99, having led a round in excess of $100m for the company a year ago. Founded in 2012 and originally known as 99taxi, 99 runs an on-demand ride service with 14 million users across some 500 Brazilian cities and towns as of May 2017.
Alibaba and Foxconn co-led a RMB2.2bn funding round for China-based smart electric vehicle developer Xiaopeng Motors. The corporates co-led the round with venture capital group IDG Capital, a venturing arm of research and media company International Data Group, investing alongside Yunfeng Capital, the private equity firm co-founded by Alibaba chairman Jack Ma, among others. Xiaopeng, also known as Xpeng, is working on an all-electric sports utility vehicle dubbed the G3. The company unveiled the car at the Consumer Electronics Show this year and plans to launch the vehicle commercially later this year.
The SoftBank Vision Fund agreed to invest $300m in US-based dog walking service Wag at an undisclosed valuation. Founded in 2015, Wag has created an app-based on-demand service that gives owners access to insured and bonded walkers in their own communities.
US-based data warehousing software provider Snowflake Computing completed a $263m growth round featuring Capital One Growth Ventures, a corporate venture capital vehicle for financial services provider Capital One. The round was closed at a $1.5bn pre-money valuation. Snowflake has created a cloud-based data warehousing software product that can store and rapidly analyse large amounts of data in a single place. It runs on the Amazon Web Services platform and is scalable.
US-based personalised health information platform SomaLogic closed a $200m round, following an extension provided by Nan Fung Life Sciences, a subsidiary of conglomerate Nan Fung, and Madryn Asset Management. Digital health technology developer iCarbonX anchored the round. Founded in 1999, SomaLogic has developed technology that measures changes in thousands of proteins in the human body, using the data to provide real-time personalised insights into, and recommendations for, a user’s wellbeing and health.
Exits
In January, GCV Analytics tracked 16 exits involving corporate venturers as either acquirers or exiting investors. The transactions – most of which took place in the US – included 12 acquisitions and four initial public offerings (IPOs).
The number of exits rose compared with the previous month, December 2017, when there were only nine. Total estimated exited capital amounted to $1.84bn, a 5% increase over the December figure of $1.74bn.
Pharmaceutical firm Celgene agreed to acquire US-based cancer treatment developer Impact Biomedicines in a $1.1bn deal, giving an exit to fellow pharmaceutical company Sanofi. Founded in 2016, Impact is developing therapies for complex cancers based on fedratinib, an oral small-molecule inhibitor of the JAK2 kinase enzyme, which will address bone marrow disorders polycythemia vera and myelofibrosis.
Open-source software provider Red Hat agreed to acquire US-based IT infrastructure automation software producer CoreOS for $250m, giving exits to chipmaker Intel and internet and Alphabet. Founded in 2013, CoreOS has developed an open-source software product that helps automate functions for cloud infrastructure such as installing important software updates, updating and patching servers, and tackling issues such as machine failures or networking outages.
Menlo Therapeutics, a skin condition treatment developer backed by pharmaceutical companies Novo and Merck & Co, closed an IPO, having secured approximately $137m. The company initially issued 7 million shares, up from 6.5 million, on the Nasdaq Global Select Market priced at the top of its $16 to $17 range to raise $119m. Menlo’s shares opened at $20.50 and closed at $33.39. Founded in 2011, Menlo is developing a drug, serlopitant, that would be the first to win regulatory approval in the US as a treatment for pruritus, itching caused by skin conditions such as psoriasis, atopic dermatitis and prurigo nodularis.
Armo Biosciences, a US-based immuno-oncology therapy developer that counts pharmaceutical company Celgene and Alphabet as investors, raised $128m in an IPO consisting of just over 7.5 million shares issued on the Nasdaq Global Select Market priced at $17 each, above the $14 to $16 range set by Armo. The number of shares offered was also increased from about 6.7 million. Founded in 2012, Armo is working on immuno-oncology treatments and intends to invest $35m of the IPO proceeds in advancing its lead drug candidate for pancreatic ductal adenocarcinoma to phase 3 clinical trials.
Practice Fusion, a US-based electronic medical record platform backed by mobile chipmaker Qualcomm, accepted a $100m acquisition offer from healthcare technology producer Allscripts. The purchase price represented a significant loss in valuation and could still change, with the figure being “subject to adjustment for working capital and net debt”. Founded in 2005, Practice Fusion operates a cloud-based electronic health records database aimed at small and independent doctors’ surgeries. The platform currently supports 5 million patient visits across 30,000 practices each month.
Pharmaceutical firm Novartis is set to exit Restorbio, a US-based ageing-related disease therapy developer that has filed to raise up to $85m in an IPO. Co-founded in 2016 by biopharmaceutical company PureTech Health, Restorbio is working on treatments for several ageing-related conditions involving decline of the body’s immune system which have no approved treatment in the US, including respiratory tract infections.
US-based autonomous security system developer Knightscope closed $25m in funding, consisting of $20m in a regulation A-plus offering and $5m in related private placements from backers including imaging technology producer Konica Minolta. Founded in 2013, Knightscope produces robots that act as mobile security guards. The robots autonomously monitor a pre-defined environment.
Networking equipment maker Cisco agreed to acquire Skyport Systems, a US-based hyperconverged infrastructure technology provider that is also one of its portfolio companies. Cisco did not disclose how much it would pay for Skyport, which has raised $67m in venture capital from an investor base that also includes GV and Intel Capital, subsidiaries of Alphabet and Intel respectively. Skyport has developed a hyperconverged system that streamlines the creation, management and security of data centres. Following the acquisition, it will become part of Cisco’s data centre – computing systems product group division.
WhoSay, a US-based marketing platform backed by corporates Tencent, e-commerce company Amazon, media companies Comcast and Creative Artists Agency (CAA), was acquired by media group Viacom for an undisclosed sum. The acquisition followed a two-year partnership between the companies, during which WhoSay handled more than 50 advertising campaigns for a variety of Viacom units, such as television channels MTV and BET. Co-founded by entertainment agency CAA and chief executive Steve Ellis in 2010, WhoSay operates a creative marketing agency aimed at a wide range of talent from micro-influencers – social media users with 1,000 to 50,000 followers – to international celebrities.
Canada-based app testing platform Buddybuild was acquired by computing company Apple for an undisclosed sum, providing an exit to media company Bloomberg’s early-stage investment subsidiary, Bloomberg Beta. Founded in 2015, Buddybuild offers mobile app development tools for Apple’s iOS operating system as well as the rival Android platform, though its support for the latter will now cease in March 2018. Buddybuild’s platform includes continuous integration and delivery, user feedback and crash reporting, and is used by audio streaming portal SoundCloud and media company New York Times.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
