The number of corporate-backed rounds reported in May was 209, down slightly from the 215 in the same month last year. Total investment value fell to $8.99bn, down 4% from $9.3bn in May 2017. Compared with the first four months of 2018, May registered weaker results than March and April, with their 272 and 234 rounds respectively. However, total capital invested was lower than any month so far this year.
The US hosted the largest number of corporate-backed deals at 120, while China was second with 21 and India third with 12.
The leading corporate investors by number of deals were semiconductor manufacturer Intel, blockchain software provider ConsenSys, whose venturing unit disclosed its first investments, as well as diversified conglomerate Alphabet. In terms of involvement in the largest deals, internet company Tencent topped the ranking, along with wealth management and microfinance firm Credit-Ease and electronics manufacturer Haier.
GCV Analytics reported 26 corporate-backed funding initiatives in May, including VC funds, new venturing units, incubators, accelerators and others. This figure was an increase over April, when there were 16 such initiatives. The estimated capital raised in those initiatives amounted to $3.19bn, up 34% from an estimated $2.39m in the previous month.
Deals
Emerging businesses from the health, IT, financial services and business services sectors led in raising the largest number of deals last month. The most active corporate venturers came from the financial services, IT, health and industrial sectors.
China-based robotics technology producer UBtech Robotics raised $820m in a series C round led by Tencent. The round also featured Haier Group, CreditEase, telecoms firm Telstra, furniture rental service Easyhome Furnishings, conglomerate Chia Tai Group and power producer China General Nuclear. The round reportedly valued UBtech at $5bn. Founded in 2012, UBtech creates family-friendly humanoid robots for entertainment and educational applications. Its range includes a service robot called Cruzr and a Stormtrooper robot, based on the Star Wars franchise and produced in partnership with media company Disney.
China-based artificial intelligence technology provider SenseTime closed a series C-plus round featuring Qualcomm Ventures, the corporate venturing subsidiary of the mobile semiconductor technology producer, at $620m. Investment and financial services group Fidelity International also participated in the round, among others. The transaction valued SenseTime at over $4.5bn. The company supplies computer vision and deep learning technology based on its supercomputing platform, powering functions such as facial and textual character recognition, video analysis and autonomous driving software.
China-based online healthcare services platform WeDoctor raised $500m in a round co-led by a subsidiary of insurance group AIA. Infrastructure and services conglomerate NWS Holdings co-led the round, which valued the company at $5.5bn. Also known as Weiyi, WeDoctor operates an online platform that enables users to book medical appointments with more than 220,000 doctors and at some 2,700 hospitals, and receive consultations from qualified physicians. The company also offers pharmaceuticals and insurance products.
US-based online trading platform Robinhood Financial secured $363m in a series D round featuring Alphabet’s CapitalG unit that valued it at $5.6bn. Investment firm DST Global led the round. Robinhood operates a secure, commission-free trading platform, generating income through the interest on the capital and securities in its clients’ accounts, and through an optional subscription service called Robinhood Gold that offers expanded trading options.
ESR Cayman, a China-based real estate developer focused on logistics, raised $306m from JD Logistics, the logistics spinoff of e-commerce firm JD.com. ESR Cayman was formed in 2016 through the merger of warehousing services provider E-Shang, which was founded in 2011, and logistics-based real estate investment firm Redwood Group Asia, founded in 2006. The company owns more than 10 million square metres of logistics real estate across China, India, Japan, Singapore and South Korea. JD Logistics’ investment will form the basis of a strategic collaboration agreement that will cover multiple areas, including property development, fund management and investments across Asia.
US-based cancer test developer Grail secured $300m in an oversubscribed series C round co-led by 6 Dimensions Capital, the healthcare investment firm co-founded by pharmaceutical group WuXi AppTec. The round, which was co-led by healthcare investment group Ally Bridge and hedge fund manager Hillhouse Capital, also featured WuXi AppTec’s genomic information subsidiary, WuXi NextCode. Spun off from genomics technology producer Illumina in 2016, Grail is using a combination of high-intensity sequencing, computer and data science technology and large-scale clinical studies to develop a blood test to detect cancer at early stage.
China-based biopharmaceutical company CStone Pharmaceuticals closed a $260m series B round featuring insurance provider Taikang and WuXi Healthcare Ventures, the strategic investment arm of WuXi PharmaTech. The round, led by Singaporean sovereign wealth fund GIC, also featured 6 Dimensions Capital. Founded in 2016, CStone is working on a combination therapies for diseases such as cancer, cardiovascular diseases, rheumatoid arthritis, haematology and autoimmune conditions, with a particular focus on immuno-oncology.
Chinese government-owned automotive manufacturer FAW Group agreed to provide $260m of funding for China-based smart car developer Byton. The investment was part of a larger series B round Byton aims to close at about $500m. Founded in 2016 as Future Mobility, Byton is developing an electric sports utility vehicle that will incorporate features such as a gesture-based control system, a driver-assistance system, augmented reality mirrors in place of rear-view mirrors and a 49-inch electronic display on the dashboard.
US-based invoicing software provider Tradeshift secured $250m in a series E round featuring financial services firm HSBC that valued it at $1.1bn. Investment bank Goldman Sachs and Canadian state-owned pension fund manager Public Sector Pension Investment Board co-led the round. Founded in 2010, Tradeshift operates a cloud-based supply chain payments and marketplaces platform aimed at business-to-business transactions. The company’s offering includes a tool for digital invoicing and accounts payable automation.
China-based catering service provider Xiyun International received $200m in a series A round featuring two spinoffs from e-commerce group Alibaba – Koubei and Ant Financial. Ant Financial, the financial services provider formed by Alibaba in 2014, and Koubei, the local services provider formed by Alibaba and Ant, were joined in the round by alternative asset manager CDH Investments. Xiyun runs an outsourced food supply business that operates some 30,000 food stalls and 2,100 dining halls across businesses, universities, government agencies, hospitals, factories, airports and railway stations. The company also links catering customers to restaurants and provides a range of associated services such as marketing and customer data analysis, food services training and food safety testing, monitoring and training.
Exits
In May, GCV Analytics tracked 18 exits involving corporate venturers as either acquirers or exiting investors. The transactions included 12 acquisitions, five initial public offerings (IPOs) and one merger.
The number of exits remained unchanged compared with April, when there were also 18 exits. Total estimated exited capital, however, amounted to $20.27bn, three times the previous month’s figure, which included a record-breaking acquisition sized at $16bn.
Big-box retailer Walmart agreed to pay $16bn for a 77% stake in India-based e-commerce marketplace Flipkart, giving several corporates billion-dollar exits. The purchase is the largest M&A transaction in the venture capital space since Facebook’s $19bn acquisition of WhatsApp in early 2014. Walmart valued Flipkart at $20.8bn. Telecoms and internet group SoftBank’s Vision Fund scored the biggest exit, receiving just over $4bn, after paying $2.5bn for a stake of about 20% in Flipkart in August last year. Other exiting corporates included e-commerce and media company Naspers, media group Bennett, Coleman & Co, research firm International Data Group through its IDG Ventures India subsidiary as well as financial services firm Morgan Stanley. Founded in 2007 as a book specialist, Flipkart has built a diversified e-commerce platform that sells products across more than 80 categories.
Online payment platform PayPal agreed to acquire Sweden-based mobile payment technology developer iZettle for $2.2bn, allowing a host of corporate investors to exit, including Intel, payment services firms Mastercard and American Express, and financial services firm Santander. Founded in 2010, iZettle has built a small card reader enabling small businesses to accept contactless and mobile payments, as well as software that allows them to take payments using smartphones, and e-commerce tools that help users create and run an online store.
Human resources firm Recruit agreed to acquire online recruitment and employment assessment platform Glassdoor for $1.2bn, giving CapitalG, Alphabet’s growth equity arm, an exit. Glassdoor has built an online platform that enables employees to leave feedback anonymously on the companies for which they work while also accessing newly listed positions. The company had 59 million monthly active users by January this year, and reviews for more than 770,000 businesses, incorporating features such as photographs, salary information and interview questions.
US-based genetic screening service Counsyl agreed to a $375m acquisition by molecular testing service provider Myriad Genetics, which will provide Illumina with an exit. Counsyl will become a wholly-owned subsidiary of Myriad once the deal closes next year. Founded in 2007, Counsyl operates a laboratory that offers low-cost non-invasive prenatal and cancer screening. It has also developed a suite of tools integrating its tests into existing clinical workflows and electronic medical records.
Huya, a gaming-themed subsidiary of China-based livestreaming platform operator YY, raised $180m from an IPO on the New York Stock Exchange. The offering consisted of 15 million American depositary shares at $12 each, at the top of the $10 to $12 range it had set earlier. The proceeds will support the company’s content and eSports partner ecosystem as it looks to beef up its content. Huya operates what it claims is China’s most popular live game-streaming platform, with almost 87 million monthly active users. YY launched the Huya platform in 2014 before it was officially spun out at the start of 2017.
Inspire Medical Systems, a US-based sleep apnea device developer spun out of medical device maker Medtronic, raised $108m in an IPO on the New York Stock Exchange. The offering consisted of 6.75 million shares priced at $16 each, the top of its $14 to $16 range. Founded in 2007, Inspire Medical has developed what is so far the only neurostimulation treatment for sleep apnoea, a disorder in which breathing is interrupted during sleep, to win approval from the US Food and Drug Administration.
Unity Biotechnology, the US-based ageing disease drug developer backed by pharmaceutical companies WuXi Pharma-Tech and Mayo Clinic, raised $85m in an IPO consisting of 5 million shares issued on the Nasdaq Global Select Market at $17 each, at the midpoint of the $16 to $18 range the company set earlier. Founded in 2016, Unity develops treatments for a range of conditions related to ageing, such as kidney disease, eye diseases and atherosclerosis, a buildup of white blood cells in a patient’s arteries. The company will use $10m to $20m of the IPO proceeds to advance its lead candidate, a musculoskeletal disease treatment, into a phase I clinical study.
Scholar Rock, the US-based spinal muscular atrophy therapy developer backed by consumer conglomerate Kraft Group, raised $75m in an IPO. The offering on Nasdaq consisted of 5.36 million shares at $14 each, in the middle of the $13 to $15 range set earlier. Founded in 2012, Scholar Rock is working on monoclonal antibodies for diseases associated with signalling by protein growth factors. The IPO proceeds will advance the company’s lead drug candidate into phase 1 clinical trials.
Singapore-based oncology therapy developer Aslan Pharmaceuticals – which counted engineering technology producer Accuron, pharmaceutical firm Tianda Pharmaceuticals and manufacturing services provider Advanced Materials Technologies as backers – raised $42.2m in an IPO in the US. Aslan priced 6 million American depositary shares, each representing five common shares, at $7.03 each. Founded in 2010, Aslan is working on treatments for orphan diseases in the US and Europe, and diseases that are prevalent in Asia. It will use $23.5m of the IPO proceeds to fund clinical trials in biliary tract cancer and gastric cancer for its lead drug candidate.
Cask Data, a US-based big data software developer backed by networking and telecoms equipment maker Ericsson, agreed to an acquisition by Google. Financial terms of the deal were not disclosed. Ericsson invested an undisclosed amount in Cask in 2016. The company will be absorbed into Google’s cloud computing services division, Google Cloud. Founded in 2011, Cask has created a software platform that enables enterprise clients to develop and run big data applications. The product sits atop Hadoop, an open-source framework for large-scale data applications.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
