There were 242 corporate-backed rounds reported in July, and 237 in August, considerably higher than those recorded in the same months last year – 211 and 194. Investment value was higher in July at $13.63bn, up from $8.8bn in July last year. August’s investment value, however, at $10.25bn, was considerably lower than last August’s $17.61bn.
Deal volume, compared with other months this year, was lower than June’s 269 but more on a par with April and May – 243 and 225 respectively. However, June set a record for estimated total capital invested this year at $27.29bn.
The US hosted the greatest number of corporate-backed deals with 225 rounds, China was second with 59 transactions, India third with 33 and the UK fourth with 23.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, investment banking firm Goldman Sachs and e-commerce firms Rakuten and Alibaba. In terms of involvement in the largest deals, Alibaba, Goldman Sachs and Alphabet topped the ranking with telecoms firm SoftBank.
GCV Analytics reported 21 and 24 corporate-backed funding initiatives in July and August respectively. They included VC funds, new venturing units, incubators, accelerators and other. This fund count suggested a slight decrease over May and June, which registered 28 and 29 such initiatives. The estimated capital raised in those initiatives for July amounted to $3.59bn and to $2.22bn in August.
Deals
Emerging businesses from the IT, health, services and financial services sectors raised the largest number of deals in July and August. The most active corporate venturers were from the financial services, IT, media and consumer sectors. Four of the the top 10 deals were above $1bn.
JD Finance, the financial services provider spun off from e-commerce firm JD.com, reportedly secured “at least” RMB13bn ($1.95bn) at an $18bn valuation. The cash came from BOCGI and CICC Capital, respective subsidiaries of financial services firms Bank of China and China International Capital Corp. Other investors were private equity group Citic Capital and brokerage firm China Securities. JD Finance provides a range of financial services including consumer loans, supply chain financing, payment services, crowdfunding and microfinance, insurance, asset management and securities.
SoftBank invested almost $1bn in China-based image recognition technology provider SenseTime through the SoftBank Vision Fund, at an undisclosed valuation. SenseTime was valued at $4.5bn at its previous funding, a $620m series C-plus round. Founded in 2014, SenseTime produces artificial intelligence technology capable of recognising faces, vehicles and objects on a large scale. The company is increasingly moving into augmented reality and autonomous driving but its technology is used most in mass surveillance systems.
US-based video production company NewTV raised $1bn, $200m of which came from a range of entertainment and media providers, including Walt Disney, 21st Century Fox, Warner Bros and Entertainment One. The rest came from institutional investors, largely from the US and China. NewTV is pursuing a business model based on the production of dramatic video content with budgets comparable to high-end content from streaming outlets like Netflix or Amazon Prime but divided into episodes that are about five to 10 minutes long.
Singapore-based ride-hailing platform Grab raised a $2bn funding round featuring automotive manufacturer Toyota, insurance group Ping An and internet company Naver. Toyota had already provided the first $1bn of funding, and the second tranche featured Ping An’s unit Ping An Capital and Mirae Asset–Naver Asia Growth Fund, the joint venture set up by Naver and investment bank Mirae Asset Daewoo, The round reportedly valued Grab at $11bn post-money and included other institutional as well as traditional venture investors. Founded in 2012 as GrabTaxi, Grab started out with a taxi-booking platform called MyTeksi but has since grown to offer a range of ride-hailing services, including a chauffeuring and carpooling.
Telecoms firm AT&T invested an undisclosed amount in US-based augmented reality technology developer Magic Leap as part of a $963m series D round, which also featured media companies Axel Springer and Grupo Globo, Alibaba, Alphabet and Saudi Arabia’s Public Investment Fund. Magic Leap is developing an augmented reality headset with a dedicated operating system and is in talks with prospective content producers. Its technology – Mixed Reality Lightfield – can superimpose ultra-realistic moving light sculptures on real-life settings.
Suning Sports, the sports broadcasting offshoot of China-based retail and commerce conglomerate Suning, closed a $600m series A round, which reportedly valued it at $2.6bn. The round was co-led by Alibaba and Goldman Sachs. It included artificial intelligence technology provider SenseTime, property developer Evergrande Group and subsidiaries of banks CCB International. Suning Sports owns the broadcasting rights to several large sporting competitions, particularly in football, where it holds the rights for China’s domestic league, England’s Premier League, Spain’s La Liga, Germany’s Bundesliga and the Asian Champions League.
China-based facial recognition software provider Megvii reportedly raised “at least” $600m in a funding round, featuring Alibaba. The corporate was joined by investment firm Boyu Capital. Founded in 2011 and also known as Face-plus-plus, Mergvii provides artificial intelligence-based facial recognition technology that incorporates image data on 1.3 billion citizens taken from the Chinese Ministry of Public Security’s database. The technology helps consumer and service-based products incorporate facial recognition, but Megvii has also worked with law enforcement to identify suspects.
China-based online audio-streaming platform Ximalaya completed a RMB4bn funding round featuring internet group Tencent. The transaction included Goldman Sachs and growth equity firm General Atlantic. It valued Ximalaya at about $3.5bn post-money. Founded in 2012, Ximalaya operates an online repository for audio content such as podcasts and radio shows covering music and information. It reportedly has more than 40 million registered users, of which 6 million are daily users. The company has partnerships with carmakers BMW and Ford, which offer the service as part of their in-vehicle entertainment systems, and with smart device producers Haier, Skyworth and Midea, which use it in their home devices.
US-based home fitness service Peloton Interactive raised $550m in a series F round backed by media group Comcast NBCUniversal, which reportedly valued it at $4.15bn. The round was led by growth equity firm TCV with a $150m investment and included financial services and investment group Fidelity. Peloton sells exercise bikes with high-definition touchscreens, allowing customers to stream live workout videos in addition to on-demand fitness classes. The bikes cost nearly $2,000 each and are displayed through a range of bricks-and-mortar showrooms while the classes are available through a monthly subscription service.
SoftBank and the SofBank Vision Fund were among the investors co-leading a $500m series B round for WeWork China, co-working space provider WeWork’s Chinese offshoot. Temasek, the investment firm owned by the Singaporean government, co-led the round, which valued the company at $5bn. WeWork China has built a network of 40 locations in three Chinese cities with a total membership of about 20,000, providing working spaces with facilities such as meeting rooms, printers, office supplies and free coffee.
Exits
In July and August, GCV Analytics tracked 33 exits – 24 in July and nine in August – involving corporate venturers as either acquirers or exiting investors. The transactions included 18 acquisitions, 11 initial public offerings (IPOs), two mergers as well as two stakes sales.
The number of exits was lower than the peak registered in June (30). The total estimated exited capital amounted to $4.93bn in July and $2.79bn in August, both significantly below the $8.16bn estimated for June.
Networking equipment manufacturer Cisco agreed to acquire Duo Security, a US-based authentication software provider previously backed by human resources software producer Workday and Alphabet. Cisco will pay $2.35bn in cash and assumed equity awards for Duo’s outstanding shares, warrants and equity incentives on a fully-diluted basis. Founded in 2009, Duo Security operates a cloud-based user verification platform that uses two-factor authentication, where a user has to enter a unique, time-limited code in addition to a password.
Pinduoduo, a China-based group buying platform backed by Tencent, raised about $1.63bn when it floated in the US. The company priced its IPO at the top of its $16 to $19 range, issing 85.6 million American depositary shares on the Nasdaq Global Select Market. The IPO reportedly valued Pin-duoduo at $23.8bn including all outstanding share options. The IPO was oversubscribed 20-fold. Buyers included Fidelity Investments and Abu Dhabi-owned sovereign wealth funds. Founded in 2015, Pinduoduo’s platform allows users to club together to receive discounts on certain items, using either the app or social media platforms to form buying groups.
Treasure Data, a US-based real-time data management platform backed by marketing firm Dentsu, was acquired by Arm, the semiconductor subsidiary of SoftBank. The transaction was reported to be worth about $600m, though this has not been officially confirmed. The deal is thought to form part of a push by Arm into the internet-of-things sector. Founded in 2011, Treasure Data has created an enterprise customer data platform that uses machine learning and artificial intelligence to extract real-time insights into users across channels such as apps and phone calls. The company targets the internet of things, automotive, entertainment and retail industries.
Otsuka Pharmaceutical, a pharmaceutical subsidiary of healthcare and nutrition group Otsuka Holdings, agreed to acquire US-based antibody developer Visterra for $430m, allowing drug producer Merck & Co to exit. Visterra is developing precision antibody-based therapeutics designed to modulate disease targets not currently treatable by other antibody-based drugs. Its candidates are based on the company’s Hierotope platform, and its pipeline includes prospective treatments for kidney diseases, cancer, chronic pain and infectious diseases.
Avnera, a US-based fabless semiconductor producer, was acquired for $405m by semiconductor company Skyworks Solutions. Avner was previously backed by semiconductor manufacturer Intel, electronics producer Panasonic, retailer Best Buy, video conferencing provider Polycom and audio equipment producer Onkyo. Skyworks agreed to pay $405m up front, with up to $20m in additional capital contingent on milestones. Founded in 2004, Avnera designs chips for the production of consumer products such as wireless home cinema systems or gaming headsets that require low power consumption. The company’s technology will enhance Skyworks products in fields such as smart voice assistants and in-vehicle systems.
Ascletis, a China-based drug developer backed by pharmaceutical company Tasly Pharmaceuticals, raised $400m in an IPO in Hong Kong. The company sold 224 million shares equating to 20% of its overall share capital at HK$14 ($1.78) a share, in the middle of the IPO’s HK$12 to HK$16 range. Singaporean sovereign wealth fund GIC committed to buying $75m of shares as a cornerstone investor. Founded in 2011, Ascletis is developing treatments for hepatitis C. It has already received approval from Chinese regulators for an anti-viral treatment.
Online food ordering service Grubhub agreed to acquire US-based mobile payment app developer LevelUp for $390m. The company had previously received funding from telecoms firm Deutsche Telekom, Alphabet and financial services firms JPMorgan Chase and CentroCredit Bank. Founded in 2008 as a mobile gaming platform, LevelUp pivoted to its current business model in 2011. It has built a mobile app that enables restaurant costumers to book tables, pre-order food and pay the bill. The restaurants can use the platform to offer loyalty schemes, launch customised marketing campaigns and track sales performance.
Bloom Energy, a US-based fuel cell energy system producer backed by energy utility Eon, raised $270m in its IPO on the New York Stock Exchange. The company issued 18 million shares priced at the top of its $13 to $15 range. Founded in 2001 as Ion America, Bloom Energy produces a power generator, the Bloom Energy Server, which uses flexible lithium-ion batteries. The systems are normally used to supplement renewable energy systems at corporate buildings, and Bloom often partners utilities.
Logistics software producer Stamps.com agreed to acquire MetaPack, a UK-based e-commerce delivery services provider backed by marketing and public relations group WPP, for £175m ($230m) . Founded in 1999, MetaPack operates an online platform for e-commerce businesses to organise logistics. The company is responsible for the deliveries of more than 550 million packages each year. It relies on a network of some 450 mail carriers and 5,000 logistics services worldwide.
Medical research technology provider Medidata agreed to acquire US-based life sciences analytics platform Shyft Analytics for $195m, having already invested in the company in 2016. Medidata owned a 6% stake in Shyft before the acquisition. Pharmaceuticals distributor McKesson had previously backed the company and exited. Shyft Analytics has developed a cloud-based platform that enables pharmaceutical and biotech researchers to mine large amounts of complex data.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
