The buzz-phrases in the industrial sector are “Industry 4.0” and the “fourth industrial revolution”. They aim to describe the major shift taking place across the sector, marrying the might of industrial manufacturing with the power of information technology.
It is about the promise of increased efficiency from internet-of-things (IoT) technologies, artificial intelligence, big data analytics, among other advances. The digitisation of industrial activity is imminent, opening doors to startups looking to disrupt and to collaborate.
The Global Manufacturing Outlook report by auditing and consulting firm KPMG surveyed 300 executives of industrial manufacturing companies worldwide, all of whom concurred there are expectations on part of stakeholders that they will lead digital transformation of their organisations’ operational models. However, they expressed apprehension that the lead times often seem overwhelming.
This means corporate venturers in this sector have much to find when scouting for innovation, but the risks of disruption affecting the parent is equally real. General Electric, perhaps the most storied industrial conglomerate since the earliest days of electrification, has been going through a break-up and sale and there has been a number of departures from GE Ventures as a result of a shrinking portfolio of parent needs.
It is understood GE intends to divest GE Ventures. It was launched in 2013 as a successor to the firm’s GE Capital unit – which still operates as a financial services provider – as well as a clutch of separate funds focused on areas such as healthcare and energy, with a brief to invest $150m a year on behalf of its parent.
3D printing, also known as additive manufacturing, is one of the most promising and disruptive technologies. While it may have failed to turn every home into a factory in the past, 3D printing is today considered essential to Industry 4.0, as it blends digital technology with manufacturing. Most 3D printers are capable of working primarily with plastic, but there is a drive to employ metals, alloys and other materials.
The Wohlers Report 2018, by consultancy Wohlers Associates, revealed significant increases in metal additive manufacturing. It said an estimated 1,768 metal additive manufacturing systems were sold in 2017, compared with 983 systems the previous year, an 80% surge. The report also notes that the number of companies engaged in producing industrial 3D printers also increased significantly in the same period, reflecting the entrance of new players in the market.
The 2019 Additive Manufacturing Market Outlook and Summary of Opportunities by consultancy SmarTech Publishing, said: “Market success in 2018 has been predicated on two driving trends. The first is the effect of a rapid strategic importance placed on additive manufacturing by large multinational corporations spanning the global chemical and materials communities to developers of traditional machine tools and industrial lasers. Second is the continued efforts of the industry to focus their strategies on applications, especially ones which provide growth that is largely complementary – not competitive – with existing manufacturing processes and machine tools.” These two driving trends suggest there are many opportunities for synergies with corporations for innovative startups in this space.
Another growing subsector of the new industrial economy revolves around unmanned aerial vehicles – drones. A recent report – Drones: Reporting for work – from 2018, by financial services firm Goldman Sachs, forecasts that the global spending on drones will surpass $100bn by the end of 2020, with the defence sector remaining the largest area of spending, expected to dedicate over $70bn.
The realm of commercial drones is, however, expanding, according to the report, with demands from two major industries dominating the landscape – construction, accounting for $11bn, and agriculture, $6bn. In construction, drone applications cover a wide range of activities including inspection, maintenance, surveying and mapping. In agriculture, drones are employed primarily for mapping, data gathering and precision farming sensor technologies.
The report also mentions the growing number of licensed drone pilots and their increasing needs for specialisation. “It will be hard going for these pilots to make a career commercially without specialising and moving above and beyond basic photography and videos.”
Drone technologies are being increasingly adopted across other industries. The 2018 Commercial Drone Industry Trends Report, by drone app market platform DroneDeploy, said while drone adoption growth was strongest in the construction sector (239% year-on-year), high adoption rates are also found in mining (198%), surveying (171%) and real estate (118%). The report also notes: “We have seen a five-times increase in enterprise customer growth since 2016. Drone adoption at large companies is currently growing at 20% every month. As a result, the average size of an enterprise drone team grew to five pilots.”
Another disruptive technology in the industrial sector is robotics. According to data from the International Federation of Robotics, by 2016 the average global robot density was at 74 per 10,000 employees in manufacturing. However, the biggest increases are expected in carmaking. Demand for robots in the automotive industry rose by 6% to 103,300 units in 2016, accounting for a 35% share of the total supply. The major drivers were investments in new production facilities in emerging economies as well as investments in major car producing countries in North America, western Europe and east Asia. The International Federation of Robotics data show that, in 2016, just five countries – the US, China, Japan, South Korea and Germany – accounted for 73% of all robot sales globally.
According to consultancy PwC’s Chemicals Trends 2018-19 report, the global chemicals industry has been facing a set of challenges by “fighting declining margins, product commoditisation, rapidly expanding competition in developing countries, and customers demanding more at lower prices”. Much of the growth has been fuelled by mergers and acquisitions. However, the report noted that this year the chemicals sector may reach a tipping point. “Prodded by accelerating technology advances, which are shaping customer purchases and needs, some chemicals companies have begun to rethink their growth strategies.”
The report also notes that the industry is not devoid of opportunities. “Significant profit opportunities await chemicals companies that are able to lead in digitising products and services, providing collaborative sales channels for customers, and generating R&D breakthroughs in nanomaterials, which can contribute to pollution reduction, disease treatment, computer sensors, wearable clothing, robotics and new forms of packaging.”
From February 2018 and January 2019, GCV reported 277 venturing rounds involving corporate investors from the industrial sector. A considerable number of them (125) took place in the US, while 28 were hosted in China, 19 in Israel, 14 in the UK and 13 in India.
Many of those commitments (72) went to emerging enterprises from the same sector, mostly robotics and unmanned aerial vehicle as well as agriculture and agtech, the remainder to companies developing other technologies in synergies with industrials – 61 deals in the IT sector (artificial intelligence, cybersecurity, big data and analytics), 34 in transport (primarily ride-hailing and car-sharing along with connected, autonomous and electric vehicle tech) and 28 in health (mostly medical devices, diagnostics and pharmaceuticals).
The network diagram, illustrating co-investments of industrial corporates, shows the range of investment interests of the sector’s incumbents. The commitments range from drones (Airware, PrecisionHawk) and robots (Sarcos Robotics) through business management software (Cosmo Tech) and big data analytics and artificial intelligence for data (Element Analytics, Bonsai), IoT applications and networks (FogHorn, Sensoro) to transport and mobility tech (Humatics, Hubject) and even smart grid and renewable energy tech (Actility and Enbala).
On a calendar year-on-year basis, total capital raised in rounds backed by industrial corporates went up significantly from $8.70bn in 2017 to $14.24bn in 2018, or 64% . The deal count also grew slightly, by 11% from 244 deals in 2017 to 270 by the end of 2018.
The corporate investors from the industrial sector involved in the largest number of deals were aircraft producer Airbus, industrial conglomerates Siemens, Sumitomo and Fosun. The list of industrial
The corporate investors from the industrial sector involved in the largest number of deals were aircraft producer Airbus, industrial conglomerates Siemens, Sumitomo and Fosun. The list of industrial corporates committing capital in the largest rounds was topped by industrial conglomerate Fosun, chemicals and energy producer Koch Industries and conglomerate Access Industries.
The most active corporate venture investors in emerging industrial companies were aircraft producers Boeing and Airbus along with diversified conglomerate Alphabet.
The emerging industrial businesses in the portfolios of corporate venturers were mostly from the drones and drone tech space (AirMap and Airware, Precision Hawk) as well as additive manufacturing (Desktop Metal and Carbon).
Overall, corporate investments in emerging industrial-focused enterprises rose significantly from 147 rounds in 2017 to 181 by the end of 2018, suggesting a 23% increase. Estimated total dollars more than doubled from $3.04bn in 2017 to $7.39bn last year.
Deals
Corporates from the industrial sector invested in large multimillion-dollar rounds, raised mostly by enterprises in the same sector as well as in transport.
China-based bicycle-rental service Hellobike secured about $700m in series E1 funding from investors including Fosun and Ant Financial, the financial services affiliate of e-commerce group Alibaba. The corporates were joined by seven undisclosed investors. Hellobike is China’s third-largest app-based bike-sharing service by monthly active users, after Mobike and Ofo.
US-based professional media content provider Getty Images signed an agreement with Koch Industries’ corporate venturing arm Koch Equity Development to secure a $500m investment. The company was majority-owned by private equity firm Carlyle Group, when the Getty family reached an agreement to repurchase control in a deal that reportedly valued Getty Images at below $3bn, including debt. Founded in 1995, Getty Images operates an online platform for media, business and creatives to purchase photography, video and music from more than 250,000 contributors that provide content from more than 160,000 news, sports and entertainment events each year.
US-based online real estate marketplace Opendoor raised $325m in a series E round co-led by home builder Lennar, Access Industries and venture capital firm General Atlantic. Property manager Invitation Homes also participated in the round, among other investors. Access Industries took part through its investment arm Access Technology Ventures. Founded in 2014, Opendoor has created an online real estate platform that helps with valuation, and once fees have been agreed its staff conduct an assessment of the property to ascertain whether work is required.
Landa Digital Printing, an Israel-based developer of nanotechnology that enhances print results, raised $300m from investors including chemicals producer Altana, a family office Skion, which like Altana is majority owned by Susanne Klatten, an entrepreneur and heiress to BMW’s automotive production business. Formed as a subsidiary of nanotechnology developer Landa Group, Landa Digital Printing’s nanographic process converts an ink image into a polymeric film that is laminated on to the paper.
E-commerce firm Blibli and industrial conglomerate Astra International invested up to $290m in a round raised by Indonesia-based on-demand ride platform Go-Jek, which was reportedly targeting $1.5bn, valuing Go-Jek at $4bn. Founded in 2010, Go-Jek operates an on-demand ride platform with some 900,000 drivers, and has branched out into adjacent services such as removal and the delivery of restaurant food, groceries and prescription medication. The company, which has roughly 15 million weekly active users, has also developed a mobile payment platform.
Energy provider Shanghai Electric and rolling stock producer CRRC Corporation co-led a RMB2bn ($288m) series A round for China-based electric vehicle developer Leap Motor. Asset management firm Gopher Asset, securities brokerage Industrial Securities and venture capital firm Sequoia Capital China also contributed to the round, which valued the company at about $1.15bn. Leap Motor is working on a smart vehicle incorporating features such as an intelligent driving system, facial recognition-based security measures and a cloud-based in-car wifi network.
Automotive manufacturers Hyundai and Kia Motors invested $250m in Singapore-based ride-hailing and online-to-offline platform Grab in connection with a partnership deal. The capital was added to a funding round, which totalled $2.7bn at the time and reached $5bn by the end of 2018. Founded in 2012 as GrabTaxi, Grab has grown its on-demand ride service into a more wide-ranging offering spanning food and package delivery as well as mobile payment across eight Southeast Asian countries.
US-based electric vehicle charging network operator ChargePoint received $240m in a series H round backed by Siemens and electric utility American Electric Power. Chevron Technology Ventures and BMW i Ventures, respective corporate venturing units of oil and gas company Chevron and carmaker BMW, as well as Daimler Trucks & Buses, a subsidiary of automotive producer Daimler, also participated in the round. Founded in 2007 as Coulomb Technologies, ChargePoint operates a network of more than 57,000 chargers.
China-based copper foil manufacturer Lingbao Wason Copper Foil received ₩270bn ($240m) from SK Holdings, the holding company of industrial conglomerate SK Group. Founded in 2001, Lingbao Wason produces copper foil, boasting an annual manufacturing capacity of 30,000 tonnes. Copper foil is an essential element of batteries, with the company’s clients including consumer electronics producer Panasonic Electric and carmaker BYD Auto. Lingbao Wason will use the funding to expand its manufacturing capacity to 75,000 tonnes by 2022. The company is a subsidiary of gold mining company Lingbao Gold Group. SK Holdings will become the second-largest shareholder following the deal’s completion.
Enerkem, a Canada-based developer of a process that converts waste to biofuel, secured C$280m ($224m) from investors including waste management services provide Waste Management of Canada and industrial conglomerate Sinobioway. Financial services firm National Bank of Canada also took part in the round, along with BlackRock, Rho Ventures, Braemar Energy Ventures, Investissement Québec, Fonds de solidarité FTQ, Cycle Capital, Fondaction and Westly Group. Enerkem produces biofuels and chemicals such as methanol and ethanol from solid waste.
Emerging industrial-focused businesses received financial backing from corporate investors from other sectors.
The SoftBank Vision Fund provided $1.1bn for US-based smart glass producer View, increasing its overall debt and equity financing to more than $1.8bn. View has created “dynamic glass” which lightens or darkens according to the amount of direct light, helping to decrease heating and lighting costs. The cash will support an increase in View’s manufacturing capabilities as well as research and development.
China-based robotics technology producer UBtech Robotics raised $820m in a series C round led by internet company Tencent. The round also featured telecoms firm Telstra, consumer electronics maker Haier Group, furniture rental service Easyhome Furnishings, conglomerate Chia Tai Group, power producer China General Nuclear and online lending platform CreditEase. China Minsheng Bank, Industrial and Commercial Bank of China, Minsheng Securities, China Film and TV Capital, Sichuan Railway Investment Group, Green Pine Capital Partners, Whale Capital, Shenzhen JinFuZi Network Technology and CDH Investments also backed to the round, which valued UBtech at $5bn. Founded in 2012, UBtech creates humanoid robots for entertainment and educational applications.
Space Exploration Technologies (SpaceX), a US-based space technology and services provider backed by Alphabet, raised a $500m round that valued SpaceX at $30.5bn. Backers include investment firm Baillie Gifford and the company’s existing investors, according to sources. SpaceX develops and launches rockets and spacecraft, resupplying the International Space Station and launching satellites on behalf of its clients. The funding will be used to build a satellite-based internet network for SpaceX as well as to developing its rockets as it works toward passenger flights to the moon and eventually to Mars.
The SoftBank Vision Fund led a $400m series C round for US-based molecular production technology developer Zymergen. Goldman Sachs, investment manager Hanwha Asset Management and venture capital firms DCVC, DFJ, Innovation Endeavors, True Ventures and Two Sigma Ventures also invested. The series C proceeds will be used to double the capacity of Zymergen’s technology platform. Zymergen utilises bioengineering, machine learning and automation technology to create speciality chemicals or products for use in industries such as pharmaceuticals, agriculture or advanced chemicals and materials.
US-based metal 3D printing company Desktop Metal closed a $160m round, which was led by Koch Disruptive Technologies, a subsidiary of Koch Industries. Other corporate backers in the round included GV, corporate venturing vehicle of Alphabet, Panasonic and hardware provider Techtronic Industries. Existing traditional VC investors including Lux Capital, New Enterprise Associates and Kleiner Perkins also participated. The funding will be used to develop the company’s additive manufacturing technology and scale it. Founded in 2015, Desktop Metal has developed and 3D metal printers for both offices and large-scale industrial settings.
US-based space services provider Spaceflight Industries secured $150m from investors including diversified conglomerate Mitsui and corporate-backed partnership Space Alliance. The round also featured undisclosed existing backers and increased the company’s overall funding to more than $200m. Space Alliance was formed by satellite system producer Thales Alenia Space and satellite operator Telespazio. Founded in 1999, Spaceflight acquires capacity on commercial space launches. The company also offers a range of additional services, such as insurance, analysis of mission feasibility and communication networks.
Singapore-based automated robotics technology producer GreyOrange completed a $140m series C round featuring diversified conglomerate Mitsubishi and e-commerce company Flipkart. Investment firm Mithril Capital led the round, which included venture capital firm Blume Ventures, Project Verte and Binny Bansal, co-founder and chief executive of Flipkart, plus unnamed existing investors. Founded in 2011, GreyOrange develops artificial intelligence-equipped robotics systems for use in e-commerce and logistics operations.
Cloud Constellation, a US-headquartered developer of a space-based data storage system, received $100m of series B funding from Haier, through its incubation platform, HCH Group. Founded in 2015, Cloud Constellation is developing a space-based data network and cloud data storage service using a network of eight satellites in low earth orbit to enable enterprise, government and military organisations to share and store data. The company claims the system will be insulated from the internet, so data will be protected from cyberattacks and avoid the requirements of privacy regulation.
Exits
Corporate venturers from the industrial sector completed 21 exits between February 2018 and January 2019 – 11 acquisitions, eight IPOs, one merger and one other transaction. None of these exits was achieved by a company developing a strictly industrial economic activity. Emerging industrial businesses are capital intensive and take longer to mature sufficiently for an acquisition or for public markets.
Pivotal Software, a US-based software development services provider spun out of software producer EMC, closed its IPO at just over $638m, after underwriters bought 5.5 million additional shares. The IPO initially consisted of 33.1 million shares at $15 each on the New York Stock Exchange, in addition to almost 3.9 million shares sold by industrial technology and appliance manufacturer General Electric. Spun out of EMC, which was renamed Dell EMC when acquired by computing technology producer Dell in 2016, Pivotal supplies software development technology as well as expertise to clients looking to create customised applications. Dell EMC is the company’s largest shareholder, while notable investors include EMC subsidiary VMware, automotive manufacturer Ford, GE and private equity firm Silver Lake.
Propeller Health, a US-based digital respiratory therapeutics developer backed by multiple corporate investors, agreed to a $225m acquisition by connected medical devices provider ResMed, providing exits to a number of corporates – pharmaceutical firms McKesson, Aptar Pharma, Hikma and GlaxoSmithKline, pharmacy chain Walgreens and manufactured goods producer 3M. Founded in 2010, Propeller Health has created a system of small sensors attached to inhalers that track usage and offer feedback to patients through a mobile app. The platform is aimed at people living with chronic respiratory diseases.
Babytree, a China-based social parenting media and e-commerce platform previously backed by Fosun, Alibaba and education services provider TAL Education, raised $217m in its Hong Kong IPO. The company priced shares at HK$6.80 ($0.90), at the bottom of a range with HK$8.80 at the top end, valuing the company at $1.5bn. Babytree has created an online community where parents can share their experiences, seek advice and find information such as a vaccination checklist and dietary guides for mothers. It also operates an e-commerce platform and a video-sharing app.
Consumer electronics producer Samsung agreed to acquire Israel-based smartphone camera technology provider Corephotonics for $155m, giving exits to memory card maker SanDisk, hard disk provider Western Digital, telecoms firm CK -Telecom, chipmaker MediaTek and manufacturing services. Corephotonics designs duel-camera technology that helps mobile device users take professional photographs, integrating capabilities such as optical zoom, low-light performance, depth features and optical image stabilisation.
Westwing, a Germany-based online furniture store backed by e-commerce group Rocket Internet, raised €120m ($139m) in its IPO on the Frankfurt Stock Exchange. The company will use the proceeds to enhance its technology and marketing activities and to repay debt. Tengelmann Ventures, the investment arm of retailer Tengelmann, and Access Industries had backed the company in previous venturing rounds. Founded in 2011, Westwing operates a shopping club that offers daily flash sales for furniture and home accessories. It made a profit in the fourth quarter of 2017 but posted a €4.9m loss before interest, tax, depreciation and amortisation for the year from €266m in revenue.
Industrial product and appliance maker Robert Bosch, telecoms firm KPN and industrial automation equipment producer Phoenix Contact exited Netherlands-based network security software developer SecurityMatters in a $113m acquisition by IoT security technology provider Forescout Technologies. Founded in 2009, SecurityMatters has built a cybersecurity platform that focuses on operational technology networks. Forescout will integrate the company’s passive network monitoring and assessment technology into its own offering.
Neuronetics, a US-based medical device developer backed by pharmaceutical firm Pfizer and GE closed its IPO at $107.5m. The company priced 5.5 million shares at $17 each on the Nasdaq Global Market, raising an initial $93.5m. Its shares closed at $26.96, giving it a market capitalisation of about $451m, and underwriters took up an option to buy a further 825,000 shares. Neuronetics’ lead product is a device intended to treat psychiatric disorders by using a magnetic field to stimulate parts of the brain associated with mood.
Saavn, an India-based music-streaming service backed by media groups Bertelsmann and Liberty Media, agreed to a merger with JioMusic, a digital music subsidiary of conglomerate Reliance Industries. Reliance will invest up to $100m in Saavn as part of the agreement, providing $20m upfront to support international growth and expansion efforts for the merged platform, which is valued at more than $1bn in the deal, with Saavn valued at about $330m. The corporate will also by $104m of stock from existing shareholders, including Liberty and Bertelsmann. Founded in 2007, Saavn on Bollywood, regional Indian and English language music.
Network security software producer Palo Alto Networks agreed to acquire Secdo, an Israel-based cybersecurity technology provider backed by corporate joint venture Rafael Development Corporation. Palo Alto will reportedly pay about $100m. Founded in 2014, Secdo has built a software platform that detects cyberthreats and identifies how a device was compromised, providing IT staff with tools to respond to attacks without impacting users. Secdo’s engineers will join Palo Alto Networks, which will integrate the technology into its Traps cybersecurity platform.
Magenta Therapeutics, a bone marrow transplant technology developer backed by corporates Alphabet, Access Industries and healthcare provider Partners Healthcare, raised $100m in its IPO. The company issued almost 6.7 million shares on the Nasdaq Global Market at $15 each, in the middle of the $14 to $16 range it had set earlier. Magenta is working on treatments for blood cancers, and autoimmune and genetic diseases based on bone marrow transplants that use gene-modified stem cells. The company will put $39m of the IPO proceeds into development of its lead program.
Global Corporate Venturing also reported exits from emerging industrial-related enterprises involving corporate investors.
NLight Photonics, a US-based laser technology producer backed by consumer electronics manufacturer Samsung, filed for an $86.3m IPO on the Nasdaq Global Market, which eventually reached $96m. The company issued 6 million shares at $16 each, above the $10.95 offering price initially set. The company expects to use the proceeds for working capital and may also acquire or invest in other businesses. Founded in 2000, NLight produces high-power semiconductor and fibre lasers. The company has a core focus on the industrial, microfabrication, aerospace and defence sectors.
Israel-based defence electronics contractor Elbit Systems sold a minority share of its cybersecurity subsidiary Cyberbit to Claridge Israel for $30m. Claridge Israel is a partnership between Canada state-backed pension fund Caisse de dépôt et placement du Québec (CDPQ) and Claridge, the family office of Stephen Bronfman, whose fortune came from the Seagram drinks business. Cyberbit has a platform that offers endpoint attack detection, system-on-a-chip automation, industrial control network protection and cybersecurity training and simulation.
Agribusiness Syngenta agreed to acquire Brazil-based agriculture management software provider Strider for an undisclosed amount, allowing mobile semiconductor technology producer Qualcomm to exit. Founded in 2013, Strider has built a software platform for farmers to manage multiple aspects of the agricultural process, including farm machinery and pest control, as well as providing satellite imagery.
Aproplan, a Belgium-based construction management app developer backed by property developer Matexi, merged with GenieBelt, a Denmark-based construction data storage and sharing platform backed by energy system provider Danish Solar. The unified company, LetsBuild, is being buoyed by an undisclosed level of funding from investors including industrial equipment supplier Solar and Inventures, a subsidiary of association management and services firm SmithBucklin. Venture capital firm Enern, growth equity firm Fortino and seed-stage investor Nordic Makers also took part in the round. The combined LetsBuild will operate a digital platform intended to improve communication and organisation on construction sites.
Funds
From February 2018 to January 2019, corporate venturers and corporate-backed VC firms investing in the industrial sector secured over $4bn in capital via 47 funding initiatives, which included 27 VC funds, 13 new or refunded venturing units, two accelerators, two incubators and three other initiatives.
On a calendar year-to-year basis, the number of funding initiatives in the industrial sector remained stable at 38 in 2018 against 37 in 2017 and 42 in 2016. Total estimated capital, however, was much lower – $4.07bn by the end of last year, down 72% from the $14.06bn in 2017.
China-based oil, gas and chemicals supplier Sinopec formed investment firm Sinopec Capital with RMB10bn. It will invest in emerging areas such as new energy, advanced materials, artificial intelligence, smart manufacturing and supply chain technologies. Sinopec did not say the vehicle would invest in startups but its activities will cover equity investments and management as well as project investments and asset management. The fund will get 49% of its capital from oil and gas refiner Sinopec Corp and the remaining 51% from parent company Sinopec Group, which also produces a range of petroleum-related products.
China-based venture capital firm Fortune Venture Capital secured RMB4.63bn for its latest fund from limited partners including property developer Century Golden Resources Group, financial services firm Industrial and Commercial Bank, Shenzhen Yunneng Fund, Kpeng Capital and the city of Shenzhen’s guidance fund. Founded in 2000, Fortune VC focuses on agricultural technology, cleantech, media, telecoms and consumer goods and services. The firm began raising money for the Shenzhen Fortune Chuangtong Equity Investment fund in 2017 and has so far invested about $190m in 30 companies.
B Capital Group, a US-based investment firm sponsored by management consultancy Boston Consulting Group (BCG), closed an oversubscribed venture capital fund at $360m. Founded in 2015 in partnership with BCG, B Capital targets global investments in transportation and industrial logistics, healthcare, financial and insurance technology and what it refers to as consumer enablement. The firm intends to back between 20 and 25 portfolio companies with the fund, and the extra capital will allow it to make follow-on investments. It operates out of three US offices and an office in Singapore.
Aerospace and defence company Lockheed Martin doubled the funding of its corporate venturing arm Lockheed Martin Ventures to $200m. The additional $100m followed new tax legislation in the US and will go primarily to early-stage startups in sensor technologies, autonomy, artificial intelligence and cybertechnology. The increased funding forms part of a $460m commitment that Lockheed Martin is making across its business operations.
Latitude Venture Partners, an Indonesia-based venture capital and business development vehicle affiliated with conglomerate Sinar Mas, secured $200m in capital. Latitude targets investments in growth-stage companies that can bring value to Indonesia, where Sinar Mas is also based. Sectors of interest to the firm include industrial, healthcare, financial and artificial intelligence technology. Sinar Mas already operates corporate venturing unit Sinar Mas Digital Ventures and is a partner in EV Growth along with internet company Yahoo Japan and VC firm East Ventures. Latitude is headed by Linda Wijaya, formerly CEO of paper producer Asia Pulp and Paper and a shareholder in Sinar Mas, as managing partner.
Germany-based chemicals producer Evonik launched its second corporate venture capital fund with a €150m commitment, increasing its funds under management to €250m. Evonik formed Evonik Venture Capital in 2012, providing an initial €100m, and the corporate has since built a 25-strong portfolio of direct and fund-of-funds investments. The vehicle’s overall strategy looks to connect Evonik to new technologies while also scouting for potential acquisition targets in Europe, North America, Asia and Israel, from offices in Germany, the US and China. The new fund will invest at series A and B stage, increasing maximum investment in a single deal from the first fund’s €5m to €15m per company.
Australia-based fund manager Main Sequence Ventures added A$132m ($94.8m) to its Csiro Innovation Fund 1 from investors including Lockheed Martin. University of Melbourne, superannuation fund Hostplus and Singaporean government-owned investment firm Temasek also contributed to the fund, which increased its size to $167m, $23m above its original target. Main Sequence Ventures was set up to manage the Csiro Innovation Fund, established in 2016 by research institute Commonwealth Scientific Research Organisation (Csiro) and Australia’s federal government. The fund invests in domestic spinouts and small and medium-sized enterprises, with a focus on agricultural technology, quantum computing, health and space technology.
Industrial equipment maker Armstrong Industrial Corporation is one of nine partners to have joined Spring Seeds Capital, the venture capital branch of government agency Spring Singapore, for a S$200m ($150m) co-investment scheme. Spring Singapore put up S$100m of capital for the initiative, which will provide funding for startups over an eight-year period. The co-investors will jointly match that figure. The partnership will look to invest in advanced manufacturing and engineering, health and biomedical sciences, and urban and sustainability technology developers. The partners include infrastructure support services provider Silicon Solution Partners, Heritas Capital Management, a private equity arm of diversified holding group IMC, and Trendlines Medical-K2 Global, a partnership between innovation commercialisation firm Trendlines and venture capital firm K2 Global.
Raystone Capital, the investment arm of China-based mobile games developer Raystone, closed its latest growth fund at RMB1bn. State-backed venture capital fund National Venture Capital Fund for Emerging Industries is a limited partner in the entity, as are funds backed by the city of Shenzhen’s municipal government, with the government-owned vehicles contributing 25% of the total. Shenzhen Longgang District Venture Capital Guiding Fund and Shenzhen government-backed fund of funds Kunpeng Fund also participated. Founded in 2009, Raystone Capital focuses on sectors such as cleantech, new materials and consumer-focused technologies. The latest fund will target China-based growth-stage companies working on artificial intelligence technologies.
Japan-headquartered industrial equipment manufacturer Nabtesco launched Switzerland-based corporate venturing fund Nabtesco Technology Ventures with €75m. The unit, operated in partnership with Switzerland-based investment firm Emerald Technology Ventures, will invest in areas of strategic importance to Nabtesco, such as robotics, motors, artificial intelligence and IoT technology. Nabtesco Technology Ventures will focus on motion control technology and is looking chiefly at investments in Europe and North America. Hiroshi Nerima, a business development manager at Nabtesco who joined the company in 2012, will be Nabtesco Technology Ventures’ president, chief executive and managing partner. He had been involved in laying the groundwork for the vehicle since March 2017.
People
GCV has reported a number of people moves in the industrial sector over the past year, and a significant number of them involved GE Ventures and Next47, the corporate venturing unit of Germany-based industrial conglomerate Siemens. In the past year GE Ventures has lost managing director Lisa Suennen, who joined US-based legal and consulting firm Manatt Phelps & Phillips to lead its corporate venture capital fund, managing director of healthcare investments Noah Lewis, who has founded private equity firm Ardan Equity Partners, and director of healthcare investments Jessica Zeaske, who left to be a partner at corporate-backed investment vehicle Echo Health Ventures.
Ralf Schnell, former head of Siemens’ corporate venturing unit for a dozen years, became head of private equity at Siemens Financial Services. He was CEO of Siemens Venture Capital until the creation of its €1bn Next47 evergreen venturing unit. As a partner at Next47, Schnell helped new recruit Lak Ananth integrate its Siemens Venture Capital portfolio.
Susana Quintana-Plaza also left Next47, where she ran its London office as a partner. She joined Next47 in late 2016, having previously been senior vice-president of technology and innovation for energy utility Eon since 2014. She was Eon’s vice-president of innovation scouting and co-investments for three years from 2011.
Gerd Goette left Siemens after nearly 20 years as a corporate venturer. He said: “I plan to stay in the energy and sustainability ecosystem, working with startups and VCs in an adviser and board capacity.” He joined what was then Siemens Venture Capital after 13 years in the corporate’s engineering team.
Swati Dasgupta left Next47 to be a director at National Grid Ventures, the strategic investment arm of UK-based grid operator National Grid Group. The unit oversees investments in technology startups, energy projects and partnerships on behalf of its parent. Before joining Next47 as a director in 2017, Dasgupta was a director of external innovation at Siemens’ technology-to-business unit, TTB, from 2013. Dasgupta had previously spent nearly a decade as a partner at IBM Venture Capital Group, a corporate venture capital subsidiary of computing technology producer IBM.
However, new people joined the Siemens venture team. Matthew Cowan, veteran venture capitalist and the co-founder and managing partner of growth equity firm Bridgescale Partners, joined Next47 in California. Cowan co-founded Bridge-scale with business partner Rob Chaplinsky in the mid-2000s.
Along with Matthew Cowan, Ching-Yu Hu joined as a principal based in the Palo Alto, California, office. At the same time, TJ Rylander, who had spent a decade as managing partner at US intelligence community venture unit In-Q-Tel, joined as a partner, and Jack Eadie joined Siemens as a UK-based principal for Next47. Eadie was formerly a venture capital investor at Eight Roads Ventures, the $4bn VC arm of fund manager Fidelity.
Robert Bosch Venture Capital, the corporate venturing subsidiary of Robert Bosch, appointed Xiaoguang Sun head of venture capital in China. Sun moved from private equity firm Yellow River Capital, where he was a partner and managing director from 2016. He previously spent eight years as a director at chipmaker Intel’s investment arm, Intel Capital.
Frédéric Rombaut, formerly managing director of corporate venturing funds for network equipment supplier Cisco and semiconductor maker Qualcomm, joined UK-based venture capital firm Seraphim Capital as general partner. Seraphim has raised a $95m fund focused on the $350bn space technology market. It is backed by limited partners including corporates SES, Airbus and Telespazio. Rombaut was managing director of Cisco Investment International unit. He left in early 2016 to focus more on personal investments through his FR Development vehicle, with Jon Koplin replacing him as UK-based managing director of Cisco Investments. Before joining Cisco in January 2012, Rombaut was managing director of Qualcomm Ventures Europe for six years.
Tomoko Inoue left venture capital firm MedVenture Partners to join Omron Ventures, the corporate venturing arm of Japan-based automation equipment manufacturer Omron, as chief executive. Inoue was a senior manager at Med-Venture Partners, a subsidiary of public-private investment partnership Innovation Network Corporation of Japan, from 2013, having helped set up the unit. She was previously a vice-president at private equity firm Tokio Marine Capital from 2006 to 2009. Omron Ventures focuses on developers of factory automation, healthcare, mobility and energy management technology.
Mike Adams became a US-based director of corporate ventures at Germany-based air and water filter provider Mann & Hummel. He was previously a principal for just over four years at 8 Rivers Capital, an energy, sustainability, transportation and communications technology developer. Before that he was managing director of technology ventures at energy provider Constellation Energy.
Miles Kirby and George Ugras have founded UK and US-based venture capital firm AV8 with a $180m committed by insurer Allianz. AV8 will invest mainly in seed and series A rounds in digital health, big data, artificial intelligence, machine learning, mobility and robotics. Ugras was previously head of IBM Ventures but he started his VC career investing in early-stage technology companies, first at Apax Partners as a principal then at Adams Capital Management as a partner.
Japan-headquartered manufacturing conglomerate Yamaha hired Nolan Paul from US-based fruit supplier Driscoll’s to develop its agricultural technology corporate venturing practice at its Silicon Valley innovation hub. As head of research and development strategy and emerging technology, Paul led Driscoll’s agtech investment portfolio for four years, looking at genetics, phenotyping, automation, robotics, biologicals, plant sensing, controlled environment, post-harvest practices and data analytics. He is now general manager for agricultural robotics and data at Yamaha Motor Ventures and Laboratory Silicon Valley.
Paul Campbell joined US-based advanced materials manufacturer WL Gore & Associates as co-leader of its co-innovation lab, Gore Innovation Centre, an 11,000 square-foot hub for product development and prototyping that connects Gore with Silicon Valley’s entrepreneurial ecosystem. Campbell will continue to work at Startup Genie, the entrepreneurial consultancy of which he has been CEO since 2009, with responsibility for incubation and corporate entrepreneur programs as well as partnerships with companies. A co-founder of Silicon Valley Innovation Group, which advises innovation executives at corporates, Campbell also helped launch a global product development course at Hult International Business School, where he remains involved as a professor.
University and government backing
GCV has reported many commitments to university spinouts in the industrial sector through sister publication Global University Venturing. Last year 112 rounds were raised by university spinouts, nearly double the 66 in the previous year. The level of estimated total capital deployed in 2018 was $2.37bn, considerably higher than the $155m in 2017.
Mazor Robotics, an Israel-based robotic surgical device maker based on research at Technion–Israel Institute of Technology, was acquired by medical device developer Medtronic for $1.6bn. The price set a record for acquisitions in the Israeli medical sector, surpassing the $1.1bn paid by drug developer Mitsubishi Tanabe Pharma for Ben-Gurion University of the Negev-founded Parkinson’s therapy developer Neuroderm in 2017. Founded in 2001, Mazor Robotics has created a robotic arm that helps surgeons guide spinal procedures, with support from features such as advanced imaging scans and a camera. Mazor’s underlying technology resulted from research led by Moshe Shoham, a professor in the faculty of mechanical engineering.
Apeel Sciences, a US-based food technology developer that emerged out of University of California Santa Barbara, raised $70m in a series C round led by hedge fund Viking Global Investors. Andreesen Horowitz, Upfront Ventures, S2G Ventures and a range of unnamed backers reportedly also contributed to the round. Apeel is developing plant-based coatings that delay the ageing of fruit and vegetables. The company hopes its technology will reduce food waste.
Spiber, a Japan-based synthetic silk products developer spun out of Keio University, received about ¥5bn ($44m) in a round led by public-private partnership Cool Japan Fund, which invested $17.6m in the round. Other investors were not disclosed. Founded in 2007 from Keio’s Institute for Advanced Biosciences, Spiber is developing a manufacturing process for products made of synthetic silk proteins rather than the natural form generally collected from creatures such as silkworms and spiders. The company is initially targeting applications for the apparel and automobile industries.
Iceye, a Finland-based Earth observation satellite spinout of Aalto University, obtained $34m in a series B round backed by government-owned investment firm Finnish Industry Investment. The round was led by venture capital firm True Ventures and featured Seraphim Capital, which manages the government and corporate-backed Seraphim Space Fund. Three VC funds allied to the Draper Venture Network – Draper Nexus, Draper Associates and Draper Esprit – also supplied funding, as did syndicate Space Angels Network and venture capital firm Promus Ventures. Founded in 2015, Iceye manufactures low earth orbit satellites that pick up detailed imaging data by using a high-detail radar technology – synthetic-aperture radar.
Innovations in the industrial sector catch the attention of governments and government-related investors, as new technologies and business models in it have the potential to boost productivity and economic growth. However, GCV recorded a considerable drop in such investments in 2018 – 32 rounds worth an estimated total of $814m compared with the 65 rounds in 2017, estimated at $976bn.