The number of corporate-backed deals worldwide in March was 264, down 4% from the 274 in the same month last year. Investment value also decreased, by 13% to $10.9bn, down from $12.5bn in March 2018.
In comparison with other months this year, deals in March were similar to January and February (262 and 263 rounds respectively). However, the total estimated capital invested, while similar to January’s $10.38bn, was lower than the $14.45bn estimated for February.
The US came first in the number of corporate-backed deals, hosting 110 rounds, while India was second with 26 rounds, China – third with 25 and Japan fourth with 21.
The leading corporate investors by number of deals were diversified internet conglomerate Alphabet, internet company Tencent and telecoms firm SoftBank. In terms of involvement in the largest deals, SoftBank and Tencent topped the ranking, along with mobile semiconductor producer Qualcomm.
GCV Analytics reported 27 corporate-backed funding initiatives in March, including VC funds, new venturing units, incubators and accelerators. This figure was higher than February, when there were 17 such initiatives. The estimated capital raised in those initiatives was $5.39bn, more than double the estimated $2.09m in the previous month.
Deals
Emerging businesses from the IT, services, health and financial sectors raised the largest number of rounds during March. The most active corporate venturers came from the financial services, IT, media and service sectors, as shown in the heatmap.
US-based satellite services provider OneWeb secured $1.25bn from investors including SoftBank, diversified conglomerate Grupo Salinas and Qualcomm. They were joined by the government of Rwanda, and the round increased the total raised by the company to about $3.4bn since foundation in 2012. OneWeb is building a network of low-earth-orbit satellites intended to provide high-speed internet connectivity to rural areas and other underserved regions. The satellites are built through a partnership with another investor, aerospace manufacturer Airbus. The funding will be used to accelerate production and increase launches.
Tencent led an $800m series D round for China-based real estate listings and services platform Ke.com. Spun off from online and offline estate agency Lianjia and also known as Beike Zhaofang, Ke runs an online platform for locating properties, using 3D modelling technology to help them see the layout of homes and providing real estate brokerage services. The company also offers an online marketplace for in-home decoration and renovation services.
Danke Apartment, a China-based operator of an online apartment rental platform, closed a $500m series C round co-led by Ant Financial, the financial services affiliate of e-commerce group Alibaba. Hedge fund Tiger Global Management co-led the round, which included Primavera Capital, CMC Capital, Gaorong Capital and Joy Capital. The company was reportedly valued at more than $2bn. Founded in 2015, Danke manages about 320,000 apartments in nine Chinese cities. The company splits large flats into smaller units aimed at recent graduates and young professionals, making more exclusive neighbourhoods affordable to individual tenants. Danke employs artificial intelligence-driven technology to calculate housing prices rather than relying on real estate agents.
Internet group Baidu led a RMB3bn ($446m) series C round for China-based smart electric vehicle manufacturer WM Motor. Chinese government-backed fund of funds Taihang Industrial Fund and venture capital firm Linear Venture also participated in the round. WM did not disclose its valuation. Founded in 2015 and also known as Weltmeister, WM released its first vehicle, a plug-in electric sports utility vehicle, in 2018.
India-based e-commerce logistics provider Delhivery closed a $413m series F round led by the SoftBank Vision Fund. Diversified conglomerate Fosun Intenational and CA Swift Investments, a subsidiary of private equity firm Carlyle Group, also participated. The Vision Fund invested $350m and now owns a 23.4% stake. Founded in 2011, Delhivery operates an end-to-end supply chain service for India’s e-commerce sector. Its network consists of 19 automated sorted centres, 30 fulfilment facilities, more than 2,500 direct delivery centres and more than 5,000 partner centres.
Eversource Capital, the joint venture between solar power producer Lightsource BP and asset manager Everstone Group, led a $330m funding round for India-based renewable energy project developer Ayana Renewable Power. The round also featured the state-owned National Investment and Infrastructure Fund of India and CDC Group, the UK government-owned development finance organisation that set up Ayana, while Eversource is participating through its Green Growth Equity Fund. CDC launched Ayana in 2018 with an undisclosed level of funding to develop hundreds of megawatts of wind and solar energy projects in India and neighbouring south Asian countries, such as Bangladesh, Sri Lanka, Nepal and Myanmar. The company currently has about 500MW of solar power under construction, having won the rights to develop 250MW in the Indian state of Andhra Pradesh through an auction by government agency Solar Energy Corporation of India.
Automotive manufacturers Hyundai and Kia invested a total of $300m in India-based ride-hailing service provider Ola through a strategic partnership agreement. Founded in 2011 as OlaCabs, Ola operates an on-demand ride app available in more than 125 cities in India, Australia, New Zealand and the UK. It makes use of a network of more than 1.3 million private and traditional metered taxi drivers. Ola has also launched tangential services such as a mobile payment platform and a credit service, Ola Money Postpaid. It entered the food delivery sector in 2017 when it acquired the Indian business of online food ordering platform Foodpanda. Delivery Hero, Foodpanda’s parent company, received an equity stake in Ola as a result. Ola also formed an electric vehicle-focused spinoff called Ola Electric Mobilit. While the company said it would use part of the $300m investment to build its electric vehicle fleet and related infrastructure in India.
US-based OpenDoor completed a $300m round featuring property developer Lennar and representatives of SoftBank, conglomerate Access Industries and Alphabet – via their respective subsidiaries the SoftBank Vision Fund, Access Technology Ventures and GV, reportedly valuing it at $3.8bn. The corporate investors were joined by General Atlantic, Hawk Equity, Fifth Wall Ventures, Norwest Venture Partners, New Enterprise Associates, SV Angel, GGV Capital, Khosla Ventures and unnamed others. OpenDoor has built an online platform that enables homeowners to sell their property relatively quickly and easily. The company then carries out any repairs after a price is agreed, paying the money and selling the home through its app. It also offers prospective buyers help with scheduling viewings and making offers.
The SoftBank Vision Fund also invested in China-based artificial intelligence and robotics technology developer CloudMinds as part of a $300m funding round. CloudMinds has built a cloud-based system with the potential to connect to millions of robots, which it also produces, allowing them to access capabilities such as computer vision, advanced navigation and natural language processing. The technology has potential applications in a range of service industries including retail and healthcare. The new funding will support the expansion of a manufacturing line in Shanghai as it looks to scale up production. The company is also planning an international growth drive, selling a few hundred of its robots, which retail for about $50,000 each, in the US this year before moving into Japan in 2020.
Tencent led a RMB2bn series B round for China-based fresh food retailer Yipinshengxian. Longzhu Capital, the corporate venturing vehicle of local services platform Meituan Dianping, also participated, along with private equity firm Capital Today and venture capital firm Eastern Bell Venture Capital. In addition to investing, Tencent plans to supply smart retail technology that could help Yipinshengxian improve its operational efficiency and customer experience. Yipinshengxian operates stores in 12 Chinese cites that sell fresh food. Customers can use a mobile app to order food from the company to be delivered to their homes or a pick-up point. The series B capital will support expansion of its offline store network to more than 1,000 outlets by the end of this year.
Exits
In March, GCV Analytics tracked 23 exits involving corporate venturers as either acquirers or exiting investors. The transactions included 17 acquisitions, four initial public offerings and two stake sales.
The number of exits was higher than the 17 in February. Total estimated exited capital surged to $10.66bn from $952m in the previous month. Compared with the same month last year, exits increased from 16 to 23, while the estimated total capital in exits decreased from $12.73bn.
On-demand ride provider Uber agreed to acquire United Arab Emirates-based ride-hailing service Careem for $3.1bn, providing exits for e-commerce firm Rakuten, telecoms firm Saudi Telecom, travel services provider Al Tayyar, its peer Didi Chuxing and automaker Daimler. The deal consisted of $1.4bn in cash and $1.7bn in convertible notes, which reportedly would be convertible to Uber stock at $55 a share. Uber expects to file for an IPO in coming weeks. Careem’s service covers more than 100 cities in the Middle East, Africa, Turkey and Pakistan in addition to digital payment business Careem Pay and last-mile delivery service Careem Now.
US-based on-demand ride provider Lyft, which has several corporates among its investors, raised $2.34bn in an IPO in which it floated at the top of its range. Lyft issued 32.5 million shares at $72 each. It initially planned to issue almost 30.8 million shares at between $62 and $68, before upgrading the range to $70 to $72. The company was valued at $24.3bn in the offering. Founded in 2012, Lyft had some 30.7 million users in 2018, through a network of about 1.9 million drivers. It made a $911m net loss in 2018 from about $2.16bn in revenue.
China-based social media platform YY completed the acquisition of one of its portfolio companies, Singapore-based social video livestreaming platform developer Bigo, for more than $1.45bn. YY paid about $343m in cash, with the remainder in shares. YY owned about 31.7% of Bigo ahead of the acquisition. Founded in 2015, Bigo’s flagship product is livestreaming platform Bigo Live. It also offers short-form video-based social media service Like as well as a range of other apps, such as gaming-focused streaming platform CubeTV. Bigo relies on artificial intelligence technology to remove sexually suggestive content from its platform and has unveiled plans to partner governments to use the same technology for cyber-surveillance.
Verano, a US-based vertically integrated cannabis group backed by cannabinoid therapy developer Scythian Biosciences, agreed to an $850m acquisition by its peer Harvest Health and Recreation. The all-stock transaction assumes a Harvest share price of C$8.79 ($6.57) and is subject to closing conditions including shareholder approval. Verano operates licensed cannabis cultivation and manufacturing facilities, produces a wide range of cannabis products such as edibles, extracts and concentrates, and owns dispensaries under the brand name Zen Leaf.
Online classified listings operator 58.com agreed to sell part of its stake in China-based automotive marketplace operator Chehaoduo to an unnamed third-party investor for more than $713m. The corporate did not identify the purchasing investor but released the news on the same day as Chehaoduo secured $1.5bn in funding from the SoftBank Vision Fund. 58.com will continue to own a minority shareholding in Chehaoduo once the deal closes. Chehaoduo was spun out of classified marketplace Ganji in 2015 and runs second-hand vehicle auction and trading platform Guazi and after-sales services platform Maodou.
Application services provider F5 agreed to acquire US-based app development technology producer Nginx for about $670m in a deal that will allow telecoms firm Telstra to exit. Nginx was founded in 2011 to market the open-source web server and application delivery software of the same name. The company offers a premium version helping enterprises deliver content rapidly and securely, and the software is used in some 375 million websites, often for load balancing, where multiple workloads are distributed across several computing platforms. The company’s brand will continue to exist independently following the acquisition.
IT networking technology provider Juniper Networks agreed to acquire Mist Systems, a US-based developer of artificial intelligence-equipped wireless networks, for $405m, allowing Alphabet, networking equipment provider Cisco and telecoms company NTT to exit. Juniper is acquiring the company to expand its capabilities in cloud-managed wireless networking. Founded in 2014, Mist has created a wireless platform that utilises artificial intelligence (AI) to make wifi more reliable and predictable. It also features an AI assistant called Marvis that can help with troubleshooting while supplying precise data on how the network is operating and how clients are acting.
Figure Eight, a US-based AI technology developer backed by software producers Microsoft and Salesforce, agreed to an acquisition by machine learning datasets provider Appen for $300m. Appen will pay $175m up front and up to $125m more contingent on performance this year. Founded in 2007, Figure Eight has built a machine learning software platform it claims can annotate text, image, audio and video up to 50 times faster than through human labour alone. The datasets are used to train AI algorithms.
Alcon, an eyecare subsidiary of pharmaceutical firm Novartis, agreed to buy US-based eyecare technology developer PowerVision, a Novartis portfolio company, in a $285m transaction. Founded in 2002, PowerVision is developing an intraocular lens implant aimed at improving the sight of elderly patients with cataracts and presbyopia, a condition that gradually reduces the eye’s ability to focus.
Medical technology provider Stryker bought Israel-based shoulder implant developer OrthoSpace for up to $220m, enabling pharmaceutical firm Johnson & Johnson and medical equipment manufacturer Smith & Nephew to exit. The all-cash deal will involve an upfront payment of $110m from Stryker, followed by future milestone payments that could reach $110m. OrthoSpace has created a biodegradable balloon implant called InSpace that helps reduce shoulder pain and improve the range of motion in the joints of patients with rotator cuff injuries. The device has been approved in the EU and is currently undergoing clinical studies in the US.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press. This is our data snapshot based on last month’s investment activity. The charts and tables have been generated by our data platform GCV Analytics.