The past year has been a busy one for the sector, marked by notable deals and remarkable initial public offerings (IPOs), particularly the $25bn flotation of China-based e-commerce company Alibaba and of Germany-based corporate-backed accelerator Rocket Internet: Global Corporate Venturing tracked $9.8bn of deals in the sector and more than $28bn in IPOs.
The majority of those deals and IPOs took place in Asia, while only some in Europe and North America. The undisputed investment leader of the year has been the China-based e-commerce giant Alibaba, by both number and sheer volume of investment, although most of them were either stake purchases or of undisclosed nature. Ranking second is the Germany-based consumer conglomerate Tengelmann, followed by Japan-based e-commerce giant Rakuten and the Germany-based and corporate-backed Rocket Internet.
Deals
The busy activity in the IPO market, beyond the Alibaba and Rocket Internet flotations, included China-based e-commerce portal JD.com – backed by Saudi billionaire Prince Alwaleed bin Talal’s Kingdom Holding – which raised more than $1.7bn in its IPO, as Reuters reported.
Backed by Disney and Foxconn, GoPro, the producer of portable high-definition camera equipment went public in June 2014 with a $427.2m initial public offering.
In April 2014, Alibaba took a 25% stake for a $692m investment in InTime, the owner of a chain of brick-and-mortar stores in China as part of its expansion beyond the online market. Alibaba also backed US-based ridesharing company Lyft, which secured $250m in a round also supported by the hedge fund sponsor Coatue Management, Third Point Ventures, the venture capital subsidiary of investment adviser Third Point, among others. The US sharing economy market, however, is not the only geography Alibaba has set its eyes on. In early 2015, Alibaba also partook in a round led by SoftBank Internet and Media (SIMI) where the China-based taxi hailing app Kuaidi Dache raised over $600m.
In April, Alibaba Group, along with private equity firm Yunfeng Capital, invested $1.22bn in internet video streaming company Youku Tudou. The same month Alibaba bought digital navigation service AutoNavi for $1.5bn. In that same month, the China-based microblogging platform Sina Weibo’s stock surged, as Alibaba increased its stake in it. The company raised $285.6m in an initial public offering. Alibaba bought more than 29 million shares in the offering, increasing its stake from 19.3% to 32% in the process. In May 2014, it purchased a 10.35% stake in Singapore Post for S$312.5m ($249m). In early October, Peel – a US-based developer of a television remote control app – received a $50m strategic investment from Alibaba, Reuters reported.
In mid-January 2015, Alibaba acquired a majority stake in News Corp-backed digital advertising platform AdChina for an undisclosed amount. Also in January, Meituan.com, the China-based group buying website backed by e-commerce company Alibaba, raised $700m in series D funding from undisclosed investors at a $7bn valuation.
Further east in Asia, the Japan-based e-commerce company Rakuten focused its investments mostly on digital and Internet-related businesses that could potentially enhance its operations and business potential. In April 2014, it was announced that one of the companies it backs, Tuniu, an online travel agency operating in China, was to file for an $120m IPO in the US. In May, Rakuten-backed social media website Pinterest raised $200m in a series F round at a $5bn valuation. In mid-March 2015, Pinterest raised a further $367m in a series G round from Mashable as well as venture capital firms Andreessen Horowitz and Bessemer Venture Partners, among others. In August 2014, Rakuten acquired the US-based e-commerce app Slice for an undisclosed amount. Also in August, Algorithmia, the US-based operator of a cloud marketplace for algorithms, raised $2.4m in a seed round led by VC firm Madrona Venture Group that also featured Rakuten. In October, Rakuten led a $14.5m series A round for Bitnet, a digital commerce platform enabling merchants to accept digital currency Bitcoin. Later on, in November, mobile marketplace app Carousell raised $6m in a series A round that followed a Rakuten-led seed round last year. Also in November 2014, Rakuten formed a strategic partnership with another Singapore-based firm: PocketMath, a mobile advertising platform that raised $10m in a series A funding. Rakuten Ventures’ managing partner Sae Min Ahn joined its board of directors. In mid-March 2015, Lyft raised $530m of which Rakuten contributed $300m in an exchange for an 11.9% stake.
In April, Tengelmann Ventures, the corporate venturing unit of Germany-based Tengelmann Group, invested in a €72m ($98.7m) equity round raised by Germany-based e-commerce company Westwing. Westwing uses a shopping club model to sell home and living products online across 10 markets on three continents and has already grown in size to more than 1,100 employees. At the time the company revealed that it had grown its full-year net revenues from €41m in 2012 to €110m in 2013. Also in the realm of online consumers business in February this year, Lamudi, a Germany-based real-estate listings website owned by incubator Rocket Internet, secured a €16m series B round from backers including Tengelmann Group, as reported by Techcrunch. Again in February 2015, Carmudi – the Germany-based operator of a classifieds website for cars and other vehicles – secured $25m in a series B round featuring Tengelmann Ventures. Apart from backing listing websites and other online marketplaces, Tengelmann has also started shopping for grocery startups. Tengelmann Ventures backed the series A rounds of incubator Rocket Internet’s Germany-based grocery startups, such as ShopWings and Bonativo. ShopWings is an online platform for groceries, which launched in October 2014, and operates in Berlin, Munich and Sydney. It secured €12m from Tengelmann as well as Rocket Internet and other investors that remained unnamed during February this year. Bonativo, an online farmers’ market, received $3.6m from Tengelmann and Rocket Internet. It enables consumers in Berlin and London to select fresh regional food produce online and have it delivered to their homes. Christian Winter, chief executive of Tengelmann Ventures, said: “We are at the fore of a strong and promising trend which we have observed for a few years now. Groceries will increasingly dominate online retail. There is a lot of scope for growth.” In September 2014, another firm backed by Tengelmann and Rocket Internet, Delivery Hero – a food ordering online platform, raised $350m in a series G funding round, featuring its existing backers as well the investment firm Vostok Nafta. Earlier in April 2014, it had managed to raise $85m in a series F round led by hedge fund Luxor Capital Group. Much like its peers, Tengelmann also ventured in a ridesharing company, Easy Taxi, which secured $40m in series D round in July 2014, co-led with Phenomen Ventures. Easy Taxi operates as a mobile app that can connect drivers with passengers. The German group’s venturing unit backed US-based sport video distributor Whistle Sport Network in a $28m series B round in January 2015, also featuring satellite television company Sky Broadcasting and cable service provider Liberty Global.
The other big Germany-based player Rocket Internet was also considerably active in its investments over the past year, particularly in late 2014 and early 2015. In November, the Nigeria-based e-commerce company Jumia raised €120m in series C funding round, with its parent company Africa Internet Group (AIG) contributing $135m of the total. AIG is actually a partnership between mobile phone networks MTN, Millicom International Cellular, and Rocket Internet. Rocket Internet increased its stake in Jumia from 26.9% to 28.7% through that round.
In early December 2014, Rocket Internet, which incubated the Germany-based online retailer Lazada Group, returned for a $248m series F round that added to funds raised from backers including Tesco, Access, Holtzbrinck and Tengelmann. In January 2015, the Germany-based online shopping club Westwing backed by retail chain Tengelmann, raised €25m. As its startup incubator and founding shareholder Rocket Internet returned for the round, alongside other existing investors, which were not disclosed. The round valued Westwing at approximately $529m.
Rocket Internet, much like Tengelmann, was after online-based food ordering businesses and it grew the size of its Global Takeaway group. It made a $328m equity investment and a $240m secondary investment in Delivery Hero during February this year, taking a 30% share. Furthermore, Rocket Internet invested €37m in FoodPanda, the Germany-based online food delivery service also known by HelloFood, as part of a €104m funding round, currently holding a 52% share of FoodPanda. It also decided to further build up its Global Online Takeaway Group by contributing a 11.4% stake in the Turkey-based online takeaway service Yemeksepeti. Together with the Group’s stakes in Spain-based La Nevera Roja and Italy-based Pizzabo, This news was revealed on the same day as the merger of two other Rocket Internet entities, e-commerce companies Lamido and Lazada in March 2015.
Rocket Internet has also recently, as of February 2014, entered into the online pawnbroking business. Along with Our-Crowd it backed Borro, a US-based online platform that provides luxury asset-backed lending, that secured $19.5m in a series E round.
In January 2014, Unilever Ventures, the corporate venturing unit of the Anglo-Dutch consumer goods company, took part in a €14m series C round of funding in the Ireland-based Brandtone, an emerging markets mobile marketing company it had previously invested in. The round was led by the agri-business company Syngenta.
In September 2014, the UK-based recipe box delivery company Gousto received £5m ($8.3m) in a series A funding from Unilever Ventures and MMC Ventures.
US-based corporate venturing players in the consumers sector were also busy. Back in May 2014, hopping on the online food bandwagon, the e-commerce giant Amazon took a minority stake in China-based fresh food delivery service Yummy77 in return for a $20m investment, as reported by TechNode. That same month Amazon also acquired a 25% stake in France-based package delivery company Colis Privé for an undisclosed amount, according to Le Journal du Net. This was Amazon’s first investment in France, building its logistics operations outside the United States. Amazon had previously been accused of destroying local businesses in France, which eventually led to “anti-Amazon” legislation in France that prevented the company from offering customers free shipping on books. In August, Amazon acquired the US-based Twitch, a social video platform for gamers backed by investors including Take-Two Interactive Software, in a cash deal worth $970m. In September Wikia, a US-based collaborative media company, raised $15m in series D funding from retailer Amazon as well as Bessemer Venture Partners and Institutional Venture Partners, for its international expansion. 2014 ended with an interesting investment for the retail giant Amazon: it made its first corporate venturing investment in India. Joined by venture capital firms Helion Venture Partners and Accel Partners, in late December Amazon led a $10m round for India-based gift card technology company QwikCilver Solutions, taking a stake sized at just under 15% in the process, the Times of India reported. The first quarter of 2015 was marked by an interesting acquisition for Amazon: in March it acquired the US-based internet-of-things tech developer 2lemetry for an undisclosed amount, which may possibly be integrated to connect wearables, sensors and devices into Amazon’s services or facial recognition technology.
US-based e-commerce company Ebay remained focused primarily on internet marketplace businesses. In March, the India classified ads business Quikr raised $90m growth funding, led by Kinnevik and supported by current investors including Nokia Growth Partners and Ebay. Also back in March, Ebay led $133.8m in series D funding for its Indian e-commerce peer Snapdeal.com. Other investors included venture capital firms Nexus Venture Partners, Kalaari Capital, Bessemer Venture Partners, Intel Capital and Saama Capital. Snapdeal piqued the interest of other big investors too. In October it was reported that the Japan-based telecommunications company SoftBank was set to invest $627m in it as part of a $10bn investment plan. As of early March 2015, Alibaba has been in talks to invest a total of $1bn in Snapdeal.
Ebay and Gree Ventures provided a ¥300m ($2.9m) series A round for Japan-based event ticket marketplace Ticket Street. India-based online classified listings site Quikr raised $60m through its previous corporate backers Ebay and Nokia. Quikr is also set to raise another $150m in order to accelerate its growth.
US-based daily deals website Groupon acquired the flash fashion site Ideeli for $43m. In August, SumUp – a UK-based mobile point-of-sale technology developer – secured an undisclosed amount of series C funding from Groupon and BBVA Ventures, the corporate venturing arm of the Spain-based bank BBVA. In December 2014, Groupon also backed Serviz – a US-based, on-demand home services provider. Serviz closed a $12.5m series B round led by venture capital firm PointGuard Ventures.
Beverage maker Coca-Cola backed Netherlands-based green chemicals producer Avantium in a €36m deal from a consortium including Swire Pacific, the food and beverage manufacturer Danone and the plastics producer Alpla. Avantium will use the funds to further develop PEF, a next-generation biological plastic that will be used as packaging material.
Other notable deals
In early April it was announced that the India-based e-commerce company Flipkart was set to close an acquisition of Myntra, an India-based fashion and lifestyle online retailer, for an estimated $330m, according to TechCrunch. After the merger took place, Flipkart managed to raise a further $210m in a round led by DST Global, the investment firm partially financed by internet company Mail.ru. In late December 2015, Flipkart closed a $700m series H round, featuring Greenoaks Capital, Steadview Capital and Qatar Investment Authority that were joined by existing investors including DST Global, Iconiq Capital and Tiger Global.
The leading sharing economy hospitality marketplace Airbnb closed a $475m series D round in August 2014. The round was led by private equity firm TPG and also featured venture capital firm Sequoia Capital and investment firms Dragoneer and T. Rowe Price.
China-based e-commerce company Koudai Gouwu raised $350m in October 2014. The deal was led by internet portal Tencent, which valued Koudai at almost $1.5bn. Koudai operates as a mobile e-commerce platform through which merchants can sell directly to buyers online. Tencent provided $145m of the funding, taking a 10% stake in Koudai in the process.
In November 2014, the France-based online men’s fashion retailer Menlook.com secured $29m in funding from investors including IDinvest Partners, the venture firm backed by insurance company Allianz.
In December the China-based smartphone manufacturer Xiaomi paid about $205m for a 1.29% stake in electrical appliance maker Midea Global as part of a strategic partnership agreement, as Technode reported. Midea manufactures a wide range of products from air conditioning units to lighting and kitchen appliances, and has recently begun to introduce smart home products to its offering. The deal was struck as part of a strategy through which Xiaomi will invest in 100 hardware manufacturers with a view to selling their products on its online store.
In January this year, Nestlé Health Science, a nutritional therapy subsidiary of the Switzerland-based food and beverage company Nestlé, invested $65m in the US-based biotechnology company Seres Health. Seres is developing a cure for clostridium difficile, a bacterial bowel infection that occurs in people with a damaged immune system. The disease kills an estimated 14,000 people each year in the US alone.
People
E-commerce giant Ebay’s corporate venturing head Steve Yankovich and part of his team were moved to Ebay Enterprise – the unit providing logistics and e-commerce services to small and medium-sized enterprises.
After seven years as president and general manager of venturing and emerging brands at Coca-Cola, Deryck van Rensburg became president of Coca-Cola Global Ventures in March 2014. He has worked in the consumer product goods industry for 26 years, first at Anglo-Dutch group Unilever and later in Coca-Cola across seven countries.