The media industry has been deeply affected and transformed by digitisation. Over the past few decades, consumers have shifted their preferences from printed newspapers, books, CDs and DVDs to digital subscriptions, e-books and online on-demand audio and video streaming.
However, demand-side pressure is not the only contributor to the shift. On the supply side, the ubiquity of internet access, combined with cheaper and more sophisticated consumer electronics, social media platforms and software, have all lowered the barriers to entry in content creation. Consumers are no longer just avid users, but also content creators and providers.
This is captured by GCV Analytics data, as the major subsectors within emerging media businesses are digital marketing and adtech, audio and video content – mostly steaming – gaming and eSports, as well as social media and networks, as outlined below.
Experts and media executives attending this year´s World Economic Forum in Davos identified major trends that have brought about the transformation of the media space and continue to drive its change. On the whole, those trends are demographic, behavioural and technology-related.
There are several demographic drivers of change in the media industry. The rise of “millennials” – the generation born between 1981 and 1997 – constitute a consumer segment demanding convenience, instant access and memorable user experience. Their patterns of consumer behaviour are likely to be picked up by the rising number of middle-class consumers worldwide – expected to reach 4.9 billion people by 2030 – who will also demand convenient and instant-access media services. Meanwhile, the world’s population is ageing. This foreshadows increased demand for a variety of health and wellness, entertainment and education services for the elderly.
Consumer behaviour shifts have been also instrumental. Not only do new consumers demand instant access and gratification through unforgettable media experiences but they are also becoming increasingly savvy at identifying marketing and propaganda disguised as editorial content. As they turn to ad-blocking software, brand managers and marketers find themselves needing to innovate in the realm of customer engagement. Moreover, we have also witnessed the rise of amateur content creators though platforms like YouTube and other social media.
Amid the current scandal over use of data at social media portal Facebook, it is also noteworthy that media consumers are aware their media consumption generates data that are collected, analysed and monetised by third parties. It is somewhat difficult to say now whether privacy concerns will bring about significant changes in the way data are handled. The new generation of media consumers appears fairly comfortable with giving up the rights to its online footprint in exchange for free services.
Technology-related factors include the availability and penetration of high-speed mobile internet access, enabling people to consume media content anyplace and anytime. The cornucopia of big data that consumers generate enables marketers and media companies to gain greater consumer insights. Media data analytics and real-time content management are the corollaries. Increasingly important in this context is the role of social media, constituting a significant channel for promoting or destroying brand image.
There have been major shifts in the related business of advertising, also increasingly digitised. Combined global digital advertising spending is expected to reach $335.5bn by 2020, according to data from Statista, cited by TechCrunch. While there is no lack of startups in the adtech and marketing tech fields, this new subsector is already concentrated. According to the Mary Meeker’s 2017 Internet Trends Report, two companies – search engine Google and social media platform Facebook – accounted for about two-thirds of US internet advertising revenues in 2016. However, this has not dissipated corporate venturers’ interest in adtech – there are still plenty of opportunities in the space for entrepreneurs.
In the gaming space, video games and traditional consoles continue to be popular, as the 2017 US Department of Commerce report on the media and entertainment industry found, but virtual reality (VR) and augmented reality (AR) have been growing fast through all subsectors of the world of entertainment. As discussed below, many media corporate venturers often co-invest in VR and AR businesses. Even though this is still a budding subsector of the media industry, it is one with a promising future where significant bets are placed.
In the gaming space more broadly, one underlying trend is the growth of mobile gaming. Acoording to a report by App Annie and International Data Corporation, mobile gaming raised its share of the worldwide gaming market, as spending on mobile games was over a third higher than spending on consoles, handhelds and desktop computer games put together. The report also points out that markets like China, Japan and South Korea are largely driving this growth. The Asia-Pacific region accounted for 60% of all consumer spending on mobile games last year. The report also noted that, even though mobile games constituted 35% of downloads on the iOS App Store and Google Play, they represented almost 80% of all app spending. Some of the top corporate-backed deals that we saw over the past year were in the gaming segment.
It is also impossible to ignore the eSports phenomenon, which has become an inseparable part of the industry. Revenues from eSports and related streaming content are forecast to reach $3.5bn by 2021, according to a report by Juniper Research. These projections take into account the growing popularity of eSports and gamer personalities on specialised platforms such as Twitch. Its monetisation comes primarily from online advertising in streaming. It must be noted, however, that eSports started as a non-western phenomenon, pioneered in South Korea with most viewers in China. The International eSports Federation wants eSports tournaments recognised as a Olympic events by 2024.
For the period between April 2017 and March 2018, GCV reported 339 venturing rounds involving corporate investors from the media sector. A large part of those (177) took place in the US, 40 were hosted in China and 25 in India.
The majority of these commitments (118) went to emerging enterprises from the same sector, with the remainder going into companies from a range of closely related sectors – 49 deals in IT, mostly in big data analysis tools, business intelligence software and VR and AR technologies, 46 in services, primarily in edtech and logistics, 45 in consumer, encompassing e-commerce platforms, consumer electronics as well as food and beverages, and 36 in financial, mostly payment technology and alternative lending.
The network diagram showing the co-investments of media corporates, illustrates the sector’s incumbents have often co-invested in VR and AR technologies – content and service providers like Upload, Shapes and Boabab Studios, 8i and Jaunt – as well as related technologies, such as computer vision and image analysis developer Meerkat.
On a calendar year-on-year basis total capital raised in corporate-backed investment rounds went down from $19.66bn in 2016 to $14.28bn in 2017 – a 28% drop. The deal count decreased by 13% from 391 deals in 2016 to 342 in 2017.
As outlined later in this article, the 10 largest investments by corporate venturers from the media sector were mostly within media, transport and consumer sector.
The leading corporate investors from the media sector were mass media group Comcast, publishing group Bertelsmann and internet media company Baidu. Film and entertainment company Walt Disney topped the list of media corporates committing capital in the largest rounds, along with Comcast, Baidu and Bertelsmann. The most active corporate venturers in the emerging media companies were internet conglomerate Alphabet, internet company Tencent as well as internet and telecoms conglomerate SoftBank along with Walt Disney and research company International Data Group (IDG).
The presence of Alphabet and Tencent in this list is noteworthy but unsurprising, as such Internet companies are involved in various subsets of the media sector – from online and print publishing to VR & AR to film and entertainment. Furthermore, Google is one of the largest global digital advertisers, as noted above.
The rising media businesses in the portfolio of these non-traditional investors were varied, encompassing anything from publishing and social media through audio and video streaming to games and adtech. Such companies have broad interests in the sector and anything that can disrupt it. The network diagram, representing corporate co-investments in media enterprises illustrates that.
Overall, corporate investment in emerging media-focused enterprises remained stable from 2016 to 2017 in terms of volume and increased only slightly in estimated value. According to GCV Analytics data, $10.02bn was invested over 265 rounds in 2017, compared with the $9.45bn invested over 262 deals in 2016.
Deals
Media sector corporates invested in a number of large rounds, raised by a range of enterprises, primarily transport, media and consumer-oriented businesses. Only one of the top rounds stood above the $1bn mark.
Walt Disney invested a further $1.58bn in its portfolio company BamTech, which is a US-based online video streaming technology provider. Disney had paid $1bn for a 33% stake in BamTech in August 2016 as part of a deal that granted it an option to acquire a majority stake. This investment hiked its share to 75%. BamTech was originally created by MLB Advanced Media, the interactive media arm of sporting league Major League Baseball (MLB). It powers the online video offerings of MLB and several other major sporting organisations that together have attracted about 7.5 million paid subscribers.
Tencent led an $818m series C round for China-based automotive e-commerce platform Chehaoduo. Shougang Fund, an investment branch of steelmaker Shougang, and ICBC International, a subsidiary of Industrial and Commercial Bank of China, also took part in the round. Chehaoduo was formerly known as Guazi, which is still the brand under which its used car trading platform operates, but the company has since expanded into new car sales through a brand called Maodou as well as online vehicle auctions and adjacent services like insurance and appraisal.
US-based fitness company Peloton completed a $325m series E round that featured Comcast NBCUniversal. Wellington Management, Fidelity Investments, Kleiner Perkins Caulfield & Byers and True Ventures co-led the round. Founded in 2012, Peloton operates a home fitness offering that combines its custom-made exercise bike with an app-based subscription service that provides video access to live classes and performance-tracking metrics.
Bytedance, the owner of news aggregation app Toutiao, led a $200m round for China-based online education provider 17zuoye. The round increased the company’s overall funding to more than $335m and followed a $100m series D round led by venture capital firm H Capital in 2015 that reportedly valued it at $600m. 17zuoye provides online learning and assessment materials covering English and mathematics for children between five and 18 which can be viewed by parents and teachers.
US-based AR mobile game developer Niantic raised $200m in a series B round that included brand services provider You & Mr Jones and internet company NetEase. The round was led by venture firm Spark Capital. Niantic was established in 2010 as an internal startup at Google before being spun out in 2015. The company has developed a range of massively-multiplayer online role-playing games, such as Pokemon Go, that incorporate real-world landmarks.
Media group Advance Publications was among the investors in a $190m series D round for US-based digital education provider EverFi, led by impact investor Rise Fund, which provided $120m. TPG Growth, the subsidiary of private equity group TPG, also contributed. Founded in 2008, EverFi has built a subscription-based digital learning platform that serves a network of more than 4,200 partners across North America.
A subsidiary of Baidu invested RMB1.01bn ($160m) in China-based smart television producer Coocaa. The Baidu subsidiary will also buy shares in Coocaa from one of its existing investors, Kujin Shenzhen, while Baidu itself will hold an 11% share in Coocaa once both transactions have closed. Coocaa was spun off from consumer electronics manufacturer Skyworth Digital, which will still own 64.3% of the company. The company develops and produces internet-connected TVs but has agreed to divest its hardware business to Skyworth by this month in return for all rights to its intellectual property. It will also form a long-term services agreement with Skyworth.
US-based multi-platform media production company Macro raised $150m in combined equity and debt financing from investors including entertainment company MNM Creative and business development firm Medialink. The round also featured impact investment firms Ford Foundation, WK Kellogg Foundation and Libra Foundation. Founded in 2015, Macro produces and finances digital series, television shows and films that target a multicultural market and seek to offer a more accurate portrayal of people of colour.
Malaysia-based online streaming subscription service iFlix closed a $133m funding round led by diversified media conglomerate Hearst. The round included media groups Liberty Global and Sky, internet company Catcha Group, telecoms firm Philippine Long Distance Telephone Company and Evolution Media Capital, a boutique investment bank co-founded by talent firm Creative Artists Agency. Founded in 2015, iFlix has created a subscription-based video-streaming platform aimed at emerging markets. The service is available to 19 countries in Asia, the Middle East and Africa.
There were other interesting deals in emerging media-focused business that received financial backing from corporate investors from other sectors.
SoftBank, through its SoftBank Vision Fund, led a $1bn funding round in US-based sports e-commerce platform Fanatics. The round included sports bodies National Football League and Major League Baseball, and Singapore-based government-backed firm Temasek. Fanatics’ valuation was reportedly $4.5bn. The company has created an e-commerce platform that sells official sports team merchandise and apparel. In April last year, the company acquired a manufacturing business to produce team jerseys and other products.
Tencent provided $630m of funding for China-based game-focused livestreaming platform Douyu. Originally known as AcFun, Douyu operates an online livestreaming platform that broadcasts gaming and eSports content. It had 30 million daily active users by late 2017, when it claimed it had also reached profitability. Tencent has been an investor since the company’s $100m series B round in early 2016.
Indonesia-based internet company Garena, rebranded to Sea Ltd, disclosed $550m in new funding from investors including diversified conglomerate JG Summit Holdings and food supplier Uni-President Enterprises. Founded in 2009, Sea operates a diversified internet business that includes an e-commerce platform called Shopee, online video streaming, chat, mobile gaming and a financial services platform known as AirPay.
Tencent committed approximately $462m in series B funding for Huya, a China-based live game-streaming spinout from social media platform YY. The deal was announced within hours of news that Tencent had invested in Huya’s main rival, Douyu (see above). The size of the stake Tencent acquired in Huya was not revealed, but the company confirmed that YY remained its majority investor. Huya’s online livestreaming platform enables users to stream their gaming to viewers. It had more than 66 million monthly active users, including 5.7 million paying subscribers.
Enterprise communication platform Slack raised $250m in a round co-led by SoftBank and venture capital firm Accel. The round valued Slack at more than $5bn, according to sources. Earlier reports had suggested the size of the round could reach $500m. Slack has built a workplace communication app with more than 5 million daily active users, including 1.5 million using the paid version.
Merchant bank Raine Group and Temasek agreed to invest a “significant” amount in Germany-based corporate-backed online music-streaming platform SoundCloud. SoundCloud, whose investors include social media company Twitter, did not disclose details of the deal, but Raine and Temasek reportedly invested about $170m, which would give them a 53% stake in the company. Founded in Sweden in 2007, SoundCloud operates an online platform where music can be uploaded, shared and streamed.
Pinterest, a US-based social media platform backed by e-commerce firm Rakuten, raised $150m from existing investors at a $12.3bn valuation. Pinterest operates a social network with 175 million monthly active users that essentially acts as an online scrapbook. It has recently focused on increasing monetisation of its platform through links to e-commerce and through promoted “pins” that connect users to specific products.
Exits
Corporate venturers from the media sector completed 48 exits between April last year and March this year, including 30 acquisitions, ten initial public offerings (IPOs), three mergers and one stake sale. On a calendar year-on-year basis, there was a sharp increase to 47 exits in 2017, up from the 36 transactions tracked in 2016. The estimated exited capital also surged substantially to $10.15bn in 2017, up from $4.42bn in 2016 – more than a twofold increase.
Media and e-commerce firm Naspers sold a HK$76.95 ($9.8bn) stake in Tencent, in which it had invested $32m in 2011. Tencent operates a large-scale online services offering centred on its messaging app, WeChat, which boasts over a billion users. Naspers had purchased a 46.5% share of Tencent through its $32m investment three years before its IPO in Hong Kong, and now holds 33.2%.
Germany-based online food ordering platform Delivery Hero went public in a €996m ($1.13bn) IPO, which gave a partial exit to e-commerce holding company Rocket Internet. The IPO consisted of 18.95 million new shares, 15 million shares held by existing investors, including Naspers, and 5.09 million shares held by the Rocket Internet-founded Global Online Takeaway Group, all at €25.50 each, at the top of the €22 to €25.50 range. Delivery Hero has built an online food ordering and delivery platform that serves customers in more than 40 countries across Europe, Latin America and the Middle East, North Africa and Asia-Pacific.
Qudian, a China-based online consumer lending service backed by game producer Kunlun Tech and financial services provider Ant Financial, raised $900m from its US flotation. The company priced 37.5 million American depositary shares at $24 each on the New York Stock Exchange, above the $19 to $22 range it had set, giving it a market value of about $7.9bn. Founded in 2014 and formerly known as Qufenqi, Qudian runs an online platform that provides credit to mostly young customers who are underserved by traditional banks due to their lack of credit history.
Yixin Group, a China-based e-commerce marketplace operator spun out of automotive transaction services provider BitAuto, raised HK$6.77bn in an IPO. The company issued almost 879 million shares on the Hong Kong Stock Exchange priced at the top of the IPO’s HK$6.60 to HK$7.70 range. The firm counted Baidu, Tencent and e-commerce firm JD.com among its previous backers. Yixin runs an online platform that functions as a marketplace for vehicles, and also operates a financial services operation that provides leasing as well as financing for car purchases.
Waimai, a food delivery service launched by Baidu, was acquired by Rajax, an operator of food delivery company Ele.me. Baidu will own a small stake in the business. The transaction reportedly valued Waimai at about $800m, though the company was estimated to be worth as much as $2.5bn the previous year. Waimai is expected to continue operating as an independent entity and staff are set to remain with the company.
Social media company Momo agreed to acquire China-based social engagement platform Tantan for about $760m, allowing Bertelsmann and YY to exit. The transaction consisted of $601m in cash and 5.3 million new shares in YY equating to $162m based on its closing price on Nasdaq. The deal would give Tantan’s shareholders a 2.7% stake in Momo. Tantan runs a social meeting app that operates through a swipe-left-or-right mechanism that can be used to make platonic or romantic connections.
Bilibili, a China-based online entertainment platform backed by mobile game developer FingerFun and Tencent, raised $483m when it floated in the US. The company priced 42 million American depositary shares at $11.50 each, in the middle of its $10.50 to $12.50 range, equating to a $3.19bn market cap. Bilibili operates an online platform focused on anime, comics and gaming that incorporates video streaming, mobile games and livestreaming. It had an average of 76 million monthly active users in the first two months of this year.
Electronics producer Apple acquired Shazam, a UK-based music identification app developer backed by a host of corporate investors, including IDG as well as record companies Sony Music Entertainment and Universal Music Group and conglomerate Access Industries, among others. Although neither company disclosed how much Apple paid, the price was reported to be about $400m. Shazam has developed an app capable of identifying background music through a mobile device’s microphone, though the company has expanded into commercial partnerships that tie in with television media campaigns.
Enterprise software provider SAP agreed to acquire US-based customer management platform Gigya in a deal that will enable media group Advance Publications, chipmaker Intel and software provider Adobe to exit. SAP will pay $350m for the company, which had disclosed approximately $104m in funding. Founded in 2006, Gigya has developed a customer identity management platform that helps businesses register customers, manage their details and maintain relationships with them, with the option to provide them with specialised services at the same time.
US-based television streaming service Roku closed an IPO that granted exits to several media companies at $253m after the underwriters took up the full overallotment option. The company initially raised $219m in the IPO, issuing approximately 6.7 million shares priced at the top of its $12 to $14 range. Exiting corporate investors included media company Sky’s corporate venturing unit Sky Ventures, media groups 21st Century Fox, News Corp and Viacom, as well as, reportedly, online streaming service Netflix. Roku sells set-top boxes that allow subscribers to stream televisual content from a range of TV and online sources. It had more than 15 million active subscribers as of June 2017.
Global Corporate Venturing also reported exits of emerging media-related enterprises that involved corporate investors from other sectors.
Bytedance, owner of news app Toutiao, acquired China-based social video app developer Musical.ly, giving an exit to mobile app developer Cheetah Mobile. According to sources, Bytedance agreed to pay between $800m and $1bn. Musical.ly has created a short-form music-based social video app aimed at a millennial user base. Users upload a 15-second clip of themselves lip-synching or engaging in some other activity accompanied by a popular song.
Razer, a US-based gaming equipment provider whose investors include Intel, raised HK$4.12bn when it floated in Hong Kong. The company priced about 1.07 billion shares at HK$3.88 each, near the top of its HK$2.93 to HK$4 range. Razer produces a range of gaming accessories, such as specialist keyboards, headsets and laptops, as well as configuration and launcher software, and also maintains a digital currency and a range of eSports teams.
Mobile news platform Toutiao reportedly acquired China-based photo augmentation app developer Faceu for $300m, giving an exit to image modification platform Meitu. Faceu has created an app that uses AR to add filters such as text, emojis or overlaid facial modifications to users’ selfies in real time, rather than requiring them to be edited later. The technology can also be used for video clips and chats. Faceu had 250 million registered users by last October – the majority are girls under 18.
Metamarkets, a US-based advertising technology developer backed by internet group Oath, was acquired by messaging app developer Snap for less than $100m. Neither Metamarkets nor Snap confirmed the deal at the time it was reported. Founded in 2010, Metamarkets provides interactive advertising analytics tools for businesses to track the real-time ad-hoc performance of their marketing campaigns. Its clients include Oath, social media company Twitter and cross-device advertising platform Drawbridge.
Saavn, an India-based music-streaming service backed by 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 buy a total of $104m worth of stock from existing shareholders, including Liberty and Bertelsmann. Founded in 2007, Saavn’s service focuses on Bollywood, and regional Indian and English language music. The platform has 30 million songs, according to its website.
Alphabet agreed to acquire US-based imaging technology developer Lytro via its company Google, in a deal that will enable mobile chipmaker Qualcomm, entertainment group Huayi Brothers and contract manufacturer Foxconn to exit. Google will pay between $25m and $40m for Lytro, which had raised more than $200m in total, according to various sources, one of which described the prospective transaction as an “asset sale”. Founded in 2006, Lytro has developed a light-field camera and imaging platform that can create the perception of 3D from 2D photographs, for purposes such as virtual reality.
Crisp Media, a US-based advertising technology developer backed by Intel, agreed to an acquisition by media and analytics company Quotient for an initial $33m. Quotient will pay $20m in cash, with the remainder provided in stock. Crisp Media could secure up to an additional $24.5m subject to financial milestones. Founded in 2003, Crisp Media operates under the brand name Crisp Mobile, offering mobile marketing and advertising services. The technology enables retailers to drive in-store sales by sending personalised messages to shoppers at optimal times.
Funds
Between April 2017 and March 2018, corporate venturers and corporate-backed VC firms investing in the media sector secured over $1.94bn in capital via 28 funding initiatives, which included 17 corporate-backed VC funds, eight new venturing units, two accelerators and one other initiative.
On a calendar year-to-year basis, funding initiatives decreased notably in number– from 44 in 2016 to 34 last year. Total capital also went down from the estimated $105.88bn – which including the record-breaking near-$100bn SoftBank Vision Fund – to $6.57bn during the same period.
Israel-based social game developer Playtika launched corporate venturing unit Playtika Growth Investments and will invest up to $400m through the vehicle. The fund will target domestic digital entertainment and consumer internet companies, particularly those with annual revenues of $10m or with proven business models that are profitable or close to break-even. Founded in 2010, Playtika develops immersive social games and claims to have been the first company to bring free-to-play casino-type games to social networks.
US-based media and entertainment group DMG Entertainment launched strategic investment fund DMG Capital Group with $300m that will go to entertainment, technology and media companies. DMG Entertainment operates across various branches of the entertainment industry, including film and television production, games, live entertainment experiences and comic books. The fund will invest in film, immersive media, gaming, entertainment licensing, broadband, free and paid television, e-commerce, mobile and over-the-top video technology together with media, entertainment and communications software and services.
China-based cybersecurity technology provider Qihoo 360 Technology partnered the municipal government-owned Beijing Cultural Centre Fund to set up a RMB1bn investment fund. The fund will target early and growth-stage companies in the internet and cultural sectors, including businesses focusing on entertainment and new media information.
Russia-based online communications and entertainment provider Mail.Ru launched a corporate venture capital unit that will invest up to $100m in game developers. Mail.Ru’s Games Investment Division will invest in domestic and international game studios and publishers. It has already allocated the first $10m of capital. In addition to equity financing, the fund will also consider acquisition deals and royalty investments. Mail.Ru’s gaming business currently consists of more than 50 games with a total audience of roughly 100 million worldwide.
Gree Ventures, the corporate venture capital arm of Japan-based digital media company Gree, closed its second fund at $67m. Founded in 2011, Gree Ventures operates from offices in Japan and Singapore, and typically invests between $300,000 and $3m in each portfolio company. Its parent company, founded in 2004, has interests in social media and online games and advertising. The fund, AT-II Investment Limited Partnership Fund, was oversubscribed above its $60m target, though Gree Ventures’ website states the fund size is $70m. With this second fund, Gree Ventures will look to expand its focus from Japan and Southeast Asia to India.
Germany-based media group ProSiebenSat.1 divested a significant part of its media-for-equity portfolio to US-based private equity firm Lexington Partners for a mid-eight-digit euro figure (€50m = $57m). ProSiebenSat.1, which operates corporate venturing unit SevenVentures, makes financial investments in startups and also participates in media-for-equity deals that involve it acquiring stakes in companies in return for providing advertising. The deal will include minority stakes in up to 16 companies held by ProSiebenSat.1 subsidiaries including SevenVentures, and the assets will be transferred to a new fund called Crosslantic Capital.
UK-based media company Guardian Media Group (GMG) launched £42m ($55.3m) corporate venturing fund GMG Ventures to make early-stage investments in media technology developers. GMG is the owner of the Guardian, the UK left-leaning daily newspaper with an online platform that attracts 140 million unique users each month. GMG Ventures will invest in startups working on technologies covering areas like artificial and intelligence and machine learning journalistic tools, adtech, reader and customer experience enhancement, payment, content distribution and tools enabling readers to respond to content through external means.
Japan-based mobile game developer Akatsuki launched a $50m investment fund that will target startups focusing on AR and other entertainment technologies. Founded in 2010, Akatsuki develops social games for use on mobile devices. Akatsuki aims to use Akatsuki Entertainment Technology Fund to encourage startups to create new content and services in the animation, film, gaming, music, sports, eSports, live and location-based entertainment markets. The fund will initially focus on AR, which Akatsuki believes has potential for use in the entertainment industry, but will also look to invest in VR and mixed reality technologies.
US-based private equity firm Vision Venture Partners launched an eSports-focused fund with $38m from fundraising led by Evolution Media, an investment firm co-founded by talent-spotter Creative Artists Agency. The fund’s other limited partners include baseball franchises the New York Yankees and St Louis Cardinals, and Shamrock Holdings, an investment firm owned by the estate of Roy Disney, a former senior executive at Walt Disney.
Denmark-based mobile advertising software provider Calldorado launched a $12m investment fund to back developers of mobile apps that use its caller ID-based advertising platform. Calldorado’s software development kit helps developers monetise their apps through advertisements displayed on a caller ID screen that can be added as a tool. Calldorado App Growth Fund will provide capital in the form of a marketing budget and will generate returns through revenue sharing, as opposed to taking an equity stake in startups. The company plans to focus on communication, utility, productivity, tools and business apps, and the fund is intended to help developers cover user acquisition costs until adoption rates become strong enough to support their business.
People
Beth Ferreira left her role as managing partner at WME Ventures, the corporate venturing arm of talent agency William Morris Endeavor, to return to venture capital firm FirstMark Capital as managing director. Ferreira first joined FirstMark Capital in 2011 as a venture partner while also working as chief operating officer of e-commerce company Fab. WME Ventures brought Ferreira on board in 2015 as one of its founding partners and she helped launch its $50m first fund, which closed in November 2016.
Jennifer Li, chief executive of Baidu’s $3bn strategic investment arm, Baidu Capital, stepped down as the company’s chief financial officer. Herman Yu, who held the position at another internet company, Weibo, will replace Li, who is stepping down after almost 10 years, though she will continue as Baidu Capital CEO. Yu was finance chief at Weibo for two years, having previously worked at design software publisher Adobe Systems and electronic payments processor Verifone.
GV, a subsidiary of Alphabet formerly known as Google Ventures, hired Craig Kornblau as its first media and entertainment adviser. Kornblau was president of Universal Pictures, the film studio overseen by NBCUniversal and owned by Comcast, between 1999 and 2014. Kornblau will work with the corporate venturing unit’s entire portfolio but will also advise on investments in the entertainment sector.
Avid Larizadeh Duggan left her general partner role at GV for an executive role at music publisher and royalty collection service Kobalt. Larizadeh Duggan joined GV in 2014, from Boticca, the luxury fashion e-commerce platform she co-founded in 2010 and where she served as chief operating officer. Kobalt has hired Larizadeh Duggan as chief strategy and business officer and executive vice-president.
Matthew Lee, former CEO and managing partner at IDG’s corporate venturing unit in Korea, has become CEO and “token economy architect” at Unblock, a blockchain technology and R&D team of Japan-based communications provider Line. Lee had left IDG Ventures Korea in early 2016 and has spent the past two years or so as managing partner of Cognitive Investment before moving to Unblock and AD4th, another decentralised ledger technology provider.
SevenVentures promoted Philip Fischer to senior investment manager. Fischer joined SevenVentures a year earlier as investment manager after a role as investment banking senior associate at JPMorgan. The promotion came after Kasper Sage, a senior investment manager at ProSiebenSat.1 Media, left to become a principal at automotive manufacturer BMW’s corporate venturing unit, BMW i Ventures. Earlier in the year, Florian Pauthner was promoted to chief executive of SevenVentures.
Martin Tschopp was appointed chief operating officer of Naspers Ventures, the corporate venturing arm of Naspers. Naspers launched Silicon Valley-based Naspers Ventures in May 2016 in a bid to diversify its venture capital activities, which had till then been concentrated on traditional internet-focused areas such as e-commerce, classified listings and payment services. Prior to Kiva, Tschopp spent almost 12 years at e-commerce marketplace eBay in various roles, ultimately rising to the position of general manager of eBay Advertising.
Marek Rubasinski, director of UK-based media company Sky’s startup investments and partnerships team, left to pursue new opportunities. Rubasinski had held the position since August 2015 and was in charge of Sky’s engagement with technology startups, chiefly through Sky Ventures. He joined Sky in 2008 from professional services firm Accenture.
Comcast Ventures, the corporate venturing arm of Comcast, hired Gil Beyda as managing director and promoted Daniel Gulati to partner. Beyda had spent the past nine years as managing partner of Genacast Ventures, a seed-stage fund formed in partnership with Comcast Ventures. He will continue to run Genacast while also investing in later-stage companies for Comcast Ventures. Before joining Genacast, Beyda was the chief technology officer of targeted advertising network Tacoda.
Rachel Lam, former head of corporate venturing unit Time Warner Investments, has set up venture capital firm Imagination Capital with her former CEO, Richard Parsons. She said Imagination Capital was targeting $250,000 to $500,000 in initial investments in institutional seed and A rounds for about 20 to 25 startups in eSports, big data, machine learning and digital media. Parsons, who stepped down as CEO of Time Warner in 2007, is now CEO of the Los Angeles Clippers basketball franchise.
Bruce Haymes, a New York-based managing director at Nielsen Ventures, the corporate venturing unit of media information provider Nielsen, left to pursue an undisclosed opportunity. Haymes said: “After 10 years with Nielsen and seven years running Nielsen Ventures and Nielsen Innovate – the incubator formed in Israel by Nielsen and VC fund Partam Hi-Tech – I have accepted an amazing opportunity elsewhere.”
University and government backing for media businesses
Over the past 12 months, there have been relatively few university investments and commitments to university spinouts in the media sector reported by our sister publication, Global University Venturing. Research-orientated academic institutions have backed or spun out companies developing software or hardware technologies that are tangentially related to the media sector.
A case in point was US-based social media management startup Soci. Stanford University’s Daper fund took part in an $8.5m series A round for the company, co-led by VC firms Vertical Venture and Grayhawk Capital. Founded in 2012, Soci develops a social media management service, allowing businesses and agencies to run large-scale campaigns across multiple social media accounts and services, with the ability to identify social content attractive to target audiences.
BlueFox, a US-based company developing customer engagement services for brands and retailers previously backed by Ecole polytechnique fédérale de Lausanne, raised $7m in its series A round from a consortium including electronics maker Panasonic and technology services platform Pentalog. Founded in 2016, BlueFox operates a cloud platform to measure foot traffic and customer engagement in physical locations. The technology relies on sensors that detect smartphone signals rather than traditional Bluetooth beacons. The technology can also be used in homes to detect parties organised either by guests staying over through a service such as Airbnb or by children while parents are away.
CY Vision, a US-based computational holographic technology spinout of Koç University, has closed a $7m series A round led by home and professional appliances manufacturer Vestel’s corporate venturing subsidiary Vestel Ventures. Vestel Ventures, a subsidiary of the Turkey-based Vestel’s technology investment arm Zorlu Holding, was joined by Intel Capital, the corporate venture capital vehicle of Intel. Founded in 2016, CY Vision has developed a holographic display platform for use in AR and VR applications. The spinout is exploiting research conducted by Hakan Urey, professor of electrical engineering at Koç. The technology is intended to eliminate problems and limitations of current AR and VR hardware, such as bulky glasses, motion sickness and a limited field of view.
Vidrovr, a US-based computer vision spinout from Columbia University, obtained $1.25m in a seed round led by Samsung Next, a corporate venturing subsidiary of technology vendor Samsung. The round was backed by Verizon Ventures and R/GA Ventures, respective corporate VC divisions of telecoms firm Verizon Communications and advertising agency R/GA. Founded in 2016, Vidrovr is building a computer vision-based system to allow video publishers to automatically categorise clips according to their content. The platform uses transcription, face detection and scene detection to formulate metadata to be matched against content elsewhere.
Government investments in the media sector, reported by our other sister publication Global Government Venturing, followed a different pattern. Over the past year, governments and government-backed investors placed bets on a wider range of emerging media enterprises – from news aggregation through video entertainment to AR applications. Governments and government-backed investors have a broader mandate, as they typically intend to stimulate innovation in their economy across all sectors.
There were some notable rounds where government investors co-invested with corporates, aside from the $1bn round raised by sports e-commerce business Fanatics, which featured Singapore government-backed firm Temasek, as mentioned in the main sector focus.
Yidian Zixun, a China-based news aggregation platform backed by media company Phoenix New Media, raised a $112m series E round from investors including government guidance fund Long De Cheng Zhang Culture Communication. The round, which also featured two unnamed participants, valued the company at $1bn. Founded in 2010, Yidian Zixun has built a personalised news app that has accumulated 52 million daily active users. Despite being launched two years before Toutiao, a rival currently raising money at a $20bn valuation, it was slower to commercialise its offering.
PCCW OTT, a China-based operator of music and video streaming platforms, raised $110m from investors including Singapore state-owned investment firm Temasek. The round also included Hony Capital, the private equity arm of conglomerate Legend Holdings, and Foxconn Ventures, the investment subsidiary of contract electronics manufacturer Foxconn. PCCW OTT operates three over-the-top – internet-only – media and entertainment platforms, such as video-streaming service Viu, which focuses on Asian content with local language subtitles available soon after initial broadcast on television.
Canada-based social fiction writing platform WP Technology, backed by state-owned pension fund Omers, is to receive approximately $50m from a consortium led by Tencent, which was reported to have provided $40m for the round, valuing WP Technology at about $400m post-money. Founded in 2006, WP Technology operates Wattpad, an online platform for fiction writers with approximately 60 million users.
China-based online news platform 36Kr Media raised RMB300m ($45.4m) in a series A round that featured Hangzhou Finance Investment, an investment firm owned by the government of Chinese city Hangzhou. Streaming service Baidu Video and advertising agency Focus Media Information Technology also participated in the round, which was co-led by venture capital firm Gobi Partners and investment firm China Prosperity Capital. 36Kr Media was spun out of technology group 36Kr in 2016. The company operates a news portal focused on the VC and technology ecosystems, and organises industry events.
US-based VR company Within raised $40m in a series B round co-led by Temasek and investment firm Emerson Collective. The round included entertainment company 21st Century Fox, advertising agency WPP, media company Macro Ventures and Raine Ventures, the investment arm of financial services firm Raine Group. Founded in 2014 as Vrse, Within has developed VR and AR content technology such as its Goldilocks storybook, which allows children to read a story aloud and see characters they mention appear on their mobile screen.
