Amid global lockdown and panicky public markets, the number of corporate-backed deals we reported from around the world in March was 216, down 21% from the 274 rounds from the same month last year. Investment value also decreased by 12% to $8.76bn – down from the $9.94bn from March 2019. In comparison with February 2020, March registered a considerably lower monthly result in terms of the total deal count, down from 283 deals.
The US came first in the number of corporate-backed deals, hosting 79 rounds, while Japan was second with 27 and China and India third with 14 each.
The leading corporate investors by number of deals were diversified internet conglomerate Alphabet, pharmaceutical company Eli Lilly and healthcare real estate company Alexandria. In terms of involvement in the largest deals, Alphabet topped the list along with automotive retailer AutoNation and automotive parts maker Magna.
GCV Analytics reported 20 corporate-backed funding initiatives in March, including VC funds, new venturing units, incubators, accelerators and others. This is a 29% decrease compared with March 2019 which had 28 initiatives. The estimated capital raised amounted to $2.34bn, also a considerable drop from the $5.10bn during the same month last year.
Deals
Emerging businesses from the IT, health, services and fintech sectors led in raising the largest number of rounds during the third month of 2020. The most active corporate venturers came from the financial, business services, IT and health sectors.
Alphabet’s self-driving car developer Waymo raised its first external funding in a round backed by several corporates. Alphabet was one of the backers that provided $2.25bn to Waymo. Other corporate backers included automotive component manufacturer Magna International and car retailer AutoNation, which invested $50m. Other investors in the round included venture firms Silver Lake, Canada Pension Plan Investment Board and the Mubadala Investment Company, which co-led the round. The round came after five years of testing on US roads. The self-driving vehicles are the core of a ride hailing service, Waymo One, in addition to a logistics-focused service, Waymo Via, where systems are applied to delivery trucks. Founded in 2009 as part of Alphabet (then Google) and spun off in 2016, Waymo develops a unified autonomous vehicle which aims to combine internally developed technology in areas like cameras and lidar sensors as well as versions of traditional automotive systems covering functions such as brakes and steering.
Internet group Tencent co-led a $1bn series G round for China-based online education platform developer Yuanfudao with investment management firm Hillhouse Capital. Private equity firm Boyu Capital and venture capital group IDG Capital also participated in the round. The funding was reportedly secured at a $7.8bn valuation. Spun off from social media platform Fenbi in 2014, Yuanfudao operates an online education platform it claims has 400 million registered users. The company offers online and homework plans, covering primary and secondary school age groups. It has benefited from an increase in activity as restrictions related to the Covid-19 pandemic force students to stay away from schools and learn at home.
US-based digital wallet developer Bakkt closed a $300m series B round that included corporates software developer Microsoft, payment services provider PayU, exchange operator Intercontinental Exchange, consulting firm Boston Consulting Group (BCG) and crypto services provider CMT Digital. Intercontinental Exchange, BCG, CMT and PayU invested directly while software provider Microsoft took part through its venturing subsidiary M12. Enterprise-focusedVC firm Goldfinch Partners and blockchain investment firm and hedge fund Pantera Capital filled out the round. Originally formed by Intercontinental Exchange, Bakkt has developed a range of digital currency products, its core offering being a digital wallet that can hold assets as diverse as crypto-tokens, loyalty points and in-game assets.
Tencent co-led a $300m series E round for China-based big data software provider MiningLamp. The round was co-led by Singaporean government-owned investment firm Temasek and featured video streaming app developer Kuaishou and undisclosed additional investors. MiningLamp produces big data mining technology that sources large volumes of raw data and uses artificial intelligence to produce information that can be used by customers in government and a range of private sector industries. The company will put the funding into growing its business in addition to R&D headcount. It also intends to create a smart marketing platform.
Tencent led a funding round for Germany-based electric aerial vehicle developer Lilium that was sized at more than $240m. The corporate was joined by other existing backers including VC firm Atomico, investment firm Freigeist Capital and asset management group LGT. Lilium was reported to be seeking $400m to $500m in the round in October 2019. Spun out of Technical University of Munich in 2015, Lilium is working on a five-seater vertical take-off and landing vehicle called the Lilium Jet which is intended for urban mobility. The latest funding will support further development of the jet along with readying the company’s already completed manufacturing facility to begin formal production, with the goal of a 2025 launch. The round reportedly valued Lilium at $750m to $1bn.
US-based edge computing technology developer StackPath secured a $216m series B round, which was co-led by two corporate investors – networking equipment producer Juniper Networks and mass media company Cox Communications. The fresh funding will be used to support product development, commercialisation efforts and engineering. The company was running in stealth up until 2016, when it raised its $180m series A round, led by private equity firm Abry Partners and other undisclosed investors. Founded in 2015, StackPath has built a global edge computing and services network to distribute, accelerate and secure cloud-based applications with a wide range of capabilities, which span from running virtual machines to a content delivery network and web application firewall. StackPath itself has carried out four acquisitions, having purchased content delivery network provider MaxCDN, traffic management software producer Fireblade, virtual private network operator Cloak and distributed denial of service mitigation technology developer Staminus.
Diversified holding company Exor agreed to pay $200m for an 8.87% stake in Via Transportation, the US-based mobility services and software provider backed by carmaker Daimler and media group Hearst. The investment came as part of a larger series E round of undisclosed size also featuring oil and gas supplier Shell, property manager Mori Building and Hearst Ventures, Hearst’s corporate venturing arm. New investor Macquarie Capital and existing backers Pitango, 83North, Ervington Investments, Planven Ventures, Broadscale Group and RiverPark Ventures filled out the round. Via provides a range of on-demand or pre-scheduled urban mobility services covering ordinary urban and rural transport to specialised services across more than 20 countries. Its algorithm optimises transport for maximum efficiency and can be incorporated into existing transport management systems.
Media conglomerate Advance and over-the-top media company The Chernin Group invested $200m in US-based mobile entertainment provider Scopely to double its series D round to $400m. VC firm NewView Capital led the round’s first tranche in October 2019, investing alongside Baillie Gifford, Greycroft Partners, Canada Pension Plan Investment Board, Revolution Growth and Sands Capital Ventures. The latest funding was supplied at a $1.9bn post-money valuation. Founded in 2011, Scopely operates a mobile games platform that distributes both in-house creations and content produced by outside developers based on third-party intellectual property, such as TV show-based The Walking Dead: Road to Survival. Scopely publishes immersive mobile games and has a stable of titles based on licences from the likes of Star Trek, Looney Tunes, The Walking Dead, Wheel of Fortune and the WWE.
Insurance group Ping An led a $146m funding round for US-based alternative investment technology developer iCapital Network through its Ping An Global Voyager Fund. Financial services firms UBS Financial Services and BNY Mellon also took part in the round, as did investment bank Goldman Sachs, Affiliated Managers Group, Hamilton Lane, WestCap, BlackRock and Blackstone. Founded in 2013, iCapital has developed an asset management software platform that allows wealth advisers and high-net-worth individuals to handle the subscription, administration and reporting processes for alternative investments such as private equity and hedge funds. Access to such investments has traditionally been out of reach for individuals. The company services assets worth $47.6bn across 472 funds and has created 57 white-label versions of its platform.
UK-based biopharmaceutical medicine developer Immunocore closed a $130m series B round featuring pharmaceutical firms Eli Lilly and WuXi AppTec, the latter through its corporate venturing fund. Growth equity firm General Atlantic led the round, which featured CCB International, JDRF T1D Fund, Rock Springs Capital, Terra Magnum Capital Partners and five existing shareholders that included Eli Lilly and RTW Investments. Bill & Melinda Gates Foundation also participated in the round, transforming convertible note financing into equity shares. Founded in 2008 by Germany-based biotechnology company MediGene, which held an initial 38.5% stake, and three private investors, Immunocore is developing drugs using T cell receptor biotechnology that will function by triggering the immune response to cancer in T cells.
Exits
GCV Analytics tracked 17 exits involving corporate venturers as either acquirers or exiting investors in March. The transactions included 12 acquisitions, two initial public offerings (IPOs), two mergers and one stake sale.
The exit count figure is the same as February’s. However, the total estimated exited capital plummeted to $1.19bn, down from the $10.19bn in the previous month, representing an 88% decrease. In comparison, in March 2019, the exits count was 24 and the estimated total capital stood at $10.76bn.
Media group Fox Corporation agreed to acquire US-based online streaming service Tubi for approximately $440m in a cash deal that will allow film studios Metro-Goldwyn-Mayer and Lionsgate to exit. The transaction may eventually reach $490m when factoring in deferred considerations and unvested options. Formally incorporated as AdRise, Tubi runs an online film and television streaming platform that is free to use but replete with advertising that cannot be skipped. It increased its monthly active users from 20 million in June 2019 to 25 million by December. Tubi will continue to operate independently under founder and CEO Farhad Massoudi but will be able to use Fox’s digital advertising expertise and add the company’s national and local news and sports programming to its online content.
Data centre interconnection technology provider Equinix completed a $335m purchase of US-based bare-metal automation system developer Packet that enabled corporates SoftBank, computer manufacturer Dell, electronics manufacturer Samsung and JA Mitsui Leasing to exit. Founded in 2014, Packet has developed technology that automates physical servers and networks. Users can build on the company’s public cloud service or use its automation software to boost their private computing infrastructure. The company’s technology will be integrated into Equinix’s enterprise offering while CEO Zachary Smith has been appointed managing director of Equinix’s bare-metal division.
Digital signature technology provider DocuSign agreed to buy its US-based portfolio company Seal Software for $188m, marking the first deal by its new head of corporate development, Eric Darwin. Founded in 2010, Seal has built a software platform that uses machine learning and natural language technology to help users organise and manage contact data across their various networks, helping them to improve sales and customer service while reducing data-related risk.
US-based mobile commerce platforms Letgo and OfferUp agreed to merge in a deal fuelled by a $120m funding round led by classified listings operator OLX Group. OLX Group, a subsidiary of e-commerce and media group Naspers’ internet assets division, Prosus, is an existing investor in Letgo and will take a 40% stake in the merged business. The $120m round included existing OfferUp investors including VC firm Andreessen Horowitz and private equity firm Warburg Pincus. Founded in 2015, Letgo operates an online platform that enables users to buy and sell goods to each other. The service is tailored for mobile use, meaning large photos of each item and enhanced chat functionality. OfferUp will run the combined company and chairman and CEO Nick Huzar will retain his positions. Alec Oxenford, Letgo’s co-founder and president, on the board of directors while OLX will continue to run Letgo’s business outside of North America.
Imara, the US-based haemoglobinopathy drug developer backed by pharmaceutical firms Lundbeck and Pfizer, went public in a $75.2m IPO on the Nasdaq Global Select Market. The offering consisted of 4.7 million shares priced at $16.00 each, increasing the number slightly from 4.45 million. The company floated at the low end of the IPO’s $16 to $18 range and the IPO valued it at approximately $265m. Founded in 2016, Imara is developing therapeutics for inherited genetic disorders of the haemoglobin, which carries oxygen from the lungs to the rest of the body through red blood cells. The company has allocated $42m of the IPO proceeds to advancing a drug candidate called IMR-687 for the treatment of sickle cell disease while $40m will fund work on it as a treatment for a blood disorder known as b-thalassemia, IMR-687 is expected to enter phase 2b clinical trials for both conditions in the first half of this year. A further $22m will go to other research costs.
Passage Bio, a US-based genetic medicine developer that counts pharmaceutical firm Eli Lilly and conglomerate Access Industries as investors, closed its IPO at more than $248m. The company floated raised an initial $216m from 12 million shares issued on the Nasdaq Select Global Market and priced at $18.00 each. The underwriters also purchased 1.8 million additional shares to add $32.4m. Founded in 2017, Passage Bio is working on genetic therapies for rare, life-threatening disorders affecting the central nervous system. It has a research, collaboration and licencing agreement with University of Pennsylvania’s Orphan Disease Center and Gene Therapy Program. The proceeds will fund planned phase 1/2 trials for three assets which are aimed at frontotemporal dementia, lysosomal storage condition Krabbe disease and genetically inherited brain and spinal cord disorder GM1 gangliosidosis respectively.
Internet-of-things hardware producer Xirgo Technologies acquired the technology and assets of Owlcam, a US-based dashcam developer backed by insurance provider CSAA, for an undisclosed amount. The company has developed artificial intelligence-powered driver and road monitoring technology that relies on a dashboard camera to record and analyse events on the road and inside the car. The device is always turned on and connects to a mobile app through 4G to store and review footage. It is designed to detect dangerous driving behaviour, prevent accidents, assist with insurance claims, record police stops and alert owners to break-ins.
Cylon Controls, an Ireland-based building control system spinout of University College Dublin which counts Energy utility ESB among its backers, agreed to an acquisition of undisclosed size by power and automation group ABB. Founded in 1985, Cylon markets a range of control interfaces such as fuse boxes, energy meters and heating and air ventilation controls for buildings in the residential and commercial sectors. The company’s offering includes a real-time, analytics-based software portal where building operators can gauge and restrain energy usage through features such as visualisation and trigger-activated alarms. ABB expects Cylon to augment its existing range of products for commercial buildings, enhancing its appeal in terms of energy optimisation and comfort.
Rented accommodation provider NestAway acquired India-based co-living space operator StayAbode for an undisclosed amount, allowing corporates Voyage Group and Akatsuki to exit. The deal consisted of a mixture of cash and equity in NestAway, according to people familiar with the matter. Founded in 2016, StayAbode operates fully furnished co-living apartments that combine private bedrooms with stylish, modern communal areas. Housekeeping and utility bills are included. The properties are typically in brownfield redevelopments marketed toward aspirational customers in the millennial bracket, and the move is expected to assist NestAway’s student housing business. It recently spun off co-working and student property brand Hello World into a distinct business.
Investment firm Blackstone agreed to buy a majority stake in HealthEdge, a US-based provider of health insurance management software that counts health insurance firm Medica as an investor. The amount Blackstone is paying was not disclosed, nor the size of its prospective stake. HealthEdge produces administrative processing software that helps healthcare companies manage and configure their health plans cost-effectively. Medica formed a partnership with the company in 2013 and invested $34m four years later, marking its most recent funding.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.