The immediate effects of the Covid-19 pandemic and the global lockdown were visible in April.
The number of corporate-backed deals we reported from around the world was 212, down 27% from the 289 rounds from the same month last year. Investment value also decreased by 27% to $6.71bn – down from the $9.16bn from April 2019. In comparison with March, April registered a considerably lower monthly result in terms of deal count, down from 237 deals.
The US came first in the number of corporate-backed deals, hosting 72 rounds, while Japan was second with 40 and China third with 21.
The leading corporate investors by number of deals were diversified internet conglomerate Alphabet, telecoms conglomerate SoftBank and enterprise software provider Salesforce. In terms of involvement in the largest deals, Alphabet and SoftBank topped the list along with networking equipment maker Cisco Systems.
GCV Analytics reported 10 corporate-backed funding initiatives in April, including VC funds, new venturing units, incubators, accelerators and others. This figure suggested a 69% drop compared with April 2019 which had registered 32 initiatives. The estimated funding raised in those initiatives amounted to $760m, also a considerable drop from the $2.07bn during the same month last year. The fewer initiatives reported are clearly due to lockdown measures around the globe and possible fund constraints.
Deals
Emerging businesses from the health, financial services, IT, health, business services and industrial sectors raised the largest number of rounds. The most active corporate venturers came from the financial, IT, media and health sectors.
US-based digital payment technology provider Stripe increased its series G round to $850m, adding $600m from investors including GV, a corporate venturing subsidiary of Alphabet. VC firms Andreessen Horowitz, General Catalyst and Sequoia Capital also took part in the extension having contributed to the $250m first close in September 2019. The extra cash was provided at the same $35bn pre-money valuation.
Stripe provides payment processing technology for online merchants, whether they operate through e-commerce platforms, on-demand marketplaces, subscription services or crowdfunding. The funding will support a growth in the company’s operations as it deals with large amounts of offline commerce migrating online due to the lockdown measures related to the Covid-19 pandemic.
Data management software provider Cohesity secured $250m in a series E round featuring computing technology manufacturer Hewlett Packard Enterprise (HPE), Cisco and SoftBank. DFJ Growth, Foundation Capital, Greenspring Associates and Wing Venture Capital co-led the round, which included Baillie Gifford, Sequoia Capital and Sozo Ventures. Cisco and SoftBank took part through Cisco Investments and SoftBank Vision Fund I.
The US-based company has built a software platform that organises vast amounts of an organisation’s data in order to prevent the fragmentation that can take place with large quantities of diverse information. Customers can also buy specialised applications from Cohesity’s marketplace.
Artificial intelligence technology provider 4Paradigm closed a $230m funding round featuring Cisco and consumer electronics manufacturer Lenovo. The China-based company did not identify any other participants in the round but stated VC firm Sequoia Capital is still its largest shareholder following its completion. It valued 4Paradigm at about $2bn.
Founded in 2014, 4Paradigm provides AI software that increases efficiency in areas like manufacturing, healthcare and supply chains. It expanded to Europe and Southeast Asia in 2019. The company has adapted to Covid-19 related work, developing a precision screening system, a tool that tracks infection points and a system that analyses disease scenarios in real time. It is also helping corporate clients shift their businesses online.
Quantum computing technology developer PsiQuantum, which is based in the US, received $215m in funding from investors including software provider Microsoft’s corporate venturing subsidiary, M12. VC firms Playground Global, Atomico, Founders Fund and Redpoint Ventures also took part in the round, as did investment manager BlackRock.
Founded in 2016, PsiQuantum is working on a commercial quantum computer that will offer a million qubits: the point at which the technology would become general purpose and useful to businesses. Qubits, or quantum bits, can be put into three states – on (or 1), off (or 0) and both simultaneously. The difference would allow quantum computers to store vastly more data and run calculations at a speed far beyond that possible even with supercomputers.
China-based pharmaceutical product developer Beijing Mabworks Biotech closed RMB1.13bn ($160m) in series C funding from investors including industrial park Beijing E-Town Biomedical Park. The round was made up of two tranches co-led by investment bank China International Capital Corporation’s CICC Qide Innovative Biopharmaceutical Equity Investment Fund, investment bank Citic Securities, Lyzz Capital and Huge Capital. Beijing E-Town’s International Investment & Development unit also took part in the round, as did Bocom International, a subsidiary of financial services firm Bank of Communications, along with asset manager Yuexiu Financial Holdings’ Industrial Fund, SDIC Unity Capital and Sealand Innovation.
Mabworks is developing monoclonal antibody-based treatments for diseases including cancer. It has 15 assets in clinical trials in China and the US covering lung, breast and colorectal cancer in addition to leukaemia and infectious diseases.
Australia-based international remittance service Airwallex completed a $160m series D round backed by internet group Tencent, Salesforce and financial services firm ANZ Bank. DST Global, Sequoia Capital China, Hillhouse Capital and Horizons Ventures also took part in the round, Salesforce and ANZ Bank investing through corporate venturing subsidiaries Salesforce Ventures and Anzi Ventures. The round reportedly valued Airwallex at $1.8bn.
Founded in 2015, Airwallex began as an international remittance service but has since expanded its offering to include a virtual card in partnership with Visa that can generate new card numbers within seconds to pay suppliers in their local currency. The company’s technology integrates with accounting software Xero and enables a multi-currency business account to transfer and receive money in denominations including Australian, US and Hong Kong dollars, British pounds, euros and Chinese renminbi.
Legend Biotech Corporation, a cellular therapy subsidiary of China-based biotech producer Genscript Biotech, raised approximately $151m from investors including pharmaceutical firms Eli Lilly and Johnson & Johnson. Hudson Bay Capital Management HBC Asia Healthcare Opportunities III fund, Capital Group’s Smallcap World Fund, Vivo Capital and RA Capital’s Healthcare Fund, Nexus Fund and Blackwell Partners vehicle are also participating in the round, designated a series A. The corporates are taking part through corporate venturing vehicles Lilly Asia Ventures and Johnson & Johnson Innovation – JJDC.
The round valued Legend Biotech at approximately $1.95bn. Formed in 2015, Legend Biotech is developing cell-based therapeutics to treat diseases including cancer and has drug candidates for haematological malignancies and solid tumours in clinical testing from phase 1 to 3. It also has an HIV drug in the pre-clinical phase.
Qingju, a China-based bicycle rental service spun off by ride hailing platform Didi Chuxing, raised $150m from investors including SoftBank. Legend Capital, the VC firm formed by conglomerate Legend Holdings, also invested according to people with direct knowledge of the deal. Didi invested a further $850m alongside the external funding. Formed in 2018 and incubated within Didi, Qingju operates an app-based bicycle sharing platform. This represents its first external funding, the sources told The Information.
Israel-based behavioural biometrics technology provider BioCatch closed a $145m series C round featuring online lending platform CreditEase and American Express Ventures, the investment arm of payment services firm American Express. Bain Capital Tech Opportunities, a growth equity vehicle for private equity firm Bain Capital, led the round, while Industry Ventures, Maverick Ventures and OurCrowd also took part.
BioCatch’s behavioural biometrics software helps prevent online fraud by analysing the digital behaviour of users online to verify the identity of potential customers. It attracted its first e-commerce customer in 2019 and will enter the public sector market in 2020.
Accounts payable software provider AvidXchange, which is based in the US, added $128m to a funding round featuring payment services firm Mastercard. Lone Pine Capital, Schonfeld Strategic Advisors, Pivot Investment Partners, Sixth Street Partners and clients of Neuberger Berman also took part in the round, which stands at $388m, and held a first close in January. AvidXchange’s software automates payments and the processing of invoices on behalf of mid-market businesses. The product can be integrated into more than 150 existing accounting software systems and the company maintains a payment network called AvidPay for use by goods suppliers.
Exits
GCV Analytics tracked 14 exits involving corporate venturers as either acquirers or exiting investors in April. The transactions included eight acquisitions, four initial public offerings (IPOs), one merger and one stake sale.
The exit count figure was lower than in March, which registered 17 exits. The total estimated exited capital decreased to $1.12bn, down from the $1.19bn in the previous month, a 6% drop. In the same month of 2019, the exit count was 20 and the estimated total capital stood at $12.95bn.
Cybersecurity software provider Palo Alto Networks agreed to buy US-based networking technology developer CloudGenix for $420m, allowing semiconductor and data technology producer Intel to exit. CloudGenix has created an autonomous SD-WAN (software-defined networking in a wide area network) cloud software platform that allows enterprise customers to automate application-based decisions based on their security, compliance and business policies. The technology helps businesses manage their applications more efficiently across their own premises, the cloud and software-as-a-service products. It will be integrated into Palo Alto Networks’ secure access service edge offering, Prisma Access.
Zentalis Pharmaceuticals, a US-based small molecule therapeutics developer backed by research services provider Pharmaron, went public in a $165m IPO on the Nasdaq Global Market. The company increased the number of shares in the offering from 7.65 million to 9.18 million and priced them at the top of the IPO’s $16-$18 range. Its shares closed at $23.20 on their first day of trading and had risen to $25.20 at time of writing. Founded in 2014, Zentalis is working on small molecule drugs designed to treat cancer by targeting fundamental biological pathways. It will use $60m of the IPO proceeds to advance its lead candidate, ZN-c5, which is in phase 1/2 clinical trials for metastatic breast cancer.
Security analytics technology provider Rapid7 agreed to acquire US-based cybersecurity software developer DivvyCloud for $145m in cash and shares, enabling mass media group Discovery Communications to exit. DivvyCloud’s platform facilitates the automation of security and remediation for cloud and software container environments, meaning enterprises can make changes to software and IT more efficiently while ensuring compliance. The software supports a range of cloud services including Google Cloud Platform, Microsoft Azure, Amazon Web Services, Alibaba Cloud and Kubernetes. It will beef up the multi-cloud capabilities of Rapid7’s Insight IT analytics platform.
Ride hailing and local services platform Gojek paid $130m to buy Moka, an Indonesia-based payment software provider backed by several corporates. The deal was reported by Kontan, with the economic news provider citing a stock regulatory filing that did not reveal the size of the deal. The company’s investors included SoftBank and financial services firm Bank Mandiri.
Moka produces point-of-sale systems that allow small merchants to receive payment through mobile devices. They can also access sales reports and store takings in a digital wallet. The company has about 40,000 Indonesian merchants among its client base and aims to increase that figure to 100,000 by the end of 2020. Gojek’s subsidiaries include GoPay, an electronic wallet that allows users to pay for items through their smartphone.
Oric Pharmaceuticals, a US-based cancer therapy developer backed by corporate investors Taiho, Hartford HealthCare and Memorial Sloan Kettering Cancer Center, went public in a $120m IPO. It consisted of 7.5 million shares priced at the top of its $14-$16 range. Oric had initially sought to issue 5 million shares, then increased it to 6.3 million. The company’s shares opened at $26 each on the Nasdaq Global Select Market and closed at $25.77m, giving it a market capitalisation of about $740m. Founded in 2014, Oric is working on oncology drugs designed to combat the body’s resistance to existing forms of cancer treatment. The company has earmarked $55m of the IPO proceeds for the advancement of its lead drug candidate, a small molecule antagonist called ORIC-101 which is in phase 1b clinical trials in combination with existing medicines for prostate cancer and solid tumours.
Keros Therapeutics, a US-based musculoskeletal disorder treatment developer backed by pharmaceutical services provider Medison Pharma and healthcare provider Partners Healthcare, floated in a $96m IPO. The company increased the number of shares in the offering from 5 million to 6 million and priced them at the top of the IPO’s $14 to $16 range. It was valued at approximately $306m in the IPO. Keros is developing drugs to treat musculoskeletal and haematological disorders with a high unmet medical need. Approximately $8.3m of the proceeds from the offering will fund phase 2 clinical trials for the company’s lead candidate, KER-050, which is intended to treat low blood cell counts for patients suffering from bone marrow cancer and a musculoskeletal disorder known as FOP.
Tianjin Ruixin Technology, a China-based aluminium product maker backed by automotive manufacturer BAIC, has floated in a RMB338m ($47.8m) IPO. The company issued almost 25.6 million shares on the Shenzhen Stock Exchange’s ChiNext board priced at RMB12.26 each. They opened at RMB14.71 on their first day of trading and closed at RMB19.42. Founded in 2014, Ruixin produces, sells and exports precision aluminium alloy-based products such as heatsinks, fluid control parts and components for apparatus such as medical equipment or automotive safety systems. The IPO proceeds have been earmarked for the bolstering of activities at a subsidiary Ruixin operates in Changshu, Jiangsu province.
M12, the corporate venturing subsidiary of software provider Microsoft, has elected to sell its stake in Israel-based artificial intelligence technology provider AnyVision due to concerns over its use in facial recognition. AnyVisios had developed image recognition software that can be used with any camera to precisely identify objects, faces and bodies, and had closed a $74m series A round featuring M12 in June 2019.
Microsoft had been carrying out an audit since November to determine whether the system was breaching its pledge on facial recognition by being used for mass surveillance of Palestinian citizens in the disputed West Bank territory. The audit concluded that the technology was being used at border crossings but did not find evidence of a mass surveillance system as reported in the media. However, Microsoft concluded that it will no longer invest in facial technology developers, as it is unable to ensure its ethical use as a minority shareholder, and agreed with AnyVision to divest its stake.
Retail group Tengelmann has exited Germany-based retail analytics software provider Metoda in an acquisition of undisclosed size by Maxburg Beteiligungen III, a fund managed by private equity firm Maxburg Capital Partners. Founded in 2012, Metoda provides software that enables retailers to track product pricing, availability, shipping cost and delivery times against e-commerce portals like Amazon without violating data protection regulations. The company raised an undisclosed amount in a 2013 seed round featuring TEV, an offshoot of Tengelman’s corporate venturing unit, Tengelmann Ventures, as well as VC fund High-Tech Gründerfonds, Bavarian state-owned investment firm Bayern Kapital and unnamed angel investors.
Pharmaceutical company Servier agreed to purchase Symphogen, a Denmark-based cancer therapy developer backed by pharmaceutical firms Novo and Takeda, for an undisclosed sum. Symphogen will become a wholly-owned subsidiary of Servier and will retain its staff. Founded in 2000, Symphogen is developing oncology and immuno-oncology drugs using its proprietary antibody discovery technology. Its two lead assets focus on metastatic colorectal cancer and lung cancer respectively. In addition to its proprietary pipeline, the company has strategic partnerships in place with Servier for indications such as metastatic solid tumours and lymphomas, and with biotechnology producer Genentech for a treatment aimed at staph infections.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.