Sports and gaming gets more competitive
Competitive online sports broke out in a big way in 2015, while physical fitness companies also made the headlines. Fitbit, the wearable fitness tracker producer backed by SoftBank and Qualcomm, raised $841m in a June IPO that returned Qualcomm’s entire $100m Life Fund, and unlike GoPro last year, its share price has actually improved as the year has gone on, rising from $20 at the time of the offering to more than $29 today.
Much of the big equity funding in the sector went to fantasy sports companies FanDuel and DraftKings, which have utilised a new daily fantasy model to ratchet up revenues. Fox Sports invested $150m in DraftKings as part of a $300m round in July that valued it at $1.2bn, shortly after FanDuel had raised $275m at a $1bn+ valuation from investors including Google Capital, Time Warner, Turner Broadcasting, NBC and Comcast.
In an echo of the ride hailing industry’s travails, daily fantasy games increasingly began to encounter regulatory issues as the year wore on, and the two are fighting an ongoing battle against New York State over the legality of their games which, technically, involve gambling.
A clue to the sector’s expansion may lie in FanDuel’s acquisition of eSports startup AlphaDraft in September, which followed its hiring of Zynga’s now defunct fantasy sports division. While fantasy sports have raised the big money, eSports, which revolves around competitive video gaming challenges, is beginning to emerge as a viable industry and 2016 may see startups such as Unikrn begin to make names for themselves.
Online/alternative education achieves new grade
As tuition fees and student debts continue to grow, online and alternative education models look set to become one of the key growth areas in the upcoming years. Pearson and Follett have both run corporate venturing units for a while, but 2015 was the year funding in the sector increased considerably.
Much of the activity came from China, where online language learning platforms TutorGroup and Zhan.com have raised a total of more than $280m in the past six weeks alone, while online course provider Hujiang.com secured $258m across two rounds, tutoring marketplace Changingedu received $100m, and e-learning platform 17Zuoye $100m.
The big splash in the US came from media group Bertelsmann, which began spending big in a bid to build up the Bertelsmann Education Group it launched in September. In the space of a week in early November it invested $230m in education technology Hotchalk and led a $105m series D round for coding course developer Udacity, the latter of which closed the round at a $1bn valuation.
It is is perhaps a signal of the nations’ differing educational priorities that the US companies raising money often tended to be coding-based – IT course provider General Assembly also closed a $70m round in October – while Chinese education platforms leaned towards language learning. Other well-funded education startups in 2015 meanwhile included Udemy ($65m), Coursera ($61m) and Udolingo ($45m)
Enterprise heralds corporate venturing
Insurance firms were also active in establishing corporate venturing units during the year, but it was striking not just how many enterprise software companies set up strategic investment wings, but the early stage at which they did so.
Box, Workday, Twilio, Expensify and, as of last week, Slack all launched corporate venturing initiatives, with Twilio, Expensify and Slack doing so while still private companies. Amazon meanwhile set up a $100m fund centred on its Alexa web analytics platform. The big word was ecosystem, as enterprise IT companies aimed to emulate Salesforce Ventures, which has effectively helped to grow its parent company’s customer base by funding the development of compatible apps and tools.
Interestingly, Twilio and Box both picked up funding from Salesforce Ventures in the past, suggesting that perhaps enterprise IT could end up being defined by a chain of corporate investment. There is going to be a lot more corporate funding floating about in 2016, and that’s before you consider that the likes of Zendesk and Dropbox could hypothetically also enter the fray.
New media matures
2015 saw three of new media’s biggest names raise huge rounds that involved them hooking up with one or more corporate partners as they look to expand their brand into new places.
Vice Media, which began life as a punk zine 20 years ago, received $400m from The Walt Disney Company over two tranches towards the end of the year as it prepared to launch its own 24-hour television channel. Disney picked up a 10% stake in Vice, continuing an ongoing strategy to strengthen its grip on the young male demographic, a strategy that has also seen it acquire Marvel and Lucasfilm, as well as online video production company Maker Studios.
NBCUniversal meanwhile invested a combined $400m in online media companies Buzzfeed and Vox Media in August. Buzzfeed, now valued at $1.5bn, and Vox, which received the funding at a $1.05bn valuation, have substantial online presences but have not yet made the leap to video in a big way. A tie-up with NBCUniversal indicates that even if they don’t end up forming their own channels, they may well go on to produce programming, or at least harness the broadcaster’s expertise in expanding their video content.
Elsewhere, it was a year of acquisitions in new media. Business Insider was acquired by Axel Springer for $343m, while clickbait specialist ViralNova was purchased by Zealot Networks for $100m, alternative music site and event promoter Pitchfork Media was snapped up by Condé Nast, and Vox Media bought technology business news site Re/code. Below the big guns, online media is increasingly beginning to resemble the magazine industry, with a series of diversified stables facing off against each other.