Hopes to leave behind the covid-19 pandemic thanks to vaccines rollout have permeated through the investment world.
Despite the fact that the road has been somewhat bumpy with the appearance of new variants, investing has been in full swing. And this continues to be true for the corporate venturing arena.
According to GCV Analytics, in the summer months of July and August, the total number of corporate-backed deals from around the world was 840 – 405 registered in July and 435 in August. This is nearly 48% higher than the total of 568 rounds from the same months last year, with 289 in July and 279 in August. Total estimated investment value stood at nearly $57bn for the two months combined – nearly 156% over the $22bn from July and August 2020. Neither July nor August was a record-breaking month for 2021 but the heightened investment interest and activity has been very much sustained during what tends to be a rather slow season in terms of deal making.
The US came first in the number of corporate-backed deals, hosting 343 rounds during the two summer months, while Japan was second with 94 and China – third with 73.
The leading corporate investors by number of deals were telecoms and internet conglomerate SoftBank, investment and financial services firm Fidelity, digital currency exchange Coinbase and cloud enterprise software provider Salesforce. In terms of involvement in the largest deals, SoftBank was on the top of the list along with Fidelity and financial firm Goldman Sachs.
GCV Analytics reported 26 corporate-backed funding initiatives in July and 33 in August, including VC funds, new venturing units, incubators, accelerators and other. These figures are comparable with the ones from the same months last year, which had registered 27 and 28 such initiatives, respectively. The estimated capital stood at $1.97bn in July and $1.56bn in August, considerably lower than the $13.98bn and $4.6bn in the same months last year. However, it must be kept in mind that the world was beginning to shake off the shock of the pandemic and the lockdown at the time. Thus, a comparison must be drawn with a grain of salt.
Deals
Emerging businesses from the health, IT, fintech and business services sectors led in raising the largest number of rounds in July and August 2021. The most active corporate venturers came from the financial, IT, media and telecoms sectors, as shown on the heatmap.
E-commerce group Amazon’s Climate Pledge Fund and automotive manufacturer Ford Motor Company co-led a $2.5bn funding round for US-based electric truck developer Rivian. The round was also co-led with investment firm D1 Capital Partners and funds and accounts advised by T Rowe Price, and included Third Point, Fidelity, Dragoneer Investment Group and Coatue Management. FoRivian is about to begin production on a range of electric trucks that will include an electric pick-up truck dubbed the R1T as well as the R1S, an all-terrain electric sports utility vehicle. Its vehicles are also set to be supplied to Amazon to serve as their last-mile delivery vans.
SoftBank’s Vision Fund 2 supplied $1.7bn in funding for South Korea-based travel and accommodation services provider Yanolja. Yanolja will use the capital to invest in its technology and expand its technology-based services into new markets. It intends to build a global travel platform that leverages artificial intelligence technology and big data to provide more automated and personalised services. Founded in 2005, Yanolja initially began as a short-term accommodation services provider before adding hospitality, food, leisure and transportation booking services to its offering, which is accessible through a mobile app.
SVolt Energy Technology, a China-based energy storage and battery technology developer spun off by carmaker Great Wall Motor, completed a RMB10.28bn ($1.58bn) series B round backed by consumer electronics manufacturer Xiaomi. Heavy equipment manufacturing company Sany also took part in the round, which was led by Bank of China Group Investment, a subsidiary of financial services firm Bank of China. Unnamed sub-funds of the National Fund for Technology Transfer and Commercialization, Country Garden Venture Capital, Shenzhen Capital, CCB Investment, IDG Capital, Oceanpine Capital, China Renaissance, SDIC and JZ Capital contributed to the round, together with unnamed new and existing backers. SVolt is working on solid-state, cobalt-free car batteries and artificial intelligence-powered smart manufacturing technology. It was created by Great Wall Motor in 2012 and spun off in 2018.
SoftBank’s Vision Fund 2 co-led a $1.5bn funding round for Turkey-headquartered e-commerce marketplace Trendyol at a valuation of $16.5bn. The round was co-led with growth equity firm General Atlantic, investment firm Princeville Capital and sovereign wealth funds ADQ and Qatar Investment Authority. Citi was financial adviser and placement agent on the deal. Trendyol operates a diversified online retail platform which incorporates on-demand grocery delivery and a peer-to-peer e-commerce marketplace. It has also built its own courier and last-mile delivery infrastructure in addition to a mobile wallet.
SoftBank’s Vision Fund 2 and internet group Prosus co-led a $1.25bn series J round for India-based food delivery service provider Swiggy at a $5.5bn valuation. The round also featured sovereign wealth fund Qatar Investment Authority as well as Accel, Wellington Management, Falcon Edge Capital, Amansa Capital, Goldman Sachs, Think Capital and Carmignac. TechCrunch reported the round includes an $800m tranche led by Prosus’ corporate venturing arm, Prosus Ventures, from April 2021. SoftBank provided a reported $450m for that close, which included Falcon Edge, Goldman Sachs, Amansa Capital, Think Capital, Carmignac and Accel. Founded in 2014, Swiggy provides food and grocery delivery services, and its online platform facilitates access to more than 150,000 restaurants and stores located in over 500 Indian cities.
US-based on-demand consumer delivery service GoPuff picked up $1bn in a funding round backed by telecoms conglomerate SoftBank’s Vision Fund 1. Blackstone’s Horizon platform, Guggenheim Investments, Hedosophia, MSD Partners, Adage Capital, Fidelity Management and Research Company, Atreides Management and Eldridge filled out the investor line-up. The round valued GoPuff at $15bn, up from $8.9bn in March. Founded in 2013, GoPuff operates an e-commerce platform for consumers to purchase items such as cleaning products, over-the-counter drugs, pet food or alcohol. It claims to deliver goods “within minutes”, using a network of micro-fulfilment centres in every market it serves. The latest cash injection will allow GoPuff to accelerate its expansion across North America, and European markets such as the UK. The company will also recruit additional staff and enhance its technology.
Antigua and Barbuda-registered cryptocurrency exchange operator FTX Trading completed a $900m series B round, featuring SoftBank, Coinbase and blockchain payment technology provider Circle. The funding was raised at an $18bn valuation from a consortium of more than 60 investors. Incubated by quantitative trading firm Alameda Research, FTX Trading runs FTX.Com, a cryptocurrency exchange with more than 1 million users that handles some $10bn of trading volume a day. The series B proceeds will be channelled into company growth and international expansion in addition to introducing new features and accumulating users.
UK-headquartered financial services app developer Revolut secured $800m in a series E round that included SoftBank’s Vision Fund 2. The corporate was joined by hedge fund manager Tiger Global Management and the funding was raised at a $33bn valuation. Revolut initially focused on cross-border financial transfers but has expanded its mobile app-based services to encompass a range of products including bill settlement and splitting, salary advances, consumer cashback, wealth management and a dedicated business offering. The cash has been earmarked for product development in addition to expanding the company’s US operations and entering the Indian market.
Chime, a US-based mobile bank operator, has secured $750m in a series G round featuring SoftBank’s Vision Fund 2, at a post-money valuation of $25bn, according to press reports. The round was led by venture capital firm Sequoia Capital Global Equities and backed by private equity and hedge funds General Atlantic, Tiger Global and Dragoneer Investment Group. Founded in 2013, Chime offers digital financial services through partnerships with regional banks, providing debit cards, spending accounts, savings accounts and special features such as SpotMe, a service which lets customers make debit card purchases that overdraw their account without paying fees. The company plans to use the funding to further expand its operations and broaden its business reach.
US-headquartered battery supply chain developer Redwood Materials raised over $700m from investors including Amazon’s Climate Pledge Fund. The round was led by funds and accounts advised by investment management firm T Rowe Price, and it valued the company at $3.7bn post-money, a source familiar with the round told TechCrunch. Fidelity, Goldman Sachs Asset Management, Baillie Gifford, Canada Pension Plan Investment Board, Capricorn’s Technology Impact Fund, Breakthrough Energy Ventures, Valor Equity Partners, Emerson Collective and Franklin Templeton filled out the round. Redwood is building a closed loop supply chain for electric vehicle batteries that will involve it partnering large companies to recycle used batteries and feed the useful materials back into the supply chain, reducing the industry’s environmental impact. The company has re cycling partnerships in place with businesses including Amazon and revealed it plans to triple the size of its Carson City, Nevada facility while constructing a new plant elsewhere in the state.
Exits
GCV Analytics tracked 103 exits involving corporate venturers as either acquirers or exiting investors in July and August. The transactions included 60 acquisitions, 24 initial public offerings (IPOs), 17 other transactions (reverse mergers with Spacs), and two mergers.
The exit count was lower in both July and August (65 and 38) than in June 2021 (79), reflecting likely a typical seasonality associated with the summer months. However, this year’s total figure for both months (103) was considerably higher than the one for the same months of 2020 – 76 (with 37 in July and 39 in August last year). The total estimated exited capital stood at $21.75bn in July and $5.5bn in August.
Krafton, a South Korea-based computer game publisher backed by gaming and internet group Tencent, raised KRW4.3tn ($3.75bn) in its IPO. Krafton offered 8.65 million shares priced at the top of a revised KRW400,000 to KRW498,000 ($350 to $436) range, making it the second largest IPO held in the country so far. The amount was about 25% smaller than the one disclosed earlier, after a regulator demanded the company amend its filings. Formed by video game producer Bluehole as a holding group in 2018, Krafton oversees subsidiaries including Bluehole Studio, PUBG Studio and Striking Distance Studios. It has sold some 70 million copies of its battle royale game, PlayerUnknown’s Battlegrounds. Much of the IPO proceeds will go toward cross-border mergers and acquisitions, according to chief financial officer Bae Dong-keun.
US-based online trading platform developer Robinhood Markets floated in a $2.09bn IPO representing exits for internet and technology group Alphabet and entertainment agency Roc Nation. The company priced 55 million shares at the foot of the IPO’s $38 to $42 range. It issued nearly 52.4 million on the Nasdaq Global Select Market while the remaining shares were divested by co-founders Vladimir Tenev and Baiju Bhatt and chief financial officer Jason Warnick. Robinhood operates an online platform with 17.7 million monthly active users who can use its Robinhood Financial marketplace to trade stocks and shares, and its Robinhood Crypto to do the same with digital currencies. It made a $7.4m net profit in 2020 from $959m in revenue.
Aurora, a US-based self-driving technology developer backed by multiple corporate investors, has agreed a reverse merger with special purpose acquisition company Reinvent Technology Partners Y. The combined company will have a $13bn pro forma implied market capitalisation and will take on Reinvent’s listing on the Nasdaq Capital Market, which was secured through an $850m IPO in March this year. It is sponsored by investment firm Reinvent Capital. The transaction includes a $1bn private investment in public equity (PIPE) financing featuring truck manufacturer Paccar, ride hailing service provider Uber and commercial vehicle producer Volvo Group, among many other investors. Formed in 2017, Aurora is working on an autonomous driving system initially aimed at the trucking market. It expects to launch its first product by 2023 and expand the application of its technology to the last-mile delivery and ride-hailing sectors.
Indonesia-based, corporate-backed e-commerce platform operator Bukalapak went public, with shares closing at Rp 1,060 ($0.0738). The trading price represented a 25% increase from an IPO price of Rp 850 ($0.059). Indonesia Stock Exchange (IDX) halted trading through its mechanism that prevents shares from rising more than 25% per day. The company had previously received backing from investors including e-commerce group Alibaba affiliate Ant Group, price comparison portal Aucfan, media groups Emtek and Gree (the latter through Strive), software supplier Microsoft and internet group Naver. Bukalapak’s market capitalisation stands at $7.6bn. It had aimed to raise $1.5bn at a $6bn valuation when it unveiled plans in July. Founded in 2010, Bukalapak provides an online marketplace that works with some 6.5 million merchants and 100 million shoppers. It also has a business-to-business supply chain platform and a financial services arm dubbed Buka Investasi Bersama.
Pharmaceutical firm Bayer agreed to pay $1.5bn upfront to acquire Vividion Therapeutics, a US-based, corporate-backed precision medicine developer. Vividion stands to gain up to an additional $500m in milestone payments. The transaction is expected to close in the third quarter of this year. Founded in 2017, Vividion is developing precision small-molecule therapies targeting cancer and immune system disorders. Its lead programmes include treatments for NRF2 mutant cancers and inflammatory diseases such as irritable bowel syndrome. Vividion will continue to market its offering independently in an effort to maintain the business’ agility.
SentinelOne, a US-headquartered cybersecurity software provider that counts semiconductor technology manufacturer Qualcomm and consumer electronics producer Samsung as investors, closed its IPO at over $1.4bn. The company issued 35 million shares in an upsized offering on the New York Stock Exchange, priced at $35.00 each. The underwriters subsequently bought a further 5.25 million. Founded in 2013, SentinelOne has developed a software platform which utilises artificial intelligence to detect, prevent and respond to cyberattacks. It posted an $118m net loss for the year ending January 2021, from $93m in revenue.
Innovium, a US-based developer of data centre network infrastructure technology backed by Qualcomm, agreed to a $1.1bn acquisition by infrastructure semiconductor company Marvell. The all-stock transaction, consisting of just over 19 million shares, remains subject to customary closing conditions and is expected to close by the end of the year. Innovium’s networking technology for data centres powers cloud and edge applications. Its Teralynx software and scalable switches can handle data transfer speeds of up to 25.6 terabits per second (Tbps) and offers low latency, and could cope with more than 100Tbps. The acquisition will allow Marvell to enter the cloud-optimised switch market.
Bullish, a US-based digital asset services provider backed by blockchain software provider Block.one, agreed a reverse merger with special purpose acquisition company Far Peak Acquisition Corporation. The deal will give Bullish the listing on New York Stock Exchange taken by Far Peak through a $550m initial public offering in December 2020. EFM Asset Management anchored a $300m private investment in public equity deal supporting the transaction that included funds and accounts managed by BlackRock in addition to Cryptology Asset Group and Galaxy Digital, at a $9bn pro forma equity valuation. Formed by Block.one with a $100m investment at the time of its launch, Bullish was tasked with developing advanced products for the digital asset management space. The startup plans to release its debut product, a cryptocurrency exchange designed to integrate the vertically integrated benefits of decentralised finance markets with the performance, compliance and privacy of central order book systems, by the end of 2021.
US-based health information provider Sema4 has completed a reverse merger with special purpose acquisition company CM Life Sciences backed by financing from investors including SoftBank. The combined business is now trading its common stock and warrants on the Nasdaq Global Select Market under the ticker symbols SMFR and SMFRW respectively. CM Life Sciences floated on the Nasdaq Capital Market in a $385m initial public offering in September 2020. SoftBank’s SB Management were among the investors that provided $350m to support the deal through a $350m private investment in public equity (PIPE) financing. Founded in 2017, Sema4 offers screening services to help diagnose, treat and prevent disease. It started out by producing models for reproductive health but later added precision oncology and covid-19 to its capabilities. The company will use the money gained through the reverse merger to fund its operations and accelerate business growth through strategic acquisitions.
Payment services firm Visa agreed to acquire one of its portfolio companies, UK-based cross-border payment software provider Currencycloud, at a valuation of £700m ($963m). Founded in 2012, Currencycloud provides a cloud-based software platform which enables banks and financial services providers to offer currency exchange, real-time notifications on foreign exchange transactions, multi-currency wallets and virtual account management. The platform supports nearly 500 banking and technology clients and has processed more than $100bn across 180 countries to date, the company said. It will continue to operate from its headquarters in London and will retain its current management team after the transaction closes.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.