The covid-19 pandemic rages on but the world has started the new year with the hope of fighting it off with vaccines. Corporate venturing activity has also had a hopeful but somewhat cautious start in January. Our data on corporate venture capital (CVC) investment activity continues to point broadly to a recovery.
According to GCV Analytics, the number of corporate-backed deals from around the world was 252 during the first month, some 8% lower than the 274 rounds from the same month last year. Investment value, however, stood at nearly $18.75bn in total estimated capital – more than double the $7.96bn from January 2020.
The US came first in the number of corporate-backed deals, hosting 99 rounds, while Japan was second with 43 and China third with 32.
The leading corporate investors by number of deals were diversified internet conglomerate Alphabet, internet firm Tencent and telecoms group SoftBank. In terms of involvement in the largest, financial services firm Fidelity, e-commerce and technology group Amazon and software developer Microsoft were at the top of the list.
Funds
GCV Analytics reported 23 corporate-backed funding initiatives in January, including VC funds, new venturing units, incubators, accelerators and others. This figure is comparable with January 2020, which had registered 27 initiatives. However, the estimated capital raised in those initiatives amounted to $1.49bn, down 71% from the $5.16bn raised during the same month last year.
Deals
Emerging businesses from the health, IT, financial, services and consumer raised the largest number of rounds during the first month of 2021. The most active corporate venturers came from the financial, IT, health and media sectors.
US-based electric truck developer Rivian raised $2.65bn from investors including Amazon’s Climate Pledge Fund. The round was led by funds and accounts advised by T Rowe Price and also featured Fidelity, Coatue, D1 Capital Partners and undisclosed new and existing investors. The funding was reportedly secured at a $27.6bn valuation.
Founded in 2009, Rivian is developing an electric pick-up truck dubbed the R1T which is slated for commercial release in June 2021, and an electric sports utility vehicle called the R1S due for release two months later.
Autonomous driving technology developer Cruise raised more than $2bn from investors including Microsoft and automotive manufacturers General Motors and Honda. Microsoft invested through a strategic partnership that will involve it combining its cloud computing and software and hardware engineering capabilities, manufacturing expertise and partner ecosystem with the US-based developer to bolster the commercialisation of the latter’s technology. The corporates were joined in the round by undisclosed institutional investors, and the cash was provided at a $30bn post-money valuation.
Founded in 2013, Cruise is developing autonomous driving software that will be used in all-electric vehicles forming the basis for shared taxi services, plus to hardware such as sensors, robotics and telematics systems.
China-based artificial intelligence (AI) technology provider 4Paradigm, backed by corporates power producer China Three Gorges, networking equipment Cisco and consumer electronics manufacturer Lenovo, closed a $700m series D round. Primavera Capital, Boyu Capital and Hopu Investments co-led the round, which also attracted many other investors including Haitong Securities, Sequoia Capital China, CPE, Goldman Sachs, Jinyi Capital and FountainVest Partners. Founded in 2014, 4Paradigm is working on an enterprise-grade AI platform and applications to support digital business transformation and increase efficiency in sectors such as finance, retail, manufacturing, energy, healthcare and logistics.
Leapmotor, the China-based electric carmaker backed by video surveillance technology producer Dahua Technology, energy utility Shanghai Electric and rolling stock manufacturer CRRC, raised RMB4.3bn ($665m).
The funding was secured through a series B round featuring a fund run by the city of Hefei, in addition to SDIC Chuangyi Industrial Fund Management, Hangzhou Jiuzhi Investment Management and Shanghai Yonghua Capital Management. Founded in 2015, Leapmotor has launched an all-electric compact car, city car and sports utility vehicle, and is looking to float on the Shanghai Stock Exchange Star Market in late 2021 or early 2022, according to the co-founder and chief executive Wu Baojun.
Finland-headquartered food and consumer goods delivery service Wolt completed a $530m funding round that included Prosus, the internet company formed by media and e-commerce group Naspers. The round was led by Iconiq Growth, a vehicle for investment firm Iconiq Capital, and also featured Goldman Sachs’ Growth equity unit, Tiger Global Management, DST Global, KKR, EQT Ventures and EQT growth, Coatue, 83North, Highland Europe and Vintage Investment Partners.
Launched in 2014, Wolt runs an app that allows users in 23 countries to order food and consumer goods from restaurants, grocers and other local retailers for delivery, having expanded from its core restaurant-focused business in the past year.
US-based cloud security software provider Lacework completed a $525m funding round featuring Liberty Global Ventures and Snowflake Ventures, representing mass media group Liberty Global and data management technology producer Snowflake.
Private equity firm Sutter Hill Ventures and technology investment firm Altimeter Capital co-led the round, which included D1 Capital Partners, Coatue, Dragoneer Investment Group and Tiger Global Management. Founded in 2015,
Lacework has built a cybersecurity platform designed for use with a range of cloud service providers, detecting behavioural anomalies and run-time threats in addition to ensuring cloud compliance. The company said it increased revenue by more than 300% during 2020.
US-based game development platform Roblox raised $520m in a series H round that included entertainment provider Warner Music Group, valuing it at $29.5bn. Investment firms Altimeter Capital and Dragoneer Investment Group co-led the round, which also featured Investment Group of Santa Barbara.
Founded in 2004, Roblox is the creator of an online platform that allows users to build their own games and then share them with others. The platform had more than 31 million active users as of September 2020 and made a $203m net loss in the first nine months of last year, while increasing revenue 68% to $588m.
US-based affordable medicine developer EQRx secured $500m in a series B round featuring healthcare software producer Nextech and GV, a corporate vehicle of Alphabet.
The round included all the participants in the $200m series A round EQRx disclosed when it emerged from stealth in January 2020, including Andreessen Horowitz, Section 32, Casdin Capital, Arch Venture Partners and Arboretum Ventures. The series A investors were joined by undisclosed payers and health systems, life sciences specialists, family offices and mutual, sovereign wealth and private equity funds.
Launched in 2019, EQRx seeks to use advanced technology to develop more affordable monotherapies and drug combinations in partnership with biopharmaceutical companies. The company has identified late-stage liver, breast and non-small cell lung cancer medication and drugs for inflammatory conditions as areas it is pursuing.
Brazil-based challenger bank Nubank raised $400m in series G funding from a consortium that included Tencent, which valued it at $25bn. Singaporean sovereign wealth fund GIC co-led the round with investment advisers Whale Rock and Invesco, while investment group Dragoneer and venture capital firms Ribbit Capital and Sequoia Capital also participated.
Founded in 2013, Nubank provides digital banking services including an online bank account, debit card, a lending practice and a loyalty points scheme to customers in Brazil, Mexico and Colombia.
SoftBank and satellite network operator Hughes Network Systems invested a combined $400m in UK-based satellite internet system developer OneWeb. The capital was added to the $1bn committed by conglomerate Bharti Enterprises’ Bharti Global subsidiary and the UK government to buy OneWeb in July 2020 in an auction after its bankruptcy.
OneWeb is setting up a constellation of satellites intended to provide widespread broadband internet coverage. The company declared bankruptcy in March 2020, when it had launched 74 of a planned 648 satellites. The company has since launched 32 satellites and the latest capital influx is expected to fund the completion of the project by the end of 2022.
SoftBank, the biggest investor in the company pre-bankruptcy, is paying $350m to increase its stake to 30%, according to the Financial Times, and will also get a seat on the board. It had held a 9% stake having converted some $90m in debt financing into equity through the $1bn rescue package in 2020.
Exits
GCV Analytics tracked 32 exits involving corporate venturers as acquirers or exiting investors in January. The transactions included 28 acquisitions, two initial public offerings (IPOs) and two reverse mergers.
The exit count figure was comparable to the one from January 2020 (28) but considerably lower than the record 48 exits in December. The total estimated exited capital stood at $9.06bn, up 8% from $8.36bn recorded in same month last year, but only a fraction of the estimated $39.77bn in December.
Faraday Future, the US-based electric car and smart vehicle developer backed by real estate developer China Evergrande, agreed to a reverse merger with a special purpose acquisition company.
The deal will allow Faraday to take the Nasdaq Capital Market listing secured by Property Solutions Acquisition Corp when it floated in July 2020 in a $200m initial public offering (IPO). It will value the merged company at about $3.4bn once the transaction closes.
The transaction was boosted by $775m in private investment in public equity financing anchored by investors including undisclosed Faraday shareholders , an unnamed original equipment manufacturer and a tier-1 Chinese city. Founded in 2014, Faraday has launched an electric vehicle called the FF91 and provides an intelligent driving software platform.
Pharmaceutical firm Sanofi agreed to acquire UK-based monoclonal antibody therapy developer Kymab in a deal sized at up to $1.45bn, allowing pharmaceutical manufacturer Shenzhen Hepalink to exit. The transaction will consist of $1.1bn in cash and up to $350m in milestone payments. It came after approximately $220m of funding raised by the company.
Founded in 2010, Kymab is developing treatments for cancer and immune-mediated diseases. Its lead product candidate, KY1005, is a monoclonal antibody that could potentially treat a range of immune-mediated diseases and inflammatory disorders.
Mobile semiconductor manufacturer Qualcomm agreed to purchase US-based silicon computing technology developer Nuvia in a $1.4bn deal that will allow computing technology provider Dell to exit. The acquisition is being conducted by the corporate’s Qualcomm Technologies subsidiary, and Nuvia’s technology is expected to enhance its mobile graphics processing unit, digital signal processor, multimedia accelerator and AI engine products.
Founded in 2019, Nuvia is developing silicon power management systems, performance processors and systems on a chip for use in compute-intensive devices, particularly those in data centres.
Angelini Pharma, a subsidiary of conglomerate Angelini, agreed to buy Arvelle Therapeutics, a central nervous system disorder drug developer spun off by pharmaceutical company Axovant, for up to $960m. The deal involves a $610m upfront payment, with up to $350m in additional capital to be paid should Arvelle’s epilepsy drug, cenobamate, achieve certain revenue targets.
Formed in 2019, Arvelle seeks to commercialise cenobamate to treat drug-resistant focal-onset seizures. The company expects to secure approval from the European Medicines Agency for the drug later in 2021 and it has received Promising Innovative Medicine designation from the UK equivalent.
Cybersecurity technology producer F5 Networks agreed to acquire US-based cloud services platform developer Volterra in a $500m deal allowing conglomerate Itochu, Microsoft and electronics manufacturer Samsung to exit. The transaction consists of approximately $440m in cash and $60m in deferred consideration and assumed unvested incentive compensation for employees.
Launched in 2017, Volterra has built a distributed cloud services platform that allows businesses to connect, secure and operate applications across multiple clouds and in edge computing. It will help F5 develop an app-driven edge platform for enterprises and cloud service providers.
Proterra, the US-based electric bus producer backed by corporates BMW, Daimler, General Motors, Mitsui, Edison Energy and Exelon, agreed a reverse merger with special purpose acquisition company ArcLight Clean Transition. The transaction gives Proterra a $1.6bn enterprise valuation and is boosted by $415m in private investment in public equity financing anchored by Daimler Trucks, a subsidiary of automotive manufacturer Daimler. Fidelity also participated in the PIPE, along with Franklin Templeton, private investor Chamath Palihapitiya and funds and accounts managed by BlackRock.
The merged company will take ArcLight Clean Transition’s place on the Nasdaq Capital Market. It floated in an IPO that closed at $275m in September 2020. Founded in 2004, Proterra manufactures plug-in electric buses for use in public transit and also provides battery and electrification technology to commercial vehicle producers in addition to charging and energy management systems.
Media group Bertelsmann and entertainment producer Walt Disney will exit US-based podcast publishing studio Wondery after the company agreed to be acquired by Amazon. The deal was sized at about $300m. Wondery will join Amazon’s on-demand audio content streaming subsidiary, Amazon Music, once the deal closes. Founded in 2016, Wondery runs a US-focused podcast production studio that commissions audio fiction and documentaries across a variety of genres for distribution through its podcasting app and third parties. Amazon Music will maintain Wondery’s presence on content marketplaces other than its own but hopes to attract more listeners to its own podcasting facility, which launched in September 2020.
US-headquartered social fashion marketplace Poshmark went public on the Nasdaq Global Select Market in a $277m IPO, enabling homebuilder JF Shea to exit. The offering consisted of 6.6 million shares priced at $42 each, well above the $35 to $39 range Poshmark had set and valuing it just above $3bn.
The offering is a significant rise from the reported $1.25bn valuation at which investors bought secondary shares in 2019 and the $600m valuation at which the company last raised money, in an $87.5m series D round in 2017 that took its total funding to near $160m.
Founded in 2011, Poshmark’s online platform enables users to browse, buy and sell fashion items in addition to interacting with each other and sharing favourite items. The company generated a $20.9m net profit in the first nine months of 2020 from sales of nearly $193m.
Women’s health technology provider Hologic agreed to acquire Biotheranostics, a US-based cancer-focused molecular diagnostics technology developer spun off by biotechnology firm BioMérieux, for about $230m. Founded in 2008, Biotheranostics supplies clinicians with molecular tests to inform diagnoses. Its tests use a DNA sample copying-method called polymerase chain reaction to investigate gene expression signatures at high resolution. The company has two existing products including Breast Cancer Index, an early-stage breast cancer assay that evaluates the possibility of prescribing endocrine, a hormone drug treatment with potential side effects. Biotheranostics also markets a genomic diagnosis test it says detects 95% of tumours that have migrated beyond the original cancer location.
Strawbear Entertainment Group, a China-based television producer that counts online streaming platform iQiyi as an investor, floated on the Hong Kong Stock Exchange in a HK$975m ($126m) IPO. The company issued 166 million shares for the IPO priced at HK$5.88 each. They opened trading at HK$7 each and closed at $10.80. E-commerce platform developer Vipshop, Snow Lake Capital and IDG’s Origin Flair subsidiary were among the anchor investors for the offering. Founded in 2014, Strawbear develops, produces and distributes drama series for television and online viewing, and will channel the proceeds from the IPO into production activities.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.