The covid-19 pandemic is far from over and a good part of the developed world is in the middle of its second wave. But positive news on the rollout of a successful vaccine has brought hope for a return to normality.
Our data on corporate venture investment activity continues to point to recovery. The number of corporate-backed deals from around the world was 244 during November, even slightly higher than the 238 rounds from the same month last year. Investment value stood at nearly $12bn – down 22% from the $15.29bn in November 2019.
The US came first in the number of corporate-backed deals, hosting 83 rounds, while Japan was second with 41 and China third with 31.
The leading corporate investors by number of deals were telecoms group SoftBank, internet firm Tencent and diversified internet conglomerate Alphabet. In terms of involvement in the largest, Softbank and Tencent topped the list followed by financial services firm Fidelity and Alphabet.
GCV Analytics reported 38 corporate-backed funding initiatives in November, including VC funds, new venturing units, incubators, accelerators and other. This figure suggested a considerable 90% increase compared to November 2019 which had registered 20 initiatives. However, the estimated capital raised in those initiatives amounted to $2.44bn, roughly comparable with $2.05bn during the same month last year.
Deals
Emerging businesses from the IT, health, services and financial sectors led in raising the largest number of rounds. The most active corporate venturers came from the financial, IT, media and health sectors.
China-based trucking services marketplace Manbang Group raised $1.9bn in a round featuring Tencent and subsidiaries of Alphabet and SoftBank. The round, which valued the company at $6.5bn according to people familiar with the matter, included China Reform Fund, GSR Ventures, Ward Ferry and Sequoia Capital. Alphabet’s investment came through its CapitalG unit while SoftBank took part through its Vision Fund.
Formerly known as Full Truck Alliance Group, Manbang runs an online platform where those looking to ship goods can link up with truckers with surplus space in their vehicles. It was formed by the 2017 merger of rivals Huochebang and Yunmanman. The company’s platform uses artificial intelligence (AI) to forge connections based on routes and space. It has signed some 5.2 million trucks up to its network, and will use the funding to expand into new markets and verticals.
Resilience, a US-based developer of medical manufacturing technology, emerged from stealth with over $800m in funding from investors including GV, a subsidiary of Alphabet. GV participated in a recently closed $750m series B round co-led by Arch Venture Partners and 8VC and backed by fellow VC firm New Enterprise Associates and unnamed pharmaceutical companies, public mutual funds, foundations, family offices and pensions.
Founded earlier this year and also known as National Resilience, Resilience is developing technologically advanced pharmaceutical manufacturing facilities that will help therapeutics developers concentrate more capital on drug discovery. The technology is intended to allow gene and cell therapies, vaccines, proteins and viral vectors to be produced quickly and safely at scale. The startup intends to bring more than 750,000 square feet of operating space online over the next year and will also offer drug chain development and supply chain management services.
Reef Technology, a US-based provider of infrastructure for on-demand services, raised $700m from investors including SoftBank’s Vision Fund. Abu Dhabi’s sovereign wealth fund Mubadala Investment Company led the round through its Mubadala Capital fund while financial services firm UBS’s Asset Management unit also took part.
Formerly known as ParkJockey, Reef’s core business was a system that allowed users to book parking spaces through a mobile app, but it now concentrates on converting underused space into hubs for on-demand services.
The company’s app still allows parking lot owners to optimise their space, but also offers space for local logistics hubs for e-commerce delivery, mini-healthcare facilities and cloud kitchens. The round was disclosed alongside the formation of Neighborhood Property Group, an investment vehicle funded by Reef and alternative investment manager Oaktree that will spend $300m on acquiring real estate assets that will support Reef’s business.
US-headquartered autonomous delivery vehicle developer Nuro announced a $500m series C round featuring SoftBank’s Vision Fund I. The round was led by funds and accounts advised by T Rowe Price and included investment and financial services group Fidelity Management & Research, Baillie Gifford and Greylock. It reportedly valued the company at $5bn.
Nuro has built a fleet of driverless vehicles that are used by companies to deliver consumer goods to customers that include prepared food, prescription medicine and groceries. The company launched the second iteration of its autonomous vehicle in February and they operate on public roads in California, Texas and Arizona.
Mitsui Sumitomo Insurance, a subsidiary of insurance group MS&AD, invested $350m in US-based online home insurance provider Hippo Enterprises through a strategic partnership deal. Hippo sells property and casualty insurance through an online service and will use the funding to expand into more states and supply additional capital to its own insurance and reinsurance companies. The agreement will involve Mitsui Sumitomo signing a reinsurance treaty to accept a portion of risk on Hippo’s behalf. Takashi Sato, managing partner at MS&AD corporate venturing unit MS&AD Ventures, is taking a board observer position at Hippo.
DataRobot, the US-based AI software producer backed by a host of corporate investors secured $270m in series F funding. Previous corporate backers include networking technology provider Cisco, human resources firm Recruit, semiconductor and chip manufacturer Intel, banking group Citi and insurance firm New York Life. The capital in this round came from new and existing investors. The transaction more than doubled the company’s valuation to north of $2.7bn and was described as a pre-IPO round. Founded in 2012, DataRobot has created an AI platform that enables enterprise customers to create and manage machine learning models that can help optimise their business performance.
US-based database software provider PingCap received $270m in a series D round that included Bertelsmann Asia Investments, a CVC vehicle for media group Bertelsmann. GGV Capital, Access Technology Ventures, Anatole Investment, Jeneration Capital and 5Y Capital co-led the round, which also featured Coatue Management, FutureX Capital, Kunlun Capital, Trustbridge Partners, Matrix Partners China and Yunqi Partners. PingCap is the creator of an open-source distributed database platform called TiDB as well as a version called TiDB that has been tailored for use on cloud platforms such as Amazon Web Services and Google Cloud.
SoftBank’s Vision Fund II led a $250m series C round for Germany-headquartered electric scooter rental service Tier. The Vision Fund was joined by Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, which invested an eight-figure amount through its Mubadala Capital unit, along with Northzone, Goodwater Capital, White Star Capital, Novator and RTP Global.
Tier runs an app-based electric scooter rental service that uses a 60,000-strong scooter network stretched across 80 cities in 10 countries. The series C proceeds will be used to expand into new markets and further deploy its urban scooter charging infrastructure.
China-based vaccine developer Rec-Biotechnology secured more than RMB1.5bn ($227m) in a series B round featuring Legend Holdings, the VC firm formed by conglomerate Legend Holdings.
Lyfe Capital, Sequoia Capital China, Vertex Ventures China, Haitong Securities subsidiary HT Capital, Co-Stone Asset Management, YuanBio Venture Capital, Tsing Song Capital and China Everbright also took part, according to a WeChat post by financial adviser Life Venture.
Founded in 2012 and also known as Abzymo Biosciences, RecBio is working on vaccines for human papillomavirus (HPV), which can trigger cervical cancer, as well as shingles and tuberculosis.
The proceeds from the round will support clinical trials for vaccine candidates including a possible covid-19 candidate and potential vaccines for HPV. RecBio is also planning to strengthen its core technology, grow its product pipeline and expand internationally.
Cars24, an India-based online automotive marketplace backed by e-commerce services provider KCK Global, raised $200m in a series E round led by investment firm DST Global. The round also featured Exor Seeds, a VC vehicle for holding company Exor, as well as investment firms Moore Strategic Ventures and Unbound. The cash was secured at a valuation above $1bn. Founded in 2015, Cars24 runs an e-commerce platform that allows customers in more than 130 Indian cities to buy and sell vehicles, using AI to assess an accurate market price for each listed vehicle. The company said this its business has already surpassed pre-coronavirus levels, and the series E funds will support technology and product development in addition to entry into new business areas.
Exits
GCV Analytics tracked 22 exits involving corporate venturers as acquirers or exiting investors in November. The transactions included 16 acquisitions, five initial public offerings (IPOs), one other transaction.
The exit count figure was considerably lower than the other months in the second half of this year but higher than the 12 exits recorded in November 2019 The total estimated exited capital stood at $9.39bn from, up 22% from $7.67bn in October and much higher than the $1.71bn from the same month last year.
Pharmaceutical firm Merck & Co agreed to acquire oncology therapy developer VelosBio for $2.75bn in cash, enabling pharmaceutical companies Chiesi and Takeda to exit. Founded in 2017, VelosBio is working on cancer drugs targeted at a type of protein known as the tyrosine kinase-like orphan receptor 1. The company’s lead product candidate, VLS-101, is an antibody-drug conjugate in a phase 1 clinical trial for haematologic malignancies and a phase 2 trial for solid tumours. It had secured $202m in funding before the acquisition agreement.
Marketing and imaging software producer Adobe agreed to buy US-based work management software provider Workfront in a $1.5bn deal that will allow quantitative trading firm Susquehanna International Group (SIG) to exit. Workfront has built a software platform that allows enterprises to focus workplace activity and collaboration in a single place, allowing marketing employees to create content and share ideas as well as oversee complex projects.
Packaged food producer Dr Oetker paid €1bn ($1.16bn) for Germany-based drink delivery service Flaschenpost in a transaction that will allow cleaning product distributor Vorwerk to exit. Founded in 2016, Flaschenpost runs an online service that allows users to order beverages in under two hours across 23 German cities. Home delivery services have experienced a significant rise in business during the coronavirus pandemic, and Flaschenpost’s sales last month alone totalled €27m. About 15% of its revenue comes from sales of its own water and beer brands.
Russia-based online marketplace Ozon will go public on the Nasdaq Global Select Market in a $990m IPO that will achieve an exit for diversified conglomerate Sistema. The company increased the number of American depositary shares – each representing one common share – in the offering from 30 million to 33 million and priced them at $30.00 each, comfortably above the $22.50 to $27.50 range it had set. Sistema and another Ozon shareholder, private equity firm Baring Vostok, are each buying $67.5m of additional shares in the company through a concurrent private placement. The IPO price valued the company at approximately $5.57bn. Ozon operates an e-commerce platform with 50 million monthly active users that connects buyers of a wide variety of consumer goods to a network of 18,000 merchants. It increased revenue from $39.1m to $66.6m year on year in the first nine months of 2020, with its net loss narrowing slightly to $12.9m.
Digital commerce software provider Lightspeed POS agreed to acquire US-headquartered point-of-sale technology producer ShopKeep in a $440m deal that will allow Salesforce and First Data to exit. The transaction consists of about $145m in cash and the remainder in about 9.5 million Lightspeed shares. ShopKeep provides technology that allows small businesses retailers to accept digital payments, plus tools such as automated inventory tracking, employee management and sales reports in real time.
JW Therapeutics, the China-based cancer drug developer founded by corporates Juno Therapeutics and WuXi AppTec, has floated in IPO that raised approximately HK$2.33bn ($300m). The company issued 97.7 million shares priced at HK$23.80 each on the Hong Kong Stock Exchange and the offering was 450 times oversubscribed. Goldman Sachs and UBS were joint sponsors. Founded in 2016, JW is working on immuno-oncology therapies focused on chimeric antigen receptor (CAR) T-cells, targeting haematological cancers and solid tumours. No CAR T-cell product has been approved yet in China. Pharmaceutical company Juno held 26% of the company’s shares pre-IPO, with counterpart WuXi AppTec owning a 14.2% stake.
Zhejiang Supcon Technology, a China-based industrial automation technology provider backed by corporates Chint, Sinopec, Intel, Wanxiang and Lenovo, raises RMB1.76bn ($268m) in its IPO. The offering consisted of about 49.1 million shares issued on the Shanghai Stock Exchange’s Star Market and priced at RMB35.73 each. Shenwan Hongyuan Financing Services was the principal underwriter for the IPO and Citic Securities was joint underwriter.
Supcon produces process automation technologies for use in manufacturing, petrochemical production and the power, nuclear, oil and gas industries. The company posted a net profit of approximately $37m for the first nine months of 2020, from about $314m in revenue. IPO proceeds will support technology development in areas like smart industrial software and control valves.
Grocery delivery service Ocado agreed the $262m acquisition of US-based warehouse robotics technology provider Kindred Systems through a deal enabling Tencent and Alphabet to exit.
Kindred produces piece-picking robots equipped with AI for use in fulfilling e-commerce orders in warehouses. It made a $16.2m net loss from $1.7m in revenue in 2019, and the all-cash transaction includes $4m that will go to employee shareholders.
NeoGames, a Luxembourg-registered, Israel-headquartered digital lottery software provider backed by betting firm William Hill, raised $81.7m in its IPO. The company issued nearly 2.63 million shares on the Nasdaq Global Market while its shareholders divested a further 2.18 million shares. They were priced at $17 each, above the IPO’s $14 to $16 range.
Spun off by online gaming technology provider Aspire in 2014, NeoGames offers technology that enables lottery operators to sell tickets and run specialist games online. The company’s revenue declined year on year from $35.2m to $24.1m in the first nine months of 2020, with a corresponding $4m profit turning to a $3.3m net loss.
US-based cellular medicine developer SQZ Biotechnologies floated in a $70.6m IPO that scored exits for insurance firm AIG, Orient Life, genomics technology provider Illumina and Alphabet. The offering consisted of just over 4.4 million shares issued on the New York Stock Exchange and priced at $16 each, at the foot of the IPO’s $16 to $18 range. The company’s shares closed at $14.50, valuing it at approximately $348m.
SQZ is developing cell therapies to treat cancer and infectious diseases based on research conducted at Massachusetts Institute of Technology. The company will add the IPO proceeds to its cash on hand and allocate $75m to a product candidate called SQZ-PBMC-HPV which is currently in a phase 1 clinical trial for locally advanced and metastatic HPV-positive tumours.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.