April was the cruellest month for corporate venturing groups hoping for March’s strong realisation activity to persist – click here for deals table, Dow Jones data, and pie charts and graphics.
There were six exits as well as one stake sale worth $201.2m tracked by Global Corporate Venturing, down from 15 exits, one stake sale and five initial public offerings (IPOs) in March worth $3.3bn.
Groups with plans to come to market delayed floats, with US-based-solar thermal company BrightSource Energy and US-based natural gas processing company Luca Technologies both shelving IPOs, while no successful corporate venturing-backed flotations were tracked in April.
Speculation has increased that the weak exit environment could delay the flotation of US-based social network Facebook, slated for this month, which many had expected to boost the wider new issue market.
Yet investment activity held up – click here for top 10 table. There were 66 corporate venturing investments tracked by Global Corporate Venturing in April worth $1.3bn. This was down from 73 investments worth $1.6bn in March, and from 70 deals worth $2bn in April last year.
However, activity in the last few days of the quarter generally takes time to track, suggesting April investments may have been close to March levels.
The largest investment of the month was the $144m round raised by Sapphire Energy, a US-based fuel-fromalgae company, which was backed by US-based crop company Monsanto among other investors.
The second-largest deal was US-based film and television company Legendary Entertainment’s $128m round, which included International Data Group’s corporate venturing unit, IDG Capital Partners, as a backer.
The third-biggest deal was Harvest Power’s $110m round, which was backed by US-based rubbish disposal company Waste Management.
The most active sector was information technology, with 24% of investments. This was closely followed by the consumer (23%) and media sectors (20%). There was a marked drop in activity in the healthcare sector, with April’s 11% of deals falling from 19% in March – healthcare is more often one of the top two most active sectors for corporate venturing investment. The other sectors by activity were clean-tech (11%), services (7%), utilities (3%) and financial services (1%).
As is typical in corporate venturing, the US accounted for two-thirds of overall investment (44 deals). This was followed by the UK with six deals. There were three investments in Germany and two in each of Israel, China and Belgium. One investment happened in each of Brazil, Canada, Dubai, Finland, France, South Korea and the Netherlands.
The dominance of first rounds diminished in April. In March, A rounds accounted for 39% of activity, compared with 23% in April. In both months B rounds were 15%. Yet in April C rounds or higher accounted for 25% of activity, while in March they accounted for 18%. In April, E rounds and beyond were unusually high at 7%, compared with a more typical 3% the previous month. Other investment activity was C (11%), D (7%), mergers and acquisitions (11%), stake purchases (14%) and seed rounds (3%).