Sell-side activity took a knock during the month as economic uncertainty dogged the headlines, yet corporates remained busy investing.
July was a sleepy month for realisation activity, as global economic headlines continue to be dominated by eurozone woes and a slowing of both the US and Chinese economies.
There were only three exits of corporate venturing-backed companies, worth $400m, in July, compared with 21 exits worth $3.9bn in June, and 15 exits worth $2.8bn in July last year.
The largest was that of Gaikai, a US-based cloud gaming company backed by semiconductor companies Intel and Qualcomm’s corporate venturing units, which was sold to Japan’s Sony Computer Entertainment for $380m.
Investments held up well, suggesting corporates are not taking their foot off the pedal in reaction to realisations slowing down. (See table.)
In July there were 72 investments in corporate venturing-backed companies worth $1bn, down from 91 deals worth $1.5bn in June, and 97 deals worth $1.6bn in July last year.
The largest investment of the month was General Atlantic, a private equity firmfor high-net-worth individuals, backing file sharing company Box, which is supported by SAP Ventures, the corporate venturing unit of the Germany-based technology company, and US-based technology company Salesforce, in a $125m deal.
The second-largest deal was China-based industrial company New Times Group backing Protean, a US-based electric drive systems company, in a quasi-corporate venturing move.
The third-largest deal was US-based consumer company Intelligent Beauty join-ing venture firms in a $76m investment in JustFab, the US-based online retail and fashion business it founded.
There appears to be a relative flightto safety in terms of investment activity, both in the locations picked for investment and the investment types that have been chosen.
There was greater than usual activity in the US – 76% of deals, continuing a trend from June when the world’s largest economy accounted for 72% of deals. (See deals map here)
Typically around two-thirds of deal activity takes place in the US – 64% in July last year. There were four deals in both Germany and the UK, and two in each of Singapore and China.
There was strong relative activity in both A rounds and later-stage deals, suggesting an interest in deals with a longer time horizon as well as those closer to exit.
There were 17 A rounds (24%) – A rounds were 13% of activity both in the same period last year and in June. There were also eight E rounds and greater (11%), compared with a more typical 4% in July last year and 3% in June.
There were 14 B rounds (19%), 12 C rounds (17%) and one D round (1%). Stake purchases made up 15% of invest-ments, mergers and acquisitions 4% and seed rounds 3%.
The most active area of activity was the traditionally strong information technology sector, with 16 deals (22%). This was followed by the consumer sector with 14 deals (20%) and media with 13 deals (18%), a particularly strong relative showing for these last two sectors. In June there were also 12 healthcare deals (17%). Clean-tech made up 8% of activity.
Liz Arrington, a partner at advisory firm Bell Mason, said: “The series A activity is pretty interesting, much of it focused in Silicon Valley. When you dig a little deeper into the deals, you see increasing evidence of savvy corporate investor participation in deals with top-tier venture capital firms, also companies successfully emerging from incubators and accelerators, and lots of activity from accelerator and seed fund 500 Startups.”
There was also some interesting private equity investments alongside corporates, with Germany-based car manufacturer Daimler acquiring a stake in US-based bus manufacturer Motor Coach Industries, alongside turnround firm KPS Capital Partners and China-based distributor Sparkle Roll.
In addition, private equity firmA Capital, backed Denmark-based home electronics company Bang & Olufsen. Arrington said: “We are seeing more evidence of corporate collaborations with private equity firms as deal sources, roll-up partners and ultimately buyers.”