Stormy markets have been ignored by busy corporate venturing groups in June.
Corporate venturers continued to invest and exit at a fair clip in June, even as the private and public markets have been rocked by turbulent discussions over the future of the eurozone, and fears have risen that the motors of the global economy, the US and China, are slowing down.
In June, Global Corporate Venturing tracked 75 investments received by corporate venturing-backed companies worth $1.3bn, and exits of 15 companies worth $3.7bn (click here for deals table, here for top 10 deals, here for Dow Jones data and here for Q2 analysis).
In the same month last year, 96 investments worth $1.5bn were tracked, and 13 exits worth $1.3bn.
In May 2012 there were 89 investments worth $1.7bn and 14 exits worth $24.6bn – the latter figurewas significantly affected by the initial public offering (IPO) of US-based social network Facebook, which raised $18.4bn, as were the second-quarter exit results below.
The largest investment of the month was the $216m round raised by China-based mobile handset company Xiaomi, which was backed by the corporate venturing units of US-based media company International Data Group and US-based semiconductor company Qualcomm.
The second-biggest deal was the $70m round raised by India-based search engine Just Dial, backed by Germany-based software company SAP’s venturing unit. The third-largest round was US-based healthcare company Trivascular’s $60m round, backed by US-based healthcare company Kaiser Permanente’s venturing unit.
Exit activity in June was dominated by trade sales, with no IPOs tracked by Global Corporate Venturing.
In the second quarter there were 247 investments worth $4.4bn and 41 exits worth $29.3bn. The second-quarter figures compared with 246 investments worth $5.2bn and 43 exits worth $6.1bn in the second quarter of 2011.
In the first quarter of 2012 there were 249 investments worth $5.2bn and 46 exits worth $5.1bn.
There appears to be a move away from early-stage deals – perhaps a “flight to safety” reflecting eurozone difficulties’ effect on sentiment, as well as a weakening of positive sentiment towards venture investment after the widely publicised complications surrounding Facebook’s IPO.
In June, the normally predominant A rounds were down to 13%, with B rounds, C rounds and stake purchases accounting for more activity. In the second quarter by contrast, A rounds were the most popular transaction, accounting for 19% of activity.
Adam Caper, managing director of corporate venturing adviser Synchrony Venture Management, said: “A focus away from early-stage represents a maturation of corporate programmes. It demonstrates an appropriate focus on strategic issues rather than corporate venturing groups merely mirroring venture investing. Increasing levels of sophistication more oriented towards emphasis on strategic value will bring with it more selectiveness, which is a good thing.”
In June, information technology was the most active sector, accounting for 24% of investments, in a noticeably busy month for the traditionally strong sector, which made up 20% of investment activity during the past quarter.
This also made it the most active sector during the three-month period. Healthcare accounted for 21% of investments in June, and 17% of activity over the quarter. The consumer sector accounted for 15% of activity in June and 19% over the quarter.
The traditionally strong media sector had a relatively subdued June, accounting for 5% of activity, against 14% during the quarter.
As is typical in corporate venturing, the lion’s share of dealflowwas in the US – 69% of activity both in June and over the quarter. The UK accounted for 6% of investments last quarter, Germany 5%, and India and China 3% each.
In June two investments were made in Japan, accounting for 3% of global dealflow.
Caper said: “The money in a venture investment is a mechanism for acquiring new capabilities and technologies in partnership with portfolio companies.
“While not irrelevant as a gross metric of activity, focusing on it misses the core focus of corporates. As programmes mature one would expect these programmes are going to use their dollars more surgically.”