Corporate-backed deals tracked by GCV Analytics in November numbered 215, significantly higher than the 186 funding rounds in the same month last year. Investment value also increased by 84% to $8.05bn – up from $4.37bn in November 2016.
The deal count in November was even more drastically higher compared with the 147 recorded in October this year. November’s count is one of the highest monthly deal counts this year, along with March (225) and June (216). Total capital invested in corporate-backed rounds in November, however, went down from $10.24bn the previous month, a 27% drop.
The US came first in the number of corporate-backed deals, hosting 95 rounds, while China was second with 37, India third with 14 and Japan fourth with 11.
The leading corporate investors by number of deals were chipmaker Qualcomm, internet company Tencent and electronics manufacturer Samsung. Of those involved in the largest deals, Tencent topped the ranking, along with e-commerce firm Alibaba and electronics contract manufacturer Foxconn (Hon Hai).
GCV Analytics reported 20 corporate-backed funding initiatives during November, including VC funds, new venturing units, incubators and accelerators. This is a substantial decrease from the previous month, when initiatives numbered 27. The estimated capital raised was also lower than in the previous month, at $1.92bn, down from $4.08bn.
Deals
The most active corporate investors were those from the financial services, IT, media and health sectors.
GCV Analytics data shows that emerging businesses from the IT, health and financial services sectors secured the highest number of deals involving corporate venturers.
The top deals by round size were raised mostly by China-based enterprises. The focus of these businesses ranged from transport and IT through industrial activities to media and financial services.
Tencent and Alibaba were the top investors in many of these largest rounds, only one of which was above $1bn.
China-based smart electric vehicle developer Nio secured over $1bn in a funding round led by Tencent. The round, which reportedly valued the company at about $5bn, included hedge fund Lone Pine Capital, asset manager Citic Capital and investment firm Baillie Gifford. Another internet company, Baidu, co-led the round, according to local media reports, but its participation was not confirmed. Founded as NextEV, Nio is working on an electric autonomous car equipped with a personalised digital assistant that it aims to bring to market by 2020. It has already created a car – the EP9 – claimed to be the fastest electrically-powered vehicle in the world.
Megvii, a China-based facial recognition technology developer also known as Face-plus-plus, raised about $460m in a round featuring diversified conglomerate SK Group and Foxconn. Russia-China Investment Fund, the private equity fund backed by the governments of each of those countries, led the round, which also featured Ant Financial, the financial services affiliate of Alibaba. Face-plus-plus provides free facial detection and recognition software to developers and enterprises. Alibaba, Ant Financial and Jiayuan, one of China’s biggest dating sites, use the software.
China-based robotics technology producer UBtech Robotics closed a $400m series C round led by Tencent. The deal reportedly valued UBtech at approximately $4bn. Founded in 2012, UBtech produces family-friendly, humanoid robots for a range of applications. Its products include educational kits that enable children to build and program their own robot, and a services robot that provides information in hotels and airports.
Alibaba led a $335m series E round for China-based online vehicle marketplace SouChe. The round took the company’s overall funding to approximately $635m. Private equity firm Warburg Pincus, investment firm Primavera Capital and CMB International, a subsidiary of financial services firm China Merchants Bank, also participated in the round. Founded in 2012, SouChe operates an online automotive e-commerce platform that partners a network of more than 110,000 new and used vehicle dealers across China. It has some 330,000 monthly active users and expects to book about RMB150bn ($22.7bn) in transactions by the end of this year.
UK-based money transfer platform TransferWise raised $280m in a series E round featuring diversified conglomerate Mitsui & Co that valued it at $1.6bn. Asset management firm Old Mutual Global Investors and venture capital firm Institutional Venture Partners co-led the round, which included Sapphire Ventures, the venture capital firm spun out of enterprise software provider SAP, among other investors. TransferWise operates an online platform enabling businesses to streamline cross-border financial transfers.
China-based artificial intelligence technology producer SenseTime received $227m from Alibaba. The transaction reportedly valued SenseTime at $3bn post-money. It is not clear whether Alibaba made the commitment as part of a $500m series C round that SenseTime is said to be in the process of raising. Founded in 2014, SenseTime is developing computer vision and deep learning technology to power facial and image recognition as well as language processing and vehicle identification.
China-based online lending marketplace WeLab raised $220m in debt and equity financing in a series B-plus round that included Alibaba’s Hong Kong Entrepreneurs Fund. Financial services firms Credit Suisse and China Construction Bank also participated in the round, along with the International Finance Corporation, the private investment arm of the World Bank. WeLab runs an app-based peer-to-peer lending platform with more than 25 million registered users. It generally issues small loans to consumers, and CEO Simon Loong had told Tech in Asia its loans business has experienced six or sevenfold year-on-year growth in the first half of 2017.
US-based augmented reality (AR) mobile game developer Niantic secured $200m in a series B round that included internet company NetEase. Brand services provider You & Mr Jones also participated in the round, which was led by venture capital firm Spark Capital. Niantic was established in 2010 as an internal startup at internet company Google, before being spun out in 2015. The company has developed a range of massively multiplayer online role-playing games, such as Pokemon Go, that incorporate real-world landmarks.
Chehaoduo, a China-based automotive e-commerce company backed by steel producer Shougang Group, raised $180m in series B-plus funding. The funding came from a subsidiary of financial services firm Bank of China Group, as well as investment firm DST Global, private equity firm Capital Today and venture capital firms Sequoia Capital China and H Capital. Chehaoduo runs two e-commerce platforms – Guazi, which focuses on used vehicles, and Maodou, which sells new cars. Both also provide adjacent services such as vehicle appraisal, automotive insurance and financial services for buyers.
US-based smart cities technology provider Intersection closed a $150m funding round led by media conglomerate Graham Holdings that also featured asset management firm ArrowMark Partners and investment firm NewSpring Capital. Intersection was created in 2015 through the merger of outdoor advertising company Titan and design consultancy Control Group, and acquired by a consortium led by Sidewalk Labs, the urban infrastructure subsidiary of diversified conglomerate Alphabet. The company operates in markets such as New York, where it has converted old phone booths into a range of kiosks, called Links, offering free wifi, information on public transit and charging facilities, which are funded through advertising displays.
Exits
In September GCV Analytics tracked 27 exits involving corporate venturers as either acquirers or exiting investors. The transactions – most of which took place in the US – included 18 acquisitions, six initial public offerings (IPOs) and one merger.
The number of exits was the same as in the previous month, the highest this year on a monthly basis. Total estimated exited capital amounted to $2.94bn, only a slight increase – 5% – over the October figure, estimated at $2.8bn.
Yixin Group, a China-based e-commerce marketplace operator spun out of automotive transaction services provider BitAuto, raised HK$6.77bn ($867m) in an IPO. The company issued almost 879 million shares on the Hong Kong Stock Exchange priced at the top of the IPO’s HK$6.60 to HK$7.70 range. Its stock opened at HK$10 and briefly reached HK$10.18 before closing at HK$8.12, giving it a market cap of about $6.54bn. Yixin runs an online marketplace for vehicles, and a financial services unit that provides leasing as well as financing for car purchases.
Bytedance, owner of news app Toutiao, acquired China-based social video app developer Musical.ly, giving an exit to mobile app developer Cheetah Mobile. According to various media sources, Bytedance agreed to pay between $800m and $1bn. Musical.ly has created a short-form music-based social video app aimed at a millennial user base. Users upload a 15-second clip of themselves lip-synching or engaging in some other activity accompanied by a popular song.
Semiconductor manufacturer Intel, industrial conglomerate Siemens and IT cloud-based service provider Red Hat exited US-based software management technology provider Black Duck Software, which agreed to an acquisition by electronic design software producer Synopsys for approximately $565m. Black Duck provides technology that automates the process of securing and managing open-source software by identifying and inventorying the software code and finding security or licence compliance issues.
PPdai, a China-based online lending marketplace backed by trading and technology firm Susquehanna International Group, raised $221m in a New York Stock Exchange flotation. The company issued 17 million American depositary shares at $13 each, below the $16 to $19 range it had previously set. Also known as Paipaidai, PPdai runs an online consumer loans marketplace with more than 48 million registered users, targeting borrowers between 20 and 40 years old that are underserved by traditional lenders, and more receptive to online activities.
Enterprise security software provider Proofpoint agreed to acquire US-based cybersecurity technology developer Cloudmark for $110m, enabling communications technology provider Nokia and trading group Sumitomo to exit. The all-cash deal is expected to close soon, pending regulatory approval. On completion, Proofpoint will integrate Cloudmark’s threat telemetry and intelligence data into its Nexus platform, which powers its product portfolio. Founded in 2001, Cloudmark provides messaging security software to protect communications service provider networks and their subscribers.
Metamarkets, a US-based advertising technology developer backed by internet group Oath, was acquired by messaging app developer Snap for less than $100m. Neither Metamarkets nor Snap officially confirmed the deal, which may not have closed yet. Founded in 2010, Metamarkets provides interactive advertising analytics tools for businesses to track the real-time performance of their marketing campaigns. Its clients include Oath, social media company Twitter and cross-device advertising platform Drawbridge.
SCPharmaceuticals, a US-based subcutaneous drug developer backed by pharmaceutical companies Sun Pharmaceutical Industries and Lundbeck, raised $89.6m in an IPO. The offering consisted of 6.4 million shares issued on the Nasdaq Global Select Market at $14 each, at the lower end of its $14 to $16 range. The company’s shares closed at $14.15, giving it a market capitalisation of about $249m. SCPharmaceuticals is developing subcutaneously-administered drugs to treat conditions such as heart failure in more affordable environments than traditional hospitals.
Spero Therapeutics, a US-based biopharmaceutical company raised $77m in an IPO. The company issued 5 million shares on the Nasdaq Global Select Market at $14 each. The company counts a range of corporates among its backers, including Alphabet and health and pharmaceutical firms Partners Healthcare, GlaxoSmithKline, Merck & Co and Lundbeck. Founded in 2013, Spero is working on drugs that treat bacterial infections resistant to multiple therapeutics, by enhancing the spectrum and potency of existing antibiotics.
Aquantia, a US-based ethernet connectivity technology producer raised $61.4m in its IPO on the New York Stock Exchange. The offering consisted of just over 6.8 million shares at $9 each, below the IPO’s $10 to $12 range. Previous corporate backers of the company include networking equipment producer Cisco Systems, semiconductor foundry GlobalFoundries, semiconductor and chip makers Intel and LSI as well as programmable logic equipment producer Xilinx. Founded in 2004, Aquantia develops and produces integrated circuits for high-speed ethernet communications, easing bottlenecks in network bandwidth caused by heavy internet traffic.
Arsanis, a US-based immunotherapy drug developer backed by Alphabet and research hub European Molecular Biology Laboratory, closed an IPO at $46m. Founded in 2010, Arsanis is working on monoclonal antibody immunotherapies to treat serious infectious diseases. Its lead product candidate, ASN100, is being developed to treat the potentially fatal infection-based disease staphylococcus aureus pneumonia.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
