There were 138 corporate-backed deals in October, down from 198 funding rounds in the same month last year. Investment value, however, doubled to $10.2bn from $5.1bn last year.
The deal count last month also dropped compared with September this year, when there were 194 rounds. October’s is the lowest monthly deal count recorded this year by GCV Analytics.
Total capital invested in corporate-backed rounds in October, however, was higher than the previous month’s $8.31bn, a 23% increase.
The US hosted the largest number of deals at 71 – more than half the disclosed dealflow – while China was second with 12 rounds, India third with 11 and Germany fourth with 10.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, internet company Tencent, semiconductor and chipset manufacturer Intel and telecoms firm SoftBank. Tencent was involved in the largest deals, with media and research company International Data Group close behind.
GCV Analytics recorded 27 corporate-backed funding initiatives in October, including VC funds, new venturing units, incubators, accelerators and other programs. This figure represents a substantial increase over September, when these initiatives numbered 13. The estimated raised capital in those initiatives almost doubled to $4.08bn, up from $2.44bn the previous month.
Deals
The most active corporate investors came from the financial services, IT, media and consumer sectors.
GCV Analytics data shows that emerging businesses from the financial, IT, services and health sectors secured the highest number of deals involving corporate venturers. The top deals by round size were not concentrated in any particular sector, however. They ranged from transport and services through consumer and media and IT to health companies. Three of the largest rounds were above $1bn.
Tencent led a $4bn round for China-based online services provider Meituan-Dianping which valued it at $30bn. Travel services provider Priceline Group also participated in the round, as did IDG Capital, the venturing subsidiary of International Data Group and the Singaporean state-owned GIC, among other investors. Meituan-Dianping runs a local services and e-commerce platform that processes about 21 million orders a day, for items such as food, event tickets and flights.
India-based on-demand ride-provider Ola raised $1.1bn in a funding round led by Tencent. SoftBank also took part in the round, as did undisclosed US-based investors. Ola is reportedly in talks with additional parties in a bid to add another $1bn, taking it above $2bn. Founded in 2011 as Olacabs, the company has built an app-based ride-hailing service.
US-based ride-hailing platform Lyft raised $1bn in a funding round led by CapitalG, the growth-stage investment arm of Alphabet. Lyft has not named other investors in the round, which valued it at $11bn. The deal came shortly after Lyft entered talks with investment banks about a possible initial public offering next year. Lyft operates an on-demand platform available in approximately 300 cities across the US.
US-based augmented reality (AR) technology producer Magic Leap raised $502m in a series D round featuring media company Grupo Globo, e-commerce group Alibaba and Alphabet. Singaporean state-owned investment firm Temasek led the round, which included financial services firm JPMorgan Investment Management, Fidelity Management and Research, Janus Henderson Investors and T Rowe Price, among other investors. Magic Leap has remained largely in stealth mode since it was founded in 2011. However, details that have emerged to date suggest the company is developing an AR headset that superimposes virtual objects on physical surroundings.
US-based biopharmaceutical company Harmony Biosciences closed a $270m funding round which featured pharmaceutical firm Novo and Nan Fung Life Sciences, a subsidiary of property developer Nan Fung. Financial services group Fidelity Management & Research also took part in the round. Harmony is developing drug treatments for rare and orphan diseases, particularly those that affect the central nervous system. It is part of the Paragon Biosciences healthcare group.
The SoftBank Vision Fund led a $164m round for Mapbox, a US-based creator of a location and mapping platform for software developers. Mapbox provides map, direction and location search services.
US-based multi-platform media production company Macro raised $150m in combined equity and debt financing from investors including entertainment company MNM Creative and business development firm Medialink. The round also featured impact investment firms Ford Foundation, WK Kellogg Foundation and Libra Foundation as well as undisclosed strategic backers. Macro did not reveal individual figures for the debt and equity portions of the round. Founded in 2015, Macro produces and finances digital series, television shows and films that target a multicultural market.
Secret Escapes, a UK-based online travel agency, previously backed by Alphabet, raised $111m in a series D round led by Temasek. The round included private equity firm Idinvest Partners and an undisclosed amount of debt financing from Silicon Valley Bank. The debt and equity portions were not revealed. Founded in 2011, Secret Escapes runs a free-to-join members-only luxury travel agency.
Flexport, a US-based backed freight management platform backed by media company Bloomberg and Alphabet, closed a $110m series C round. Financial services firm Wells Fargo participated as a new investor, investing through its strategic capital unit. Founded in 2013, Flexport operates a software platform that enables users to schedule, track and manage the shipping of large quantities of goods by sea or air, and provides services such as warehousing and shipping insurance.
Bill.com, a US-based payment processing network backed by payment services firm American Express, raised $100m in a round co-led by JPMorgan Chase and Temasek. Bill.com operates a processing network for business payments used by its 2.5 million members to process some $50bn of payments a year.
Exits
In October, 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 19 acquisitions, seven initial public offerings and one merger.
This number of exits – the highest monthly figure this year, represents an increase from the 15 and 20 transactions tracked in August and September respectively. Total estimated exited capital, however, amounted to $2.78bn, significantly lower than the $5.68bn for September.
Qudian, a China-based online consumer lending service backed by financial services provider Ant Financial and game producer Kunlun Tech, raised $900m from its flotation in the US. The company priced 37.5 million American depositary shares at $24 each on the New York Stock Exchange, above the $19 to $22 range it had set earlier, giving it a market value of about $7.9bn. Founded in 2014 and formerly known as Qufenqi, Qudian runs an online platform that provides credit to mostly young customers who are underserved by traditional banks due to their lack of credit history.
Razer, a US-based gaming accessories producer backed by Intel and mobile services provider Hangzhou Liaison Interactive, raised up to $550m when it floated in Hong Kong. The company priced its shares at between HK$2.93 ($0.38) and HK$4., and had already secured $150m in commitments from cornerstone investors. Razer’s core business is its gaming products range, which incorporates everything from joysticks and specialist keyboards to gaming software and laptops. It recently broadened its offering by launching an eSports platform and a virtual currency known as zGold.
Nutonomy, a US-based self-driving technology producer backed by electronics producer Samsung, agreed to a $450m acquisition by automotive components manufacturer Delphi Automotive. Delphi will pay $400m upfront, and with earn-outs the purchase price will total approximately $450m. Founded in 2013, Nutonomy is working on software called NuCore to organise large fleets of autonomous ride-hailing vehicles by enhancing image perception, mapping and localisation, motion planning and decision-making.
Apama Health, a US-based catheter developer backed by healthcare provider Ascension Health, agreed to an acquisition by medical device manufacturer Boston Scientific for up to $300m. Boston Scientific is to pay $175m in cash for Apama, with the remaining $125m dependent on clinical and regulatory milestones. Founded in 2009, Apama has been developing a radiofrequency balloon catheter system to treat atrial fibrillation, a relatively common type of heart rhythm abnormality that affects approximately 33 million worldwide.
MongoDB, a US-based database software producer backed by several corporate investors, raised $192m when it floated on Nasdaq. The company priced 8 million shares at $24 each, well above the $18 to $20 range it had set earlier. This valued the company at $1.17bn. Enterprise software providers Salesforce and Red Hat, Intel and computing equipment producer Dell are all investors in MongoDB and hold stakes of less than 5% in the company. MongoDB has created a database software platform that has been downloaded more than 30 million times. It generates revenue through subscriptions and has built up a network of more than 4,300 customers. It made a $45.8m net loss in the first half of 2017, from $68m in revenue.
Rhythm Pharmaceuticals, a US-based developer of treatments for metabolic disorders, raised $120m from an IPO that provided exits to pharmaceutical companies Pfizer and Ipsen. The company priced its shares at $17, above the IPO’s $14 to $16 range, and increased the number of shares it planned to issue from 6.7 million to 7.05 million. Its stock opened at $23.21 on its first day of trading and closed at $30. Rhythm is working on peptide drugs that can combat life-threatening metabolic diseases by treating rare genetic deficiencies. Its lead product candidate, setmelanotide, has completed phase 2 proof-of-concept trials for three disorders that cause extreme appetite, leading to obesity.
ForeScout Technologies, a US-based network security software provider backed by corporates Intel and Itochu, raised $116m in its IPO, after pricing its shares at $22, at the top of the $20 to $22 range it had set earlier, and increasing the number of shares offered from 4.8 million to 5.28 million. Founded in 2000, ForeScout has developed software that provides an alternative to the software agents traditionally used by big businesses for large networks.
Biom’Up, a France-based medical device developer backed by pharmaceutical firm Lundbeck and insurance provider Sham, flotated on the Euronext Paris market, raising €38.1m ($45m). The company priced more than 3.6 million shares at €10.50, in the middle of the IPO’s €9.50 to €11.50 range, and achieved a valuation of €113m. Founded in 2005, Biom’Up is working on collagen-based medical devices that can be absorbed by the body.
Money Forward, a Japan-based financial management app developer backed by several domestic corporates, raised approximately $25m in its IPO. The offering took place on the Tokyo Stock Exchange’s Mothers Index Futures market and valued Money Forward at $505m. The company’s previous corporate backers included retail group Isetan Mitsukoshi, financial services firms Toho Bank, North Pacific Bank, Gunma Bank, Fukui Bank, Shiga Bank and Mizuho Bank, the latter through its Mizuho Capital subsidiary. The company has built app-based financial management platforms for personal and business accounting, and is the first Japan-based fintech developer to float.
India-based telecoms company Spice Mobility agreed to acquire an additional 10.8% stake in mobile services subsidiary Spice Digital from fabless semiconductor producer MediaTek, which sold its stake for $5.25m, roughly a quarter of the $20m it invested in Spice Digital in 2011. Spice Mobility thus increased its stake in Spice Digital from 89% to nearly 100%. Formerly known as Cellebrum Technologies, Spice Digital provides a range of services for mobile phone users, often through mobile apps, covering areas such as music, commerce, information and educational services.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
