The number of corporate-backed deals in September stood at 186, down from the 209 funding rounds in the same month last year. Investment value, however, was 21% higher than last year’s level, at $8.23bn, up from $6.77bn in September 2016.
The deal count in September rose slightly compared with 176 in August this year, though there is normally a slowdown related to the summer holiday season. September’s deal count, however, was lower than July’s, when we reported 197 transactions.
Total capital invested in corporate-backed rounds during September also declined, down from the record-setting $17.16bn in August, representing a 100% decrease.
The US came first in the number of venturing deals with corporate backing, hosting 100 rounds, more than half the disclosed dealflow. China was second with 15 rounds and India and the UK third with 11.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, payment platform PayPal and semiconductor and chipset manufacturer Intel. In terms of involvement in the largest deals, telecoms firm SoftBank topped the ranking, along with other investors, most notably e-commerce platform Alibaba and financial firm Fidelity.
Deals
The most active corporate investors came from the financial services, IT, industrial and media and health sectors, as shown on the heatmap.
GCV Analytics data shows that emerging businesses from the IT, health, financial and media sectors secured the highest number of deals involving corporate venturers. The top deals by round size were not concentrated in any particular sector, however. Rather, they ranged from transport and services through consumer and media to health companies.
SoftBank, through its $93bn Vision Fund, led a $1bn funding round in US-based sports e-commerce platform Fanatics. The round, first rumoured a month ago, also included sports bodies National Football League (NFL) and Major League Baseball (MLB). Fanatics has created an e-commerce platform that sells official sports team merchandise and apparel. Fanatics acts as the official merchandise partner for NFL and MLB as well as fellow sports bodies National Basketball Association, National Hockey League and Nascar.
Alibaba agreed to pay RMB5.3bn ($798m) to raise its stake in China-based logistics affiliate Cainiao Smart Logistics Network from 47% to 51%. Cainiao was formed in 2013 by Alibaba, which held a 48% stake at the time of its formation, together with diversified conglomerate Fosun and retail chain Intime Retail Group. Cainiao oversees an e-commerce logistics system that spans more than 120 warehouses and 180,000 express delivery stations across more than 600 Chinese cities, with the company’s large data-powered IT system linking its services to improve efficiency.
China-based medical imaging equipment developer United Imaging Healthcare raised RMB3.3bn ($505m) in a series A round co-led by insurance provider China Life Insurance. China Life co-led the round with SDIC Fund Management, a private equity firm majority-owned by the Chinese government’s investment holding firm, State Development & Investment Corporation. Founded in 2011, United Imaging is working on imaging devices that use computerised tomography, magnetic resonance imaging and digital radiography. It has also developed a full-body positron emission tomography (PET) scanner to track the body’s internal metabolic processes.
Deliveroo, a UK-based online food ordering platform, received £285m ($384m) in new funding. Financial services group Fidelity and investment firm T. Rowe Price co-led the round, which valued Deliveroo at $2bn. The funding follows a decision by SoftBank’s Vision Fund not to back Deliveroo. Founded in 2012, Deliveroo enables consumers to order food from local outlets such as cafés and restaurants through a mobile app and website. The food is delivered by bicycle and motorcycle couriers which work for Deliveroo on a freelance basis.
US-based electric scooter provider Gogoro closed a $300m series C round that included diversified conglomerate Sumitomo, energy utility Engie and consumer electronics producer Panasonic. The round valued Gogoro at more than $800m, CEO Horace Luke told Forbes. Founded in 2011, Gogoro has developed a smart electric scooter as well as a battery-swapping network for its customers, both of which were launched in Taipei, the capital of Taiwan, in 2015.
India-based budget hotel booking platform Oyo Rooms raised $250m in a funding round led by Softbank’s $93bn Vision Fund. Service project management and contract manufacturing company Hero Enterprise, among others, also contributed to the round, which reportedly valued Oyo at $850m to $900m. Founded in 2012, Oyo operates an online platform for users to book branded rooms in partner, budget hotels that guarantee a certain standard of accommodation. The company currently manages a network of 7,000 hotels with 70,000 rooms across 200 cities.
US-based genetics services provider 23andMe received $250m in a round led by venture capital firm Sequoia Capital, at a $1.5bn pre-money valuation. Financial services group Fidelity Management & Research (FMR) took part in the round, as did family office Euclidean Capital, investment firms Altimeter Capital and Casdin Capital, and research support organisation Wallenberg Foundation. 23andMe operates a consumer genetics service allowing users to send a DNA sample for analysis, in order to find out if they are more susceptible to certain health conditions or discover information about their ancestry.
US-based mass transit service Via obtained a strategic investment from a consortium led by car manufacturer Daimler, estimated to be worth approximately $250m. The figure includes a $50m commitment from Daimler’s Mercedes-Benz Vans subsidiary towards the creation of a Netherlands-based joint-venture that will operate an own-brand and licensed service across European cities. Remaining investors in the round were not named. Founded in 2012, Via operates a shuttle-based carpooling service that it provides both directly and through licensing partnerships with other public transport providers, such as rail company Deutsche Bahn-owned public transport operator Arriva.
US-based enterprise communication platform Slack raised $250m in funding, “much of which” came from SoftBank’s Vision Fund. The round, which valued Slack at $5.1bn post-money, also featured venture capital firm Accel. Slack has built a communication platform that has 9 million weekly active users and 6 million daily active users, according to Bloomberg, 2 million of which are paid subscribers.
Internet group Tencent participated in a $230m series C+ round for China-based grocery e-commerce platform MissFresh. Hedge fund manager Tiger Global Management and investment firm Genesis Capital co-led the round, which followed a $100m series C for the company in January this year. MissFresh runs an online platform that sells fresh produce such as fruit, vegetables, seafood and eggs, and delivers them to customers within two hours, making use of a cold chain logistics network it has established in China.
Exits
In September GCV Analytics tracked 18 exits involving corporate venturers as either acquirers or exiting investors. The transactions – most of which took place in the US – included 14 acquisitions and four initial public offerings (IPOs).
This exits count figure represents a decrease from the 16 and 15 transactions tracked in the summer months of July and August this year. Total estimated exited capital in September amounted to $5.42bn, significantly above the dollar figures for either July or August – estimated at $2.57bn and 1.79bn, respectively.
SoftBank invested $500m in China-based online insurance platform ZhongAn Online Property and Casualty Insurance as part of the latter’s $1.5bn IPO. ZhongAn issued approximately 199 million new shares on the Hong Kong Stock Exchange priced at HK$59.70 ($7.64) each, at the top of the HK$53.70 to HK$59.70 range it had set. SoftBank acquired a stake sized at just under 5% for its investment. ZhongAn’s online platform provides upwards of 300 specialised insurance packages, its most popular being the option to append insurance to e-commerce purchases in order to cover the cost of returning the goods.
NeoTract, a US-based medical device producer, was acquired by medical device maker Teleflex for a total of $1.1bn, thus giving an exit to pharmaceutical group Johnson & Johnson, whose strategic investment arm of Johnson & Johnson, participated in NeoTract’s $28.1m funding round in 2009. Founded in 2004, NeoTract has developed a minimally invasive device, UroLift, to treat lower urinary tract symptoms caused by an enlarged prostate gland, a condition known as benign prostatic hyperplasia (BPH).
Rigontec, a Germany-based RNA therapeutics developer backed by pharmaceutical firm Boehringer Ingelheim, agreed to an acquisition by US-based pharmaceutical company Merck for up to €464m ($554m). Merck, through an unnamed subsidiary, will make an upfront cash payment of €115m, with the remaining €349m dependent on clinical, development, regulatory and commercial milestones. The deal is subject to certain closing conditions. Rigontec, spun out from University of Bonn’s Institute for Clinical Chemistry and Clinical Pharmacology in 2014, is developing an immuno-oncology treatment that exploits a mechanism of the body’s immune system known as RIG-I.
Food and beverage producer Nestlé agreed to acquire a majority stake in Blue Bottle Coffee, the coffee roaster and retailer backed by internet technology group Alphabet. Nestlé declined to provide details of the deal, but the Financial Times reported it is set to pay up to $500m for a 68% stake in the company. The New York Times confirmed the stake size, but a source told Bloomberg the price was $425m. Founded in 2002, Blue Bottle has built a premium coffee brand with a presence in the US and Japan.
Best Logistics, a China-based logistics service backed by e-commerce group Alibaba, raised $450m in an IPO in the US. The company priced 45 million American depositary shares on the New York Stock Exchange at $10 each, at the foot of the $10 to $11 range it had set. Alibaba had considered buying up to $150m of shares in the IPO but did not ultimately do so. Best provides supply chain services such as warehousing and last-mile package delivery through third-party affiliates which use its technology platform. It serves more than 500 corporate customers as well as a range of small and medium-sized businesses.
Enterprise software provider SAP agreed to acquire US-based customer management platform Gigya in a deal that will enable chipmaker Intel, software provider Adobe and media group Advance Publications to exit. SAP will pay $350m for the company. Founded in 2006, Gigya has developed a customer identity management platform that helps businesses register customers, manage their details and maintain relationships with them, with the option to provide them with specialised services at the same time.
Despegar, the Argentina-based travel and accommodation booking marketplace backed by tourism services provider Expedia, raised $332m in an IPO on the New York Stock Exchange. The company issued almost 12.8 million shares priced at the top of the $23 to $26 range it had set the previous week. Founded in 1999, Despegar runs an online platform that sells flights, holiday accommodation package holidays on behalf of third parties. The platform, known as Decolar in Brazil, was responsible for $3.3bn in bookings in 2016, and Despegar made a $17.8m net loss that year from $411m in revenue.
Agricultural and construction equipment manufacturer John Deere agreed to purchase Blue River Technology, a US-based agriculture technology developer backed by agrochemical company Monsanto, for $305m. Founded in 2011, Blue River produces robotic systems that integrate computer vision and machine learning technology to detect and monitor each individual plant in a crop and apply herbicides and fertilisers only when needed.
Fintech company Blackhawk Network acquired CashStar, a US-based digital gift card service backed by semiconductor technology producer Intel, for approximately $175m in an all-cash transaction. CashStar will become part of Blackhawk’s digital and incentives businesses. CashStar has developed a platform that allows customers to purchase personalised digital and physical gift cards. Retailers can use the service to manage gift voucher-based promotions and marketing efforts.
Game developer Nexon paid $80m for a 65.2% stake in Korbit, a South Korea-based cryptocurrency exchange backed by SoftBank. The valuation of Korbit was initially pegged as more than $150m, but Nexon’s South Korean holding company NXC subsequently told TechCrunch the deal valued the company at approximately $120m. Korbit operates an online platform that enables users to trade in cryptocurrencies such as Bitcoin, Ethereum and Ripple. It stores the majority of deposits in digital wallets that are not connected to the internet in order to prevent cyberattacks.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
