According to GCV Analytics, in September, the number of corporate-backed deals from around the world stood at 481, 47% higher than the 323 rounds from the same month last year. Investment value stood at nearly $25.27bn in total estimated capital – more than double the $12.25bn of September 2020. The US came first in the number of corporate-backed deals, hosting 195 rounds, while Japan was second with 81 and China and India – third with 34 each.
The leading corporate investors by number of deals were telecoms and internet conglomerate SoftBank, investment and financial services group Fidelity and diversified internet conglomerate Alphabet. In terms of involvement in the largest deals, Softbank and Fidelity were on the top of the list along with internet company Tencent.
GCV Analytics reported 23 corporate-backed funding initiatives, including VC funds, new venturing units, incubators, accelerators and other. This figure was 32% lower than the one from September 2020, which had registered 34 such initiatives. The estimated capital stood at $6.6bn, nearly 25% up from $5.29bn from the same month last year.
Deals
Emerging businesses from the IT, financial, health, media and consumer sectors led in raising the largest number of rounds in September 2021. The most active corporate venturers came from the financial, IT, media and industrial sectors, as shown on the heatmap.
Databricks, a US-based data analytics software developer which counts a raft of corporates as investors, raised $1.6bn in a series H round led by investment bank Morgan Stanley’s Counterpoint Global unit. The round valued the business a $38bn post-money. UC Investments, which manages University of California’s retirement, endowment and cash assets, took part in the round as did funds and accounts managed by BlackRock and funds and accounts managed by T Rowe Price Associates. Founded in 2013, Databricks runs a cloud-based data management platform for aggregating and processing unstructured and structured data. It will use the proceeds of the series H round to invest in technology innovation and enter new markets.
Online food ordering service Delivery Hero led a $950m series C round for Germany-based grocery delivery service Gorillas. The round included Tencent, investment management firm Coatue Management, investment firm DST Global and venture capital firm A-Star Partners, reportedly valuing the startup at $3bn. Delivery Hero reportedly contributed nearly $200m of the total raised in the round. Founded in 2020, Gorillas offers groceries to customers in 57 cities across eight European countries for delivery within 10 minutes of an order, selling items at retail price. The cash will go to European growth and comes as the company has moved into the United States having begun deliveries in New York.
Mexico-based used car marketplace Kavak raised $700m in a series E round featuring SoftBank and consumer internet company Sea. The round, which more than doubled the company’s valuation to $8.7bn, also included General Catalyst, Founders Fund, Tiger Global Management, D1 Capital Partners, Ribbit Capital and Spruce House. Kavak operates an online platform for users to buy and sell their vehicles. Beginning in Mexico, the company has since expanded into the Brazilian and Argentinian markets over the past two years, and CEO Carlos Garcia told Reuters it has its eye on emerging markets outside Latin America going forward. The new funding makes Kavak the second-highest valued startup in the region, behind Brazil-based digital bank Nubank.
Singapore-headquartered delivery services provider Ninja Van received $578m in a series E round featuring e-commerce group Alibaba and logistics services firm GeoPost’s DPD Group subsidiary. B Capital Group, the venture capital firm backed by consulting firm Boston Consulting Group, also took part in the round, as did VC firm Monk’s Hill Ventures and Zamrud, a Bruneian sovereign wealth fund. The deal helped lift the company’s valuation above the $1bn mark and came before a possible initial public offering. Founded in 2014, Ninja Van has built a Southeast Asia-focused e-commerce order fulfilment services platform covering markets including its home country, Malaysia, Indonesia, Thailand, Vietnam and the Philippines.
India-based online reselling platform Meesho raised $570m in funding at a $4.9bn valuation from investors including social network operator Facebook, SoftBank and internet group Prosus. Fidelity and investment firm B Capital Group co-led the round, which also featured Footpath Ventures and Trifecta Capital. SoftBank tapped its Vision Fund 2 to participate in the round while Prosus, which was formed by media and e-commerce group Naspers, was represented by its corporate venturing unit, Prosus Ventures. Founded in 2015, Meesho runs an online platform that lets small businesses and entrepreneurs sell products to consumers through social media. It also handles the administrative side of selling through services including supply chain management, payment processing and logistics.
UK-headquartered cybersecurity technology developer Snyk secured $530m in a series F round featuring project management technology provider Atlassian, chemical and energy group Koch Industries and enterprise software provider Salesforce, among many other investors. Atlassian Ventures, Koch Strategic Platforms and Salesforce Ventures represented the corporates in the round, which valued Snyk at $8.5bn and which consisted of primary and secondary transactions including more than $300m in fresh capital. Founded in 2015, Snyk has built a cloud-based IT security software tool, Developer Security Platform, which helps app developers create safer products. Some 1,200 organisations including Asurion, Google, Intuit, Revolut and Salesforce use the company’s platform and its total funding stands at $775m. The company claims to have helped more than 15 million entrepreneurs start their own online businesses in India. It has raised just over $1bn to date.
China-based semiconductor wafer manufacturer FerroTec received $511m in a series B round featuring communications equipment producer Yangtze Optical FC (YOFC). State-owned investor Capital Operation co-led the round with Sunic Capital and it included Bocom International Holdings and CCB International, on behalf of financial services firms Bank of Communications and China Construction Bank. FerroTec produces semiconductors, automotive electronics, medical devices and other industrial equipment and components. It plans to use the funding to reach a monthly production capacity of 200,000 12-inch silicon wafers by the end of 2022.
Discord, the US-based online messaging platform developer backed by corporates Tencent and WarnerMedia, has raised $500m in a funding round led by Dragoneer Investment Group. The round also featured Fidelity, Baillie Gifford, Coatue Management, Franklin Templeton and unnamed existing investors, and it valued the company at approximately $15bn. Discord’s platform was launched for gamers to communicate with each other in real time but experienced an explosion in demand during the pandemic and has expanded its chat products to include events beyond gaming. The funding will be used to grow the company’s workforce and invest in new products.
India-based automotive e-commerce platform Cars24 has secured $450m in a series F round co-led by SoftBank’s Vision Fund 2 at a $1.84bn valuation. Tencent and Exor Seeds, a vehicle formed by reinsurance provider PartnerRe and its parent firm Exor, joined Moore Strategic Ventures in the $340m equity portion of the round, which was co-led by investment firm DST Global and asset manager Falcon Edge. Unnamed financial institutions supplied $110m in debt financing. Founded in 2015, Cars24 has built an artificial intelligence-equipped online marketplace that helps users buy and sell used cars at market prices. The company operates 205 branches across 182 cities in its home country, having also launched offices in Australia and United Arab Emirates. Cars24 co-founder and CEO Vikram Chopra told TechCrunch the company will use the cash to expand its presence in India and other markets, ramp up its data, appraisal process and sales-related technologies and build plans to help customers finance their purchases.
US-based Bitcoin mining company Genesis Digital Assets secured $431m in a funding round that featured cryptocurrency derivatives exchange FTX. Crypto investment firm Paradigm led the round, which was filled out by Nydig, Stoneridge, Ribbit Capital, Electric Capital, SkyBridge and Kingsway Capital, the last of which had provided $125m for the company. Genesis aims to be the largest and most profitable Bitcoin mining operation by 2025 and claims to already account for 2.4% of the Bitcoin network, with a data centre capacity of 150 MW. The funds will be used to expand the company’s mining operations using clean energy, and it expects to reach 1 GW of capacity by the end of 2023. It said the round is the largest so far disclosed by a Bitcoin miner.
Exits
GCV Analytics tracked 48 exits involving corporate venturers as either acquirers or exiting investors in September. The transactions included 37 acquisitions, six initial public offerings (IPOs), four other transactions (reverse mergers with Spacs), and one stake sale.
The exit count was considerably above the September 2020 figure (37). The total estimated exited capital stood at $12.56bn, 20% lower than the same month from last year ($15.69bn).
Digital payment processor PayPal agreed to acquire its Japan-based consumer finance service portfolio company Paidy for about $2.7bn. The deal is expected to definitively close during the fourth quarter of 2021. Paidy will continue to operate under the leadership of its founder and executive chairman Russell Cummer and president and CEO Riku Sugie. Launched in 2008, Paidy offers a buy-now-pay-later service that enables its customers to make instant credit purchases, which they can repay on a monthly basis. PayPal plans to use this acquisition to strengthen its capabilities and presence in the domestic payments market in Japan.
SoftBank sold 57 million shares in South Korea-based e-commerce platform operator Coupang, which went public in March 2021, for approximately $1.69bn in total. The sale valued the shares at about $29.69 each, below the IPO price of $35.00. SoftBank will hold approximately 568 million shares in the company after the transaction. Founded in 2010, Coupang operates an online marketplace that delivers diversified consumer goods to users on the day of purchase. It floated on the New York Stock Exchange (NYSE) in a $4.55bn initial public offering in which 100 million shares were issued by Coupang and 20 million were sold by its investors.
Broncus, a US-based medical equipment developer backed by corporate investors Baidu and Intuitive Surgical, floated on the Hong Kong Stock Exchange in a HK$1.67bn ($215m) IPO. The offering entailed the company issuing almost 89.4 million shares priced at the upper end of the IPO’s HK$17.20 to $HK$18.70 range, giving it a market capitalisation of roughly HK$10bn ($1.3bn). The shares opened and closed at HK$18.00 and HK$15.00 respectively on the first day of trading. Founded in China in 1997 as Broncus Technologies, Broncus is developing medical devices focusing on interventional procedures for lung diseases. The company had filed for an $86.3m IPO on the Nasdaq Global Market in 2007 before cancelling the plans the year after. The company booked $32.6m and $48.8m in net losses in 2019 and 2020 respectively, and its revenue fell from $8.1m to $3.3m over the same period.
Freshworks, a US-based customer relationship management (CRM) software developer backed by Alphabet, raised $1.03bn in an IPO on the Nasdaq Global Select Market. The company priced 28.5 million shares at $36 each, above the $32 to $34 range set for the offering. Its shares closed at $47.55, equating to a market capitalisation of $13.5bn. Founded in India, Freshworks produces a variety of software used by companies for CRM, customer experience and IT service management processes. More than 52,000 businesses use its software-as-a-service products. Freshworks reported $169m of revenue and a $9.8m net loss for the six months ending June 2021, compared to $111m and $57.1m over the same period the year before. It had raised $400m in funding prior to the offering.
Toast, the US-based restaurant management software provider backed by Alphabet, closed its IPO at $1bn. The company had priced a little over 21.7 million shares at $40.00 each. The shares rose to $55.81, giving it a market capitalisation of just over $28bn. Lead book-running managers Goldman Sachs, Morgan Stanley and JP Morgan, book-running managers KeyBanc Capital Markets, William Blair and Piper Sandler and co-managers Canaccord Genuity, Needham & Company and R Seelaus bought another 3.26 million shares to close the offering. Founded in 2011, Toast has built a software platform which integrates point-of-sale and business management tools to enable restaurants to operate their retail, takeout and online delivery from a single place. It made a $248m net loss in 2020 from $823m in revenue.
Polestar Performance, the Sweden-headquartered electric vehicle (EV) producer spun off by carmakers Volvo Cars and Geely, agreed to merge with special purpose acquisition company Gores Guggenheim at an expected $20bn valuation. The merged business, Polestar Automotive Holding, will take the place on the Nasdaq Capital Market secured by Gores Guggenheim – formed by affiliates of private equity firm The Gores Group and investment adviser Guggenheim Capital – in a $750m IPO in March 2021. The transaction will be supported by $250m in private investment in public equity financing from unnamed institutional investors. Polestar has developed a hybrid electric sports car called the Polestar 1 and an electric five-door hatchback, the Polestar 2. It expects to launch three more vehicles in the next four years beginning with a sports utility vehicle in early 2022.
Gogoro, a Taiwan-headquartered electric scooter manufacturer backed by corporate investors Engie, Panasonic and Sumitomo, agreed to a reverse takeover with special purpose acquisition company Poema Global Holdings Corp. The merger is set to close in the first quarter of 2022, and will give Gogoro a pro forma enterprise valuation of $2.35bn. The merged company will take the spot on the Nasdaq Stock Exchange held by Poema Global, when the latter floated in a $300m IPO in January 2021. The deal is being supported by more than $250m in PIPE funding from investors including electronics contract manufacturer Foxconn and GoTo Group, a diversified technology group formed through a May 2021 merger between ride hailing service Gojek and e-commerce platform operator Tokopedia. Founded in 2011, Gogoro provides intelligent electric scooters, mopeds and motorcycles as well as a network of artificial intelligence and cloud-powered battery swapping stations in markets including Taiwan, Japan and India.
Remitly, a US-based remittance services provider backed by payment services firm Visa, insurance provider Prudential Financial and internet group Prosus, raised $523m in its IPO. The company issued just under 12.2 million shares on the Nasdaq Global Select Market priced at $43 each, above the IPO’s $38 to $42 range. They are trading at $46.83 at time of publication, suggesting a market capitalisation of $7.6bn. Founded in 2011, Remitly operates a remittance service that lets customers send money internationally through digital channels including online and mobile devices. It has in excess of 5 million customers globally and processes more than 75 currencies. The company reported $202m of revenue for the first six months of 2021, up from $105m in the same period the year before, and its net loss was cut from $21.1m to $9.2m.
Inpria, a US-based semiconductor manufacturing technology provider backed by several corporates, agreed to a $514m acquisition by one of them: petrochemical materials provider JSR. JSR already owned a 21% stake in the company, having most recently led its $31m series C round in 2020. Following the completion of the deal, Inpria will become a wholly-owned subsidiary of JSR. Founded in 2007, Inpria has created metal oxide photoresists (light-sensitive materials) for a semiconductor production process called extreme ultraviolet lithography which simplifies the manufacturing of integrated circuits while reducing costs.
Alexion, pharmaceutical company AstraZeneca’s rare disease subsidiary, wholly acquired portfolio company Caelum Biosciences, US-based amyloidosis treatment developer, in a deal sized at up to $500m. Alexion had previously bought a non-controlling stake in Caelum in January 2019 – before AstraZeneca agreed in December 2020 to purchase the former for $39bn – picking up an option to buy the rest of the Caelum down the line. The corporate is now exercising the option at a price of $150m upfront, in addition to up to $350m in earn-out payments depending on the achievement of certain regulatory and commercial targets. Through the acquisition, AstraZeneca will take full control of Caelum’s flagship product, CAEL-101, a monoclonal antibody treatment for AL amyloidosis, a protein-formation disorder that can lead to loss of organ function.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.