The number of corporate-backed deals fell in February compared with the same time last year – 148 funding rounds versus 162 in the second month of 2016 – the second straight month of declining deal volume. Comparative investment value dropped by about 9%, to $4.38bn from $4.77bn in February 2016, and only one company raised a round above the $1bn mark – China-based video streaming platform iQiyi (see below).
Both the deal count and total capital invested in corporate-backed rounds were lower in February than in January, when 180 rounds were reported, accounting for $5.85bn in value. But the 9% dip in investment value in February was slight compared with the 42% plunge in January.
The US came first in the number of corporate-backed venturing deals, hosting 80 rounds, or more than half the dealflow. China came in second at 20 rounds, the UK third with 14, and India fourth with 13.
The leading corporate investors by number of deals were technology research and media group International Data Group (IDG), diversified conglomerate Alphabet, industrial conglomerate General Electric (GE) and semiconductor manufacturer Qualcomm.
In terms of involvement in the largest deals, IDG topped the ranking again, along with internet company Baidu, telecoms firm SoftBank and payments company Ant Financial.
Deals
GCV Analytics data shows that emerging businesses from the financial services, health, media and IT sectors secured the largest number of deals involving corporate venturers.
The most active corporate investors were from the financial services, IT, industrial, media and health sectors, as shown on the heatmap.
The largest round was raised by iQiyi – $1.53bn from investors including Baidu and IDG Capital, IDG’s local venture capital affiliate. Baidu contributed $300m to the round, which also featured traditional venture capital investors. Launched as Qiyi in 2010, iQiyi operates an online video platform that offers both a free and a premium subscription-based streaming service with about 480 million active users monthly.
India-based ride-hailing service Ola received $330m in funding from SoftBank as well as two other existing unnamed investors. The deal valued Ola at $3.5bn, a 30% drop from the previous funding round which closed in 2015 at $557m at a valuation of $5bn. Ola, established in 2011 as Olacabs, operates a ride-sharing platform that enables users to book taxis, auto-rickshaws, luxury vehicles and shuttle buses in 102 Indian cities.
Ant Financial, the financial services affiliate of e-commerce group Alibaba, agreed to invest $200m in Kakao Pay Corp, a mobile finance subsidiary of South Korea-based internet company Kakao. The funding will be used to launch Kakao Pay as a separate entity from Kakao. Currently, the company provides financial services including online payment, bill payments and remittance to a customer base of more than 14 million.
Jera, a joint venture between Japan-based energy utilities Tokyo Electric Power and Chubu Electric Power, paid $200m for a 10% stake in India-based renewable power producer ReNew Power. Founded in 2011 with $200m of financing from investment bank Goldman Sachs, ReNew develops, builds and operates renewable energy plants. In April 2016, the company became the first developer to commission 1GW of solar and wind projects in India.
View, a US-based advanced glass producer previously backed by corporates GE and Corning, raised $100m in funding from backers including TIAA Investments, an affiliate of asset manager Nuveen. TIAA invested $50m in the round, but the names of the other investors were not revealed. Founded in 2007 as Soladigm, View has developed a form of glass that tints lighter or darker depending on external light, helping a building’s inhabitants to control light and temperature.
ClearMotion, a US-based company developing what it calls the world’s first digital chassis, secured $100m in series C financing from backers including Qualcomm, which invested via its Qualcomm Ventures unit. ClearMotion is developing software-controlled actuators to replace traditional shock absorbers in vehicles, directing their wheels to provide a steady, smooth ride regardless of speed or conditions.
US-based conversational intelligence technology developer SoundHound secured $75m in funding from investors including subsidiaries of electronics manufacturer Samsung, graphics technology provider Nvidia and human resources provider Recruit Holdings. Samsung Catalyst Fund, Nvidia GPU Ventures and RSI Fund I were joined by insurer Sompo Japan Nipponkoa and financial services firm Nomura Holdings. SoundHound’s Houndify artificial intelligence platform is used in products such as smart speakers and smartphones, enabling them to respond and provide answers when users ask about the weather, flights or restaurants, for example.
AGC Asahi Glass, a Japan-based producer of glass, advanced materials and chemicals, led a $65m series C round for US-based smart glass developer Kinestral Technologies. The round also featured semiconductor equipment maker Hermes-Epitek as well as Mitsubishi UFJ Capital and Alexandria Venture Investments, subsidiaries of financial services firm Mitsubishi UFJ Financial Group and real estate trust Alexandria Real Estate Equities respectively. Founded in 2011, Kinestral has created a responsive form of tinting glass called Halio that provides shade in a building.
US-based imaging technology developer Lytro raised $60m from investors including manufacturing services provider Foxconn, entertainment producer Huayi Brothers and Qualcomm Ventures. Founded in 2006, Lytro has developed a light field camera and imaging platform that can be used to film and create high-quality virtual reality (VR) content.
China-based car-sharing service Atzuche collected RMB400m ($58m) in a series C round featuring media company Hearst and insurer China Pacific Insurance. The round also included venture capital firm Matrix Partners, private equity firms ChinaEquity Group and Everbright Ivy Capital, and CSC Financial, an investment bank trading as China Securities. Founded in 2013, Atzuche operates a peer-to-peer car-sharing platform through which users rent vehicles to each other.
Exits
In February GCV Analytics tracked 17 exits involving corporate venturers as either acquirers or exiting investors, a slight decrease compared with the 19 exits reported in the same month a year ago. The transactions – most of which took place in the US, the UK and Japan – included 16 acquisitions and one business closure.
While the number of exits was higher than the 13 exits tracked in January this year, total estimated exited capital in February amounted to $443m, down considerably from the estimated $1.04bn in January.
Intel Capital, the corporate venturing subsidiary of chipmaker Intel, exited US-based iris-recognition technology producer Delta ID in a $106m acquisition by identity verification technology provider Fingerprint Cards. Founded in 2011, Delta ID has created a cloud-based system called ActiveIris, which it claims is the only iris-recognition system for mobile phones, PCs, tablets and vehicles.
Computing hardware producer Dell is set to exit US-based antivirus software developer Invincea after cybersecurity firm Sophos agreed to acquire it in a deal initially valued at $100m. Invincea develops software that uses behavioural monitoring and deep-learning neural-network algorithms to detect and fight malware. Its customers are mainly the US government and the healthcare and financial services industries.
Transportation-ordering platform Grab agreed to acquire Indonesia-based online payment platform Kudo for over $100m, giving exits to media firms Emtek, Singapore Press Holdings and Gree. Kudo has built an online platform that processes payments, allowing non-banking users to make or receive payments for goods such as tickets, food, consumer goods, mobile credit or insurance.
Electronic payments company Ingenico agreed to buy India-based payments processing firm TechProcess for Rs6bn ($88.6m), providing an exit to technology producer Nokia’s investment unit, Nokia Growth Partners. Founded in 2000, Techprocess operates two payments services – an electronic bill payments platform called Billjunction and a mobile payments gateway service dubbed Paynimo, aimed at consumers and merchants.
DeviantArt – a US-based online community for artists, backed by design software company Autodesk and video technology producer DivX – was acquired by cloud-based web development platform Wix, which paid approximately $36m in cash, including some $3m in assumed liabilities. Founded in 2000, DeviantArt operates a website that enables artists and designers to share their work.
Social media company Nextdoor agreed to acquire Streetlife, a UK-based social media platform backed by media group Archant, for an amount reported by TechCrunch to be less than £10m ($12.5m) in cash. Streetlife operates a social media platform based on the location of users’ homes. Users sign up with their address and are instantly linked to neighbours, allowing them to share and exchange information, advice or local plans.
Watchup, a US-based news streaming platform backed by software producer Microsoft and media companies Tribune Media and McClatchy, was acquired by media organisation software provider Plex. The financial terms of the transaction were not disclosed. Watchup operates an app that syndicates videos from more than 150 news publishers, spanning international outlets such as CNN and Vox as well as local channels.
Ebates, a loyalty marketplace subsidiary of e-commerce firm Rakuten, acquired US-based loyalty marketing services provider Cartera Commerce for an undisclosed sum, giving an exit to insurance provider USAA. Cartera runs a platform that enables users such as retailers, card issuers or airlines to offer loyalty marketing services and reward schemes.
Beepi, a US-based online vehicle marketplace which has raised about $150m in funding from investors including carmaker SAIC Motor, is set to wind down, according to the Wall Street Journal. Founded in 2013, Beepi ran an online peer-to-peer marketplace for used cars. It grew quickly and in September 2015 the company closed a $70m round led by China-based SAIC that valued Beepi at $500m.
Telecoms firm Verizon acquired US-based drone operating software provider Skyward for an undisclosed amount, giving an exit to its corporate venturing unit, Verizon Ventures. Skyward produces software that makes the management and operation of unmanned aerial vehicles more efficient and cost-effective.
