The number of corporate-backed deals in May stood at 202, significantly higher than the 118 funding rounds in the same month last year. Investment value increased by 45% to $9.26bn – up from $6.39bn in May 2016. The deal count in May was higher than the previous month’s 147 rounds. The numbers also compare favourably with most other months this year, except March, when GCV recorded 212 transactions. However, total capital invested in corporate-backed rounds during May declined from $10.5bn in April, an 11% decrease.
The US featured the greatest number of corporate venturing deals, hosting 109 rounds – slightly more than half of the disclosed dealflow – while China was second with 23 rounds and India third with 11.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, telecoms company SoftBank, software producer Microsoft and internet company Tencent. In terms of involvement in the largest deals, SoftBank and Tencent also topped the ranking
Deals
The most active corporate investors were from the IT, financial services, health and media sectors.
GCV Analytics data shows that emerging businesses from the IT, health, financial and services and 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 to fintech companies. Notably, some of the largest registered rounds were raised by emerging enterprises based in Asia.
SoftBank invested $1.4bn in India-based e-commerce company One97 Communications. The round valued One97 at $7bn post-money. One97 operates a diversified e-commerce and online services business but it is now best known for Paytm, the mobile payment platform it launched in 2010, which enables users to buy phone credit, pay bills and buy insurance or book travel tickets.
Tencent led a $1.2bn funding round for Indonesia-based on-demand ride and delivery service provider Go-Jek. The deal, Tencent’s first venture capital investment in Indonesia, valued Go-Jek at $3bn post-money. Go-Jek initially focused on a ride-hailing service involving motorcycle taxis called ojeks, but has since expanded to four-wheeled vehicles and now oversees a network of 200,000 drivers in 25 Indonesian cities.
A host of investors, including Tencent and automotive e-commerce firm Bitauto, agreed to invest a total of up to RMB4bn ($580m) in China-based online vehicle-trading platform Yixin Group. Yixin has developed an online marketplace for new and used vehicles that is accessed by carmakers, vehicle dealers and automotive service providers as well as financing and insurance partners.
Indonesia-based internet company Garena rebranded as Sea Ltd, disclosing $550m in new funding from investors including diversified conglomerate JG Summit Holdings and food supplier Uni-President Enterprises. Founded in 2009, Sea operates a diversified internet business that includes e-commerce platform Shopee, online video streaming, chat, mobile gaming and financial services platform AirPay.
SoftBank led a $502m series B round for UK-based virtual reality development software provider Improbable that valued the company at more than $1bn. Venture capital firms Andreessen Horowitz and Horizons Ventures also participated. Improbable will use the funding to develop its technology, in particular SpatialOS, the distributed operating system it has built to help developers create large-scale virtual reality simulations.
Guardant Health, a US-based developer of a liquid biopsy system for cancer detection, raised $360m in a round led by an unnamed subsidiary of SoftBank. The round also featured Singapore’s state-owned firm Temasek as well as Sequoia Capital, Khosla Ventures, Lightspeed Venture Partners and OrbiMed among other investors. Founded in 2013, Guardant is working on non-invasive cancer diagnostics tests that utilise digital sequencing technology to provide a detailed picture of genomic alterations that cause tumours to grow, evolve or form resistance to treatment.
US-based fitness company Peloton completed a $325m series E round that included mass media group Comcast NBCUniversal. Founded in 2012, Peloton operates a home fitness service that combines its custom-made exercise bike with an app-based subscription service providing video access to live classes and performance-tracking metrics.
Online payment services firm PayU invested €110m ($120m) in Germany-based online consumer lending platform Kreditech as part of a strategic partnership. Kreditech has built an online platform that incorporates consumer lending, a digital wallet and a personal finance manager, using machine learning and non-traditional data sources to select borrowers. The company’s subsidiaries claim to have processed more than 4 million loan applications in Germany, Russia, Mexico, Spain and Poland.
China-based online reading platform Zongheng Literature raised RMB800m in a funding round co-led by entertainment group Perfect World. Venture capital firm Sequoia Capital China co-led the round. Established in 2008, Zongheng Literature operates an online reading platform that offers more than 100,000 works. The company was first owned by Perfect World, acquired by internet company Baidu for RMB191.5m in 2013 and repurchased by Perfect World for RMB1bn last year.
US-based distributed ledger technology developer R3 raised $107m in series A funding from a range of banks and other corporate investors. R3 represents a substantial consortium of financial services firms that have combined to develop blockchain technology for commercial use. The funding represents the first two tranches of a planned three-tranche round and the participants so far include insurance firm Ping An, Temasek and Intel Capital, the corporate venturing subsidiary of semiconductor technology provider Intel. More than 40 banks also took part, including Barclays, Royal Bank of Scotland, HSBC, BBVA, Natixis, BNP Paribas, Société Générale, Credit Suisse, UBS, Deutsche Bank, ING, Intesa Sanpaolo, Commerzbank, Nordea Bank, OP Cooperative, SEB and Danske Bank among others.
Exits
GCV Analytics tracked 20 exits involving corporate venturers as either acquirers or exiting investors. This figure is a considerable increase over the 13 reported during the same month a year ago. The transactions – most of which took place in the US – included 13 acquisitions, five initial public offerings (IPOs), one merger and one company closure.
The numbers are an increase over the nine transactions tracked in the previous month. Total estimated exited capital in May amounted to $1.86bn, more than three times the estimated $553m in April.
Biotechnology producer Bioverativ agreed to acquire True North Therapeutics, a US-based rare disease therapy developer backed by pharmaceutical firms including GlaxoSmithKline, in a deal that could reach $825m. Bioverativ paid $400m upfront, potentially with up to $425m in milestone payments to True North’s shareholders dependent on development, regulatory and sales achievements. True North was spun out of pharmaceutical company iPierian in 2013, and its lead drug candidate is monoclonal antibody TNT009, which is being developed to combat rare haemolytic condition cold agglutinin disease.
US-based Cloudera went public in a $225m IPO that gave semiconductor maker Intel an exit, but at a steep discount from its investment valuation, signalling that while the IPO market is improving, some corporates may have to accept paper losses in return for exits. Cloudera issued 15 million shares on the New York Stock Exchange at $15 each, above the $12 to $14 range it had set. The IPO underwriters have a 30-day option to buy up to 2.25 million additional shares. Founded in 2008, Cloudera has developed a cloud-based hybrid open-source enterprise data management platform that incorporates machine learning and advanced analytics to help subscribers improve their businesses and design better connected products.
GV, the corporate venturing unit formerly known as Google Ventures, exited US-based deep data analysis technology provider Lattice Data in an acquisition by computing company Apple. Apple paid “around $200m” for Lattice. Founded in 2015 and based on technology from Stanford University research project DeepDive, Lattice is developing machine-learning software that can convert unstructured dark data, such as text or images into structured data that can be analysed.
Biopharmaceutical company Horizon Pharma agreed to acquire River Vision Development, a US-based thyroid eye disease (TED) treatment developer backed by pharmaceutical firms GlaxoSmithKline and Lundbeck, for an initial $145m. The cash will be provided up front, and the price could rise in if River Vision meets certain regulatory and sales milestones. River Vision is developing monoclonal antibody teprotumumab to treat TED, a rare autoimmune inflammatory disorder that inflames the eye muscles and fatty tissue behind the eye to the point where a person cannot close his or her eyes.
Networking equipment maker Cisco agreed to acquire US-based artificial intelligence (AI) technology developer MindMeld in a $125m deal, giving exits to corporates Intel, electronics manufacturer Samsung, internet conglomerate Alphabet, cable company Liberty Global and telecoms firm Telefónica. MindMeld has built a machine-learning-infused AI platform that allows users to create intelligent conversational interfaces for applications or devices. The technology will enable Cisco to add functions such as natural language commands to its collaboration products, most notably enterprise collaboration platform Spark.
MedImmune, a biotech subsidiary of pharmaceutical firm AstraZeneca, exited US-based cancer therapeutics developer G1 Therapeutics in a $105m IPO on Nasdaq. G1 issued 7 million shares at $15 each, at the foot of its $15 to $17 range, giving it a market value of approximately $410m. Founded in 2012 and based on research from North Carolina University’s Lineberger Comprehensive Cancer Centre, G1 is developing cancer treatments that focus on a family of proteins called cyclin-dependent kinases that help cells grow and spread.
Ovid Therapeutics, a US-based neurological disorder therapy developer backed by pharmaceutical firms Takeda and Sanofi, raised $75m in an IPO, issuing 5 million shares at $15 each. Ovid is developing drugs to treat rare neurological disorders and will use $35m of the proceeds to finish a phase 2 trial for its lead candidate, OV101, for adults, and a phase 1 trial for children with genetic disorder Angelman syndrome.
Canada-based biopharmaceutical company Zymeworks raised $58.5m in an IPO that gave exits to pharmaceutical firms Celgene, Eli Lilly and EMS. The company issued 4.5 million shares on the New York Stock Exchange at $13 each, the low end of the $13 to $16 range set previously. Zymeworks is developing biotherapeutics to treat cancer, and will invest between $20m and $30m of the IPO proceeds to advance its lead candidate, bispecific antibody ZW25, through phase 1 clinical trials.
UK-based mattress producer Eve Sleep raised £35m ($45.3m) in an IPO that gave an exit to media company Channel 4. Eve Sleep supplies high-grade foam mattresses, pillows, duvets and sheets through an online platform. It generated about £12m of revenue in 2016, up from £2.6m the year before, and made an ebitda (earnings before interest, taxes, depreciation and amortisation) loss of £11.3m.
Crisp Media, a US-based advertising technology developer backed by Intel, is set to be acquired by media and analytics company Quotient for an initial $33m. Quotient will pay $20m in cash, with the remainder provided in stock. Crisp Media could secure up to $24.5m in additional cash subject to financial milestones in the year following the acquisition. Founded in 2003, Crisp Media operates under the brand name Crisp Mobile, offering mobile marketing and advertising services. The technology enables retailers to drive in-store sales by sending personalised messages to shoppers at optimal times.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
