The number of corporate-backed deals in March soared to 212 funding rounds, up from 159 at the same time last year. Investment value rose compared with last year’s levels, by 55%, to over $7.73bn from $4.98bn. Two companies raised funding rounds above the $1bn mark.
Both the deal count and total capital invested in corporate-backed rounds were higher in March than they were in the first and second months of this year – there were 189 rounds reported in January and 162 rounds in February. There was also a significant surge in investment value compared with the previous two months of the first quarter – from $5.94bn in January and $5.44bn in February, a 30% and a 42% increase, respectively.
The US feaured the largest number of venturing deals with corporate backing, hosting 95 rounds – slightly less than half the dealflow – while India was second at 18 rounds, China third with 17, and the UK fourth with 15.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, technology research and media group International Data Group (IDG) and pharmaceutical company Leo Pharma.
Alphabet topped the ranking in total deal value, along with telecoms firm SoftBank and internet company Tencent.
Deals
The most active corporate investors came from the IT, financial services, media, consumer and health sectors. GCV Analytics data shows that emerging businesses in the IT, financial, services, health 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. They ranged from transport and services through fintech and media to health companies.
SoftBank announced it was to invest $1bn in Singapore-based ride-hailing service Grab as part of a $1.5bn funding round. Launched in 2012 and originally known as Grab Taxi, Grab runs a diversified transport-on-demand platform that incorporates taxis, carpooling and motorcycles. The company has focused primarily on Southeast Asia and has already expanded into its seventh country, Burma.
US-based short-term accommodation marketplace Airbnb closed a $1bn series F round that, according to reports in September, included Alphabet. Airbnb did not officially disclose the identity of any of the investors in the round, which numbered 40 according to a regulatory filing that valued the company at $31bn. Airbnb runs an online and mobile platform for people to lease or rent properties over short periods.
Grail, a US-based oncology diagnostics spinout of genomics technology producer Illumina, achieved a first close of its series B round at $900m with the backing of several corporates – Johnson & Johnson Innovation, an investment unit of the US-based pharmaceutical company, through its subsidiary Johnson & Johnson UK Treasury; pharmaceutical firms Bristol-Myers Squibb, Celgene and Merck & Co, medical technology producer Varian Medical Systems, pharmaceuticals supplier McKesson’s corporate venturing unit McKesson Ventures, e-commerce company Amazon and Tencent. The round was led by VC firm Arch Venture Partners.
Established early last year, Grail is working on a blood test for early-stage detection of cancer that combines Illumina’s high-intensity sequencing technology with data obtained through computer science and population-scale clinical studies.
China-based bicycle-hire service Ofo closed a $450m series D round from a consortium that included ride-sharing app provider Didi Chuxing. The round, which valued Ofo at more than $1bn, was led by investment firm DST. Founded in 2014, Ofo operates an app that enables users to book bikes and unlock them through a code on their smartphones. The bicycles are tagged with GPS technology.
SoftBank invested $300m in US-based co-working space provider WeWork, as the Wall Street Journal reported. The capital, which was provided at a $17bn valuation, will form part of a round that could reach $3bn. Founded in 2010, WeWork operates a network of workspaces stretching across cities in 15 countries that feature super-fast internet, printing and scanning facilities, common spaces, meeting rooms and free refreshments.
India-based online retail service Paytm E-Commerce is set to raise $200m in a funding round led by e-commerce group Alibaba. The latter was reportedly committing $177m of the total, while investment fund Saif Partners was supplying the remaining $23m, which values Paytm E-Commerce at $1bn. The round was first reported a month ago, when it was valued at between $180m to $200m. Paytm E-Commerce oversees Paytm’s e-commerce functions.
China-based healthcare access app developer Haodaifu Online raised $200m in a series D round led by Tencent. Founded in 2006, Haodaifu operates a platform for people to search for hospitals and doctors, book appointments, locate and share information, and receive online consultations. There are more than 10 million patients registered with the platform, which has signed up about 490,000 doctors in 7,500 Chinese hospitals or clinics.
Netherlands-based online grocer Picnic raised €100m ($108m) in a round led by NPM Capital, the private equity arm of trading group SHV Holdings. The round also featured private equity firm De Hoge Dennen as well as Hoyberg, which acts as the investment office of the Hoyer family. Launched in September 2015 after a stealth period of roughly three years, Picnic sells groceries online, sourcing them from predominantly local retailers and delivering them to customers at set times using electric vehicles.
Financial services firm BBVA led an £83m ($102m) funding round for UK-based mobile banking service Atom Bank which valued the company at $320m. Fund manager Woodford Investment Management and hedge fund sponsor Toscafund Asset Management also took part in the round along with undisclosed additional investors. Atom launched its digital banking platform in April last year after about two years of preparation. It offers customers a fixed savings account and has branched out into mortgages and business loans.
Malaysia-based online streaming subscription service iFlix closed a round of more than $90m featuring media groups Liberty Global and Sky, and telecoms company Zain. Evolution Media Capital, the investment banking entity co-founded by talent agency Creative Artists Agency, also invested in the round, as did Malaysia-based internet company Catcha Group and an undisclosed privately-held investment management firm. Founded in 2015, iFlix operates a subscription-based video-streaming service that operates in nine markets, mostly in Southeast Asia.
Exits
GCV Analytics tracked 21 exits in March involving corporate venturers as either acquirers or exiting investors. This figure represents a considerable increase compared with the 13 reported during the same month a year ago. The transactions – most of which took place in the US and Europe – included 15 acquisitions, five IPOs and one business closure.
The number of exits represents an increase over the 14 exits tracked in January and the 19 reported in February this year. Total estimated exited capital in March amounted to over $5.2bn, almost seven times the estimated $753m in February.
US-based visual media platform Snap closed its long awaited IPO at $3.91bn, after its underwriters took up the option to buy an extra 30 million shares. Snap issued 145 million shares at $17 each, and added 55 million shares divested by existing backers to raise an initial $3.4bn through a listing on the New York Stock Exchange. This gave exits to investors including Alibaba and internet companies Tencent and Yahoo.
NBCUniversal subsequently revealed it had invested $500m in Snap through the offering. Snap is best known for the Snapchat platform, but its IPO filing indicates its long-term plans involve expanding into an all-purpose visual media company that will also delve into hardware.
E-commerce and cloud computing group Amazon agreed to acquire United Arab Emirates-based online marketplace Souq.com for $650m, providing media and e-commerce firm Naspers with an exit. Founded in 2005, Souq operates the largest online marketplace in the Middle East by customer size, linking to about 75,000 businesses and offering some 2 million consumer items for sale.
Medical device manufacturer Boston Scientific agreed to purchase Switzerland-based heart valve replacement technology provider Symetis in a $435m all-cash deal, giving an exit to pharmaceutical firm Novartis. Founded in 2001, Symetis develops and manufactures percutaneous heart valve replacement products to treat severe cardiac valve conditions.
US-based integration software producer MuleSoft floated in a $221m IPO on the New York Stock Exchange. The company issued 13 million shares at $17 each, above the $12 to $14 range it set earlier. The flotation allowed other backers like cloud service Salesforce, via its corporate venturing unit Salesforce Ventures, technology supplier Cisco and enterprise software producer ServiceNow to exit. Founded in 2006, MuleSoft has developed a software integration platform that helps businesses merge their various applications into a single network.
US-based data analytics software provider Alteryx raised $126m when it went public on the New York Stock Exchange, providing an exit to media and data firm Thomson Reuters. Alteryx issued 9 million shares at $14 each, the top of its intended range. Founded in 1997, Alteryx has built a self-service data analytics platform that companies can use to prepare, organise and manage data to yield clearer insights into their businesses. Alteryx had more than 2,300 corporate customers in more than 50 countries at the end of last year.
Netherlands-based renewable chemicals producer Avantium secured €103m in an IPO on the Euronext Amsterdam and Brussels exchanges, providing exits to several corporate backers. Previous corporate backers of the company which exited include beverage producer Coca-Cola, food and beverage manufacturer Danone, diversified conglomerate Swire Pacific, plastics manufacturer Alpla and pharmaceutical firm Pfizer. Avantium develops techniques and processes to convert biological materials into new materials. Its products include PEF, a recyclable plastic made from plant-based industrial sugars used in packaging.
Conglomerate Access Industries exited Israel-based cybersecurity software developer LightCyber through a $105m acquisition by cybersecurity technology provider Palo Alto Networks. LightCyber has built automated behavioural analytics software that uses machine learning to detect and identify cyberattacks by seeking out behavioural anomalies in a client’s network.
Otsuka Pharmaceutical, the drug production arm of diversified conglomerate Otsuka Holdings, agreed to acquire Neurovance, an attention-deficit hyperactivity disorder (ADHD) treatment developer, giving an exit to pharmaceutical firm Novartis. Spun out of biopharmaceutical company Euthymics Bioscience in 2011, Neurovance is developing a triple reuptake inhibitor to combat ADHD.
Legend Capital, a corporate venturing fund backed by conglomerate Legend Holdings, exited China-based graphite film producer Tanyuan Tech in a RMB409m ($59m) IPO. The company issued 52 million shares on the Shanghai Stock Exchange at RMB7.87 each. Founded in 2010, Tanyuan produces graphite film with high potential for thermal conductivity and heat dissipation, meaning it can be used to release heat generated by smartphones.
Chemicals supplier Nippon Shokubai agreed to acquire US-based chemicals producer Sirrus for an undisclosed sum, allowing car maker General Motors and diversified conglomerate Mitsui to exit. Founded in 2009 as Bioformix, Sirrus makes monomers and derivatives that enhance performance and cut energy consumption in advanced manufacturing and assembly processes.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
