The number of corporate-backed rounds reported in June was 256, considerably higher than the 222 funding rounds in the same month last year. Investment value rose even more significantly to $26.75bn – almost four times more than the $6.94bn of June 2017.
Compared with preceding months this year, June sported stronger results than April and May, with their 241 and 224 rounds, respectively, but somewhat weaker than March’s 273.
However, June set a record for estimated total capital invested this year. The US hosted the largest number of corporate-backed deals, 139, while China was second with 33 and the UK third with 15.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, telecoms firm SoftBank and e-commerce company Alibaba. In terms of involvement in the largest deals, SoftBank topped the ranking.
GCV Analytics reported 29 corporate-backed funding initiatives in June, including VC funds, new venturing units, incubators, accelerators and others. This figure was a slight increase over May, when there were 28 such initiatives.
The estimated capital raised in June’s initiatives amounted to $2.77bn, down 18% from the estimated $3.36bn the previous month.
Deals
Emerging businesses from the IT, health, financial services and services sectors raised the largest number of deals during June. The most active corporate venturers were from the financial services, IT, media and health sectors, as shown on the heatmap.
Ant Financial, the China-based financial services affiliate of Alibaba, raised approximately $14bn in a series C round, backed by Singapore’s sovereign wealth fund GIC. The renminbi-denominated tranche was largely provided by existing unnamed investors. The round consisted of a US dollar-denominated tranche, which was backed by GIC as well as Temasek, an investment firm owned by the Singaporean state. Ant Financial offers a host of financial services products developed or connected to Alibaba, which spun the company out in 2011. The company’s flagship product is Alipay, which dominates more than half China’s mobile payment market, with other tools including credit-scoring platform Sesame and money management fund Yu’e Bao.
SoftBank agreed to provide $2.25bn for GM Cruise Holdings, an autonomous driving spinoff of automotive manufacturer General Motors (GM). SoftBank’s Vision Fund will invest an initial $900m when the deal closes, at which time GM itself will put up a further $1.1bn in funding, and will supply the rest once Cruise advances its driverless car technology to commercial release, resulting in a total 19.6% stake for SoftBank’s fund. Cruise is developing autonomous vehicle technology that will be deployed in GM’s Bolt range of electric vehicles. The technology is being road-tested in the US states of California, Arizona and Michigan, expecting to reach market in 2019. The company was formed in 2013 and GM paid $1bn to acquire it in early 2016, giving an exit to Qualcomm Ventures, the venturing unit of the semiconductor manufacturer.
Evergrande Health Industry, a healthcare subsidiary of property developer China Evergrande, bought a 45% stake in US-based electric vehicle developer Faraday Future for $860m. Founded in 2014, Faraday Future is developing connected electric cars. The company’s first production vehicle, FF 91, was unveiled in 2017 and will boast features such as autonomous parking capabilities and facial recognition.
Lyft, a US-based ride-hailing service backed by corporates including GM, Alphabet, Alibaba, e-commerce firm Rakuten and automotive component manufacturer Magna International, raised $600m in a round that valued it at $15.1bn post-money. Fidelity Management and Research led the round. Lyft runs an app-based ride-ordering platform that had more than 610,000 daily active drivers across the US and Canada at the end of last year.
China-based online tutoring service VIPKid raised $500m in series D-plus funding from a consortium co-led by internet group Tencent, Coatue Management, Sequoia Capital and Yunfeng Capital. The round reportedly valued VIPKid at RMB20bn ($3.1bn). Founded in 2013, VIPKid operates a platform that offers real-time, one-to-one English tutoring. It employs more than 40,000 teachers from North America and has attracted more than 300,000 students across 35 countries to date.
China-based smart car developer Byton closed a $500m series B round, which included automotive manufacturer FAW Group and battery producer Contemporary Amperex Technology. TUS Holdings, the enterprise arm of Tsinghua University, also took part in the round alongside unnamed backers. Founded in 2016 as Future Mobility, Byton is developing smart, electric vehicles that boast features such as a gesture-based control system, a driver-assistance system, augmented reality mirrors instead of rear-view mirrors and a 49-inch electronic display on the dashboard.
China-based fintech platform Caogen Touzi secured RMB2.3bn in series D funding from a consortium led by oil exploration and production firm Geo-Jade Petroleum, which participated through an unnamed industrial fund and was joined by a range of unnamed existing shareholders. Founded in 2013, Caogen Touzi has developed a range of investment tools for private users and small to medium-sized companies. Users can also apply for collateral loans backed by assets such as houses and vehicles, while the company also offers consumer instalment credit products in rural areas.
US-based online real estate marketplace Opendoor raised $325m in a series E round, co-led by home builder Lennar, conglomerate Access Industries and venture capital firm General Atlantic. Property manager Invitation Homes also participated in the round. Access Industries took part through its investment arm Access Technology Ventures. Founded in 2014, Opendoor has created an online real estate platform. It offers help with valuation, and once fees have been agreed its staff conduct an assessment of the property to ascertain whether work is required.
China-based bicycle-rental service Hellobike raised RMB2.06bn from Ant Financial. The transaction bestowed unicorn status on Hellobike, which is now reportedly valued at $1.47bn. Ant Financial has become the largest shareholder in the business, owning 36%. Hellobike operates an app-based service that reportedly had 100 million registered users by April this year. It is currently available in 180 Chinese cities.
Alibaba co-led a $300m series D round for China-based cross-border online retail platform Xiaohongshu that reportedly valued it at more than $3bn. Tencent also participated in the round. Xiaohongshu, which means Little Red Book, started off as an online portal where users could review items they had bought in other countries. However, the app’s popularity led to the company branching into direct e-commerce, allowing users to buy high-grade goods internationally. The platform, which has more than 100 million users, also has a tool that helps compile shopping itineraries for foreign trips, and allows users to post blogs, photos or videos of their trips.
Exits
In June, GCV Analytics tracked 28 exits involving corporate venturers as either acquirers or exiting investors. The transactions included 16 acquisitions, 11 initial public offerings (IPOs) and one stake sale.
The number of exits went up significantly compared with May and April, which both registered 18 exits. In contrast, total estimated exited capital amounted to $7.75bn, down from the $20.27bn of the previous month. However, May’s figure included a record-breaking acquisition of $16bn.
China-based consumer electronics producer Xiaomi, in which Qualcomm is an investor, raised $4.72bn in an IPO on the Hong Kong Stock Exchange. The company priced roughly 2.18 billion shares at the low end of the HK$17 to HK$22 ($2.17 to $2.80) range it had previously set. The price valued Xiaomi at about $54bn. Founded in 2010, Xiaomi designs and manufactures smartphones as well as other electronic devices such as smart home products, tablets and televisions which are connected through its proprietary operating system.
Adaptive Insights, a US-based business planning software provider backed by enterprise software producer Salesforce, agreed to an acquisition by cloud-based human resources management platform Workday for $1.55bn. The transaction includes $150m in unvested equity that will be issued to Adaptive Insights staff. Founded in 2003 as Adaptive Planning, Adaptive Insights operates a cloud-based platform that allows organisations to build models of their operations and collaborate on planning while analysing performance data.
Home24, a Germany-based online home products retailer backed by e-commerce holding group Rocket Internet, raised €150m ($174m) in an IPO in Germany. The company priced just over 6.5 million shares at €23 each, near the top of the offering’s €19.50 to €24.50 range, giving it a market capitalisation of more than $690m. Home24 runs an online platform that sells furniture, lighting products or bedding to customers in Germany, France, Italy, the Netherlands, Austria, Switzerland, Belgium and Brazil on behalf of more than 500 producers.
Entertainment company Nordisk Film has bought one of its portfolio companies, Sweden-based games maker Avalanche Studios, for a total of €117m. Nordisk paid a $98m to acquire the remaining shares in Avalanche – it already owned a minority stake. The corporate previously injected $10m in April 2017, though it is not clear when it supplied the remaining money. Founded in 2003, Avalanche Studios develops games with a focus on open world action. The company will continue to develop its current projects.
Translate Bio, a biopharmaceutical company backed by agribusiness Monsanto and pharmaceutical firms GlaxoSmithKline, Merck & Co, Pfizer and Merck Group, raised more than $121m when it floated on the Nasdaq Global Select Market. The company increased the number of shares in the IPO from 7.7 million to 9.35 million, and priced them at $13, in the middle of the $12 to $14 range it had set. Formerly known as RaNA Therapeutics, Translate is working on messenger RNA therapies to treat diseases associated with gene or protein dysfunction. Its core platform was initially developed at pharmaceutical firm Shire.
VictorOps, a US-based IT incident management platform backed by property developer JF Shea, agreed to an acquisition by big data software developer Splunk for approximately $120m in cash and stock. The transaction is subject to closing conditions. The majority of the amount will be paid in cash, though Splunk did not offer further details. Founded in 2012 as VictorOpx, VictorOps has created an incident management platform that helps IT staff solve problems. The platform will be integrated into Splunk’s offering.
Payment services provider PayPal agreed to acquire US-based fraud detection software developer and portfolio company Simility for $120m. Simility’s software, the Adaptive Decisioning Platform, detects and prevents fraudulent transactions in real time by combining artificial intelligence and big data analytics. It can also be tuned for specific scenarios. PayPal plans to integrate the technology into its own offering.
Aptinyx, a US-based neurologic disorder drug developer backed by property and healthcare group Nan Fung Group, raised approximately $102m when it floated on the Nasdaq Global Select Market. The company issued 6.4 million shares at $16 each, at the top of the IPO’s $14 to $16 range, giving it a $520m market capitalisation. Founded in 2015, Aptinyx is developing synthetic small molecules to treat disorders of the brain and nervous system.
Neon Therapeutics, a US-based immuno-oncology treatment developer backed by pharmaceutical company Pharmstandard International and Access Industries, raised $100m when it floated. Neon Therapeutics is developing therapeutics vaccines and T-cell therapies for cancer. Its approach relies on targeting neoantigens – antigens that are foreign to the body but present in cancer cells.
Magenta Therapeutics, a bone marrow transplant technology developer backed by corporates Alphabet, Access Industries and healthcare provider Partners Healthcare, raised $100m in its IPO. The company issued almost 6.7 million shares on the Nasdaq Global Market at $15 each, in the middle of the $14 to $16 range it had set earlier. Its shares opened at $15.92 on the first day of trading and closed at $14.50. Magenta is working on treatments for blood cancers, and auto-immune and genetic diseases based on bone marrow transplants that use gene-modified stem cells.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
