The number of corporate-backed deals in March was 270, up from the 233 funding rounds in the same month last year. Investment value also increased significantly, by 70% to $12.27bn – up from $7.22bn last year.
Compared with January and February this year, March has the strongest deal count, outperforming the 197 and 158 deals in January and February respectively. Total capital invested in March was almost as high as the $12.84bn estimated in January.
The US hosted the largest number of corporate-backed deals – 115 – while China was second with 34 rounds, the UK third with 16 and Australia fourth with 12.
The leading corporate investors by number of deals were diversified internet and technology conglomerate Alphabet, telecoms and media company SoftBank as well as internet company Tencent. Of those involved in the largest deals, e-commerce firm Alibaba and Tencent topped the ranking, along with media research company International Data Group (IDG).
GCV Analytics reported 21 corporate-backed funding initiatives in March, including VC funds, new venturing units, incubators and accelerators. This figure is an increase over February’s figure, when there were 18 such initiatives. The estimated capital raised by those initiatives was $1.82bn, down from the estimated $2.54m the previous month.
Deals
Emerging businesses from the IT and health sectors raised the largest number of rounds during the third month of 2018. The most active corporate venturers were from the financial services, IT, media and consumer sectors.
Alibaba invested $2bn in Singapore-based online marketplace Lazada, effectively doubling its investment in the company, in which it already held an 83% share. Lazada runs an e-commerce operation spanning Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam with more than 145,000 merchants selling items such as electronics, household goods, fashion, toys and appliances.
Tencent led an $818m series C round for China-based automotive e-commerce platform Chehaoduo. Shougang Fund, an investment branch of steelmaker Shougang, and ICBC International, a subsidiary of Industrial and Commercial Bank of China, also took part in the round. Chehaoduo was formerly known as Guazi, which is still the brand under which its used car trading platform operates, but the company has expanded into new car sales through a brand called Maodou as well as online vehicle auctions and adjacent services like insurance and appraisal.
Tencent provided $630m of funding to China-based game-focused livestreaming platform Douyu. Originally known as AcFun, Douyu operates a platform that broadcasts gaming and eSports. It had 30 million daily active users as of late 2017, when it claimed it had also reached profitability.
SoftBank led a $535m series D round for US-based delivery services provider DoorDash, increasing the company’s overall funding to $722m. DoorDash runs a last-mile delivery service for restaurants that operates across more than 600 cities in the US and Canada. It has local eateries and national chains among its users and intends to extend the service to a range of other consumer industries.
Chehejia Information Technology, a China-based electric vehicle developer also known as CHJ Automotive, closed a RMB3bn ($475m) series B round featuring department store chain Intime Retail. Founded in 2015, Chehejia is developing electric cars, which it plans to use for on-demand rental and ride-sharing services. It is also working on a seven-seat luxury sports utility vehicle it aims to mass produce by 2019.
Tencent supplied approximately $462m in series B funding for Huya, a China-based live game streaming spinout from social media platform YY. The size of the stake Tencent has acquired in Huya was not revealed, but the company has confirmed that YY remains its majority investor. Huya’s online livestreaming platform allows users to stream their gaming to viewers in real time. It had more than 66 million monthly active users, including 5.7 million paying users, by the middle of last year.
China-based bicycle rental platform Ofo secured RMB1.77bn from Alibaba. Founded in 2014, Ofo operates a dockless bicycle-sharing service that had 200 million registered users globally by end of last year.
France-based airship developer Flying Whales raised a total of $246m in funding from investors including aerospace manufacturer Aviation Industry Corporation of China. Flying Whales is working on an airship that can carry up to 60 tons of cargo, with a first flight scheduled for 2021 when the company also aims to list on the public markets. It will initially focus on the lumber industry.
Columbia Asia, a spinoff of US-based healthcare provider Columbia Pacific Management, raised $210m in funding, $140m of which came from diversified conglomerate Mitsui. Mitsui had previously invested $101m in 2016. Columbia Asia operates 29 hospitals across India, Malaysia, Indonesia and Vietnam.
US-based personal genomics marketplace developer Helix closed the first tranche of a $200m series B round featuring genomics technology provider Illumina and medical research firm Mayo Clinic. Launched in 2015, Helix operates what it refers to as an online store for personal genomics products, offering services such as genetic sample collection, DNA sequencing and secure genetic data storage.
Exits
In March, GCV Analytics tracked 16 exits involving corporate venturers as either acquirers or exiting investors. The transactions included nine acquisitions, four initial public offerings (IPOs), one merger, one stake sale and one shutdown. The number of exits was the same as in February, but slightly lower than January. The total value of the exits was $13.49bn, a more than three-fold increase over February. However, a single transaction accounted for $9.8bn of that total.
Media and e-commerce firm Naspers sold HK$76.95bn ($9.8bn) of shares in Tencent, in which it had invested $32m in 2011. Tencent operates large-scale online services offering centred on its messaging app, WeChat, which has more than 1 billion users. At the end of last year, it was the fifth most valuable company in the world and had a market capitalisation of about $505bn. Naspers acquired a 46.5% share of Tencent through its $32m investment, three years before its IPO in Hong Kong.
Pharmaceutical firm Lund-beck agreed to acquire Netherlands-based central nervous system disorder therapy developer Prexton Therapeutics for up to €905m ($1.11m), allowing pharmaceutical company Merck to exit. Lundbeck agreed to pay €100m up front, with the rest to come in the form of development and sales milestone payments. Founded in 2012, Prexton is developing foliglurax, a small-molecule modulator of a glutamate receptor that could be an oral treatment for Parkinson’s disease.
US-based collaboration and data storage platform Dropbox went public in a $756m IPO on the Nasdaq Global Select Market. The company issued 36 million shares at $21 each, giving it market capitalisation of $8.22bn. Dropbox had reportedly raised its price range from $16 to $18 a share, to $18 to $20. It was revealed also that Salesforce had acquired 4.76 million additional shares by investing $100m via a private placement. Founded in 2007, Dropbox runs a cloud-based storage and sharing platform with more than 500 million users, more than 11 million of which are paying subscribers.
Financial data and analysis provider S&P Global agreed to acquire US-based data technology provider Kensho Technologies for approximately $550m, enabling Alphabet to exit. Founded in 2013, Kensho has developed an artificial intelligence platform that allows users to ask questions about complex problems in plain English and receive answers within seconds.
Bilibili, a China-based online entertainment platform backed by Tencent and mobile game developer FingerFun, raised $483m when it floated in the US. The company priced 42 million American depositary shares at $11.50 each, in the middle of its $10.50 to $12.50 range, equating to a $3.19bn market capitalisation. Its stock opened at $9.80 and closed at $11.24. Bilibili operates an online platform focused on anime, comics and gaming that incorporates video streaming, mobile games and livestreaming. It had an average of 76 million monthly active users in the first two months of 2018.
Cybersecurity software producer Palo Alto Networks agreed to acquire US-based cloud security technology developer Evident.io for $300m, allowing Alphabet to exit. Evident’s core product, the Evident Security Platform, continuously monitors deployments in cloud computing platforms such as Microsoft Azure or Amazon Web Services to detect and manage security risks.
Wellness business software producer Mindbody agreed to acquire Booker Software, a US-based developer of salon and spa management software, allowing payment technology provider First Data to exit. Founded in 2010 and formerly known as GramercyOne, Booker has built an end-to-end software offering for spas and beauty salons that includes online booking and payment, customer relationship management, automated marketing and staff management tools.
US-based cancer treatment developer Arcus Biosciences, which counts several corporates among its investors, closed its IPO at $138m. The company issued 8 million shares at $15 each, at the top of its range, to raise an initial $120m. Investors in Arcus include pharmaceutical companies Celgene, Novartis and Taiho, the latter of which had invested through its Taiho Ventures unit, as well as GV, a subsidiary of Alphabet. Founded in 2015, Arcus Biosciences is working on cancer immunotherapies.
Saavn, an India-based music streaming service backed by media groups Bertelsmann and Liberty Media, agreed to a merger with JioMusic, a digital music subsidiary of conglomerate Reliance Industries. Reliance will invest up to $100m in Saavn as part of the agreement, providing $20m immediately to support international growth and expansion efforts for the merged platform. The corporate will also buy $104m worth of stock from existing shareholders including Bertelsmann and Liberty. Founded in 2007, Saavn operates a music streaming service that focuses on Bollywood, regional Indian and English language music. The platform claims to have 30 million songs.
Acacia Pharma, a UK-based nausea and vomiting treatment developer backed by pharmaceutical firms Novo and Lund-beck, raised €40m in an IPO on Euronext Brussels. The company issued about 11.1 million shares at €3.60 each to institutional investors in the US, the UK and Europe. Founded in 2007, Acacia develops intravenous therapies for postoperative nausea and vomiting, a condition that affects approximately 30% of patients and as many as 80% of high-risk patients who use anaesthetic gases and opioid painkillers.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
