AAA Dealflow maintains pace in September

Dealflow maintains pace in September

The number of corporate-backed rounds reported in September was 239, up 12% from the 213 funding rounds in the same month last year. Investment value also increased slightly to $9.72bn – up 6% from the $9.12bn in September 2017. September’s deal number was similar to those of July and August, with their 244 and 243 rounds respectively.

Most corporate-backed deals were hosted by the US, where there were 117 rounds, China and India were second with 20 rounds and the UK third with 16.

The leading corporate investors by number of deals were diversified conglomerate Alphabet, social media holding company Snap and real estate firm Alexandria. Those involved in the largest deals were telecoms firm SoftBank, along with internet company Tencent and financial services group Goldman Sachs.

GCV Analytics reported 19 corporate-backed funding initiatives in September, including VC funds, new venturing units, incubators, accelerators. This is a decline from August, when there were 24 such initiatives. The estimated capital raised in September’s initiatives amounted to $1.6bn, down 28% from an estimated $2.2bn the previous month.

Deals

Emerging businesses from the financial services, health, IT and media sectors raised the largest number of deals during September. The most active corporate venturers came from the financial services, IT, media, health and consumer sectors.

India-based short-term accommodation provider Oyo Rooms raised $1bn from investors including the SoftBank Vision Fund, which joined venture capital firms Sequoia Capital and Lightspeed Venture Partners for an initial $800m tranche. Oyo reportedly also secured commitments for the remaining $200m. The round valued the company at $5bn. Founded in 2013, Oyo partners hotels and rebrands rooms to offer a standardised service, including toiletries and fresh linen, that users can book through its website and app. The company also offers staff training to its partner hotels, and takes a 25% commission on bookings. The company has expanded across India and into Malaysia, Nepal, the UK and China.

China-based used vehicle marketplace Souche collected $578m in a series F round backed by e-commerce group Alibaba and insurance provider Sunshine Insurance Group. Primavera Capital and Morningside Venture Capital co-led the round, which included fintech developer CreditEase and a range of undisclosed investors. Founded in 2012, Souche runs an online car sales platform that connecting medium and large-sized second-hand dealerships across China.

Tencent co-led a $450m round for China-based online grocery retailer MissFresh. The round was co-led by investment firm Goldman Sachs Investment Partners unit. Founded in 2014, MissFresh oversees an online operation selling fresh produce to customers across 20 Chinese cities including Beijing, Shanghai, Guangzhou and Shenzhen. The funding will support the expansion of the company’s cold chain logistics and supply chain capabilities in addition to its smart retail technology.

China-based after-sales automotive services provider Tuhu secured $450m in a series E round that included Tencent. CICC Qiyuan and CICC Alpha, both overseen by investment bank China International Capital Corporation, plus Carlyle Group, Sequoia Capital and other investors. Tuhu operates an online platform supplying replacement car parts, tyres and lubricants as well as services such as vehicle maintenance, washing and waxing. It claims to have 13,000 outlets spanning more than 350 Chinese cities.

US-based online real estate transaction platform Compass received $400m in a series F round from a consortium co-led by the SoftBank Vision Fund. The round was co-led by sovereign wealth fund Qatar Investment Authority. The round reportedly valued Compass at $4.4bn post-money. Founded in 2012 as Urban Compass, Compass operates an end-to-end luxury online real estate brokerage that operates across 21 markets in the US. The funding will go to technology development, international expansion and further growth across the US.

Opendoor, a US-based operator of an online real estate marketplace, received $400m from the SoftBank Vision Fund. The investment valued the company at more than $2bn. Founded in 2014, Opendoor runs an online platform where users can buy and sell properties using a smartphone. It is present in 19 US cities but intends to expand that to 50 by the end of 2020. The funding will support the software development.

Media holding company WndrCo led a $295m round for US-based mobile privacy software provider AnchorFree, which included venture capital firms Accel, 8VC, SignalFire and Green Bay Ventures. Founded in 2005, AnchorFree has created mobile app Hotspot Shield, a virtual private network for mobile devices.

US-based handheld ultrasound device maker Butterfly Network raised $250m in a series D round featuring pharmaceutical company Fosun Pharma. The round was led by financial services and investment group Fidelity and included philanthropic organisation Bill and Melinda Gates Foundation, private investor Jamie Dinan and unnamed existing backers. It valued Butterfly at $1.25bn. Butterfly Network has developed handheld 3D ultrasound scanner iQ. It is the size of an electric razor and costs $2,000, considerably less than current alternatives which can retail for up to $20,000.

Stripe, a US-based payment technology provider backed by Alphabet and credit card firms Visa and American Express, has closed a $245m round led by hedge fund manager Tiger Global Management. The round valued Stripe at $20bn. Stripe has developed a mobile-focused payment infrastructure that can be integrated into an online merchant’s existing platform. The company charges a small amount for each transaction that uses the technology and has launched its point-of-sale hardware device.

US-based automation software developer UiPath raised $225m in a series C round led by CapitalG, a venturing subsidiary of Alphabet. The round, which valued it at $3bn, also featured financial services firm Sequoia Capital and venture capital firm Accel. Founded in 2005, UiPath has built a robotic process automation platform that uses software bots to automate repetitive processes to help ensure enterprises and government agencies maintain productivity and comply with regulations.

Exits

In September, GCV Analytics tracked 26 exits with corporate venturers participating as either acquirers or exiting investors. The transactions included 13 acquisitions, 11 initial public offerings and one merger. The number of exits rose significantly compared with August, which, as a slow summer month, registered just nine exits. Total estimated exited capital amounted to $9.47bn, up fourfold from the $2.29bn estimated during the previous month.

China-based local services platform Meituan-Dianping raised $4.22bn in an initial public offering that included a $400m investment by Tencent. Meituan Dianping issued 480 million primary shares on the Hong Kong Stock Exchange at HK$69 ($8.79) each, near the top of the IPO’s HK$60 to HK$72 range. The offering reportedly valued the company at about $52bn. Established through the 2015 merger of group buying platform Meituan and restaurant listings service Dianping, Meituan-Dianping now operates an online portal that links to a range of services including food delivery, travel booking and event ticketing.

Biopharmaceutical company Alexion Pharmaceuticals agreed to acquire Syntimmune, a US-based autoimmune disease therapy developer backed by drug producer Baxalta, for up to $1.2bn. Alexion will pay $400m in cash upfront and up to $800m more if Syntimmune hits certain milestones. Founded in 2013, Syntimmune is developing therapies for autoimmune diseases.

Nio, a China-based smart electric car developer with Tencent, internet company Baidu, consumer electronics producer Lenovo and e-commerce firm JD.com as investors, raised approximately $1bn when it floated on the New York Stock Exchange. The IPO consisted of 160 million American depositary shares at $6.26 each, near the bottom of the $6.25 to $8.25 range set earlier. It valued Nio at $6.4bn. Founded in 2014 as NextEV before rebranding, Nio is working on plug-in electric cars fitted with features including artificial intelligence and autonomous driving systems. Nio’s first model, the EP9 supercar, was released in 2016, and it launched its first commercial model, ES8, last December.

Farfetch, a UK-based fashion e-commerce platform backed by media group Advance Publications and JD.com, went public in an IPO that raised approximately $885m. The company issued just over 33.6 million shares on the New York Stock Exchange while its shareholders sold an additional 10.6 million. The shares were $20 each, above the IPO’s $17 to $19 range, giving it a market cap of about $5.8bn. Founded in 2008, Farfetch operates an online marketplace for luxury fashion items, selling the wares of almost 1,000 producers to 2.3 million customers worldwide.

Business communications technology supplier Vonage Holdings agreed to acquire US-based customer service technology provider NewVoiceMedia in a $350m deal, allowing enterprise software producer Salesforce to exit. NewVoiceMedia has developed a cloud software platform that integrates with an organisation’s existing customer relationship management software, bringing together all communications channels to help staff contact customers more effectively.

Germany-based industrial internet-of-things technology provider Relayr was acquired by Hartford Steam Boiler, an equipment breakdown insurance subsidiary of reinsurance firm Munich Re, for $300m. Founded in 2013, Relayr has created a middleware software platform that relies on artificial intelligence to offer data insights into new and legacy hardware. The technology makes it possible, for example, to predict when a machine is likely to fail.

Pharmaceutical firm Boehringer Ingelheim acquired one of its portfolio companies, Austria-based immuno-oncology therapy developer ViraTherapeutics for €210m ($245m). ViraTherapeutics is developing oncological drugs based on viruses that have been engineered to destroy cancer cells while leaving surrounding tissue unharmed. It was spun out of Medical University of Innsbruck in 2013. The company’s lead asset is a modified virus that enhances the immune response and impacts tumours directly.

US-based event ticketing and technology platform developer Eventbrite secured $230m when it floated on the New York Stock Exchange, chalking up an exit for payment technology producer Square. The IPO consisted of 10 million shares at $23 each, giving it a $1.76bn valuation. The company had initially set a $19 to $21 range before upgrading it to $21 to $23. Eventbrite has created an online ticketing platform through which some 203 million tickets were sold over the course of last year. The company made a $15.6m net loss in the first half of 2018 from $142m in revenue.

SVMK, the US-based owner of online customer research platform SurveyMonkey, floated in a $180m IPO that scored exits for Alphabet and Salesforce. The company increased the number of shares in the offering from 13.5 million to 15 million at $12 each, above the $9 to $11 range it had set earlier. SurveyMonkey has built a cloud-based software platform with 16 million active users that helps clients design, create and distribute online surveys in order to conduct research and analyse the resulting data.

Tapingo, a US-based, student-focused food ordering platform backed by mobile chipmaker Qualcomm, agreed to an acquisition by food delivery service Grubhub for about $150m. Grubhub will integrate Tapingo’s service into its own offering. Tapingo has developed an app that allows university students to pre-order and pick up food from local outlets. The app integrates with meal plans and point-of-sale systems on campus, and is currently available at more than 150 institutions across the US.

Note: Monthly data can fluctuate as additional data are reported after GCV goes to press

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