The number of corporate-backed deals we reported from around the globe in April stood at 234, up 48% from the 158 funding rounds in the same month last year. Investment value also increased considerably, by 30%, to $14.24bn – up from $10.97bn in April 2017.
April registered somewhat weaker results than March this year with its 270 rounds, but still outperformed January and February in terms of deal count. However, total capital invested was higher than the $12.27bn estimated for March or than any other month so far this year.
The US came first in the number of corporate-backed deals, hosting 122 rounds, while China was second with 31, the UK third with 15 and India fourth with 14.
The leading corporate investors by number of deals were internet company Tencent, e-commerce firm Alibaba and telecoms firm SoftBank. In terms of involvement in the largest deals, Tencent and SoftBank topped the ranking, along with diversified internet and technology conglomerate Alphabet.
GCV Analytics re-ported 16 corporate-backed funding initiatives in April, including VC funds, new venturing units, incubators and accelerators. This figure is lower than that of March, which registered 21 such initiatives. The estimated capital raised in those initiatives was $2.39bn, up from the estimated $1.82m in the previous month.
Deals
Emerging businesses from the health, IT, services and financial sectors raised the largest number of rounds during April. The most active corporate venturers came from the financial services, IT, industrial and media sectors, as shown on the heatmap below.
China-based online group buying platform Pinduoduo closed a $3bn funding round led by Tencent. Venture capital firm Sequoia Capital reportedly also participated in the round, which valued Pinduoduo at $15bn. Founded in 2015, Pinduoduo operates an e-commerce offering in which users utilise social media platforms, such as messaging service WeChat, to share details of products, and to form purchasing groups to secure discounts.
China-based trucking services marketplace Manbang Group raised $1.9bn in a round featuring Tencent and subsidiaries of Alphabet and SoftBank. The round valued the company at $6.5bn. Alphabet’s investment came through its CapitalG unit, while SoftBank took part through the SoftBank Vision Fund. Formed in 2017 and previously known as Full Truck Alliance Group, Manbang manages an online platform where those looking to ship goods can link with truckers with surplus space in their vehicles. It was formed by the merger of rivals Huochebang and Yunmanman.
Alibaba made a RMB4.5bn ($717m) investment in Huitongda Network, a spinoff from China-based retail chain Jiangsu Five Star Appliances. Founded in 2010, Huitongda provides e-commerce and marketing services to a network of about 80,000 rural bricks-and-mortar retailers in 15,000 Chinese towns. Through it, local retailers sell items to a wider market, while online merchants can access rural customers more directly.
China-based bicycle rental service Hellobike secured approximately $700m in series E1 funding from investors including conglomerate Fosun and Ant Financial, the financial services affiliate of Alibaba. The corporates were joined by seven unnamed investors. The funding is the first tranche of the company’s series E round and it is in the process of raising the rest. Electric vehicle developer WM Motor is also expected to take part in the round. Hellobike is China’s third-largest app-based bike-sharing service by monthly active users, after Mobike and Ofo. It has 100 million registered users and a presence in 180 Chinese cities.
Alibaba led a $600m series C round for China-based artificial intelligence (AI) software provider SenseTime, which valued it at $4.5bn. Retail group Suning and Singaporean government-owned investment firm Temasek also participated in the round, which the company claims is the largest raised by an AI technology developer. Founded in 2014, SenseTime supplies computer vision and deep learning technology based on its supercomputing platform, powering functions such as facial and textual character recognition, video analysis and autonomous driving software.
India-based online retailer Paytm Mall raised $445m in a round led by SoftBank, which committed $400m. Alibaba supplied an additional $45m, valuing Paytm Mall at approximately $1.9bn. The capital will be supplied in four tranches and will give SoftBank a 21.1% stake, with Alibaba’s stake dropping from 36.3% to just over 30%. Launched by mobile payment platform Paytm in 2016, Paytm Mall has since been restructured into a separate business by One97 Communications, the e-commerce and online services group that owns Paytm.
New Leshi Smart Home, an affiliate of China-based consumer electronics producer LeEco, raised RMB3bn from investors including several corporates. Real estate developer Sunac China, Tencent, retailer Suning and e-commerce firm JD.com provided about $318m of the funding, with the rest reportedly coming from convertible note financing. Formerly known as Leshi Zhixin Electronic Technology, New Leshi Smart Home produces smart internet-connected televisions under the brand name LeTV Super TV.
Renrenche, a China-based operator of an online marketplace for used vehicles, received $300m from investors including ride-hailing service Didi Chuxing. Tencent was also reported as seeking to back the round, led by investment banking firm Goldman Sachs. Founded in 2014, Renrenche operates an e-commerce platform for second-hand cars that is active in more than 80 Chinese cities. The company is also looking to develop financing services later this year and plans to explore opportunities in the after-sales market in partnership with Didi.
US-based immuno-oncology drug developer Allogene Therapeutics was launched with $300m in series A financing from investors including pharmaceutical firm Pfizer, which also provided assets for the startup. The round was also backed by University of California’s Office of the Chief Investment Officer of the Regents, among other investors. Allogene was founded to develop 16 preclinical assets and one clinical asset licensed by Pfizer from biopharmaceutical developers Cellectis and Servier for an oncological approach called allogenic Car-T therapy, which uses cells from healthy donors rather than relying on a patient’s own DNA. It is expected to reduce waiting times for cancer treatment.
Alisports, the sports affiliate of Alibaba, raised RMB1.2bn in series A funding from investors including insurance firm China Taiping Insurance. The round was led by Yunfeng Capital, an investment firm co-founded by Alibaba’s executive chairman Jack Ma. The transaction valued the company at $1.3bn. Founded in 2015, Alisports operates a professional sports platform that integrates services such as e-commerce, media, marketing, cloud computing and video and targets areas such as ticketing, events management and copyright.
Exits
In April, GCV Analytics tracked 18 exits involving corporate venturers as either acquirers or exiting investors. The transactions included 11 acquisitions and seven initial public offerings (IPOs).
The number of exits increased slightly over March, when there were 15. Total estimated exited capital, however, amounted to $5.89bn, a drop from the previous month, which included the $9.8bn stake sale of Tencent by South Africa-based media group Naspers.
Local services platform Meituan-Dianping agreed to buy China-based bike rental service Mobike for $2.7bn. The transaction was reportedly brokered by Pony Ma, chief executive of Tencent, which also owns a stake in Meituan-Dianping. Founded in 2015, Mobike operates an app-based dockless bike-sharing service that has attracted hundreds of millions of registered users. The company entered its 200th market in January 2018 when it launched a service in Paris.
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 a total market capitalisation of $8.22bn. Dropbox had reportedly upped its price range from $16 to $18 a share, to $18 to $20. It was revealed that Salesforce had acquired 4.76m additional shares by investing $100m via a private placement. Founded in 2007, Dropbox has developed a cloud-based storage and sharing platform with more than 500 million users, 200,000 of which are businesses and 11 million of which are paying subscribers.
Pivotal Software, a US-based software development services provider spun out of software producer EMC, closed its IPO at just over $638m, after underwriters bought 5.5 million additional shares. The IPO initially consisted of 33.1 million shares at $15 each, in addition to almost 3.9 million shares sold by industrial technology and appliance manufacturer General Electric. Spun out of EMC, Pivotal supplies software development technology as well as expertise to clients looking to create customised applications.
US-based digital signature technology provider DocuSign floated in a $629m IPO, in which Alphabet and mass media group Comcast exited. The shares were priced at $29, above the $24 to $26 range the company had set, giving DocuSign a market capitalisation of over $4.4bn. The company issued just over 16 million shares on the Nasdaq Global Select Market, raising almost $466m, while shareholders sold almost $164m of shares in the offering. DocuSign has developed an e-signature platform it claims has hundreds of millions of users, including some 370,000 businesses.
Weebly, a US-based website creation platform backed by Tencent, agreed to an acquisition by payment processing firm Square for approximately $365m. Square is paying a mix of cash and shares, including restricted stock units for Weebly’s founders and employees that will vest over four years. Founded in 2007, Weebly operates an online platform for building and hosting websites and e-commerce stores. Square will integrate Weebly’s offering into its suite of products.
Homology Medicines, a US-based rare disease treatment developer backed by pharmaceutical firm Novartis, raised $165.6m in an IPO on the Nasdaq Global Select Market. The company, which had originally targeted $100m in proceeds, priced its shares at $16, offering a total of 9 million. They traded at $16.49 at close, giving Homology a market cap of about $627.9m. Founded in 2015, the company is working on gene therapies that target the underlying causes of rare diseases.
Surface Oncology, a cancer drug developer with pharmaceutical companies Eli Lilly, Amgen and Novartis as investors, raised $108m in its IPO. The offering consisted of 7.2 million shares priced at the top of its $13 to $15 range. Novartis Institutes for Biomedical Research, a subsidiary of Novartis, invested another $11.5m in the company through a concurrent private placement. Surface Oncology develops immuno-oncology therapies focusing on the biological pathways important to immunosuppression.
Network security software producer Palo Alto Networks agreed to acquire Secdo, an Israel-based cybersecurity technology provider backed by corporate joint venture Rafael Development Corporation. Palo Alto agreed to pay about $100m. Founded in 2014, Secdo has built a software platform that detects cyber-threats and identifies how a device has been compromised, providing IT staff with granular tools to respond to attacks without impacting users.
Goldman Sachs Bank USA, a subsidiary of investment banking group Goldman Sachs, acquired Clarity Money for a reported $100m, allowing financial services firm Citi to exit. Launched in 2017, Clarity has developed a mobile app with more than 1 million registered users that uses artificial intelligence, machine learning and data science to manage personal finances. It helps users track their spending, identifies potentially unwanted subscriptions for cancellation, and recommends additional personal finance products.
US-based laser technology developer NLight raised $96m in IPO that scored an exit for Samsung Ventures, a corporate venturing subsidiary of the electronics producer. The offering consisted of 6 million shares at $16 each, above its $13 to $15 range. The company’s stock opened at $23 on the Nasdaq Global Market and closed at $25.01, giving it a market capitalisation of just over $840m. Founded in 2000, NLight supplies semiconductor and fibre lasers for use in manufacturing processes for the industrial, microfabrication, aerospace and defence industries.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
