The covid-19 pandemic is far from over yet but our data suggest investment activity among corporates may be beginning to register a rise.
According to GCV Analytics, the number of corporate-backed deals from around the world was 304 in September, broadly in line with the 308 rounds from the same month last year. Investment value increased by 15%, standing at $10.9bn – up from the $8.67bn in September 2020. In comparison with August this year, September registered more deals (304 vs 265).
The US came first in the number of corporate-backed deals, hosting 98 rounds, while Japan was second with 50 and China – third with 34.
The leading corporate investors by number of deals were telecoms group SoftBank, diversified internet conglomerate Alphabet and e-commerce and home electronics firm Amazon. In terms of involvement in the largest deals, automotive manufacturer SAIC Motors topped the list along with SoftBank and Amazon.
GCV Analytics reported 33 corporate-backed funding initiatives in September, including VC funds, new venturing units, incubators, accelerators and other. This is a considerable (83%) increase compared with September 2019 which registered 18 initiatives. The estimated capital raised in those initiatives amounted to $5.4bn, considerably below the $9.69bn during the same month last year.
Deals
Emerging businesses from the health, IT, financial services and the consumer sectors led in raising the largest number of rounds. The most active corporate venturers came from the financial, IT, consumer, health and industrial sectors.
WM Motor, a China-based electric carmaker backed by internet companies Baidu and Tencent and metals trader China Minmetals, raised RMB10bn ($1.47bn) in a series D round co-led by automotive manufacturer SAIC Motor. An unnamed state-owned investment company was the other co-leader. Shanghai Automotive Industry, the parent company of automotive manufacturer SAIC Motor, had reportedly invested $73.1m.
WM Motor sells smart electric vehicles with features such as autonomous driving and connected electronics systems. It also markets a mobile app called GetnGo to pay for vehicle charging. The series D financing will go towards research and development, marketing, sales and branding activities.
US-based mobile bank operator Chime completed a $485m series F round backed by Access Technology Ventures, an investment vehicle for diversified conglomerate Access Industries. Coatue Management, Iconiq Capital, Tiger Global Management, Whale Rock Capital, General Atlantic, Dragoneer Investment Group and DST Global also took part in the round. Chime is now valued at $14.5bn, more than doubling its $5.8bn valuation in December 2019 and increasing it almost tenfold in 18 months.
Founded in 2013, Chime is a “challenger” bank that offers financial services through a mobile app and does not operate physical branches. Customers have access to a current account, debit card, overdrafts and features such as receiving their salary early.
Zwift, the US-based operator of a social exercise platform, raised $450m from investors including Amazon’s Alexa Fund and bicycle producer Specialized Bicycle Components’ Zone 5 Ventures fund. The round reportedly valued the company at more than $1bn. Founded in 2014, Zwift runs an online platform where runners and cyclists can connect and race each other at home in immersive environments. The platform has more than 2.5 million users and has begun organising dedicated events such as a virtual Tour de France. The fresh funding has been earmarked for more development of the company’s software and the commercial launch of its first hardware products.
China-headquartered artificial intelligence (AI)-powered drug developer XtalPi received nearly $319m in a series C round co-led by SoftBank, insurer PICC Group and VC firm Morningside Venture Capital. SoftBank and PICC Group participated through respective investment units Vision Fund 2 and PICC Capital.
Internet group Tencent, quantitative trading firm Susquehanna International Group (SIG)’s local outfit SIG China and insurance provider China Life Insurance’s investment arm China Life Private Equity Investment also contributed.
Founded in 2014, XtalPi exploits AI and cloud computing technologies to facilitate therapy development by predicting the physicochemical and pharmaceutical properties of small-molecule drug candidates. The money will drive further platform development.
Brazil-based digital bank Neon Pagamentos raised $300m in series C funding from investors including online payment processor PayPal and Propel Venture Partners, the venture capital firm funded by banking group BBVA.
Growth equity firm General Atlantic is leading the round. PayPal invested through corporate VC unit PayPal Ventures. The capital will be provided through two equal tranches.
Neon offers a digital bank account, credit cards, loans and investment products for both consumers and businesses. It oversees 9 million accounts and will put the series C proceeds into technology and product development, recruitment and expanding its user base.
US-based online insurance platform Next Insurance collected $250m in series D financing led by CapitalG, the growth equity arm of Alphabet, and with participation from reinsurance provider Munich Re. VC firm FinTLV also took part.
Founded in 2016, Next Insurance specialises in policies for small businesses and the self-employed, running an AI-powered online portal that enables customers to purchase coverage in 10 minutes.
The company offers policies across areas such as general and professional liability, business insurance, commercial auto insurance and worker’s compensation insurance. It has grown to more than 100,000 customers across the US.
US-based data processing unit designer Nuvia received $240m in a series B round including Dell Technologies Capital, the corporate venturing division of computing technology producer Dell. Mithril Capital led the round, which also included funds managed by BlackRock, Temasek, Fidelity, Atlantic Bridge, Redline Capital and Capricorn Investment Group, among others.
Founded in February 2019, Nuvia is working on silicon semiconductor architectures for data centres that are energy efficient while delivering high performance. The company was co-founded by the team who previously led the design of consumer electronics company Apple’s chips used in iPhones and iPads.
Pharmaceutical and agricultural product manufacturer Bayer invested $50m to lead a $239m series D round for US-based drug discovery technology provider Recursion through its Leaps by Bayer subsidiary. The round reportedly valued Recursion just below $1bn pre-money. The round was filled out by existing backers including Intermountain Ventures, care provider Intermountain Healthcare’s corporate venturing unit. Recursion is combining automation and machine learning technology with what it claims is the largest biological image dataset in the world to discover drug treatments for a range of conditions including cancer and genetic disorders.
China-based supply chain services provider Xingyun raised $200m in a series C round co-led by insurer Taikang Insurance, publisher Shanghai United Media’s Zhongyuan Capital fund and investment firm Highlight Capital. Hidden Hill Capital, a fund for logistics company GLP, and C&D Emerging Industry Investment, the corporate venturing arm of real estate and logistics firm C&D Group, also took part.
Xingyun provides a broad suite of supply chain services to importers, ranging from consultancy and financial services to logistics and trading. It also runs a cross-border online marketplace called XY-Storehouse. It maintains operations in China, Australia, Germany and Japan. The funding has been allocated to bolstering supply chain capacity and to recruitment.
Private equity firm Hellman & Friedman invested $200m in Sprinklr, a US-based marketing software provider backed by semiconductor and data technology producer Intel, at a $2.7bn valuation. The equity funding was raised with $150m in convertible securities from Sixth Street Growth, a growth equity vehicle for investment firm Sixth Street.
Sprinklr has created a customer experience management platform that helps staff interact with customers across social media and messaging platforms.
Exits
GCV Analytics tracked 37 exits involving corporate venturers as acquirers or exiting investors in September. The transactions included 23 acquisitions, 10 initial public offerings (IPOs) and four other transactions.
The exit count figure was similar to August, which recorded 38 exits. The total estimated exited capital more than doubled from to $7.54bn to $15.92bn versus the previous month (though one of the reported acquisitions was $8bn). During the same month of 2019, the exits count was 32 and the estimated total capital stood at $3.37bn.
US-based medical diagnostics technology Grail agreed to an $8bn acquisition by genomics technology producer Illumina, which had spun out the former. Grail will receive $3.5bn in cash and $4.5bn in stock.
The two companies have agreed a deadline of December 20 to finalise the deal, after which Illumina will pay Grail $35m per month until the deal closes. Grail and Illumina have also signed a $315m merger termination agreement. The deal remains subject to regulatory approval.
Spun off in 2015, Grail is working on technology that combines gene sequencing with population-level clinical studies to detect cancer at an earlier stage, increasing a patient’s odds of survival. The company filed for an IPO earlier this month with a $100m placeholder amount.
US-based data analysis software provider Snowflake went public on the New York Stock Exchange, which came with a $250m investment by enterprise software producer and existing investor Salesforce.
Snowflake issued 28 million shares at $120 each, above the $100 to $110 range it had set, after having lifted it from $75 to $85 a share. Salesforce subsidiary Salesforce Ventures and investment holding company Berkshire Hathaway provided $250m each to Snowflake via a private placement at the same time. On the first day of trading, the stock price surged above $300 but pulled back later in the day and closed with nearly 112% gain.
Founded in 2012, Snowflake has developed a cloud software platform which enables users to unify large amounts of data that are siloed, combine them with new data and analyse them. The company boasts over 3,100 customers and has more than doubled its revenues to $242m in the first half of 2020 with a net loss of $171m.
Amwell, a US-based telehealth technology provider backed by electronics and medical technology producer Philips, insurance group Allianz and pharmaceutical firms Teva and Takeda, raised $742m in its IPO.
The company increased the number of shares in the offering from 35 million to 41.2 million and priced them at $18, above the $14 to $16 range it had set. Internet technology provider Google invested $100m in a separate private placement.
Formerly known as American Well, Amwell has built a telehealth technology platform that links patients with healthcare providers and insurers. It manages telehealth operations for 55 insurance plans and 150 healthcare systems.
JFrog, the US-based software release platform developer that counts computing technology producer Dell among its investors, went public in a $509m IPO on the Nasdaq Global Select Market.
The offering consisted of 8 million shares issued by JFrog and almost 3.7 million additional shares sold by its shareholders. They were priced at $44 each, comfortably above the IPO’s $33 to $37 range. The company’s shares closed at $64.79 on the first day of trading, giving it a market cap of more than $5.75bn, up from a $1.5bn valuation in October 2019.
JFrog has built a software platform that allows users to organise and schedule updates in a continuous flow, a process it describes as liquid software. It increased revenue by more than 50% year on year to $69.3m in the first six months of 2020 while its net loss fell slightly to $430,000.
Fleet management equipment producer Omnitracs agreed to acquire SmartDrive, a US-based telematics system provider that counts automotive component maker Wabco and tyre manufacturer Michelin among its investors.
Although neither company officially disclosed the sale price, Barrons reported that the transaction is set to be sized at $450m. SmartDrive is the developer of a video-based telematics system that captures data such as fuel capacity, engine health and distance between vehicles to improve safety
and efficiency.
Ireland-based inflammatory disease drug developer Inflazome was acquired by pharmaceutical firm Roche for €380m ($448m) in an upfront payment, providing an exit to pharmaceutical firm Novartis. Inflazome is eligible to receive additional milestone payments, but details were not revealed. Founded in 2016, Inflazome is working on drugs that target inflammasomes, which drive chronic conditions ranging from Parkinson’s and Alzheimer’s diseases to asthma, inflammatory bowel disease, chronic kidney disease, cardiovascular disease and arthritis. The company is based on research by co-founders Matt Cooper from University of Queensland, who served as chief executive, and Luke O’Neill from Trinity College Dublin.
Automotive remarketing technology provider KAR Auction Services agreed to buy BacklotCars, an online automotive reselling platform, in a $425m deal that will enable social media company Renren to exit. The acquisition is intended to strengthen KAR’s online auction platform, TradeRev.
BacklotCars co-founders Justin Davis, Ryan Davis, Josh Parsons and Fabricio Solanes will carry on running the company’s service from its headquarters in Missouri. Founded in 2015, BacklotCars is the owner of an online dealer-to-dealer marketplace for second-hand vehicles, allowing companies such as rental services and dealers to buy and sell cars without having to travel. Inspections are carried out by trained mechanics it employs.
Pure Storage agreed to buy US-based data management software provider Portworx in a $370m deal that will allow corporates cloud services provider NetApp, networking technology producer Cisco, IT services firm Hewlett Packard Enterprise (HPE) and industrial equipment maker General Electric to exit.
Founded in 2014, Portworx has developed a data services software platform built on open-source containerised application management software Kubernetes. Its technology will be integrated with Pure Storage’s existing data platforms.
Outset Medical, the US-based dialysis technology producer that counts medical device maker Baxter International among its investors, closed its IPO at approximately $278m. The company issued 8.95 million shares on the Nasdaq Global Select Market at $27 each to raise an initial $242m.
Outset has developed a haemodialysis system that can perform dialysis using only tap water and an electrical outlet. It is putting the proceeds into upgrading its sales and customer support along with its research and development activities.
Chef, a US-based software development technology provider backed by HPE and financial services firm Citi, agreed to a $220m acquisition by software development tool producer Progress. Progress will pay the full sum in cash. Founded in 2008 as Opscode, Chef has built a product suite to automate the building, deployment, management and securing of software applications. The company made its product offering open source in April 2019 but offers a dedicated enterprise version on a subscription basis, generating more than $70m in annual recurring revenue.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.