With the slow recovery from the financial crisis and divestiture strategies undertaken by some big players, 2014 was marked by numerous exits by corporate investors in the industrials sector. The CEO of Siemens Venture Capital, Ralph Schnell, has commented that the company’s plan was to “invest smaller amounts between half a million and one million US dollars in the respective companies” which would enable them to “support many more individual startups and more effectively spread the risks.” Extensive diversification appears to be the leitmotif of this new strategy.
Many existing funds managed by corporate venturing units also remained active. Several of them, including Siemens and GE, invested in high-tech innovations in areas such as IT, big data, healthcare and energy. Others, such as German firms BASF and Evonik, strictly adhered to investing in promising businesses whose activity is directly related to theirs.
BASF remained focused on chemicals businesses and Evonik Industries on industrial materials and chemicals as well. 3M and Robert Bosch ventured into some online and IT businesses but most of the new additions to their portfolios were closely related to their own line of business. Firms with highly diversified investment strategies, such as Access Industries tended to concentrate investments on merely one of their targeted sectors – technology and online businesses in the case of Access in 2014.
Funds
Siemens set up a $100m venture capital fund to support startups in very early stages of development – the Industry of the Future Fund. This step is part of its new “Industrie 4.0” strategy which consists of “providing capital to those companies whose innovative technologies and vision have the potential to change the landscape of manufacturing and industrial automation.”
In April 2014, GE divested $1.3bn of private equity funds as its parent company was bidding $17bn for Alstom’s power business. The LP interests were acquired by the France-based investment firm Ardian.
Exits
In December, Teradata acquired big data archiving company Rainstor, which had raised $29m from investors including Dow Chemical, Rogers Communications, and Informatica. In January 2015, DNA sequencing technology company DNA Electronics (DNAe) acquired US-based life sciences technology developer NanoMR in a $24m cash deal, providing an exit to Dow.
GE exited two of its investments through IPOs over the past year. Townsquare, which operates 312 radio stations and more than 325 comparison websites, managed to raise roughly $144m after the bankruptcy of its predecessor Regent Communications, thanks to the GE backing since 2010. Townsquare went public in July 2014 and raised $92m in an underpriced IPO. The Israel-based solar inverter maker SolarEdge, also previously backed by GE, filed for an $125m IPO on NASDAQ in late February 2015.
HP acquired Siemens-backed Voltage Security for an undisclosed amount. Voltage has developed data protection technology for businesses that includes encryption and tokenization, a process that limits access to sensitive information by only referencing it rather than providing direct access.
South Korean LG Chem acquired US-based water desalination technology developer NanoH2O for $200m, according to a Korean Stock Exchange filing. The company was previously backed by BASF Capital, the corporate venturing arm of Germany-based chemical producer BASF, and France-based petroleum company Total’s unit Total Energy Ventures. Arcadia Biosciences, another company previously back by BASF with $33m investment, has recently (February 2015) said it will seek to raise $86m through an IPO.
The US-based Access Industries has also joined the exit spree. In early October 2014, Rocket Internet finally went public but failed to take off after an underpriced $1.8bn IPO. Access Industries held an 8.5% stake after investing $400m in July 2013. The online fashion retailer, Zalando, backed by Access Industries and personally by its CEO Len Blavatnik, went public in November as well, raising approximately $664m from the IPO, which valued the company at approximately $6.6bn.
In March 2014, ABB made a profitable exit when it sold its share of the cyber security company Industrial Defender for an undisclosed amount to Lockheed Martin, which has fully acquired the business.
In May 2014, healthcare product provider Covidien acquired US-based wearable medical technology producer Zephyr Technology for an undisclosed amount, as reported by Mobile Health News. This meant exits for corporate venturing units Motorola Solutions Venture Capital and 3M New Ventures. In August it led a financing round which totalled $5m for Smart Energy Instruments. This round is expected to accelerate SEI’s efforts in developing electronic chipsets with high-precision, real-time monitoring capabilities for smart grids, and give 3M a larger presence in the energy sector.
Deals
As the Siemens-backed US cybersecurity company Voltage Security was acquired by Hewlett-Packard for an undisclosed amount, Siemens has invested in cybersecurity firms, pledging $3m on the US-based CounterTack in series B fundraising as well as an undisclosed amount on the Israeli-based CyActive. These investments in cybersecurity are no accident, as “as the threat landscape continues to grow more dangerous,” Ralf Schnell, CEO of SFS VC has said. Notably, Siemens also pledged $10m on the German-American Polarion Software, maker of application lifecycle management (ALM) technology for software and product development. In terms of investments in the healthcare sector, it is also worth mentioning that Siemens, along with the pharmaceutical giant Novartis, helped Seventh Sense raise $16m in a series B round.
In June 2014, Sunverge, a US-based manufacturer of distributed energy management systems, closed a $15m series B round featuring Siemens’ venture capital unit and Total Energy Ventures. In March, the US-based sustainable energy and chemicals producer Lanzatech secured $60m in a series D round led by Japan-based conglomerate Mitsui and supported by industrial conglomerate Siemens and the China International Capital Corporation (CICC). Chargepoint, a US-based operator of a network of electric vehicle (EV) charging stations, secured $22.6m in new funding from existing investors including Siemens and BMW along with new ones.
Along with Drive Capital, GE Ventures helped Aver Informatics – a data management platform for healthcare reimbursement – raise $8.5m in series A funding. It also made its first software investment in the growing Israeli health-tech sector in MedAware, a developer of big data analytics solutions for drug prescriptions. Another strategic health-tech investment was made jointly with Baird Capital – Apertiva, which raised $18m in a series A round. The company has set an ambitious and far-reaching goal – providing analytics and algorithms to all healthcare providers and pharmaceuticals through a cloud-based platform at an affordable price. Noah Lewis, head of GE Ventures, commented to the Wall Street Journal: “We scoured the Earth for something like this, for a company working on this. We didn’t find anyone else.” GE was also among those to back US cloud software company Bracket Computing in an $85m round that included Qualcomm as well.
In the healthcare realm, the GE backed US RainDance Technologies in a $16.5m series E financing round in early March 2014. The company develops innovative solutions for liquid biopsy and standardised testing of complex diseases. US-based digital drug developer Chrono Therapeutics closed a $32m series A round in June featuring medical practice Mayo Clinic and GE Ventures. It intends to use the funding to complete its digital aid for quitting smoking.
Sungevity Inc., a leader in the global solar market, announced $70m in new equity financing (series A) from GE and EON.
In August 2014, Robert Bosch Venture Capital (RBVC) led a $3.75m series A round for Flybits, a Toronto-based startup aiming to advance context-aware mobile experience platform. This is RBVC’s first investment in Canada. Flybits technology has been used in developing smarter cities, connected stadiums, smart corporate campuses, shopping malls, conference venues and even fashion shows. Luis Llovera, managing director of Robert Bosch, said: “The company has demonstrated a unique and innovative approach in building foundational technology to deliver Contextual Mobility Services for both display-driven devices and for the emerging Internet of Things applications.” In July 2014, the UK-based fabless semiconductor company Xmos closed a $26.2m series D round backed by Robert Bosch, alongside Huawei Technologies, ICT and semiconductor producer Xilinx. In April, the developer of autonomous household robot devices RobArt GmbH received 1m euros from RBVC in a €3m series A funding round, also backed by Innovacom and SEB Alliance. In October 2014, the German solar film developer Heliatek raised $22.5m in a series C round that included Bosch, BASF, RWE and High-Tech Gründerfonds.
In early 2014, Pyreos Limited, a Scotland-based maker of ultra‐low power consumption infrared sensors, announced they had secured a further funding round of $4m led by Robert Bosch Venture Capital.
US-based semiconductor component maker SiTime, previously backed by Bosch and other industrial giants, closed a $25m series G round on Tuesday, securing $15m in debt from Capital IP Investment Partners and $10m in equity from undisclosed investors.
In October, BASF led a $3m series A financing round with a $1.5m investment in the US-based SLIPS Technologies, developing customised, highly-repellent slippery surfaces for materials in a broad range of applications. Earlier in August, BASF invested €1m (out of a €3m deal) in the UK-based technology company SmartKem, a research and development leader in high performance organic semiconductor inks, used in printed thin film transistors (TFTs), unbreakable and fully flexible electronics and OLED (Organic Light Emitting Diodes) displays. After having invested $30m in the US-based Renmatix, back in 2012, BASF entered into a non-exclusive joint development agreement with the company regarding its PlantroseTM process for the production of industrial sugars from non-edible woody biomass. Industrial sugars are important bio-based precursors for a variety of chemicals based on renewable feedstocks.
In January 2015, Access Industries and several China-based conglomerates contributed to a $7m series A round raised by the big data-focused marketing technology provider Rubikloud. US-based artificial intelligence (AI) technology developer Sentient Technologies secured $103.5m in November in a series C round co-led by US-based conglomerate Access Industries and Tata Communications, a subsidiary of India-based conglomerate Tata. Founded in 2007, Sentientis deploying its technology on a large scale in an attempt to create the world’s most powerful AI system. Operating in stealth until now, the company has been testing its system in financial trading and medical research.
One of the biggest competitors of the popular app Uber, GetTaxi – an app to locate taxis – secured $150m in series D funding from backers including investment firm Vostok Nafta, which supplied $25m, in August 2014. The Israeli-based firm was previously backed by Access Industries through a series B round for $20m in 2012.
China-based internet giant Alibaba has contributed $215m to a $280m venture capital round raised by US-based mobile messaging service Tango. The remaining $65m were provided by various investors. The German online shopping club Westwing raised €72m ($98.7m) in April 2014 from the Tengelmann retail group. The company was previously backed by Access Industries, among other investors. In early January 2015 it raised another €25m ($29.7m) in a new series C round backed by undisclosed existing investors, as reported by Reuters.
In March, Persimmon Technologies, a US-based vacuum robotics and hybrid-field motor technology company, raised $6m series C funding from new investor ABB Technology Ventures, the corporate venture capital unit of the ABB Group, a Zurich-based power and automation technology group, as well as from previous investors including Intel Capital. In November, ABB made a $12m investment in a series C round in the artificial intelligence firm Vicarious. ATV’s managing director Girish Nadkarni said “This partnership is a perfect fit. ABB is a pioneer in the robotics industry while Vicarious has positioned itself to do the same for AI.”
In addition to the Sentient deal jointly with Access Industries, Tata Capital was also reported to have helped Innoviti, an India-based provider of payment services, raise R100m ($1.64m). Tata Capital invested R40m ($660,000), while the rest came from several high net worth individuals. Tata’s Opportunities Fund added to its portfolio Varroc Engineering Private, one of India’s largest unlisted auto parts manufacturers with a diversified product portfolio, as well as Shriram Properties Private Limited part of the Shriram Group, a residential housing developer in South India. Tata’s Healthcare Fund was also active throughout 2014. In March it invested in Sandor Nephro Services, operating over 30 in-hospital dialysis centres in India, and in Lokmanya Hospitals, a chain of tertiary care hospitals in Maharashtra with focus on trauma and cold orthopaedic surgeries like knee and hip replacement, arthroscopy and spine surgery.
Meanwhile, Ratan Tata, the chairman of Tata Sons, the holding company of the India-based Tata Conglomerate, was reported to have made a personal, undisclosed investment in the India-based online retailer Snap-deal, which has gathered over $400m in funding in previous rounds featuring Intel, eBay, Temasek and Softbank.
US-based digital art platform Depict raised $1.6m in October 2014 from 3M New Ventures and several angel investors. Depict enables its users to discover, share and collect digital art, which can also be brought into their physical spaces.
In April 2014, the US-based biotechnology company Verdezyne agreed the key terms for a $48m funding round led by Malaysia-based conglomerate Sime Darby Berhad, which also included petroleum producer BP and nutrition and mineral technology company DSM. In 2014, DSM added to their venturing portfolio Isobionics, a biotechnology company active in the area of environmentally-friendly isoprenoids-based flavour and fragrance ingredients for the flavour & fragrance, agrochemical and pharmaceutical markets. In early 2015 it announced it would also add in a series B round Interface Biologics, which is an early commercial stage company developing transformative biomedical polymer technology to improve the safety and effectiveness of medical devices.
In late March 2014, the Chinese conglomerate Wanxiang closed a $149m purchase of the bankrupt Fisker Automotive. Wanxiang is also the owner of past Fisker investor and battery supplier A123 Systems.
In September 2014, Total and DuPont jointly contributed to a $22m round for the Next Steppe, developing crops that can be used as biofuel feedstock.
MTPV Power, a US-based developer of semiconductor technology converting heat to electricity, raised $11.2m in a series B-1 round featuring Total Energy Ventures and SABIC that took place in July 2014.
In March 2014, Newlans, a US-based fabless semiconductor company which specializes in reconfigurable broadband analog signal processing solutions, announced it had closed a $15m series B funding round led by Intel Capital with participation from existing investors Paladin Capital and Lockheed Martin Corporation. Later on in May it raised additional $5m from Verizon.
In January 2014, FRX Polymers, a US-based maker of environmentally-friendly flame-retardant plastic, raised $12m series C financing led by Germany-based materials group Evonik Industries, which invested $2.5m through Evonik Venture Capital. Other investors included Capricorn Venture Partners, DB Masdar, SAM Private Equity, BASF Venture Capital, and Israel Cleantech Ventures. Later the same year, in May, it raised a further $8m in a second round of series C funding. In July 2014, Biosynthetic Technologies (BT), a US-based producer of biodegradable lubricants, received an undisclosed amount of funding from specialty chemicals group Evonik and BP ventures. The company has also been heavily backed by Monsanto.
In January 2015, the industrial group Evonik invested an undisclosed amount in Nanocomp, a Finland-based producer of nanophotonics technology for polymer film, alongside Finnvera Venture Capital.
In August 2014 Castrol helped Zubie raise $8m in a series B funding round, led by the Nokia’s Connected Car Fund alongside automotive parts supplier Magna, communications company Comporium and venture capital firm OpenAirEquity Partners.
Meanwhile, the Japanese giant Sumitomo has increased its investments in online businesses. In June 2014, a local-level record was set by Acommerce, a Thailand-based e-commerce service and logistics provider, by closing a $10.7m series A round backed by Sumitomo, among other investors. In early February, 2015 the Japanese mobile games developer announced it had closed a $6.2m round featuring Sumitomo, the B Dash fund and the financial firm Shinsei, as reported by the Bridge.
People
Beth Comstock, the former head of GE Ventures, has become head of GE Lighting, and Sue Siegel head taken over as head of the GE Ventures and Healthymagination units. Prior to joining GE, Siegel was a partner at Mohr Davidow Ventures. A Crown Fellow at the Aspen Institute, Siegel was recognized as one of the “100 Most Influential Women in Silicon Valley.” In May 2014, GE Capital, which provides debt financing as part of its wider corporate lending and leasing activities, hired Robert Plehn to head the its capital markets team. Plehn was formerly the head of the assets backed solutions team at Lloyds Banking Group.
Amit Dev Mehta, former senior vice-president at Tata Capital and head of its London office, left the company in late 2014 and is now working as a corporate advisor.
BASF Venture Capital added two new investment managers, Sven Thate and Maximillian Hill, during 2014. Both previously held other roles at BASF. That worked in Taiwan and Germany for BASF’s Electronic Materials business unit leading different technology and business development teams for the semiconductor and photovoltaic industries, while Hill worked in the area of Performance Measurement within the business unit Asset Management Capital Markets for Deka Investment in Frankfurt.