Optimism around the world’s recovery from the pandemic continued in the corporate venturing arena through May, with deals, exits and funding all up on the same month in 2020.
Funding initiatives dropped to 20 from April’s 54 but the close of SoftBank’s Vision Fund 2 on $30bn ensured a dramatic rise in capital devoted to corporate venture investing.
According to GCV Analytics, in May the number of corporate-backed deals from around the world was 371, nearly 30% higher than the 286 rounds from the same month last year. Investment value stood at nearly $19.92bn in total estimated capital – nearly twice as much as the $10bn of May 2020.
The US came first in the number of corporate-backed deals, hosting 171 rounds, while Japan was second with 51 and China – third with 28.
The leading corporate investors by number of deals were telecommunications and internet group SoftBank, financial services group Fidelity and diversified internet conglomerate Alphabet. In terms of involvement in the largest deals, SoftBank was on the top of the list along with Fidelity and investment bank Goldman Sachs.
GCV Analytics reported 20 corporate-backed funding initiatives, including VC funds, new venturing units, incubators, accelerators and other. This figure was lower than the previous months of this year, though slightly higher than May 2020, which had registered 17 initiatives. The estimated capital rose significantly due to SoftBank’s Vision Fund 2 reaching $30bn.
Deals
Emerging businesses from the health, IT, financial and media sectors led in raising the largest number of rounds in May 2021. The most active corporate venturers came from the financial, IT, media and industrial sectors.
US-headquartered e-commerce holding company Perch completed a $775m series A round led by SoftBank’s Vision Fund 2. The round also featured venture capital firm Spark Capital and alternative investment manager Victory Park Capital. It is the largest series A closed by a US-based company, according to Perch. Founded in November 2019, the company is acquiring direct-to-consumer e-commerce brands, particularly third-party merchants on online marketplace Amazon, in a bid to build a diversified online retail offering. It has bought more than 70 brands so far and targets category leaders with the potential to scale their businesses.
Canada-based digital investment platform developer Wealthsimple received C$750m ($610m) in funding from investors including Allianz X, a subsidiary of insurance group Allianz, at a valuation of almost $4.1bn. Meritech Capital and Greylock Partners co-led the round, which also featured DST Global, Sagard, Iconiq Capital, Dragoneer, TCV, iNovia Capital, Base 10 Partners, Redpoint Ventures, Steadfast Capital, Alkeon Capital Management, TSV, Plus Capital and multiple individuals. Wealthsimple offers an online service that allows users to invest in low-cost index funds while using technology to automate practices like rebalancing or tax loss harvesting. It has also added features to the platform such as high interest savings and commission-free trading.
Satellite operator Eutelsat Communications agreed to invest $550m in UK-headquartered satellite internet technology developer One Web, in return for a stake sized at about 24%. OneWeb is building a 648-satellite constellation intended to provide broadband coverage to remote areas from low orbit. The initial system is expected to be operational by the end of 2021 and it said Eutelsat’s capital will take it most of the way towards its funding goal. The company had raised a total of $3.4bn from investors including SoftBank’s Vision Fund, conglomerate Bharti Enterprises and satellite services provider Hughes Network Systems before filing for bankruptcy in March 2020. Bharti and the UK government to buy OneWeb’s assets for $1bn in July the same year. SoftBank paid $350m for a 30% stake in the resurrected company in January 2021 while Hughes Network Systems invested $50m.
Noom, the US-headquartered creator of an online platform that guides healthy behaviour, secured approximately $540m in a series F round featuring pharmaceutical firm Novo and electronics manufacturer Samsung. Private equity firm Silver Lake led the round, which included Oak HC/FT, Temasek, Sequoia Capital and RRE Ventures, while Samsung participated through corporate venture capital (CVC) unit Samsung Ventures. It reportedly valued the company at $3.7bn.
Founded in 2008, Noom has built a mobile platform which combines data analytics with human coaching to help users take steps to manage their weight, reduce stress and prevent diabetes. The funding has been earmarked for the company’s international expansion plans and share repurchases.
US-based website analytics platform developer ContentSquare closed a $500m series E round led by Vision Fund 2 at a $2.8bn valuation. Bpifrance, Canaan, Eurazeo, Highland Europe, KKR and funds and accounts managed by BlackRock filled out the equity investors, while Sapiance Capital supplied debt financing.
Founded in France in 2012, ContentSquare has built software designed to help enterprises analyse their customers’ digital behaviours in a bid to increase brand loyalty. Its client base includes some 700 users across 25 countries. The company has offices in New York and San Francisco, the UK, Germany, Israel and Japan. The cash will be used to improve its technology, consolidate its presence in Europe and the US, enter new markets across Asia and explore mergers and acquisitions.
US-based electric aviation technology developer Beta Technologies picked up $368m in a funding round backed by e-commerce and cloud computing company Amazon. Fidelity Management and Research led the round, which also featured Redbird Capital and undisclosed new and existing backers. Amazon contributed through its Climate Pledge Fund and the oversubscribed round reportedly valued Beta at $1.4bn.
Beta Technologies is working on electric vertical aircraft that can carry 1,500 pounds of cargo or up to six people, covering a distance of 250 nautical miles (463 kilometres) on a single charge. The funding has been allocated to continued development of Beta’s electric propulsion systems and controls, and the construction of manufacturing facilities.
Back Market, a France-based refurbished electronic devices marketplace, secured $335m in a series D round featuring Aglaé Ventures, a VC firm sponsored by diversified holding firm Groupe Arnault. Goldman Sachs Growth Equity, a division of investment bank Goldman Sachs, also took part in the round, which was led by growth equity firm General Atlantic. The round also attracted Generation Investment Management, Eurazeo and Daphni, and valued the company at $3.2bn. Back Market runs an online marketplace for refurbished electronic devices and home appliances. It screens each seller and requires proof of their refurbishment process, monitoring their performance in real time to ensure quality is maintained.
China-based grocery delivery app operator Dingdong Maicai closed a $330m series D-plus round led by SoftBank’s Vision Fund. The company’s overall funding now stands at more than $1bn. It most recently secured $700m in a series D round co-led by investment group DST Global and investment management firm Coatue.
Founded in 2017, Dingdong Maicai has built a grocery e-commerce platform it claims delivers fresh produce and seafood ingredients door-to-door in under 30 minutes. It has served more than 5 million households across 27 markets in its home country.
Vinted, the Lithuanian-headquartered operator of a second-hand fashion marketplace, picked up €250m ($303m) in a series F round featuring Burda Principal Investments, a subsidiary of media group Hubert Burda. The round was led by EQT Growth, a fund operated by investment firm EQT, at a $4.2bn valuation, and it included Insight Partners, Lightspeed Venture Partners and Sprints Capital.
Founded in 2008, Vinted has built an online platform where users can buy and sell second-hand clothing and home goods. It has more than 45 million users located across 13 countries including the US, UK, France and Germany, and the cash will fund platform and technology development.
US-based vertical farming technology developer Bowery Farming raised $300m in series C funding from investors including GV, a corporate venturing subsidiary of Alphabet. Fidelity Management & Research led the round, which included Amplo, General Catalyst, GGV Capital, Groupe Artémis, Gaingels, Temasek and private investors José Andrés, Lewis Hamilton, Chris Paul, Natalie Portman and Justin Timberlake.
Bowery is developing a sustainable indoor farming scheme designed for cities. It has built a system dubbed BoweryOS that integrates artificial intelligence (AI), machine learning and computer vision-equipped software, hardware and sensors, reducing the water and land usage involved for growing greens.
Exits
Record highs were also tracked in exits. There were 58 exits involving corporate venturers as either acquirers or exiting investors in May. The transactions included 36 acquisitions, 13 other transactions (reverse mergers with Spacs), 8 initial public offerings (IPOs) and one merger.
The exit count figure rose 65% versus the May 2020 figure (35). The total estimated exited capital stood at $20.93bn, considerably higher than the same month from last year ($3.28bn).
JD Logistics, the logistics offshoot of China-headquartered e-commerce group JD.com, floated on the Hong Kong Stock Exchange in a HK$24.6bn ($3.2bn) IPO. The offering comprised approximately 609 million shares priced at HK$40.36 each, towards the lower end of the IPO’s HK$39.36 to HK$43.36 range.
Formed by JD.com as its delivery services arm, JD Logistics combines AI technology with a China-wide network of warehouses to deliver e-commerce products to customers within 24 hours. The IPO proceeds will go to strengthening its logistics infrastructure, part of a drive that has involved it opening 200 warehouses this year.
Ginkgo Bioworks, a US-based microbe engineering services provider that counts genomics technology producer Illumina as an investor, agreed to a reverse merger with Spac Soaring Eagle Acquisition Corp.
The deal valued the combined business at $17.5bn and included a $775m private investment in public equity (PIPE) financing co-led by Baillie Gifford, Putnam Investments and Morgan Stanley Investment Management’s Counterpoint Global vehicle. The PIPE consortium featured accounts advised by Ark Investment Management as well as ArrowMark Partners, Bain Capital Public Equity, Berkshire Partners, Franklin Advisers, Cascade Investment, Casdin Capital, General Atlantic, Senator Investment Group, Viking Global Investors and funds and accounts advised by T Rowe Price.
Soaring Eagle raised $1.73bn through its own IPO in February The merged company will take its listing on the Nasdaq Capital Market. Founded in 2009, Ginkgo has created cellular programming technology used to grow organisms for industrial applications such as nutritional products, consumer goods and fragrances.
Financial management software producer Bill.com agreed to purchase payment management platform developer Divvy in a $2.5bn transaction enabling digital payment processor PayPal and electronics wholesaler Hanaco to exit. The deal consists of $625m of cash and the rest in Bill.com shares. It came four months after Divvy secured $165m in series D funding from investors including PayPal subsidiary PayPal Ventures and Hanaco at a $1.6bn valuation.
Divvy’s software platform allows businesses to efficiently track spending on expenses and corporate cards in real time while setting flexible limits. The deal will allow Bill.com to offer business customers accounts payable, accounts receivable and corporate card spend management options from a single place.
Better, the US-based digital mortgage services provider backed by corporates SoftBank and financial services and insurances companies American Express, Ping An, Citi and Ally Financial, agreed a reverse merger at a $7.7bn post-deal valuation. The company will join forces with SPAC Aurora Acquisition Corp, taking the position on the Nasdaq Capital Market it acquired in a $220m IPO in March.
The deal will be supported by $1.5bn in PIPE financing from SoftBank’s SB Management subsidiary, Activant Capital and fellow investment firm Novator Capital, Aurora Acquisition Corp’s sponsor. Founded in 2016, Better offers a range of services including commission-less mortgages which are informed by the company’s Tinman data technology platform. It also provides realty services and title and homeowners insurance.
Oatly, a Sweden-based oat milk producer backed by talent and entertainment agency Roc Nation, floated on the Nasdaq Global Select Market in a $1.43bn IPO. The company issued almost 84.4 million shares priced at $17 each, at the top of the IPO’s $15 to $17 range. The company most recently raised $200m in a July 2020 round led by investment management firm Blackstone that included Roc Nation and Rabo Corporate Investments, a corporate venturing vehicle for agriculture-focused banking group Rabobank.
Founded in 1994 to advance research at Lund University, Oatly provides oat milk and other oat-derived food products traditionally made from cow’s milk, including ice cream, speciality coffees, yoghurt, cream, spread and custard.
Roivant Sciences, a US-based biopharmaceutical company backed by SoftBank and pharmaceuticals Sumitomo Dainippon Pharma and Dexxon, agreed a reverse merger at a combined $7.3bn valuation. It will merge with Montes Archimedes Acquisition Corp, a Spac sponsored by healthcare investment firm Patient Square Capital, which floated on the Nasdaq Capital Market in a $400m IPO in October.
Sumitomo Dainippon, SoftBank subsidiary SB Management and data analytics service provider Palantir Technologies all contributed to a $200m private investment in public equity (PIPE) financing supporting the transaction. Founded in 2014, Roivant has built a technology platform it uses to launch companies it refers to as ‘vants’ across a range of medical and healthcare areas. The proceeds from the deal are expected to fund its activities through 2024.
Benson Hill, a US-based food innovation technology developer backed by Alphabet, agricultural goods processor Louis Dreyfus Company and supermarket chain Emart, agreed to a reverse takeover. The company merged with Star Peak Corp II, a SPAC that listed on the New York Stock Exchange in a $350m flotation in January, at a valuation of approximately $1.35bn.
Van Eck Associates Corporation, Hedosophia, Lazard Asset Management, Post Holdings and funds and accounts managed by BlackRock provided $225m in private placement financing to support the deal along with existing Benson Hill backers and affiliates of Star Peak. Benson Hill’s technology platform combines artificial intelligence and big data technology with a range of breeding techniques, partnering corporates to develop new products. The transaction comes after approximately $244m in funding.
Kakao Entertainment, an subsidiary of internet group Kakao, agreed to buy US-based short-form fiction platform developers Radish and Tapas Media for a combined $950m, allowing several corporate investors to exit. It will purchase Tapas for about $510m, while Radish will be acquired in a $440m deal.
The deals followed the January 2021 merger of two Kakao subsidiaries: online content marketplace Kakao Page and record label and talent agency Kakao M. Founded in 2012, Tapas operates an online platform for ‘bite-sized’ webcomics and novels. Kakao Page increased its stake in the company to 40.4% through an investment of undisclosed size in November.
Learning platform developer Kahoot agreed to acquire US-headquartered digital learning software provider Clever for up to $500m in a deal that will enable Alphabet to exit. The transaction will be made up of an initial $435m combined with up to $65m in performance-based add-ons available, consisting of 82% cash and 18% Kahoot shares. Founded in 2012, Clever has built a secure portal used by almost 90,000 US schools that enables students to sign in to a range of learning apps using one digital ID. The deal is intended to boost Norway-headquartered Kahoot’s presence in the US, and Clever will integrate the company’s learning apps into its offering.
ESS, a US-based energy storage technology producer backed by SoftBank and chemical companies PTT Global, Evergy and BASF, agreed a reverse takeover with Spac Acon S2 Acquisition Corp. Acon S2 floated on in a $250m IPO on the Nasdaq Capital Market in September 2020, and the merged business will take its listing, the deal valuing ESS at $1.1bn. Fidelity led a $250m PIPE financing supporting the deal that included SB Energy, part of SoftBank, as well as chemicals producer BASF and Breakthrough Energy Ventures. ESS provides iron flow batteries for use in storing energy from commercial and utility-scale renewable energy systems.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.