Media is one of the most widely disrupted industries by new technologies. Newspapers, magazines and books have gone digital. CDs, DVDs or TV channels have made way to subscription and streaming services. Games have become multiplayer “freemium” – free plus additional premuim services – online entertainment and digital marketing has taken over traditional advertising.
Disruption is overpowering, leading to mergers and new players with knock-on impact to corporate venturing vehicles, such as the closure of Time Warner’s unit following its merger with AT&T. The combination of internet-connected electronic gadgets along with consumer content creation have resulted in a significant shift in the sector. An analysis by the World Economic Forum (WEF) at Davos attributes this disruption to four major waves of digitisation – file-sharing, streaming, social and mobile, which have been “driven by the impatience of consumers to access any content from anywhere in the world at any time”. This trend can be expected to intensify with the rollout of 5G higher-speed internet access technologies in 2020, according to consultancy Deloitte’s 2019 Media & Entertainment Industry Outlook.
According to GCV Analytics data, the major subsectors in emerging media are audio and video content, gaming and eSports, and social media and networks. The interest in such enterprises by corporate venturers reveals the perceived opportunities in those areas, given their already palpable disruptive impact.
The WEF analysis claims that “great content is no longer enough”, maintaining that the next innovation wave in the industry is likely to be related to the internet of things and the “living services” concept. To face this new wave of disruption would in practice require integrating customised content into a broader user experience, offering better viewing recommendations and more relevant advertisements, among other things.
The WEF estimates that further digitisation in the media sector is likely to unlock $1.3 trillion in value over the next six years. The analysis identifies overarching digital themes – personalisation, contextualisation, content fragmentation, partnerships and industrialisation.
Personalisation and contextualisation suppose a mix of challenges and opportunities for marketers and content creators delivering personalised content and ads to engage consumers. While this implies opportunities for new technologies such as artificial intelligence (AI), big data or virtual and augmented reality, it also entails concerns and apprehensions about data privacy and transparency. It is difficult to predict to what extent such privacy concerns will lead to changes in the way corporations handle data. For the most part, media consumers are not uncomfortable giving up access to their online footprint in exchange for free services.
Media consumers are not only subject to intense information overload through the avalanche of free content, but also split between more screens on more devices – smart TVs, smartphones, tablets and computers. The WEF analysis notes that “broadcasters will have opportunities to exploit the growing popularity of the ‘second screen’ among TV viewers by creating integrated second-screen services”. Social media platforms and instant messaging applications have begotten communities of content which may become crucial for advertising.
Just as consumer attention is split, content creation is fragmented, which generates an environment favouring partnerships across the industry. The WEF analysis points out: “Technology is enabling enterprises to partner their audiences to fund or co-create innovative content. Companies will need to harness technology effectively, setting it at the heart of the digital organisation, balancing creativity in content creation with industrialising digital processes such as production and distribution.”
These developments create opportunities for emerging media tech businesses, which media corporations may wish to partner. There are many examples for such partnerships. In 2018, media provider Comcast announced it would add Amazon Prime Video to its content – subscribers already have streaming services such as YouTube, Netflix and Pandora.
One notable media development is found in news content creation and disruptive use of AI. According to WEF data, major media publishing outlets like the Washington Post, Associated Press, the BBC, Reuters, Bloomberg, the New York Times and the Wall Street Journal are “dabbling in AI”. In the Far East, the use of AI has already reached new heights. The China-based Xinhua News Agency launched the world’s first AI-powered graphics-based news anchors, both male and female. According to a report by the Reuters Institute for the Study of Journalism, citing a survey of almost 200 editors, CEOs and digital leaders, nearly three-quarters of global media players are already employing some sort of AI technology.
The importance of digital advertising and marketing has been gaining momentum, so much so that US digital advertising spending is expected to overtake spending on traditional advertising by the end of this year, according to a forecast by platform eMarketer, cited by TechCrunch, which predicts that digital ad expenditures will rise to an estimated $129.3bn, while traditional advertising is expected to decline to $109.5bn. This implies that much of the increased revenue will go to two leading companies that account for much of this already concentrated market – Google and Facebook. Such developments are likely to increase corporate venturers’ interest in adtech businesses.
One of the areas with great potential for advertising and entertainment is virtual and augmented reality (VR and AR) content. A report on VR and AR devices by global analyst company CCS Insight points out that, despite the wide range of applications of VR tech, gaming is the primary impetus for sales of VR devices.
An underlying trend is the growth of mobile gaming. According to the Global Video Games Industry report by consulting firm Research and Market, global video gaming industry was estimated at $96bn in 2018. The report notes that low-cost internet access and penetration of mobile devices has enabled streaming games to grow in popularity. The report also attributes the fast growth of streaming games, which it expects “to continue for the next few years”, to the growth in the number of online video viewers globally. It also notes the role of cloud computing, which speeds up the rendering of content.
A burgeoning trend within gaming is eSports. Multiplayer video-game competitions have invigorated the bottom lines of game publishers and marketers. According to Deloitte’s 2019 Media & Entertainment Industry Outlook report, the global eSports market is expected to generate $1.5bn in annual revenues by next year, mostly from advertising and sponsorship. This advertising targets an estimated global audience of 600 million, even though the phenomenon first originated in east Asia. Large-scale media companies are already taking interest – for example sports network ESPN aired the Overwatch games eSports tournament.
Regulation has affected media and content creation in Europe. The controversial new EU Copyright Directive and its articles 11 and 13 have resulted in international protests. Article 11 establishes that search engines and news aggregate platforms will have to pay to use links from news websites. Article 13 will hold larger technology companies liable for materials posted without a copyright permission. Article 13 does not apply to cloud storage services and exemptions, including parodies, such as memes. Some have criticised the measure as unfair and contrary to free exchange of information, while others have praised it for ensuring that content creators will be fairly recompensed. Implementation of this directive will create opportunities for tech companies to ensure compliance.
For the period April 2018 to March 2019, GCV reported 396 venturing rounds involving corporate investors from the media sector. A considerable number (180) took place in the US, 42 were hosted in India, 41 in China and 26 in Japan.
Many of those commitments (125) went to emerging enterprises in the same sector, mostly digital marketing and advertising, gaming, audio and video content and publishing, and with the remainder going to companies developing other technologies in synergies with media sector incumbents – 70 deals in the services sector (education and edtech, real estate tech, communication tech services and human resources), 63 in the IT sector (primarily artificial intelligence, big data analytics, enterprise software and cybersecurity), 41 in financial services (mostly payment tech and alternative lending) and 40 in the consumer sector (food and beverage, hygiene and beauty, fashion and apparel, and e-commerce).
The network diagram, illustrating co-investments of media corporates, shows the variety of investment interests among the sector’s incumbents. The commitments range from virtual reality technology (Dreamscape Immersive, 8i) and games and sports (Drone Racing League, Niantic Lab) through news content providers (Scroll), TV and video content (NewTV, Philo) to marketing (BitStar) and e-commerce (Flipkart).
On a calendar year-on-year basis, total capital raised in corporate-backed rounds went up from $15.25bn in 2017 to $16.06bn in 2018, a 5% increase. The deal count also grew slightly, by 7% from 347 deals in 2017 to 373 by the end of 2018.
The 10 largest investments by corporate venturers from the media sector were not necessarily concentrated in the same industry.
The corporates from the media sector involved in the largest number of deals were internet media company Baidu and media groups Bertelsmann and Comcast. Those committing capital in the largest rounds were headed by media and e-commerce group Naspers, Baidu and eSports team owner Axiomatic.
The most active corporate venture investors in emerging media businesses were internet company Tencent, e-commerce firm Alibaba, diversified internet conglomerate Alphabet, investment banking firm Goldman Sachs and telecoms firm SoftBank.
Emerging media businesses in the portfolios of corporate venturers came from the TV and video content (NewTV, Philo), sports (The Athletic, Whistle Sports Network), games and gaming (Niantic Lab), news content (The Skimm) and social media networks (Foursquare).
Overall, corporate investments in emerging media-focused enterprises dropped from 208 rounds in 2017 to 193 by the end of 2018, a 7% decrease. The estimated total value of these rounds, however, went up by nearly 7% from $10.74bn in 2017 to $11.47bn last year.
Deals
Corporates from the media sector invested in large multimillion-dollar rounds, raised mostly by enterprises from the media and consumer sectors. Three of the top 10 deals were above $1bn.
Epic Games, a US-based game developer, raised about $1.25bn from investors including Axiomatic, Smash Ventures, investment firm KKR, multi-family office Iconiq Capital, private equity firm Vulcan Capital and venture capital firms Kleiner Perkins and Lightspeed Venture Partners. The transaction reportedly valued the company at almost $15bn. Epic was originally formed in 1991 but its first big hit came in the late 1990s when it released shooting game Unreal. Epic’s largest recent success has been Fortnite Battle Royale, a massive multiplayer battle game for consoles, mobile and computer. The game is free but in-app purchases drove its revenue to more than $1bn in just 10 months.
US-based short-form video production company NewTV closed an initial $1bn round from a consortium including a range of corporate investors. Media and entertainment groups 21st Century Fox, Walt Disney, Entertainment One, ITV, Lions-gate, Metro Goldwyn Mayer, NBCUniversal, Sony Pictures Entertainment, Viacom and Warner Media were all among the investors. Alibaba, mass media group Liberty Global and investment banking firms Goldman Sachs and JPMorgan Chase also participated. NewTV is developing an online platform that will feature drama, comedy, documentaries and reality shows cut into 10-minute episodes, made with budgets comparable to high-profile cable channels or streaming services like HBO or Netflix.
Naspers invested $660m in India-based online food delivery platform Swiggy, leading its $1bn series H round. Local services platform Meituan Dianping and Tencent also took part, along with DST Global, Coatue Management, Hillhouse Capital and Wellington Management. The round reportedly valued Swiggy at $3.3bn. Swiggy runs an app-based service for ordering food from local restaurants in 58 Indian cities.
US-based AR technology developer Magic Leap closed a series D round at $963m. The round was initially backed by Alibaba, Alphabet and media company Grupo Globo. All contributed to the round’s $502m first tranche, which also featured Singaporean government-owned investment firm Temasek. Magic Leap added $461m to the round – $400m from Saudi Arabia’s Public Investment Fund and another $61m from a host of new investors, including media group Axel Springer’s corporate venturing unit, Axel Springer Digital Ventures. The round reportedly valued the company at about $6bn. Founded in 2011, Magic Leap has developed an AR headset and operating system and is in talks with prospective content producers. Magic Leap’s goggles superimpose animated graphics over reality.
Suning Sports, a sports broadcasting offshoot of China-based retail and commerce conglomerate Suning, closed a $600m series A round co-led by Alibaba and Goldman Sachs. Other participants were AI technology provider Sense-Time, property developer Evergrande Group, subsidiaries of banks CCB International, Minsheng Bank and ABC International, Sports Industrial Fund of Zhejiang Province and Jiangsu Province, and private equity firm Yunfeng Capital. The round reportedly valued Suning Sports at $2.6bn. It owns the broadcasting rights to several large sporting competitions, particularly in football – China’s domestic league, England’s Premier League, Spain’s La Liga, Germany’s Bundesliga and the Asian Champions League.
Naspers provided a total of $500m for US-based e-commerce app developer Letgo. Naspers made the investment through its online marketplace subsidiary OLX. Letgo has created an app for buying and selling second-hand goods, using an AI system that sets a category, title and price for each item based on a photo. It has been downloaded more than 100 million times and has hosted some 400 million listings. Letgo plans to use the funding to support development and monetisation of the platform, including real estate listings.
Mobile commerce platform Movile and Naspers participated in a $500m round for Brazil-based online food delivery platform iFood. The corporates were joined by private equity firm Innova Capital. Movile invested as iFood’s majority owner, having held a 60% stake following a round in 2015, while Naspers is one of Movile’s largest investors. Founded in 2011, iFood runs an online platform for ordering food from more than 50,000 restaurants.
Baidu led a RMB3bn ($446m) series C round for China-based smart electric vehicle manufacturer WM Motor. Chinese government-backed fund of funds Taihang Industrial Fund and venture capital firm Linear Venture also participated. WM did not disclose a valuation, but earlier reports suggested one of more than RMB20bn. Founded in 2015 and also known as Weltmeister, WM released its first vehicle, a plug-in electric sports utility vehicle, last year. The funding from this round will be allocated to research and development.
India-based educational app developer Byju’s raised $400m in a round led by Naspers Ventures, the corporate venturing arm of Naspers. Canadian pension fund CPPIB and private equity firm General Atlantic both participated, with the latter also buying an undisclosed number of shares in a secondary transaction. Byju’s operates an app-based learning platform aimed at students aged 10 to 18, using online video courses. It has attracted 30 million registered students and 2 million paid subscribers. The money will enable the company to support expansion efforts in India, the US, the UK and Australia, and develop a separate app aimed at younger pupils.
Baidu led a RMB2.1bn round for China-based elevator advertising service XinChao in connection with a partnership agreement between the companies. XinChao has agreed to join Baidu’s advertising network, Baidu Juping, which is present in 31 Chinese provinces and regions, and it intends to leverage the corporate’s AI technology to make its advertising terminals more intelligent. Founded in 2007, XinChao operates an advertising service that promotes customers through screens installed in more than 700,000 elevators across China.
Other deals in emerging media-focused businesses were backed by corporate investors from other sectors.
China-based digital media company Bytedance raised $3bn from investors including SoftBank at a $75bn valuation. Growth equity firm General Atlantic and investment firms KKR and Primavera Capital Group also took part. Bytedance’s best known property is news aggregation app Toutiao, which had 120 million daily users at the start of 2018, but it also runs short-form video platform TikTok, which has more than 500 million monthly users, and photo modification app Faceu. The company has recently launched additional products, such as budget e-commerce platform Zhidian and social commerce app Xincao, and will put the funding towards expanding both domestically and internationally.
China-based online audio-streaming platform Ximalaya has completed a RMB4bn funding round featuring Tencent. The round included Goldman Sachs and growth equity firm General Atlantic and valued Ximalaya at about $3.5bn post-money. Founded in 2012, Ximalaya operates an online repository for audio content such as podcasts and radio shows covering music and information. It reportedly had more than 40 million registered users in 2018. The company has struck partnerships with carmakers BMW and Ford, which offer the service as part of their in-vehicle entertainment systems, as well as with smart device producers Haier, Skyworth and Midea, which employ it in their home devices.
US-based professional media content provider Getty Images signed an agreement with conglomerate Koch Industries’ corporate venturing arm Koch Equity Development, securing a $500m investment. The company was majority-owned by private equity firm Carlyle Group until the Getty family agreed to repurchase control in a deal that reportedly valued Getty Images at below $3bn, including debt. Founded in 1995, Getty Images operates an online platform for media, business and creatives to buy photography, video and music supplied by more than 250,000 contributors who provide content from more than 160,000 news, sports and entertainment events annually.
Social media platform Reddit secured $300m in a series D round led by a $150m commitment from Tencent, reportedly valuing it at $3bn post-money. The round featured undisclosed existing backers. Reddit has previously received backing from other corporates. Condé Nast, part of media group Advance Publications, acquired Reddit in 2006 but spun it off in 2014 through a $50m series B round. Founded in 2005, Reddit operates an online social platform with 330 million monthly users. While generating revenue of $85m in 2018, Reddit is currently said to be looking to capitalise on advertising opportunities across the platform.
US-based AR game studio Niantic secured $245m in a series C round featuring Axiomatic and Samsung Ventures, a subsidiary of consumer electronics producer Samsung. Institutional Venture Partners led the round, which included two more venture capital firms, Battery Ventures and Causeway Media Partners. It valued Niantic at almost $4bn post-money. Spun off in 2015 from internet technology provider Google, where it had been incubated since 2010, Niantic develops AR games.
China-based video advertising software provider Beijing Moviebook Technology raised RMB1.36bn in a series D round co-led by SenseTime and SBCVC, a venture capital firm formed by SoftBank. The round included media group Oriental Pearl, Qianhai Wutong M&A Fund and investment firms Lang Sheng Investment and PAC Partners. Moviebook produces video recognition technology that enables clients to advertise products in online videos through overlays designed to blend visually with the content on screen. The company also runs a data management platform that helps customers analyse the effectiveness of their online ad campaigns.
Exits
Corporate venturers from the media sector completed 43 exits between April 2018 and March 2019 – 30 acquisitions, 11 initial public offerings, a merger and a stake sale.
Retail group Walmart closed its $16bn acquisition of a 77% stake in India-based online marketplace Flipkart, enabling Naspers, SoftBank and e-commerce company eBay to exit. Although some investors, including SoftBank and eBay, exited entirely, others such as Tencent, software provider Microsoft and investment firm Tiger Global Management opted to retain stakes. The deal valued Flipkart at about $20.8bn, and the stake purchase was made alongside the provision of $2bn of equity funding. Flipkart runs an e-commerce platform that lists more than 80 million products in about 80 categories, including electronics, appliances, clothing and home goods. It also owns fashion e-commerce subsidiaries Myntra and Jabong, and payment app PhonePe.
Local services platform Meituan-Dianping agreed to acquire China-based bike-rental service Mobike for $2.7bn. Bertelsmann Asia Investments, the local investment arm of Bertelsmann, was one of the early investors in Mobike that exited. The transaction was reportedly being 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. Mobike had Previously unsuccessfully attempted a merger with its rival Ofo.
OLX Group, a classified listings subsidiary of Naspers, paid $1.16bn to increase its stake in Russia-based online classifieds and property listings platform Avito to 99.6%. Naspers had initially provided $50m for Avito in 2013 and subsequently invested $1.2bn two years later to raise its stake from 17.4% to 67.9%. The latest investment involved it increasing its share from 70.4% and values the company at $3.85bn. Avito runs an online classified listings platform with 10.3 million daily visitors covering property, consumer goods, vehicles, services and jobs. OLX runs 17 brands covering five continents, with a total of 350 million monthly users.
China-based social media platform YY acquired its portfolio company Bigo, a Singapore-based social video livestreaming platform, for over $1.45bn. Exiting corporate backers included Bertelsmann Asia Investments and Ping An Overseas Holdings, the asset management arm of insurance firm Ping An. The deal consisted of about $343m in cash, with the rest in shares. Founded in 2015, Bigo runs Bigo Live, while also offering a short-form video-based social media service known as Like and a range of other apps such as gaming-focused streaming platform CubeTV. Bigo uses AI to eliminate sexually suggestive content from its platform.
Nio, a China-based smart electric car developer backed by domestic corporates Baidu, Tencent, electronics producer Lenovo and e-commerce firm JD.com, raised about $1bn when it floated on the New York Stock Exchange. The IPO consisted of 160 million American depositary shares at $6.26 each, almost at the bottom of the $6.25 to $8.25 range the company had set. It valued Nio at $6.4bn. Founded in 2014 as NextEV before officially rebranding in 2017, Nio is working on plug-in electric cars fitted with features including AI and autonomous driving systems. Nio’s first model was released in 2016, and it launched its first commercial model, a seven-seater sports utility vehicle, in 2017.
Farfetch, a UK-based fashion e-commerce platform backed by media group Advance Publications and JD.com, went public in an IPO that raised about $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 priced at $20, 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 and high-end fashion items from almost 1,000 producers to a 2.3 million-strong customer base worldwide.
Online classified listings operator 58.com sold part of its stake in China-based automotive marketplace operator Chehaoduo for more than $713m. The corporate did not identify the purchasing investor, but released the news on the same day that Chehaoduo secured $1.5bn from the SoftBank Vision Fund. The transaction is subject to unspecified closing conditions. 58.com will retain a minority shareholding in Chehaoduo once the deal closes. Chehaoduo was spun out of classified marketplace Ganji in 2015. It runs second-hand vehicle auction and trading platform Guazi and after-sales services platform Maodou.
US-based digital signature technology provider DocuSign floated in a $629m IPO in which Alphabet and Comcast both sold shares. The shares were priced at $29, above the $24 to $26 range the company set earlier, giving DocuSign a market capitalisation of more than $4.4bn. The company issued just over 16 million shares on the Nasdaq Global Select Market for almost $466m of proceeds, while its 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. It more than halved its net loss to $52.3m in the year running up to January 2018, while increasing revenue 36% to more than $518m.
Treasure Data, a US-based real-time data management platform backed by marketing firm Dentsu, was acquired by Arm, the semiconductor subsidiary of SoftBank. The deal is thought to form part of Arm’s push into the internet-of-things sector. Founded in 2011, Treasure Data has created an enterprise customer data platform that uses machine learning and AI to extract real-time insights into users across channels such as apps and phone calls, to provide personalised offerings for customers. The company targets the internet-of-things, automotive, entertainment and retail industries.
Ascletis, a China-based hepatitis C drug developer backed by pharmaceutical company Tasly Pharmaceuticals, raised $400m from an IPO in Hong Kong. Outdoor advertising group Focus Media had previously backed the company via its Jiangnanchun Foundation. The company floated by selling 224 million shares equating to 20% of its overall share capital at HK$14 ($1.78) each, in the middle of the IPO’s HK$12 to HK$16 range. Founded in 2011, Ascletis is developing treatments for hepatitis C. It received approval from Chinese regulators for anti-viral treatment Ganovo. The company has also concluded phase 2 and 3 trials for Ravidasvir, which is taken orally with Ganovo as a joint regimen.
Global Corporate Venturing also reported exits from emerging media-related enterprises that involved corporate investors from various sectors.
Mass media company Viacom agreed to pay $340m for US-based online television streaming service Pluto TV, enabling a host of corporates to exit, including broadcaster Sky, media group ProSiebenSat.1, talent agency UTA, recording studios Universal Music Group, Samsung, mass media group Scripps Networks Interactive and TV content producer Windsor Media. Pluto operates an online platform with more than 12 million monthly users that allows them to stream content from more than 100 customised channels programmed by the company or its partners. Viacom said it was buying the company to enhance its presence in new distribution platforms and advanced advertising activities.
Gimlet Media, a US-based podcast publisher backed by marketing group WPP and diversified conglomerate Graham Holdings, was acquired by music-streaming platform Spotify for $337m. Founded in 2014 as American Podcasting Corporation, Gimlet produces and hosts narrative and scripted podcasts. It also has a branded division that creates sponsored content and has moved into television production with adaptations of two of its podcasts – psychological thriller Homecoming, and StartUp, which focuses on co-founder Alex Blumberg’s journey launching the company.
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 market capitalisation. The company had initially set a $19 to $21 range for the IPO, before upgrading to $21 to $23. Eventbrite has created an online ticketing platform it supplies to promoters which was responsible for a total of some 203 million tickets sold over the course of 2017. The company made a $15.6m net loss in the first half of 2018 from $142 in revenue.
Babytree, a China-based social parenting media and e-commerce platform backed by corporates Alibaba, contract manufacturer Fosun and education services provider TAL Education, raised $217m in its Hong Kong IPO, pricing shares at HK$6.80, the bottom of a range with HK$8.80 at the other end. Babytree had hoped to secure up to $1bn at a valuation of $3bn to $5bn, but its valuation dipped to $1.5bn. Babytree has created an online community where parents can share their experiences, seek advice and find information such as a vaccination checklists and dietary guides for mothers. It also operates an e-commerce platform and a video sharing app called WeTime.
SurveyMonkey, a US-based online survey management platform backed by Alphabet and cloud-based software platform Salesforce, closed its IPO at $207m – underwriters took up a greenshoe option. The company priced 15 million shares at $12 to raise an initial $180m on the Nasdaq Global Select Market. The underwriters later bought another 1.75 million shares. They closed at $16.03. SurveyMonkey’s platform enables users to design and distribute online surveys and to analyse the results. In addition to the IPO, Salesforce invested $40m through a private placement.
Huya, a gaming-themed subsidiary of China-based livestreaming platform operator YY, raised $180m from an IPO on the New York Stock Exchange. The offering consisted of 15 million American depositary shares at $12 each, the top of its $10 to $12 range. YY launched the Huya platform in 2014 before it was spun out at the start of 2017. Huya operates what it claims to be China’s most popular live game-streaming platform, with almost 87 million monthly users. The proceeds of the IPO will support the company’s content and eSports partner ecosystem, research and development, marketing and expansion of services.
Entertainment company Nordisk Film acquired its portfolio company, Sweden-based games maker Avalanche Studios, for €117m ($138m). Nordisk already owned a minority stake. Founded in 2003, Avalanche Studios has developed games with a focus on “open world” action.
Inke, a China-based live game-streaming platform backed by online game publisher Beijing Kunlun Tech and Tencent, raised HK$1.05bn in its IPO on the Hong Kong Stock Exchange. The company priced shares at HK$3.85, the bottom of the range it had set, while increasing the number of shares in the offering from 257 million to 300 million. Founded in 2015, Inke runs a mobile-focused livestreaming platform that concentrates on gaming, allowing viewers and video creators to communicate with each other. It had about 195 million registered users as of the end of 2017. The company made a net loss of about RMB239m in 2017 from RMB3.94bn in revenue.
Qutoutiao, a China-based news aggregation platform backed by Tencent and smartphone producer Xiaomi, went public in an $84m IPO on the Nasdaq Global Market. The company issued 12 million American depositary shares, representing 3 million ordinary shares, at $7 each, the foot of the IPO’s $7 to $9 range. An unnamed affiliate of JD.com bought about 2 million shares in the offering. Founded in 2016, Qutoutiao has created an app that aggregates articles and short videos from media companies and freelancers, personalising the feeds. It claims the platform has 62 million monthly users.
Funds
Between April 2018 and March 2019, corporate venturers investing in the media sector secured over $2.1bn in capital via 20 funding initiatives, which included 16 VC funds, two accelerators and two other initiatives.
On a calendar year-to-year basis, the number of funding initiatives in the media sector went down to 23 in 2018 versus 35 in 2017 and 44 in 2016. Total estimated capital also decreased to $2.29bn by the end of last year, down 65% from the $6.62bn in 2017.
One of the oldest corporate venturing units from the media sector was shut down. US-listed media group WarnerMedia closed WarnerMedia Investments. Formed in 1998 as Time Warner Investments, WarnerMedia Investments was rebranded following the conversion of its parent company from Time Warner to WarnerMedia in 2018, after it was acquired by telecoms firm AT&T. The vehicle had built a substantial new media and media technology portfolio that included in-game communication software producer Discord, valued at more than $2bn and fantasy sports platform and fellow unicorn FanDuel, as well as NextVR and Conviva, which have each raised more than $100m.
WarnerMedia Investments’ exits include online streaming management company Maker, which Disney acquired for $500m in 2014, advertising technology provider Adify, which was purchased by Cox Enterprises in a $300m deal in 2008, and content monetisation platform PlaySpan, bought by Visa in a $190m deal in 2011. Despite its history and record of success, the unit ceased to invest. Its portfolio is reportedly being managed by Priya Dogra, executive vice-president of strategy and corporate development for WarnerMedia, and could be sold to another investor. Other reports suggested it would be absorbed into WarnerMedia Innovation Lab, a new incubator and partnership hub headed by Jesse Redniss, formerly executive vice-president of data strategy and product innovation for Warner subsidiary Turner.
China-based venture capital firm Fortune Venture Capital secured RMB4.63bn for its latest renminbi-denominated fund from investors including property developer Century Golden Resources Group. Financial services firm Industrial and Commercial Bank, Shenzhen Yunneng Fund, Kpeng Capital and the city of Shenzhen’s guidance fund also invested. Founded in 2000, Fortune VC focuses on media and telecoms technologies, consumer goods and services, agtech and cleantech.
China-based venture capital firm AlphaX Partners closed its first fund at RMB2bn with financial backing from online lending platform CreditEase, Focus Media and cybersecurity software producer Qihoo 360. Venture capital and startup services provider Zero2IPO Group and government guidance fund CICC were also among the fund’s backers. The fund is both dollar and renminbi-denominated, and investors include unnamed US and European institutions as well as Chinese entrepreneurs. Founded in 2016, AlphaX targets Chinese high-growth companies developing technologies in sports and culture, consumer and enterprise software and AI.
SoftBank has established a $300m corporate venturing fund in China in partnership with a subsidiary of private equity group TPG. SoftBank will participate through SoftBank Ventures Korea, a Korea-based internationally-focused fund it set up in 2000, while TPG is represented by its TPG Growth division. China Ventures Fund I will back early-stage companies focusing on areas such as digital media and online content, AI and deep tech. Other investors include internet company Naver, mobile network operator LG Uplus, game producer Nexon, insurance provider KB and financial services firms KDB and NongHyup.
Venture firm ATM Capital raised $200m for the first close of a fund anchored by Alibaba’s Electronic World Trade Platform and online listings platform 58.com. The corporates were joined by private investors including Xiaochuan Wang, chief executive of search engine provider Sogou. The firm has not disclosed a final target for the fund, which will focus on early and growth-stage investments in media, logistics, retail and financial technology developers operating in Southeast Asia. The firm’s founding partners are Tony Qu, an associate director at Alibaba unit Alibaba Capital Partners for five years up to 2012 who went on to CDH Investments before founding Bat Capital, and Jeeves Jiang, former CEO of smartphone producer Coolpad Indonesia.
US-based venture capital firm Underscore VC closed its latest fund at about $117m, securing healthcare provider Boston Children’s Hospital as a backer. Other investors include Greenspring Associates and various family offices. The capital was raised after the existing investors in Underscore’s earlier fund approached the firm about a follow-on vehicle. Apart from providing funding, Underscore has created a network of entrepreneurs, executives and experts through which it pairs startups with mentors. Underscore invests in sectors such as augmented and virtual reality, AI and machine learning, marketing technology, cloud infrastructure, blockchain and the internet of things.
Sapphire Ventures, the US-based venture capital firm spun out of software producer SAP, launched a $115m fund backed by its corporate parent. It will invest in sports, media and entertainment businesses. City Football Group, the holding company that owns football teams including Manchester City and New York City FC, was the fund’s anchor investor, while baseball league Major League Baseball, American football franchise New York Jets and ice hockey team San Jose Sharks also invested. Other backers include apparel manufacturer Adidas, entertainment producer Anschutz Entertainment Group, mass media conglomerate Sinclair Broadcast Group and financial services firm Bank of Montreal. The ownership of basketball team Indiana Pacers and funds affiliated with the owners of American football team San Francisco 49ers also invested. Sapphire Sport will participate in series A and B rounds, making initial commitments of $3m to $7m. Areas of interest include next-generation media, sports betting and data analytics, digital fitness, eSports and gaming.
Finland-based venture capital fund NordicNinja VC attracted carmaker Honda and electronics companies Panasonic and Omron to its €100m inaugural vehicle. Public financial institution and export credit agency Japan Bank for International Cooperation also backed the vehicle, which is incorporated as JB Nordic Fund I and advised by venture capital firm Nordic Ventures. It will focus on deep tech companies in the virtual reality, artificial intelligence, autonomous mobility and internet-of-things sectors in the Nordic and Baltic states. NordicNinja cited ecosystems around KTH Royal Institute of Technology and universities in Odense, Denmark, and Espoo and Helsinki, Finland, as areas with promising technologies. Startups will receive between $2m and $5m and access expertise to help with expansion into Asia.
Singapore-based venture capital firm Golden Gate Ventures closed its third fund at $100m, having secured diversified conglomerate Hanwha, Naver and property developer Mitsui Fudosan as backers. State-owned investment firm Temasek and the government-backed Korea Venture Investment Corporation, were also among the fund’s LPs. Founded in 2011, Golden Gate concentrates on series A-stage investments in Southeast Asia-based companies developing mobile and online-focused consumer offerings. The oversubscribed third fund reached its $65m first close, following a similarly oversubscribed second fund closed at $60m in 2016 with backing from Naver, Temasek, Hanwha subsidiary Hanwha Life Insurance and media company Hubert Burda.
Japan-based venture capital firm Genesia Ventures reached a $45m first close of its second fund, having secured commitments from several corporates. Investors include Mizuho Bank and Mizuho Capital, subsidiaries of financial services firm Mizuho Financial Group, machine leasing service JA Mitsui Leasing, payment services firm Marui Group, internet company Mixi and real estate developer Tokyu Fudosan’s TFHD Open Innovation Program. Genesia will initially focus on investments in seed and pre-series A-stage companies, seeking new economy and digital media businesses, and technologies such as AI, robotics and drones, as well as digital innovations in telecoms, publishing and real estate. Targets will be based in Indonesia, Vietnam and Singapore but Genesia plans to expand to other countries in Southeast Asia.
Thailand-based conglomerate True Corporation’s True Incube incubator and Line Games, a gaming subsidiary of messaging platform Line, were among the founders of new private equity fund Line Games-True-Kona Limited Partnership, which has $22.7m to deply, according to a filing. State-backed Korea Venture Investment Corporation and True-Kona, a joint venture between True Incube and investment firm Kona Venture Partners, also backed the vehicle. The fund will make investments in early-stage companies in gaming and technology, where Line and True Incube hope to forge commercial partnerships.
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Michael Yang left Comcast Ventures, the corporate venturing arm of Comcast, where he had been a managing director for nine years. Omers Ventures, the venture capital arm of Canada-based pension fund Ontario Municipal Employees Retirement System (Omers), hired him as a US-based managing partner to run an office it has opened in Silicon Valley. Yang led investments in healthcare, internet of things and virtual reality technology during his time at Comcast Ventures.
Eze Vidra, formerly an investment partner at corporate venturing unit GV, launched venture capital fund Remagine Ventures, as one of its two founding managing partners. Israel-based Reimagine will focus on media technology developers, and seek $40m, including media and telecoms companies as limited partners. Before setting up the fund, Vidra was chief information officer of Antidote.me, developer of a digital platform that links patients with clinical trials. Vidra joined Antidote in August 2016 having left GV, a subsidiary of Alphabet, eight months earlier. He was a general partner at the European office of GV, then known as Google Ventures, when it was set up in 2014.
Bruce Haymes, a New York City-based managing director at Nielsen Ventures, the corporate venturing unit run by media information provider Nielsen, left to pursue an “opportunity elsewhere”. Nielsen hired Haymes as senior vice-president of global business development and M&A in 2008. He subsequently led Nielsen’s early-stage investment and accelerator programs linking the corporate’s long-term strategies with externally developed businesses, and founded and launched Nielsen Innovate in Israel. Haymes’s role was taken on, at least initially, by John Burbank, who oversees Nielsen’s global corporate development and strategic innovation as well as Nielsen Ventures.
Scott Levine left his managing director position at WarnerMedia Investments, media group WarnerMedia’s now-defunct corporate venturing unit, to join Samsung Catalyst Fund. WarnerMedia Investments, formerly Time Warner Investments, hired Levine in 2011. He was responsible for investments in digital media startups and oversaw funding for portfolio companies that were later acquired.
After WarnerMedia’s venturing subsidiary was closed, Allison Goldberg, a senior vice-president who was also the unit’s managing director, left the company. Goldberg had been promoted to lead what was then known as Time Warner Investments after the retirement of Rachel Lam in 2017. Time Warner hired Goldberg in 2001 after she spent a year as a venture capital associate at Groupe Arnault, having jumped from media investment banking at Morgan Stanley after graduating in economics and finance from Wharton School.
Vincent Pieterson, formerly a managing director at RTL Ventures, Luxembourg-based media company RTL Group’s corporate venturing arm, co-founded asset management firm Averest Capital. As a managing partner at Averest Capital, Pieterson will be responsible for deal execution, strategy, innovation and sustainability. The €30m fund will invest in Netherlands-based agtech, biotech, construction and retail businesses in the middle market. Each transaction will be between €5m and €10m. Before setting up Averest, Pieterson took an M&A adviser position at RTL Ventures in 2012, and was promoted to a managing director role in 2016 to oversee investments in e-commerce companies and healthcare and educational technology developers.
Jacob Smilovitz, director of mergers and acquisitions and investments at media company New York Times, was promoted to executive director of corporate development and financial planning and analysis. Smilovitz has held a range of strategy and development posts at New York Times since he joined in 2014, and was promoted to director of M&A and investments in 2017 after overseeing its $30m acquisition of product review platform the Wirecutter in 2016. In his new role, Smilovitz will manage the company’s corporate venturing investments and merger and acquisition deals. Before joining New York Times, Smilovitz spent three years at digital advertising agency Rosetta, initially as an account executive before shifting to various consultant positions.
Eva Rez, formerly an investor at seed-stage venture capital fund Episode 1 Ventures, joined UK-based media company and broadcaster Sky as a senior investment manager. Rez said her position at Sky’s Startup Investments & Partnerships would be her first corporate venturing appointment. Rez spent six months at Episode 1, scouting investments in UK-based deep tech developers. She also established and diversified relationships with incubators, accelerators and other VCs. Before that, she chaired the education committee at the Hungarian Venture Capital Association, helping to organise events for Hungary-based startups and VC ecosystem stakeholders.
Jen Kodner left Comcast Ventures where she had been head of talent since 2018, to join venture capital firm Draper Fisher Jurvetson as a talent partner. Kodner will now be responsible for working with DFJ’s portfolio companies to identify and recruit new executives. Before that, she was a partner on the executive talent team at venture capital firm Andreessen Horowitz for nearly two years, and earlier spent over four years at cloud content management company Box, one of DFJ’s portfolio companies, where she was part of the recruitment team.
Kirthiga Reddy has taken a venture partner position at the SoftBank Vision Fund. Reddy joined SoftBank Investment Advisers, which manages the fund, following an eight-year stint at social media company Facebook, having led its global marketing partnerships after spending six years as managing director for India and Southeast Asia. In her new role, Reddy will focus on investments in AI, robotics, health, bioengineering and internet-of-things technology. She told TechCrunch she was “actively recruiting” staff, particularly women investors. Before Facebook, Reddy worked at software provider Phoenix Technologies and smartphone maker Motorola.
Marek Rubasinski left media company Sky, where he was director of its startup investments and partnerships team, to join UK-based gaming platform developer Polystream as chief commercial officer. Polystream is developing a cloud-based platform that will enable users to play any game directly on a website or platform without needing to create an account or download or install anything. As part of his new role, Rubasinski will help Polystream put together a series A round later this year while expanding its headcount as it looks to secure business and form long-term partnerships. Sky hired Rubasinski in 2008 to be its director of business development, a role that included responsibility for over-the-top video agreements with partners including gaming systems Xbox and Playstation.
Jessica Verrilli left social media company Twitter to return to GV, an early-stage investment subsidiary of Alphabet. In October 2015, Verrilli returned to social media company Twitter less than six months after leaving to join GV. She left Twitter again in December 2017, having initially joined the company in 2009, rising through the ranks to become director of corporate development and strategy in 2014. Verrilli will be GV’s only female investing partner and will concentrate on consumer technology with an interest in emerging technologies such as cryptocurrencies. She is also a co-founder of women’s investing group #Angels, along with other female Twitter execs in 2015.
University backing for media companies
By the end of 2018, 10 rounds had been raised by university spinouts, a figure similar to the nine registered the previous year. The level of estimated total capital deployed in 2018 was $64m, more than double the $25m in 2017.
Bitmovin, an Austria-based video technology spinout from University of Klagenfurt, raised $30m in a series B round led by Highland Europe. Atomico, Constantia New Business, Dawn Capital and Y Combinator also supported the round. Founded in 2013, Bitmovin has developed technology to encode videos in the cloud, known as adaptive streaming. The technology matches quality to bandwidth, guaranteeing a constant stream and avoiding buffering. Stefan Lederer, Christopher Müller und Christian Timmerer, co-founders of Bitmovin, previously helped develop Mpeg-Dash, a video streaming standard now used by large platforms such as Netflix and YouTube. Their patent forms the basis for Bitmovin.
Vesper, a US-based microphone technology spinout from University of Michigan, completed a $23m series B round led by American Family Ventures, the corporate venturing arm of insurance provider American Family Insurance. The round also featured e-commerce and cloud computing firm Amazon’s Alexa Fund, as well as microphone manufacturer Shure, computer interface developer Synaptics, Baidu and Bose Ventures, the strategic investment subsidiary of audio product supplier Bose. Vesper makes compact microelectromechanical microphones for use in devices such as voice-activated smart assistants and bluetooth headsets. The company’s flagship product can act as a voice trigger in battery-powered machines while using low power.
Cerebri AI, a US-based customer engagement software provider co-founded by a University of Texas at Austin (UTA) alumnus, closed a $5m series A round backed by University of Texas’s Horizon Fund. M12, the corporate venturing arm of Microsoft, led the round with contributions from venture capital firm WorldQuant Ventures and VC fund Leawood Venture Capital. Founded in 2015, Cerebri AI has created cloud-hosted software product Cerebri Values. It uses AI and machine learning to gauge customer engagement metrics such as marketing and customer service. The platform then suggests responses to help clients drive sales, revenue and other performance goals.