There has been much optimism in the world since the beginning of 2021, while the corporate venturing arena has seen a rise in deals, exits and funding initiatives at least since the successful development and approval of coronavirus vaccines. This trend continued in April as well and is strengthening, as many countries see vaccine rollouts and a gradual easing of pandemic-related restrictions.
According to GCV Analytics, the number of corporate-backed deals from around the world was 336 in April, nearly 34% higher than the 251 rounds from the same month last year. Investment value stood at nearly $21.22bn in total estimated capital – nearly three times over the $7.31bn from April 2020, which was in the middle of a nearly global lockdown.
According to GCV Analytics, the number of corporate-backed deals from around the world was 336 in April, nearly 34% higher than the 251 rounds from the same month last year. Investment value stood at nearly $21.22bn in total estimated capital – nearly three times over the $7.31bn from April 2020, which was in the middle of a nearly global lockdown.
The US came first in the number of corporate-backed deals, hosting 143 rounds, while Japan was second with 53 and China – third with 32.
The leading corporate investors by number of deals were internet and telecoms conglomerate SoftBank, diversified internet conglomerate Alphabet and internet and gaming company Tencent. In terms of involvement in the largest deals, SoftBank was top of the list along with investment management and financial services group Fidelity and consumer electronics manufacturer Sony.
GCV Analytics reported 38 corporate-backed funding initiatives, including VC funds, new venturing units, incubators, accelerators and other. This figure is higher than the one from April 2020, which registered 21 initiatives. The estimated capital raised in those initiatives amounted to $3.02bn, 9% higher than the $2.76bn raised in the same month last year.
Emerging businesses from the health, IT, financial and consumer sectors led in raising the largest number
of rounds in April 2021. The most active corporate venturers came from the financial, IT, media and
industrial sectors.
Deals
US-headquartered video game developer Epic Games closed a $1bn funding round featuring a $200m investment by Sony, valuing it at $28.7bn. Sony was joined by Fidelity, among many other investors. Epic specialises in multiplayer online games using its Unreal Engine, and its most famous titles are battle royale game Fortnite and first-person shooter series Gears of War.
The company is looking to build a ‘Metaverse’ of games, having acquired multiplayer sports title Rocket League by buying its developer, Psyonix, in mid-2019 and agreeing to buy another studio, Tonic Games, the creator of battle royale platformer Fall Guys.
Netherlands-based customer service software provider Messagebird added $800m to a series C round featuring media group Bonnier, expanding it to $1bn. Bonnier joined Eurazeo, Tiger Global Management, BlackRock, Owl Rock, Glynn Capital, LGT Lightstone, Longbow, Mousse Partners, NewView Capital, Accel, Atomico and Y Combinator in the extension, which was 70% equity financing and 30% debt.
Messagebird offers a range of customer service tools across a variety of channels including email, phone, WhatsApp, text messaging and push notifications. The company revealed it has channelled $600m of the extension into acquiring SparkPost, the US-based creator of an email optimisation software platform it claims oversees some 4.5 trillion emails a year for its customers.
US-based autonomous driving software developer Cruise added $750m from big-box retailer Walmart and unnamed institutional investors to its latest round, boosting it to $2.75bn. The capital was raised at a valuation of about $30bn and followed a $2bn first close in January, featuring software provider Microsoft and carmakers Honda and General Motors (GM) as well as unnamed investors.
Cruise is developing autonomous driving software in addition to robotics and hardware such as cameras and sensors. The company is also working on a ride hailing app intended to serve as the basis for a robotaxi service and is trialling its technology in driverless vehicles in San Francisco. It agreed a deal to operate the service in Dubai and could also be expanding into delivery vehicles.
SoftBank’s Vision Fund 2 led a $676m series D round for US-based artificial intelligence (AI) software developer SambaNova Systems. The round included Intel Capital and GV, corporate venturing subsidiaries for semiconductor and data technology provider Intel and Alphabet respectively, and it reportedly valued the company at $5.1bn.
Singaporean state-owned entities Temasek and GIC filled out the round together with Walden International, WRVI and funds and accounts managed by BlackRock. SambaNova is developing systems to run advanced AI applications that are intended to be more powerful that existing central or graphics processing units, for use across data centres, the cloud and edge computing.
Vision Fund 2 also co-led a $640m series E round for Singapore-headquartered intelligent retail technology provider Trax with investment management firm BlackRock. The round included Sony Innovation Fund by IGV2, a corporate venture capital vehicle for Sony, in addition to pension fund manager Omers, and it valued the company at $2bn according to Globes.
Trax provides computer vision and AI equipped technology that tracks in-store conditions and stock levels to help grocery retailers and consumer packaged goods producers make more effective decisions in real time.
Polestar, the Sweden-based electric vehicle (EV) developer spun off by automotive manufacturer Volvo Cars, received $550m in funding from investors including conglomerate SK Group. Chongqing Chengxing Equity Investment Fund Partnership co-led the round with Zibo Financial Holding and Zibo Hightech Industrial Investment, and it included undisclosed other participants. It represents the brand’s first external funding.
Volvo bought Polestar’s predecessor, a touring car racing team of the same name, in 2015 and announced its intention to begin developing EVs under its brand two years later. It has since released a hybrid electric sports car called Polestar 1 and an all-electric fastback model dubbed Polestar 2.
The offshoot maintains a dedicated production facility in China, where Volvo Cars’ parent company, carmaker Geely, is based, in addition to a sales and distribution network.
Vision Fund 2 was also the leader for a $210m second tranche for US-based security and governance software provider OneTrust that took its series C round to $510m. Asset manager Franklin Templeton also took part in the second close, which followed a $300m tranche featuring TCV and existing investors including Insight Partners and Coatue in December 2020. The final close came at a $5.3bn post-money valuation. OneTrust’s software uses AI and robotic automation technology to enable companies to operationalise security, privacy, data governance, ethics and compliance activities to ensure they meet all their regulatory requirements.
Two entities owned by Tencent have provided $225m for India-based social network operator ShareChat as part of its $502m series E round. The round was led by hedge fund manager Tiger Global Management and also featured venture capital firm Lightspeed Venture Partners as well as Snap, the owner of messaging app Snapchat.
Tencent provided almost half the capital in the form of convertible debt, from Netherlands-registered vehicles Zennis Capital and Hlodyn, which list Tencent executives Jingsi He and Constant Pieter van der Merwe as directors. Should the debt be converted into equity, they would own a 19.7% stake in ShareChat.
Tencent would be unable to invest in the company directly due to strict rules governing the acquisition of stakes in India-based companies by Chinese entities. ShareChat runs an online platform with more than 160 million monthly users who can communicate with each other in 15 languages. It also operates a short-form video app called Moj with 120 million monthly active users.
SoftBank provided $500m in funding for US-based online mortgage platform Better at a reported $6bn valuation. The round boosted the company’s overall funding to $954m and increased its valuation 50% from November 2020 when it completed a $200m series D round that included insurance group Ping An and American Express Ventures, a subsidiary of payment services provider American Express. Better offers a streamlined online mortgage and mortgage refinancing service through financial services partners. The company is preparing to float later this year, according to the Wall Street Journal.
Plaid, a US-based financial data software provider backed by Alphabet, financial services and payment companies American Express, Citi, Mastercard and Visa, raised $425m in series D funding. Growth equity firm Altimeter Capital led the round, investing together with Andreessen Horowitz, Index Ventures, Kleiner Perkins, New Enterprise Associates, Ribbit Capital and Silver Lake. The round reportedly valued the company at $13.4bn.
Founded in 2013, Plaid has created a software tool that helps users connect their bank accounts with products provided by external financial technology providers such as Coinbase, Robinhood and Venmo. The company’s chief executive, Zach Perret, told CNBC the money will be used to develop new services and hire staff, after it increased headcount by 40% in 2020. Visa agreed in January to terminate its $5.3bn acquisition of Plaid. The US Justice Department filed an antitrust lawsuit in November and the companies decided to cancel the deal instead of fighting the suit.
Exits
Record highs were also tracked in exits. GCV Analytics tracked 52 exits involving corporate venturers as acquirers or exiting investors in April. The transactions included 30 acquisitions, 14 initial public offerings (IPOs), five reverse mergers with special purpose acquisition companies (Spacs) and three mergers.
The exit count figure tripled that from April 2020, which was 17. The total estimated exited capital stood at $9.7bn, considerably lower than the record numbers registered in February ($25.5bn) and March ($32bn) this year.
UiPath, the robotic process automation (RPA) software producer that counts Alphabet and Tencent as investors, closed its IPO at almost $1.54bn. The company issued 9.4 million shares priced at $56 each, above the $52 to $54 range for the offering. Investors including Alphabet unit CapitalG sold nearly 14.5 million more shares. The extra shares bumped the number issued by UiPath to 13 million and the move came after UiPath’s shares rose significantly post-IPO.
The company provides RPA technology enabling enterprises to automate repetitive back-office tasks, and it made nearly $608m in revenue in 2020 together with a $92.4m net loss. It had raised approximately $2.05bn prior to the offering.
TuSimple, a US-based driverless truck producer backed by corporate investors, floated in a $1.35bn IPO on the Nasdaq Global Select Market. The company issued approximately 27 million class A shares priced at $40 each while SunDream, a vehicle for Charles Chao, chairman and chief executive of internet company Sina, sold nearly 6.8 million additional shares. The range for the offering had been set at $35 to $39 and the price gave TuSimple a market capitalisation of approximately $8.53bn.
Founded in 2015, TuSimple is developing self-driving vehicles from bases in Arizona, New Mexico and Texas intended for land freight transportation, and expects to commercially launch them in 2024. It made a $178m net loss in 2020.
Grab, a Singapore-headquartered ride hailing service backed by range of corporate investors, agreed a reverse takeover with Spac Altimeter Growth Corp at an initial pro-forma equity value of $39.6bn. The combined business will take the position secured by Altimeter Growth, an affiliate of technology investment firm Altimeter Capital Management, which floated in a $450m IPO in October 2020. The valuation makes this the largest reverse merger agreement.
Funds managed by Altimeter Capital are putting up $750m for a $4bn private investment in public equity (PIPE) financing deal supporting the transaction that includes conglomerate Sinar Mas, clove cigarette producer Djarum and Fidelity. Formerly known as GrabTaxi, Grab’s core business is its on-demand ride service but it has diversified into food and package delivery as well as financial services, through an offshoot that raised more than $300m in January this year.
Women-focused medical technology producer Hologic agreed to acquire Mobidiag, a Finland-headquartered molecular diagnostics technology developer backed by clinical diagnostics product maker Autobio Diagnostics, for €668m ($795m). The deal involves a cash payment of $714m combined with $81m of net debt financing.
Founded in 2000, Mobidiag produces polymerase chain reaction-based tests and equipment for acute care conditions including gastrointestinal and respiratory infections. The company’s offering includes the Amplidiag range, for high-throughput molecular diagnostics, and Novodiag for fast on-demand molecular diagnostics. It generated approximately $42m of revenue in 2020.
Zymergen, the US-based biomanufacturer backed by SoftBank and conglomerate Hanwha, went public in a $500m IPO on the Nasdaq Global Select Market. The offering consisted of just over 16.1 million shares, upsized from an initial allocation of 13.6 million and priced at the top of its $28 to $31 range. Founded in 2013, Zymergen produces materials using biological processes, including films for use in smart electronics devices such as rollable tablets. It made a $262m net loss in 2020 from $13.3m in revenue but will channel the IPO proceeds into product commercialisation.
SmartRent, a US-based intelligent home technology developer backed by e-commerce firm Amazon, agreed a reverse merger Spac Fifth Wall Acquisition Corp I at a $2.2bn valuation. The merged entity will take the spot acquired by the latter, which was formed by property-focused VC firm Fifth Wall, which floated in a $345m IPO on the Nasdaq Capital Market in February 2021.
Property developer Lennar, home leasing service Invitation Homes, Starwood Capital Group, Koch Real Estate Investments, Baron Capital Group, D1 Capital Partners, Long Pond Capital and Conversant Capital are taking part in a $155m PIPE financing supporting the deal.
Founded in 2017, SmartRent provides residential internet-of-things (IoT) automation software and hardware products designed to help real estate maintenance managers and rental firms monitor the IoT tools installed in their properties. Its existing shareholders will hold about 73% of the company post-merger.
Sarcos Robotics, a US-based industrial robotics technology manufacturer backed by software producer Microsoft, construction equipment maker Caterpillar, air carrier Delta and oilfield services provider Schlumberger, agreed to list through a reverse merger. The company joined forces with special purpose acquisition company Rotor Acquisition Corp in a transaction that will value them at a combined $1.3bn. The merged business, Sarcos Technology, will take the spot on the New York Stock Exchange secured by Rotor in a $240m IPO in January 2021.
Caterpillar’s subsidiary Caterpillar Venture Capital, Schlumberger and data analytics provider Palantir backed a $220m private investment in public equity financing for the deal with Millennium Management, Jaws Estates Capital, Michael F Price and funds and accounts managed by BlackRock. Sarcos produces robotic exoskeletons that help users lift heavy objects while preventing injuries.
Compass, the US-based real estate software provider backed by SoftBank and media group Advance Publications, went public in a $450m IPO. The offering consisted of 25 million shares priced at $18.00 each, at the foot of an $18 to $19 range cut from $23 to $26 at the same time the size of the offering was reduced from 36 million shares. The company floated on the New York Stock Exchange and its shares closed at $18.59, giving it a market capitalisation of roughly $7.2bn.
Investors including SoftBank’s Vision Fund and hedge fund manager Discovery Capital Management had expressed interest in buying $140m in the offering but have not revealed whether they did so. Founded in 2012, Compass has built an online platform that provides extensive listings of homes for sales. Its technology helps its brokers provide a more efficient service for both buyers and sellers, and it made a $270m net loss in 2020 from $3.72bn in revenue.
Pharmaceutical firm Novo is set to exit US-based life science research tool developer Unchained Labs in an agreed $435m acquisition by private equity firm Carlyle Group. The company provides a range of life science tools used by biologics and gene therapy researchers to analyse and identify large, complex molecules. It has eight product lines and expects to generate over $75m of revenue in 2021.
Consumer purchase data aggregator Cardlytics agreed to purchase Bridg, a US-based customer data analysis software provider backed by payment services group Visa, for at least $350m in cash. Cardlytics could also make two cash and stock earnout payments sized between $100m and $300m, one and two years after the acquisition, depending on Bridg’s sales run rate in the United States.
Bridg was founded in 2012 as Ecinity and has built a software product designed to help retailers and consumer brands understand customer behaviour through data in addition to assisting them with providing personalised services. Cardlytics’ advertising tool is embedded in financial services firms’ digital platforms and allows users to acquire loyalty rewards. The software then helps the service providers analyse how their customers spend money for more effective marketing campaigns.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.