The number of corporate-backed deals in February was 131, noticeably down from the 174 funding rounds in the same month last year. Investment value, however, increased significantly – up from $5bn in February 2017.
The deal count in February declined from the previous month (191 rounds). Total capital invested in corporate-backed rounds in February also went down from $12.84bn in January, a 30% drop.
As usual, the number of corporate-backed deals was greatest in the US, which hosted 64 rounds, India was second with 14 rounds, China third with seven and the UK fourth with six.
The leading corporate investors by number of deals were semiconductor manufacturer Intel, media group Bertelsmann and internet company Tencent. In terms of involvement in the largest deals, Tencent topped the ranking, along with insurer China Life and e-commerce company Alibaba.
GCV Analytics recorded 18 corporate-backed funding initiatives in January, including VC funds, new venturing units, incubators, accelerators and others. This figure implies a decrease from January, when there were 25 such initiatives. The estimated raised capital in February’s initiatives was about $2.5bn, down from an estimated $2.7bn in January.
Deals
Emerging businesses from the IT, financial, services, transport and media sectors raised the largest number of rounds in the second month of 2018. The most active corporate venturers came from the financial services, IT and media sectors.
JD Logistics, the logistics spinoff of China-based e-commerce firm JD.com, received funding from investors including Tencent and China Life for a round expected to close at about $2.5bn. JD Logistics was formed by its parent company in April 2017 out of a logistics operation it had been running for a decade. It has seven “fulfilment” centres and more than 400 warehouses, which it claims represents the largest fulfilment infrastructure of any China-based e-commerce firm.
Alibaba paid approximately $857m for a 15% stake in China-based furniture retailer Beijing Easyhome Furnishing Chain Store Group as part of a RMB13bn ($2.04bn) funding round. The round also featured insurance firm Taikang and private equity firms Yunfeng Capital and Harvest Capital. Founded in 1999, EasyHome operates a chain of 223 stores across 29 Chinese provinces and municipalities that sell furniture, home improvement and building materials. It also provides home design and renovation services.
Moderna Therapeutics, a US-based RNA therapeutics developer backed by pharmaceutical firm AstraZeneca, raised $500m from investors including Alexandria Venture Investments, a branch of life sciences real estate trust Alexandria Real Estate Equities. The round valued Moderna at $7.5bn, according to the Financial Times. Moderna Therapeutics is working on treatments based on messenger RNA, molecules that transmit genetic information. It is currently developing 19 drug candidates taking in treatments for infectious, rare or cardiovascular diseases along with immuno-oncology therapies.
Alibaba led a $300m round for India-based online grocery BigBasket that included private equity firm Abraaj Group and venture capital firm Bessemer Venture Partners. Alibaba committed $146m in the round, which reportedly valued BigBasket at $950m. Founded in 2011, BigBasket runs an e-commerce platform that sells fresh produce, packaged food and beverages, spices and a range of household goods. It has 6 million registered users spanning 26 Indian cities.
E-commerce firm Blibli and industrial conglomerate Astra International reportedly agreed to invest up to $290m in a $1.5bn funding round being raised by Indonesia-based on-demand ride platform Go-Jek. Astra could provide between $150m and $170m, while Blibli would supply $100m to $120m for the round, which would value Go-Jek at $4bn. Founded in 2010, Go-Jek has some 900,000 drivers, and has branched out to adjacent services such as removals and delivery of restaurant food, groceries and prescription medication.
US-based biotech startup Celularity secured $250m of funding from investors including pharmaceutical companies Celgene, United Therapeutics and Sorrento Therapeutics, genomic data provider Human Longevity and conglomerate Genting Group, which invested with traditional venture firms. In addition to investing, the three corporates have supplied synergistic assets to set up the company. Celularity is developing cell and tissue regenerative therapies derived from the placenta, to address conditions such as autoimmune disease, diabetes, haematological and solid tumours, and the effects of ageing.
Enerkem, a Canada-based developer of a process that converts waste to biofuel, secured C$280m ($224m) from investors including waste management services provide Waste Management of Canada and industrial conglomerate Sinobioway. Financial services firm National Bank of Canada also took part in the round. Enerkem produces biofuels and chemicals such as methanol and ethanol from solid waste using a proprietary system. It operates from a commercial facility in Alberta.
Ant Financial, the financial services affiliate of Alibaba, agreed to invest $200m in India-based restaurant listings and reviews platform Zomato at a $1.1bn valuation. Info Edge, the online classified listings company that was Zomato’s majority investor as recently as 2015, is selling $50m of shares to Ant Financial as part of the round and will own a 30.9% stake once the deal closes. Zomato operates an online listings platform for restaurants that includes menus and reviews from its users. It covers a total of more than a million restaurants spanning some 10,000 cities across 24 countries.
Kakao Games raised $130m in funding from investors including Tencent, which participated through two unnamed subsidiaries and was joined by mobile game publisher Netmarble, game development studios Actozsoft and Bluehole, as well as mergers and acquisitions fund Premier Growth. Nikkei Asian Review put the size of Tencent’s commitment at $46.4m but reported that only one unit of Tencent took part in the deal. Kakao Games was spun out of Kakao last year, having begun life as Daum Games, a subsidiary of Daum Communications, the internet portal that merged with Kakao in 2014.
Tencent and Times Internet, the online services subsidiary of media group Bennett, Coleman & Co, co-invested $115m in India-based music-streaming platform Gaana, whose platform was launched by Times Internet in 2010 offering both a free version supported by advertising and a premium subscription service. In addition to sorting songs by categories such as genre and artist, Gaana also allows users to select music by language.
Exits
In February, GCV Analytics tracked 15 exits involving corporate venturers as either acquirers or exiting investors. The transactions – most of which took place in the US – included 11 acquisitions, two initial public offerings (IPOs), one merger and one shutdown. The number of exits went down slightly compared with January, when there were 17 exits. Estimated exited capital, however, totalled $3.49bn, a significant increase (89%) over January’s estimated at $1.84bn.
Pharmaceutical firm Roche agreed to acquire cancer research technology provider and portfolio company Flatiron Health, paying $1.9bn for the remainder of the company’s shares. Roche already owned 12.6% stake in Flatiron, meaning the acquisition valued the company at approximately $2.15bn. Founded in 2012, Flatiron has developed electronic health record software configured for oncology research, as well as technology that can manage and develop cancer research data.
Social media company Momo agreed to acquire China-based social engagement platform Tantan for about $760m, allowing Bertelsmann and social network operator YY to exit. The transaction will consist of $601m in cash and 5.3 million new shares in YY equating to $162m based on its Nasdaq price. The deal would give Tantan’s shareholders a 2.7% stake in Momo. Tantan runs a social meeting app that operates through a swipe-left-or-right mechanism that can be used to make platonic or romantic connections.
Mobile news platform Toutiao reportedly acquired China-based photo augmentation app developer Faceu for $300m, giving an exit to image modification platform Meitu. Faceu has created an app that uses augmented reality to add filters such as text, emojis or overlaid facial modifications to users’ selfies in real time, rather than editing them in afterwards. The technology can also be used for video clips and chats. Faceu had 250 million registered users as of October last year, most of whom are girls under 18.
E-commerce holding group Rocket Internet sold about 5.7 million shares in Delivery Hero, a Germany-based food ordering platform that went public in July last year, for approximately €197m ($242m) . The sale valued the shares at roughly €34.50 each, a substantial jump from the IPO price of €25.50. Delivery Hero operates an online service where users can order food for delivery from a network of local restaurants. It increased the number of orders on its platform by 48% to almost 292 million last year, and its revenue by 60% year on year.
Huami, a China-based wearable device producer that counts electronics manufacturer Xiaomi as an investor, raised $110m in an IPO in the US. The offering consisted of 10 million American depositary shares issued on the New York Stock Exchange at $11 each, in the middle of the IPO’s $10 to $12 range. Founded in 2013, Huami makes smart, wearable biometric devices that track a user’s physical activity, monitoring heart rate, steps, length of sleep, weight or body fat composition. Its sole partner is Xiaomi, for which it creates products such as watches or smart bands.
Pharmaceutical firm Allergan agreed to buy Australia-based dermatology product developer Elastagen for an initial $95m, allowing cosmetics producer AmorePacific’s corporate venturing unit, AmorePacific Ventures, to exit. The size of the deal, which is subject to regulatory approval, could be increased by contingent commercial payments, the details of which were not disclosed. Founded in 2005, Elastagen is developing tissue repair products based on human tropoelastin, a building block of elastin that gives skin, arteries and lung tissue its elasticity.
Cardlytics, a consumer purchase data platform backed by marketing and loyalty analytics provider Aimia and financial technology provider Fidelity Information Services, secured $70.2m when it went public. The company issued 5.4 million shares on the Nasdaq Global Market at $13 each, the bottom of the IPO’s $13 to $15 range. Cardlytics has created a purchase intelligence platform that analyses consumer purchase data from about 2,000 financial institutions.
VCG Hong Kong, a subsidiary of image licensing service Visual China Group, paid $17m for one of its portfolio companies, photography-focused social community 500px. Founded in 2009, 500px has built an online community of 13 million photographers who share and license their images. VCG has distributed content on behalf of 500px since 2015, and the companies jointly launched a Chinese platform called 500px.me the same year.
Data storage technology provider Western Digital exited US-based file-sharing service provider Hightail in an acquisition of undisclosed size by enterprise software producer OpenText. Founded in 2004 as YouSendIt, Hightail operates a cloud-based service that enables users to share files too large for email. The company has also launched a platform aimed at creative professionals to facilitate collaborations and feedback.
E-commerce firm Amazon agreed to acquire US-based smart security technology provider and portfolio company Ring, reportedly paying more than $1bn. Mobile semiconductor technology producer Qualcomm, property developer JF Shea and insurance firm American Family will exit. Multiple sources told Axios the acquisition was Amazon’s second-largest yet, which suggests it is above the $1.2bn it paid for online shoe seller Zappos but below the $13.7bn purchase of grocery chain Whole Foods. Founded in 2012 as Doorbot, Ring’s core product is a smart doorbell with a camera and an attendant app, but it has extended into other security products such as motion-sensitive outdoor lights and security cameras. u
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
