Developments in this sector are expected to facilitate the digitisation of everything. For that and other reasons, the sector is unsurprisingly one of the most highly competitive industries. Its companies see themselves forced to continually make significant outlays of capital and innovate so they can stay competitive and relevant. The telecoms business is a capital-intensive one.
With its high levels of competition and high capital requirements, telecom is possibly the most technologically disrupted sector. Core services for telecoms carriers – such as voice or texting (SMS) – have been long replaced by over-the-top (OTT) providers of instant messaging and social media like WhatsApp, WeChat and Facebook Messenger that operate via internet connection. This disruption has a palpable impact on telecoms’ revenue streams.
The trend is likely to deepen with the rollout of 5G and the range of connected technologies that may fuel. The sector’s incumbents are likely to look for synergies and partnerships with other service providers that benefit from mobile connectivity.
These conditions explains why telecom carriers’ corporate venturing units have been sought third parties as limited partners (LPs) to back their fund and deals. Examples abound – from SoftBank with its near-$100bn first Vision Fund to Swisscom, Telstra and Deutsche Telekom. Over the past few years, the sector has developed structures and strategies to be able to incorporate such third-party LPs.
With the impact of the covid-19 pandemic and its economic downturn, these practices are likely to be adopted by corporate venturers from other sectors. While demand for capital by emerging enterprises is virtually unceasing, the supply of venture capital funding requires that a broader range of investors see potential for exceptional financial returns.
However, established companies generally feel optimistic about business opportunities, thanks the potential of 5G technologies which lies in 5G’s higher speed. The last major network upgrade, 4G, was rolled out in 2009 and mobile devices reached a peak speed of almost 10 Mbps. This pales in comparison with what 5G is set to deliver – speeds between 10 and 20 Gbps. This would drive network latency from 30ms to about 1ms, making it apt for a wide range of services and devices that require ultra-low latency.
Consulting firm Deloitte surveyed 415 US-based executives responsible for connectivity at organisations during the first quarter of this year. The surveyed executives were from companies planning to adopt 5G and (or) Wifi 6 technology in the next three years. A majority of the surveyed (79%) thought advanced wireless would transform their industry within the next three years. Three-quarters of them believe 5G would be “critical” in the upcoming years, with 87% believing it could even create a competitive advantage. According to the survey, organisations expected to invest an average of nearly $116m in wireless technologies in the next three years.
As 5G takes over developed markets, telecom carriers are expected to successfully roll out and scale 3G and 4G connectivity in developing economies, where the subscription base is already mature. According to The Economist, Sub-Saharan Africa already has an average of 104 mobile service subscriptions per 100 people, comparable with Latin America (107) and even North America (109).
According to another report by Deloitte, “2020 Telecommunications Industry Outlook”, this is set to be the year of 5G. The report states that the telecoms sector and other adjacent industries are still in search of the “killer apps”, emphasising that yet unknown technologies and services are likely to emerge: “In reality, 5G is very much in the ‘build’ phase right now. However, as people come to truly understand its capabilities and limitations, we can expect to see the next generation of solutions based on 5G. The transition to 5G is expected to generate a windfall for network, infrastructure and equipment vendors.” The report cites a forecast from market research firm Gartner which expects global network infrastructure revenues for the technologies to reach $4.2bn by the end of 2020.
From a consumer standpoint, 5G is expected to deliver massive broadband capacities enabling high-speed communication for a host of applications and services from IoT and robotics through AI-powered vehicles and smart homes to live TV. Previous editions of the Deloitte report have cited US surveys, which state 37% of respondents have unlimited data plans, increased from 25% in 2017. As providers strive to offer lower prices of data plans paired with other services, the average revenue per user tends to decrease.
This decline has compelled telecom providers to seek new opportunities. These naturally come from partnerships in the content space, as more than half of US households, (55%, according to Deloitte’s Digital Media Trends survey in 2019) subscribe to paid video streaming services. The figure is likely to have increased even more during the covid-induced lockdown this year. Telecom companies may also find other opportunities related to the industrial applications of 5G in manufacturing, health services such as telemedicine, transport and smart vehicles, retails and e-commerce, in education as well as in rise of edge computing. According to some forecasts, 45% of IoT-spawned data will be stored and processed near or at the edge of networks.
Deloitte’s report also identifies some of the fields which, if powered by 5G, may open new growth opportunities, such as sports betting. The report notes: “In many ways, 5G technology and sports betting are made for each other. 5G is designed to support low-latency, high-volume communications – precisely the kind of connections that real-time sports bettors are likely to desire. And, 5G is already being deployed in sports stadiums, sports bars and other venues where such betting might take place.”
As the telecoms sector is a highly regulated one, it is important to bear in mind political and legal developments. According to the report, the primary concerns are heightened regulatory scrutiny and the burden related to data privacy and security, as well as potential antitrust backlash against technology companies. It even states: “General Data Protection Regulation was the first significant regulation that challenged US technology companies to re-examine how they conduct business and store consumers’ data. However, since then, there have been a flurry of actions by global regulators against US tech companies. Global regulators cite the EU’s example for their own laws and investigations against big tech.”
While political and regulatory conditions for telecoms vary greatly, there have been examples of how deeply they could influence the directions of the industry. In the US, tax reduction domestic businesses and rescinding net neutrality, have had an undoubtedly positive for telecoms’ top and bottom lines. In contrast, the EU’s obligatory removal of roaming charges across member states has exerted more pressure on already squeezed margins of telecom carriers. Finally, allegations of security threats and espionage have led to the banning of devices and network equipment from China-based electronics manufacturer Huawei in the US and other countries.
Sector specialist: Chris Bartlett
Chris Bartlett is senior vice-president of corporate development at US-based telecoms firm Verizon and head of its corporate venturing unit, Verizon Ventures.
Verizon focuses on improving its 5G and related technology following the idea of “5G network built right”, which encompasses areas including mixed reality, the internet of things (IoT), advanced robotics, 3D printing, wearable tech and other emerging technologies.
Verizon Ventures has therefore been targeting developers of 5G-related technologies such as connected devices and hardware, media and entertainment, commerce and advertising, infrastructure and networking, as well as data and analytics.
Bartlett oversees joint ventures, strategic investment activity, acquisitions and divestitures. The unit has invested in more than 70 companies to date across industries and technologies since it was launched in 2000.
Above: Chris Bartlett
At the Global Corporate Venturing & Innovation Summit in January, Bartlett highlighted the unit’s new focus on 5G. Its impact would be larger than previously believed, he said, adding that Verizon is already building a network to help devices and networks to connect.
Bartlett predicted 5G would start gaining traction in 2021 and the following year would be even more important for the technology. Verizon Ventures had already been investing in companies with foundation tech for 5G, and it is a strategic topic for many CEOs and chief innovation officers across the telecoms industry.
Verizon Ventures’ investment activities could be a proxy, enabling more efficient connections, initially in the industrial sector, but increasingly more on the enterprise and supply chain sides, according to Bartlett, who added: “5G would enable industrial IoT, real-time analytics and faster decision-making.”
Sector specialists: Guenia Gawendo and Irene Gómez
Guenia Gawendo and Irene Gómez head Telefónica’s two innovation groups.
Gawendo is the director of Telefónica Innovation Ventures (TIV), a corporate venturing vehicle for Spain-based telecommunications firm Telefónica. Her mission is to identify new business opportunities and foster strategic partnerships aligned with the firm’s global strategy by scouting and investing in technological startups directly or through a network of leading venture capital funds in key markets in which TIV participates as a limited partner. TIV has 10 active portfolio companies invested directly and more than 80 startups invested through nine VC funds in key markets for Telefónica.
Above: Guenia Gawendo (left) and Irene Gómez (right)
Gómez is the director of Telefónica’s Connected Open Innovation, an open innovation network formed in January 2020 by the firm. She previously concentrated on big data and artificial intelligence for nearly four years for the Telefónica’s AI platform, Aura, having spent more than a decade at the group in various roles.
Entangled in quantum communications
by James Mawson, editor in chief
Telecoms’ last transformative business model changes were the development of mobile phones and voice-over-internet protocol. These have transformed the world, powering the technology revolution as surely as the chips that process the information.
Another seismic disruption beckons. A quantum internet promises a truly unhackable way to communicate, allied to artificial intelligence to process the reams of near-instantaneous data flows. It will be effectively a world of magic.
This month, researchers have demonstrated the first city-wide quantum network moving beyond tests between two people, according to blog SingularityHub.
A team at the University of Bristol in the UK has developed a quantum communication network that can simultaneously connect at least eight users across a distance of 17 kilometres. In a paper in Science Advances, they demonstrated that the network can simultaneously and securely connect all 28 possible pairings of eight users across existing fibre optic networks in the city.
Lead author Siddarth Joshi said in a press release: “Until now, building a quantum network has entailed huge costs, time, and resources, as well as often compromising on its security which defeats the whole purpose. Our solution is scalable, relatively cheap and, most important of all, impregnable.”
UK quantum photonics startup AegiQ has also this month secured £1.4m ($1.8m) from UK government research agency InnovateUK to develop secure quantum communications for fibre-optic and satellite based applications.
Led by CEO and co-founder Max Sich, AegiQ is a spin-out of the University of Sheffield and part of the UK government’s £70m funding initiative to secure the UK’s position as a world-leader in quantum technology.
Rather than binary code where numbers are either one or zero, quantum’s ability for an atom to be in either state means it makes its messages harder to decipher just as the processing power of its chips accelerates the ability of quantum computers to crack traditional messages’ encryption.
This promise of truly unhackable communication is driving a global push to build a quantum internet, with China previously in the lead.
In June, Chinese researchers demonstrated a practical way to share security keys over 1,120 kilometres using entangled photons – particles tied together by the strange laws of quantum mechanics – sent and received by satellites.
The sector in charts
For the period between August 2019 and July 2020, we reported 246 venturing rounds involving corporate investors from the telecoms sector. Many of them (101) took place in the US, while 33 were hosted in Japan, 13 in China and 12 in India.
On a calendar year-on-year basis, total capital raised in corporate-backed rounds rose from $38.28bn in 2018 to $40.4bn in 2019, representing a 6% increase. The deal count also registered an increase, with 268 deals last year compared with the 221 tracked in 2018, a 21% increase.
Overall, corporate investments in emerging telecoms-focused enterprises went up from 16 rounds in 2018 to 25 by the end of 2018, suggesting a 56% increase. The estimated total dollars in those rounds more than doubled from $802m in 2018 to $1.94bn last year.
Telecoms and internet company SoftBank, cable and media conglomerate Comcast and telecoms carrier NTT Docomo were the leaders in largest number of deals and in capital invested.
The most active corporate venture investor in the emerging telecoms businesses was semiconductor producer Qualcomm.
Deals
Corporates from the telecoms sector invested in large multi-million-dollar rounds, raised by enterprises from the consumer, media, transport, services and other sectors. Four of the top 10 deals were above the $1bn mark and all top deals featured SoftBank as an investor.
SoftBank agreed to provide $9.5bn for a rescue package for US-based workspace provider and portfolio company We Company, whose valuation dropped from $47bn to less than $10bn. The deal included $3bn in a tender offer allowing all the other investors to sell their shares, a $1.5bn funding commitment and $5bn in debt financing. The corporate was also to buy about $1bn of the shares held by founder and former chief executive Adam Neumann. WeWork runs over 530 shared workspaces in cities across 30 countries.
China-based real estate platform operator Beike Zhaofang received roughly $2.41bn in a series D-plus round which featured a $1bn investment from SoftBank. Internet group Tencent also joined the round, which reportedly valued Beike at slightly more than $14bn. Launched in 2017 by Lianjia and known as Ke.com, Beike has developed an online platform which provides users with access to apartments for rent that span almost 100 Chinese cities. The platform uses 3D modelling to enhance online viewings and is looking to build a 200 million-strong customer base in 300 Chinese cities. It also offers services such as interior decoration, property management and real estate financing.
India-based short-term accommodation platform Oyo received $1.5bn in funding from investors including the $98.6bn first Vision Fund. The Vision Fund entity SVF India Holdings supplied $807m, while the other $693m came from RA Hospitality Holdings, an investment vehicle formed by Oyo founder and CEO Ritesh Agarwal. The round valued the company at $10bn. Oyo provides access to short-term accommodation through its online platform. It partners hotel and guest house owners and rebrands their outlets while ensuring they meet minimum standards. The company’s network features more than 23,000 hotels spanning more than 80 countries.
India-based mobile payment platform Paytm received $1bn in a series G round featuring the Vision Fund and Ant Financial, the financial services affiliate of e-commerce firm Alibaba. Asset management firm T Rowe Price led the round, which valued Paytm at $16bn. Ant Financial contributed $400m to the round, while Vision Fund supplied $200m.
SoftBank invested on the proviso that Paytm goes public within five years. If an initial public offering does not occur, SoftBank will have the right to sell its shareholding to a third party. Paytm has built a mobile wallet enabling consumers in India and Japan to pay in stores, add credit to smartphones and settle utility bills. It has also entered the e-commerce, gaming and ticketing sectors and increased its focus on signing up merchants in small Indian cities and towns.
The Vision Fund led a $750m funding round for US-based snack delivery service GoPuff. VC firm Accel, which was reported as an existing investor, also participated in the round. Vision Fund retained an option to invest a further $250m in the company. Founded in 2013 while its co-founders were at university, GoPuff runs an online platform where users can order more than 2,500 products ranging from snacks and beverages to more widespread groceries and household goods. It is present in 150 US markets and is open 24 hours a day in its larger markets.
China-based online tutoring service Zuoyebang closed a $750m series E round that included Vision Fund. Private equity firm FountainVest Partners and investment firm Tiger Global Management co-led the round, which also featured the Qatar Investment Authority. Formed by internet group Baidu in 2014 and spun off the year after, Zuoyebang operates a platform where users can access online courses and homework assistance plus live tutoring through video. It claims 170 million monthly active users, 50 million daily active users and roughly 12 million paying subscribers.
Vision Fund also invested $655m in UK-based business finance provider Greensill. It was a returning investor, having invested $800m last year, reportedly at a $3.5bn valuation. That valuation had reportedly risen to $4bn. SoftBank’s Vision Fund had already invested $800m earlier last year, reportedly at a $3.5bn valuation.
Founded in 2011, Greensill provides supply chain finance to clients across North America, Europe, Africa and Asia, working with financial services firms and institutional investors to supply the capital. Greensill has extended more than $150bn in financing to date, covering more than 8 million clients across 60 countries.
Customer relationship management software provider Salesforce led a $290m series B round for US-based robotic process automation (RPA) technology producer Automation Anywhere through its Salesforce Ventures subsidiary. The round valued Automation Anywhere at $6.8bn and also featured SoftBank Investment Advisers, the division of SoftBank that manages its Vision Fund, as well as investment banking firm Goldman Sachs. Founded in 2013, Automation Anywhere has created an intelligent automation platform that enables organisations to automate repetitive or manual processes using software bots. The product combines RPA with analytics tools and artificial intelligence (AI) and machine learning technology. The company has also built a version tailored for Salesforce users called Automation Anywhere Salesforce Connector, which is available through the latter’s AppExchange marketplace.
US-based robotic fulfilment systems developer Berkshire Grey secured $263m in a series B round led by SoftBank. Khosla Ventures, New Enterprise Associates and Canaan also contributed. Berkshire Grey has developed technology that combines robotics and artificial intelligence (AI) to automate retail, e-commerce and logistics fulfilment. Applications include sorting small packages for online businesses and just-in-time stock replenishment for stores. The funding will support global expansion efforts and drive recruitment. The company will also look to make acquisitions.
SoftBank led a $250m series D round for Quintoandar, the Brazil-based operator of an online marketplace for rental properties. The round also featured investment firm Dragoneer, growth equity firm General Atlantic and venture capital firm Kaszek Ventures, and it reportedly valued the company at more than $1bn. Quintoandar runs an online platform where users can search for rental properties and book viewings. The company oversees communication between prospective tenants and landlords, processes payments and retains a digital copy of the rental agreement. It has also created a credit analysis tool that lessens the needs for references, insurance or large deposits.
Deals with investors from outside the sector
Deutsche Telekom Capital Partners, the corporate venturing arm of Deutsche Telekom, led a $65m series C round for US-based customer support software provider Aircall. Swisscom Ventures, the corporate venturing arm of the telecoms firm, also participated in the round, as did Adams Street Partners, eFounders, Draper Esprit, Balderton Capital and NextWorld. Aircall provides cloud software that integrates with an enterprise’s existing applications, including customer relationship management platforms Zendesk and Salesforce, to allow customer service staff to provide better service during phone calls.
US-based wifi technology developer Plume completed a $60m series D round co-led by telecoms firms Charter Communications, consumer electronics manufacturer Belkin, Qualcomm and cable television provider Service Electric Cablevision. The equity round, secured with $25m in debt financing from Silicon Valley Bank and WestRiver Group, also included telecoms firm Shaw Communications and mass media group Liberty Global. Qualcomm and Liberty Global invested through their venture units. Founded in 2015, Plume has created a mesh technology – a type of network designed to provide sustained wifi coverage throughout a house – which uses AI to adapt signal strength in real time.
Federated Wireless, a US-based provider of phone spectrum-sharing technology, extended a series C round featuring telecoms infrastructure providers SBA Communications and American Tower to $64.7m. Allied Minds and Pennant Investors provided $13.7m having participated in the $51m first tranche in September 2019 alongside SBA, American Tower and Singaporean sovereign wealth fund GIC. Founded in 2012, Federated Wireless offers shared spectrum technologies which enable mobile network operators to more efficiently allocate specific US radio frequencies for small enterprise communication networks. The funding will support a wireless network-as-a-service offering, targeting businesses through an integration with cloud computing platforms Amazon Web Services and Microsoft Azure.
US-based geospatial analytics provider Satellogic collected $50m in funding from investors including Tencent. The round also featured venture capital fund Pitanga Fund; IDB Lab, the innovation arm of IDB Group, which comprises financial institutions Inter-American Development Bank, Multilateral Investment Fund and Inter-American Investment Corporation; and unnamed existing investors. Founded in 2010, Satellogic manufactures low-orbit microsatellites that capture images to facilitate geospatial analytics by clients such as governments and large enterprises. The capital will enable the company to cope with demand. IDB Lab’s investment has been specifically earmarked for monitoring crops and plagues affecting small and medium-sized farms in Latin America and the Caribbean.
US-based broadband technology developer Tarana Wireless received $24m in funding from investors including satellite technology and services provider EchoStar as part of a round with a $60m targeted close. Venture capital firm Khosla Ventures and family office 1010 Holdings also contributed to the tranche.
The company said it had secured commitments for the remaining $36m to be supplied between by the end of October 2020. Founded in 2009, Tarana has developed a fixed wireless access network that boasts gigabit speeds. Its radio signals are impervious to obstructions, interference, spectrum scarcity and changing weather conditions. It is expected to be particularly useful for suburban broadband. The funding will support pre-commercialisatuion as Tarana prepares for the mass rollout of its residential broadband service.
Taiwan-based broadband chipset manufacturer Metanoia Communications completed a $19.3m funding round featuring its founder, semiconductor and computer touchpad manufacturer Elan Microelectronics. The round was co-led by the Taiwanese government’s National Development Fund and venture capital firm Taiwania Capital. Formed in 2004, Metanoia provides chipsets and programmable software for use in network communications infrastructure and specifically systems that support higher-speed broadband. The company initially focused on wired connectivity but plans to put the funding towards diversifying into 5G.
US-based secure telecoms technology developer SignalWire completed a $11.5m series A round backed by Samsung Next, the early-stage investment fund owned by consumer electronics producer Samsung. VC firm Storm Ventures led the round and was joined by peer Sequoia Capital’s Sequoia Scouts scheme, among other investors. Founded in 2017, SignalWire has created a technology platform that can be programmed by enterprise clients to facilitate secure communications through media including telephone calls, internet voice calls and text messages. The series A cash will allow the company to accelerate the development of a product called SignalWire Cloud that provides a more intuitive user experience for its clients.
Lynq Technologies, a US-based developer of a communication software platform for low-bandwidth data, secured $6m in a seed round featuring Sony Innovation Fund, a corporate venturing vehicle for consumer electronics producer Sony. The round also included FF Venture Capital, Chetrit Ventures and Plus Eight Equity Partners, and came after a $1.7m crowdfunding campaign on Indiegogo. It will be used to increase headcount. Founded in 2014, Lynq has developed a decentralised, private, secure and portable network for transmitting location data, enabling communications for miles without infrastructure. The company claims it has created unique methods of frequency-hopping that allows user to transmit location data without being detected or intercepted.
Zoox, a Brazil-based provider of a public wifi system that generates data from its users, secured R$27m ($5m) in a funding round led by insurance firm HDI Seguros. The round included corporate VC firm 2A Investimentos and the capital has been earmarked for product development.
US-based virtual radio access network technology provider Altiostar Networks raised $4m in a series C round by telecoms conglomerate Telefonica. Founded in 2011 as Radio Mobile Access, Altiostar produces virtual radio access network technology that allows telecoms firms to deploy outdoor and indoor mobile phone networks, with operators managing interference and scaling coverage through a software interface.
Exits
Corporate venturers from the telecoms sector completed 43 exits between August 2019 and July 2020 – 31 acquisitions, nine initial public offerings (IPOs) and two other transactions.
Year-on-year, GCV registered an increase in the number of exits by telecoms corporates in 2019, which reached 43, up 187% from 15 the previous year. The total estimated capital in those exits stood at $19.62bn, 11% down from the $22.03bn in 2018.
Peloton Interactive, the exercise equipment and class provider backed by mass media group Comcast NBCUniversal and cosmetics distributor Grace Beauty, went public in a $1.16bn IPO. The company floated on the Nasdaq Global Select Market after pricing 40 million class A shares at the top of the IPO’s $26 to $29 range. Founded in 2012, Peloton sells exercise bikes and treadmills with video screens that broadcast gym classes, available through a paid subscription plan. The company has 1.4 million members, and it more than doubled revenue to $935m in the first half of 2019, though its net loss also increased, from $47.9m in the first half of 2018 to nearly $196m a year on.
App delivery services provider F5 Networks agreed to acquire US-based anti-fraud technology developer Shape Security in a $1bn deal that will enable telecoms firm SingTel, internet conglomerate Alphabet, enterprise IT company Hewlett Packard Enterprise and airline JetBlue to exit. Shape’s software uses artificial intelligence, machine learning and analytics helps protect businesses from online attacks and fraud made by bots that can bypass conventional barriers. The company targets business users across the financial services, airline, retail and government sectors.
Israel-based urban mobility app developer Moovit confirmed an acquisition by its existing shareholder, Intel, for a total consideration of $900m. The semiconductor manufacturer paid $840m, net of the equity gain of its corporate venturing unit Intel Capital. Founded in 2012, Moovit has built a real-time transit data app for users that pulls in public traffic data and user-generated updates to calculate the most efficient routes. It also offers third-party business access for clients such as municipalities or ride-sharing apps such as Uber. The service covers 3,100 cities in 102 countries, where it has attracted more than 800 million users, a sevenfold increase over two years. Intel will integrate Moovit’s enterprise platform into its autonomous driving technology subsidiary Mobileye.
Banking software producer Temenos agreed to pay at least $559m to acquire Kony, a US-based mobile banking software developer backed by telecoms firms SoftBank and Telstra. The deal consisted of $559m upfront and a $21m earn-out. Founded in 2008, Kony operates a cloud-based platform that allows enterprise clients to develop and deploy applications that enable customers to perform functions such as signing up for accounts, accessing loans and making payments at any time of day. The company’s offering includes Kony Quantum, an app development tool for financial services providers that requires minimal coding.
Relay Therapeutics, a US-based cancer drug developer backed by SoftBank and Alphabet, went public in a $400m IPO. The company increased the number of shares in the offering from 14.7 million to 20 million and priced them at $20.00 each, above the IPO’s $16 to $18 range. The shares closed at $35.05 on their first day of trading on the Nasdaq Global Market, giving it a market cap of more than $3bn.
Founded in 2016, Relay is using insights into protein motion to develop small molecule drugs intended to treat cancer. Up to $155m of the IPO proceeds will go to a phase 1 clinical trial for one of its lead product candidates, RLY-4008, in small tumours and to part of the phase 2/3 trials.
SoftBank’s Vision Fund sold approximately $377m of shares in US-based, publicly-listed oncology diagnostics technology developer Guardant Health. It sold 4.9 million shares at $77 each, more than four times the price at which Guardant floated in October 2018. SoftBank and its affiliates held almost 27.9 million shares as of the IPO. Guardant is developing blood tests to detect early signs of cancer in high-risk populations or returning cancer in existing patients. The tests are personalised for each patient based on the molecular profile of their tumours, and the company is using the technology to develop tests for early-stage and recurring cancers.
OneConnect Financial Technology, the Singapore-based financial technology platform developer spun off by insurer Ping An, closed its IPO at approximately $347m. Previous backers of the company include SoftBank, real estate developer Oceanwide Holdings’ Oceanwide Financial Technology vehicle and financial services firm SBI. The company raised an initial $312m when it floated on the New York Stock Exchange, issuing 31.2 million American Depositary Shares (ADSs) priced at $10.00 each. Ping An itself subscribed for $10m of shares. The extra capital represents the partial exercise of an over-allotment option that gave the underwriters 30 days to buy up to 4.68 million more ADSs. Spun off in 2017, OneConnect offers a cloud-based platform that includes a range of financial technology tools to help businesses in the industry digitise
their services.
Data centre interconnection technology provider Equinix completed a $335m purchase of US-based bare-metal automation system developer Packet that enabled corporates SoftBank, technology producers Dell, Samsung and leasing services firm JA Mitsui Leasing to exit. Packet has built an automation software platform for use with bare-metal servers – servers located in a physical space rather than in the cloud. The company’s technology will be integrated into Equinix’s enterprise offering.
Lemonade, the US-based online insurance provider backed by Alphabet, SoftBank and insurance firms Allianz and XL Catlin, went public in a $319m IPO. The offering consists of 11 million shares priced at $29.00 each on the New York Stock Exchange. The company had set a range of $23 to $26 for the IPO before increasing that to $26 to $28. The IPO price valued the company at more than $1.9bn. Founded in 2015, Lemonade offers property and casualty insurance through an online platform that uses bots instead of human brokers, using
AI and behavioural economics to combat fraud. It is present in the US,
UK and Germany.
UCloud Information Technology, a China-based cloud services provider backed by media group Bertelsmann, secured RMB1.94bn ($284m) IPO on Shanghai Stock Exchange’s Star Market. The company reportedly selected Star Market for its flotation as it is the only bourse in mainland China that enables companies to go public with a dual-class share structure, enabling founders to retain a majority of the voting rights.
UCloud issued 58.5 million shares priced at approximately $4.84 each, valuing it at about $2bn, and its share price increased to $10.60 on the first day of trading.. Founded in 2012, UCloud operates 32 data centres across 25 countries and territories in Asia, Europe and the US. It focuses on products such as cloud storage, data analytics and cybersecurity tools and serves clients primarily in the internet, e-commerce, manufacturing, gaming and financial industries.
GCV reported six exits from emerging telecoms-related enterprises that involved a corporate investor.
Broadband satellite network operator Hughes Network Systems committed $50m to join conglomerate Bharti Enterprises and the UK government in buying UK-based satellite internet services provider OneWeb. The conglomerate’s UK subsidiary, Bharti Global, and the British government, made a winning $1bn bid for the bankrupt business. Founded in 2012 as WorldVu, OneWeb’s goal is to build a constellation of 650 low Earth orbit satellites to deliver internet access to rural and remote areas. It launched 74 satellites before filing for bankruptcy in March 2020. The UK government’s purchase of OneWeb is reportedly motivated by its desire to build a homegrown alternative to Galileo, the EU-owned global navigation satellite system. The UK will lose access to Galileo when it leaves the EU.
Agora, a China-based video communication technology provider backed by quantitative trading firm Susquehanna International Group, floated on the Nasdaq Global Select Market today in a $350m IPO. The offering consisted of 17.5 million ADSs, each representing four ordinary shares, at $20.00 each, above the $18 to $20 range the company had set. The IPO price valued the company at $2bn. Founded in 2014, Agora provides a software development kit that enables developers to more easily integrate audio and video communications as well as livestreaming functionality into their software and games. It relies on Agora’s cloud-based platform, removing the need for developers to build their own infrastructure. Agora claims it has clocked more than 2 billion installations of the kit to date.
Mobile content discovery platform Digital Turbine agreed to purchase US-based peer Mobile Posse in a deal reported by DC Inno to be about $66m in size, allowing SoftBank to exit. Softbank Capital led the company’s $10m series B round in 2007. Founded in 2005, Mobile Posse has developed a content discovery platform intended to be built into smartphones by original equipment manufacturers to provide an aggregated feed tailored to users’ individual tastes. The company expected to announce $55m in revenue for 2019.
US-based telecoms company Yonder Media Mobile agreed to acquire Mexico-based mobile Virtual Network Operator carrier Weex for an undisclosed amount. The latter, which was launched through the Coca-Cola Founders Platform in 2014, aims to become Mexico’s largest mobile virtual network operator. Its goal is to substitute predetermined, fixed packages that traditional telecom companies offer for a personalised, flexible alternative.
Qualcomm exited radio frequency (RF) technology provider Cavendish Kinetics in an acquisition of undisclosed size by RF equipment producer Qorvo. Spun off from Cambridge University, Cavendish produces micro-electromechanical systems technology used to enhance antenna tuning in smartphones, improving reception and mobile data rates. The deal followed at least $68.5m in funding for Cavendish, which raised $36m in a 2015 round that included $25m from Qorvo subsidiary Triquent Semiconductor.
Software holding company Volaris Group agreed to acquire US-based mobile optimisation technology provider Flash Networks in a deal of undisclosed size enabling telecoms firm Verizon to exit. Founded in Israel in 1996, Flash supplies a range of mobile internet-focused products covering areas like signalling and radio connection optimisation, network security or app monetisation.
Funds
For the period between August 2019 and July 2020, corporate venturers and funds investing in the telecoms sector secured more than $8.8bn in capital via seven funding initiatives, which included four VC funds, two accelerators and one other initiative. The dollar estimate, however, is high due to the effect of a $8.5bn fund which targets telecoms, among many other sectors.
On a calendar year-basis, the number of funding initiatives in the telecoms sector went up slightly from seven in 2018 to 10 last year, significantly down from the peaks of 24-27 initiatives reported in 2014-16. The total estimated capital for 2019 stood at $13.9bn because of the effect of the unusually large TA XIII.
Insurance firm Taiwan Life provided $20m to TA XIII, which is run by growth-focused private equity firm TA Associates. The fund focuses on telecoms, financial services, consumer goods, healthcare, business, services, technology and media companies, investing across North America, Western, Central and Eastern Europe. The investment was one of several commitments to equity and debt funds made by Taiwan Life in 2019, according to its annual filing.
Qualcomm Ventures launched a $200m investment vehicle intended to boost an ecosystem around an expected 5G network product offering. The 5G Ecosystem Fund will provide up to $200m in funding for companies developing technologies and products that will incorporate 5G,. More specifically, the fund will invest in areas involving the transformation of mobile networks to a 5G standard and its potential in enterprise markets.
Office furniture manufacturer Sunon, surveillance equipment maker Dahua, optical communication technology producer ZhongJi InnoLight, online media company Zhebao and carmaker SAIC contributed to the latest fund for China-based investment firm Winreal Investment. The fund, dubbed Rongteng 5G Industry Fund, reached its first close having raised half of its projected total. The vehicle was expected to close at RMB2bn ($292m). The carmaker participated through its SAIC Capital subsidiary, while the other corporates invested directly. Winreal concentrates on investments in companies seeking to digitally enhance existing industries such as education, manufacturing, transport and security. The vehicle will invest in developers of technology related to 5G.
Mobile network operator Vodacom Tanzania launched a three-month accelerator in partnership with corporate access-led incubator Smart Lab with $150,000 in funding to train local entrepreneurs. Vodacom Digital Accelerator will accept early and growth-stage businesses in segments including mobile, telecoms, media, health, education, e-commerce and financial technology.
The accelerator will be split into three phases and provide participants with access to Vodacom resources, mentors and partners, ahead of an investor’s day where an additional six months of support from the corporate and others will be up for grabs. Vodacom Tanzania is a subsidiary of South Africa-headquartered Vodacom Group, which cohasunts telecoms firm Vodafone among its shareholders.
Orange Fab, the accelerator for France-based telecoms operator Orange, started its 17th programme in Russia. It will be based at the Skolkovo campus and will accelerate technology startups focused on AI, big data analytics, internet of things, next-generation network and cloud technologies. More than 400 startups have been through Orange Fab programmes since 2013.
STV, the Saudi Arabia-based venture capital firm originally set up by Saudi Telecom, was reported to be considering raising a second fund sized at a minimum of $500m. Abdulrahman Tarabzouni, chief executive of STV, told Bloomberg: “I definitely see a path to a second fund that is equal or larger to the $500m fund we have today.”
Ride hailing service Uber bought STV portfolio company Careem Networks in 2019 for $3.1bn, while retailer Amazon purchased Dubai-based peer Souq.com in 2017. Other portfolio companies include e-commerce firm Mrsool and education app Noon Academy.
University funding
By the end of 2019, there were only two rounds raised by university spinouts developing telecoms-related technologies and three during 2020. Estimated total capital deployed in 2019 stood at $68m, up from $503m in 2018.
Blu Wireless, a UK-based developer of 5G communication technologies spun out of University of Bristol, obtained £12.7m ($16.6m) in growth funding from investors co-led by mobile chipset manufacturer Arm. The round was also co-led by Calculus Capital, Kendall and MGL, with participation from Guinness Asset Management. Founded in 2009, Blu Wireless supplies connectivity technology for wireless network applications that enables the operator to limit latency and instability in data speeds. The company is currently focusing on a 5G telecoms technology known as millimetre wave that could help clients such as transport networks deliver reliable multi-gigabit speeds.
Tarana Wireless, a US-based broadband technology developer based on research at University of California, Berkeley, received $24m in funding from investors including satellite technology and services provider EchoStar as part of a round with a $60m targeted close. Founded in 2009, Tarana has developed a fixed wireless access network that boasts gigabit speeds. Its radio signals are impervious to obstructions, interference, spectrum scarcity and changing weather conditions. The network dynamically adjusts thousands of times per second to deliver consistent speeds at a range of up to 15 kilometres using unlicensed spectrum.
People
SoftBank dominated the people news.
The parent company hired Ralf Wenzel as chief executive of its nascent Latin America-focused incubator, Tech Hub. Wenzel is the founder and CEO of Foodpanda, an online food ordering platform acquired in 2016 by peer Delivery Hero, where Wenzel subsequently took on the chief strategy officer position from early 2017 until 2019. His new role will involve him creating 50 joint ventures and strategic partnerships in the next five years among Vision Fund portfolio companies.
The group also hired Taiichi Hoshino to head up its investment planning department. Hoshino had been a managing director at Japan Post Bank, rising in mid-2018 to oversee a $1.9 trillion investment portfolio with senior managing director Kunio Tahara. Hoshino had previously co-founded Golvis Investment, a hedge fund where he served as chief operating officer.
Subsidiary SoftBank Investment Advisers, which runs the VisionFund, hired Ioannis ‘John’ Pipilis as head of financing. Pipilis had been the head of fixed income trading at financial services firm Deutsche Bank. He joined the bank in 2000 as a senior trader in its global credit trading division before being appointed global head of credit structuring in 2007. Deutsche Bank made Pipilis head of fixed income in mid-2018 to handle areas such as corporate and sovereign credit derivatives, high-yield bonds and leveraged loans.
SBIA also promoted Faisal Rehman to managing partner. He was recruited in August 2018 from financial services firm Deutsche Bank where he had spent nearly two decades. He oversaw Vision Fund’s deals in the Middle East as a United Arab Emirates-based partner. US-based Ramzi Ramsey was also promoted to partner.
Jenny Lee, formerly a senior talent partner at financial services firm Citadel, joined SBIA as head of US talent acquisition. Lee was expected to support recruitment efforts, identifying, acquiring and managing human resources, mainly in the US.
Vikas Agnihotri joined the subsidiary as an India-based operating partner. Agnihotri joined Google in 2011 as an India-based director before being promoted to managing director of sales at Google India seven years later. He was made interim head of Google India in April 2019. Vision Fund appointed Sumer Juneja as an India-based partner in late 2018 and its local portfolio companies include Delhivery, FirstCry, Grofers, Lenskart, Ola, Oyo, Paytm and PolicyBazaar.
Kristin Bannon was hired by Vision Fund as a vice-president. Bannon had been a vice-president at Morgan Stanley for nearly a decade, and had led its technology investment banking. She joined SoftBank Investment Advisers (SBIA), which manages Vision Fund on behalf of the corporate. The fund also hired Serena Dayal as an investment director. She had been a senior vice-president at Fortress Investment Group (FIG) since 2017, overseeing real estate private equity deals, before SoftBank and FIG joined forces to form an asset management arm called SoftBank Financial Services in March 2018.
Daisy Cai became a partner at Vision Fund. She had been a founding partner at Gaocheng Capital, a growth-stage private equity firm backed by hedge fund manager Hillhouse Capital. The move will represent a return to corporate venturing for Cai, who had previously been a managing partner for China-based internet group Baidu, working on both early-stage fund Baidu Ventures and late-stage vehicle Baidu Capital, having joined the company in 2016.
SoftBank assigned two Vision Fund managing partners, Akshay Naheta and Kentaro Matsui, to senior roles. Naheta took a senior vice-president position to mitigate the vehicle’s investment losses, offering strategic assistance to the management team. Based in the United Arab Emirates, he has been leveraging his connections with Abu Dhabi sovereign wealth fund Mubadala Investment to help raise the second Vision Fund. He had been hired Naheta in 2017 after a stint at Knight Assets & Co, the UK-based investment firm he founded in 2011. Matsui assumed a senior advisory post to enhance Vision Fund’s investment strategy, having concentrated on Asia-based financial, healthcare and logistics technology deals from SBIA’s Tokyo office. China-based Didi Chuxing, Manbang Group and Ping An Healthcare Management formed part of his portfolio. Matsui came from brokerage Mizuho Securities where he advised on SoftBank’s acquisitions of semiconductor manufacturer Arm and telecoms operators Vodafone Japan and Sprint.
The failure of workspace provider WeWork to go public in September 2019 combined with paper losses at ride-hailing portfolio companies like Uber, hard hit by the covid-19 pandemic, and those that have gone bankrupt such as Brandless or OneWeb, led to substantial losses at Vision Fund, which shed staff.
David Thévenon joined UK-based venture capital firm Balderton Capital as a general partner. SBIA recruited Thévenon in 2016 as a founding partner of the $98.6bn Vision Fund, two years after he joined SoftBank as a managing director. Thévenon led its investments in ride hailing services Didi Chuxing, Grab, Ola and 99 in addition to digital insurance provider Lemonade and online lenders Kabbage and SoFi.
Michael Ronen left SBIA, having been negotiating terms for several weeks. Ronen had joined in 2017 after three years at investment bank Goldman Sachs’ technology, media and telecoms group. Ronen’s deals included a commitment of up to $2.25bn for autonomous driving software developer Cruise Automation, its leading of a $1bn round for shipping management platform Flexport and an investment in parking system developer ParkJockey at a valuation of more than $1bn.
Xiangyu ‘Sean’ Liu departed from his investment director position to join litigation finance technology provider Legalist as chief financial officer. Liu was hired in 2018 to help set up a China-based office in Shanghai, where he oversaw the investment team and conducted deals with companies based in the country. The Vision Fund formed a $200m joint venture with insurer ZhongAn Online P&C Insurance in August 2018 and the vehicle has backed China-headquartered companies including travel services provider Klook and automotive e-commerce platform Chehaoduo (Guazi).
Carolina Brochado left the Vision Fund and joined investment firm EQT. SBIA hired Brochado as a UK-based investor in early 2019 and promoted her to partner early this year. By the time she left the unit in April, she had invested in companies including data analytics technology developer Behavox and fitness subscription service Gympass.
Praveen Akkiraju left his managing partner position at SBIA. Akkiraju joined in April 2018 after two years as chief executive of cloud technology producer Viptela, following four years as CEO of enterprise software supplier VCE from 2012. His remit involved investing in enterprise technology developers in the Americas and Asia, as well as co-leading India-based deals. His duties at Vision Fund, including his board seat at portfolio company Automation Anywhere, will be largely assumed by senior managing partner Deep Nishar.
Setyanto Hantoro departed from telecoms firm Telkom Indonesia’s corporate venturing arm, MDI Ventures, and took a managing director role at its wireless network group, Telekomunikasi Selular (Telkomsel). Hantoro has worked for Telkom Indonesia for more than a decade and held a variety of roles. He was Telkom Indonesia’s VP of strategic business development and executive VP of strategic investment for more than seven years from 2012. Hantoro most recently served as interim chief executive of MDI Ventures, according to Telecompaper Asia, after former chief executive Nicko Widjaja’s departure in July 2019.
MDI Ventures hired Shannon Lee Chaluangco as a Singapore-based investment director. Chaluangco came from C31 Ventures, the corporate venture capital subsidiary of shopping centre operator CapitaLand, where she was an investment manager from 2017 before becoming team lead in early 2019. Chaluangco managed the S$110m ($79m) fund on behalf of C31 Ventures, which participated in deals for portfolio companies such as retail data analytics software provider Omnistream, restaurant booking platform Chope and mobile commerce platform Mobikon.
Pedro Trucharte left his interim manager role at MásVentures, Spain-based telecoms company MásMóvil’s startup accelerator, to join digital consulting firm Kairós Digital Solutions. The company had appointed Álvaro del Portillo to lead the unit. Del Portillo had been head of strategic technical projects for MásMóvil and had sat on MásVentures’ executive committee since early 2018. Trucharte’s role at MásMóvil involved Trucharte partnering seed-stage venture capital fund Inveready and setting up MásVentures in January 2019. He helped define the scheme’s open innovation strategy in a bid to identify and back companies developing innovative telecoms technologies.
Laurel Buckner left her managing director position at ATN Ventures, the corporate venture capital (CVC) arm of US-based telecoms and renewable energy investment holding company ATN International. Venture capital firm WestRiver Group hired Buckner in the same role ahead of the planned launch of a fund that will target machine learning. Based in Seattle, she will co-lead its $100m Pacific Northwest fund with MD Anthony Bontrager. A Global Corporate Venturing Powerlist winner in 2018, Buckner joined ATN as a senior vice-president in late 2017 to set up its corporate VC unit, after being vice-president of corporate venture investments and mergers and acquisitions at US-based telecoms firm GCI Communications.
US-listed telecoms group Verizon hired Tammy Mahn as an Israel-based managing director for its corporate venturing arm, Verizon Ventures. The move came as the unit was bolstering its activities in Israel, having invested in internet-of-things technology startup Wiliot and machine learning software developer Iguazio earlier. Mahn joined another managing director in Israel, Merav Rotem Naaman, who was a Global Corporate Venturing Rising Star in 2018, and senior associate Gidon Azaryev, who came on board in February 2020.
US-based mobile network operator US Cellular’s strategic investments and partnerships team ceased operations in 2019 former business development manager Susan Bova confirmed to GCV. The company’s strategic investments and partnerships division made equity investments, focusing on startups developing 5G networking, cloud services, data, mobile payments, internet-of-things agriculture, smart cities, artificial intelligence, blockchain and cybersecurity technology. Former business development manager Susan Bova told GCV she has left US Cellular “to explore other options”, while Jeff Cologna, an executive that has concentrated on strategic investments and partnerships since 2007, was unable to comment on his next move.
Claudio Barahona Jacobs left Wayra Chile, a regional startup accelerator for Spain-listed telecoms group Telefónica, and joined Chile-based venture capital fund Alaya Capital Partners. Movistar Innova, an entrepreneurial co-working centre and incubator backed by Telefónica Chile’s Movistar subsidiary, hired Barahona in 2011 as senior innovation product manager. He also became head of acceleration at Wayra Chile to oversee early-stage investments. Telefónica Open Future, Telefónica’s open innovation arm and Movistar Innova’s successor, appointed Barahona country manager for Chile in 2016 to run CVC initiatives in the country including Wayra, fund-of-funds network Amerigo and corporate venturing vehicle Telefónica Ventures.
Joshua Agusta joined Mandiri Capital, the VC arm of Indonesia-based financial services firm Bank Mandiri, as director of fund investments. Agusta spent more than four years at MDI Ventures, as head of portfolio from early 2017 to September 2018 before being promoted to vice-president of investments. Formed in 2015 with a reported $36.5m in capital, Mandiri Capital targets financial technology developers located in Southeast Asia and also oversees an incubator known as Digital Business Incubator.
Comcast Ventures, the corporate venturing arm of Comcast, hired professional basketball player Andre Iguodala as a venture partner for its Catalyst Fund. Formed in 2011 with $20m of capital, Catalyst Fund concentrates on startups at seed and series A-stage with founders from under-represented minority groups. Its 26-strong portfolio includes community lodging network operator Starcity and legal-analysis software provider Ross Intelligence. Iguodala is a prolific investor who has backed about 40 companies including footwear manufacturer Allbirds, eSports team owner Swift, second-hand clothing marketplace Twice and video conferencing technology producer Zoom Video Communications. Iguodala has also invested in and sat on the board of Jumia, the Africa-focused online marketplace that went public in April 2019, but is best known in the wider world for winning three NBA titles with basketball team Golden State Warriors.
Terry Evans was appointed principal at Verizon Ventures. Evans’s investment remit at Verizon includes commerce and advertising, connected devices and hardware, data and analytics, infrastructure and networking, and media and entertainment. He comes on board after four years at diversified products manufacturer United Technologies as a mergers and acquisitions corporate development manager specialising in building automation systems and energy management software. Prior to joining United Technologies, Evans was a wealth management-focused business development manager at financial services firm PNC from 2011 until 2013 and at banking group HSBC from 2009 until 2011.
GCV Analytics’ definition of the telecoms sector encompasses telecoms service providers and wireless technologies as well as other telecoms-related emerging businesses.