The number of corporate-backed deals we reported from around the world in November was 210, down 18% from the 256 funding rounds from the same month last year.
Investment value also decreased by 64%, to $11.76bn – down from the record $32.72bn in November 2018. November registered the lowest monthly result of the year in terms of deal count but not the lowest level of total estimated capital invested, which was $8.08bn in September.
The US came first in the number of corporate-backed deals, hosting 73 rounds, while Japan was second with 33 and China third with 19.
The leading corporate investors by number of deals were telecoms and internet conglomerate SoftBank, followed by diversified internet conglomerate Alphabet and financial services firm Goldman Sachs. In terms of involvement in the largest deals, e-commerce group Alibaba topped the list along with SoftBank and investment and financial services group Fidelity.
GCV Analytics reported 19 corporate-backed funding initiatives in November, including VC funds, new venturing units, incubators, accelerators and other. This figure suggested a decrease compared to October which registered 25 initiatives. The estimated capital raised in those initiatives amounted to $1.99bn, lower than the $2.59bn in October.
Deals
Emerging businesses from the IT, health, business services and media sectors raised the largest number of rounds during the month. The most active corporate venturers came from the financial services, IT and media sectors.
China-based logistics services provider Cainiao Smart Logistics Network received RMB23.3bn ($3.33bn) from Alibaba. Alibaba increased its stake from 51% to 63% with the investment, which included new shares and a secondary transaction of undisclosed size involving an unnamed shareholder. Cainiao was co-founded by Alibaba, which owned a 48% stake at launch, diversified conglomerate Fosun and retailer Intime Retail Group in 2013. The company runs a logistics platform that connects delivery drivers, goods and warehouses with each other to facilitate e-commerce deliveries. Alibaba previously increased its stake in the business to 51% by investing $798m in 2017.
India-based short-term accommodation platform Oyo raised $1.5bn in a series F round backed by SoftBank. Ritesh Agarwal, Oyo’s founder and chief executive of Oyo, reportedly invest $700m in the round and venture capital firms Lightspeed Venture Partners and Sequoia Capital India were also participating in the round, which would value Oyo at $10bn. Founded in 2013, Oyo operates a network of leased and franchised hotels where customers can book rooms that offer standardised amenities. It also maintains an offering called Townhouse, similar to its core service but chiefly aimed at millennials. Oyo initially concentrated on its domestic market but has since expanded to more than 1.2 million rooms across 800 cities spanning 18 countries.
Paytm raised $1bn in series G funding at a $16bn valuation from investors including SoftBank’s Vision Fund and Ant Financial, the financial services affiliate of Alibaba. Asset management firm T Rowe Price led the round, which included venture capital firm Discovery Capital. Ant Financial contributed $400m to the round, while Vision Fund supplied $200m. SoftBank agreed to an investment two weeks ago as long as Paytm goes public within five years. If an initial public offering (IPO) 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 brick-and-mortar 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.
China-based smart electric vehicle (EV) developer Xiaopeng Motors completed a $400m series C round that featured consumer electronics producer Xiaomi, which made the investment as part of a strategic partnership. The corporate will offer its expertise and insights into consumer behaviour, technology know-how and market trends to drive Xiaopeng’s value. The round also included chairman and chief executive He Xiaopeng, as well as a range of unnamed new and existing strategic and institutional investors, and undisclosed private equity firms. Founded in 2014 and also known as Xpeng, Xiaopeng is working on connected EVs that tap into artificial intelligence (AI) technology to offer features such as autonomous driving. The company’s first production vehicle, the G3 SUV, was launched in December 2018 and Xiaopeng reached a milestone of 10,000 vehicles rolling off the production line.
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, in addition to Goldman Sachs. Founded in 2013, Automation Anywhere has created an intelligent automation platform that enables organisations to automate some repetitive or manual processes using software bots. The product combines RPA with analytics tools and AI and machine learning (ML) technology. The company has also built a version tailored for Salesforce users called Automation Anywhere Salesforce Connector, which is available on the latter’s AppExchange marketplace.
Netherlands-based online grocery retailer Picnic secured €250m ($275m) in funding from investors including NPM Capital, a vehicle for trading group SHV Holdings. The round included Hoyer, De Rijcke and Finci, which represent the Hoyberg, Kruidvat and Van der Wal families respectively. All three are repeat investors. Financial services firm ABN Amro put up €50m of the round in the form of a loan. The cash was raised as Picnic fights a court case brought by a trade union arguing that it should pay its employees the minimum rate for supermarket workers, while the company argues that its business is not in that bracket. Founded in 2015, Picnic runs an online grocery store that sells food and household goods, delivering to customers in 125 cities across the Netherlands and Germany. Picnic runs seven distribution hubs but the latest funding will support the development and construction of a larger, 42,000 square-metre distribution centre.
PharmEasy, an India-based online pharmacy backed by insurer Medi Assist Healthcare Services and healthcare supply chain services provider Ascent Health and Wellness Solutions, raised $220m in funding. Singaporean state-owned investment firm Temasek led the round, which included Canadian pension fund Caisse de dépôt et placement du Québec, financial services firm KB Financial Group and Eight Road Ventures, an investment vehicle for Fidelity. The round valued PharmEasy at $700m. Founded in 2015, PharmEasy operates an online pharmacy that sells healthcare products, diagnostic tests and medicines. Users can either upload their prescription or, if they do not yet have one, receive a free phone consultation during the checkout process.
Payments technology firm Visa paid $200m to take a 20% interest in Nigeria-based electronic payments company Interswitch at a $1bn valuation. Visa reportedly became a cornerstone investor through the investment, as the company prepares for an IPO rumoured to be scheduled for 2020. The company, founded in 2002, supplies services centred on Africa. Its flagship product is the Verve payments card, which lets Nigerian customers pay at a range of merchants in a country where payment fraud is still common. Verve is reportedly Africa’s largest debit card program with more than 19 million accounts active. Interswitch’s other services include electronic payment processing terminals and digital e-commerce modules, and Visa’s investment will underpin a strategic alliance with the company aimed at seizing opportunities in Africa’s digital payments sector.
US-based e-commerce fraud prevention software developer Riskified, backed by financial services provider Capital One, received $165m in a series E round backed by Fidelity. General Atlantic led the round, which also featured Qumra Capital, Pitango Venture Capital and Entrée Capital. The investment valued Riskified at more than $1bn. Riskified’s platform exploits AI technology to instantly confirm legitimate e-commerce customers and prevent fraudulent transactions. It also enables merchants to safely offer alternate payment methods and protects consumers accounts from misuse. The funding will drive rapid domestic and international expansion efforts and will allow Riskified to extend its product footprint.
ACV Auctions, a US-based online automotive marketplace backed by SoftBank, picked up $150m in a series E round co-led by Fidelity and investment management firm Wellington Management Company. Bain Capital Ventures, a subsidiary of private equity firm Bain Capital, also took part in the round, as did Bessemer Venture Partners and Tribeca Venture Partners. Founded in 2014, ACV Auctions runs a wholesale vehicle marketplace for franchise and second-hand car dealerships to purchase and sell vehicles through an auction process taking 20 minutes. The platform provides third-party inspections, account management, title and payment processing, arbitration management and transportation. The company will also look to expand further across North America and hire staff, adding to its more than 1,000 employees.
Exits
GCV Analytics tracked 10 exits involving corporate venturers as either buyers or exiting investors in November. All the transactions were acquisitions.
The exit count figure decreased considerably compared with October, which registered 18 exits. The total estimated exited capital, however, went up to $1.72bn from the $1.15bn in the previous month, representing a significant 50% increase. In comparison, during the same month of 2018, the exit count was higher (17 transactions) and so was the estimated total capital – $3.55bn.
Biopharmaceutical company Alkermes agreed to acquire US-based neurological disease drug developer Rodin Therapeutics for up to $950m, enabling medical group Johnson & Johnson and Alphabet to exit. The transaction will consist of $100m in cash and up to $850m in milestone payments related to regulatory and clinical progress and pre-set sales levels.
Rodin is developing treatments for neurodegenerative diseases like Alzheimer’s disease, Lewy body dementia, Huntington’s disease and frontotemporal dementia as well as sickle cell disease and cancer. The company’s small molecule therapeutics will rely on targeting selected protein complexes which can modulate gene expression. They are intended to complement Alkermes’ range of treatments for central nervous system diseases.
Scout RFP, a US-based developer of a sourcing platform for businesses, agreed to a $540m acquisition by one of its existing investors, enterprise software producer Workday. The all-cash transaction allowed Salesforce Ventures and GV, respective corporate venturing divisions for cloud computing firm Salesforce and technology conglomerate Alphabet, to exit. Founded in 2014, Scout runs a cloud-based platform for procurement staff to manage sourcing and supplier engagement, collaborate with relevant parties and handle a pipeline of projects. Scout’s employees will join Workday, which expects the platform to complement its existing offerings Workday Procurement and Workday Inventory.
Cybersecurity software producer Palo Alto Networks agreed to acquire Aporeto for $150m in cash. The US-based network security technology developer was backed by media company Comcast, power utility National Grid, cybersecurity software developer Symantec and telecoms firm Telia. Founded in 2015, Aporeto has built a zero-trust cybersecurity platform that protects hybrid and multi-cloud environments from being hacked. The software authenticates, authorises and encrypts each workload with a cryptographically signed identity independently of the network configuration and at scale, rather than relying on IP addresses or static access control lists. Palo Alto Networks expects the acquisition of Aporeto to strengthen its own cloud native security platform, Prisma Cloud.
Insurance provider Maif exited France-based voice technology developer Snips in a $37.5m acquisition by speaker system producer Sonos. Snips is the creator of a full-stack software platform that can be used to develop custom voice-based digital assistants. The platform facilitates localised voice processing on devices, meaning products can be made more private as well as more accurate, and tools created through the system are compatible with existing voice-based assistants.
Mobile advertising technology provider InMobi Group acquired India-based social influencer content portal Roposo in a $20m deal enabling media group Bertelsmann to exit. The price was not officially disclosed but industry trackers estimated it consisted of $20m in cash and stock. Founded in 2013, Roposo has created a mobile app that publishes short-form video content from professional influencers in various languages. It will be integrated with mobile content distribution platform Glance, which spun off from InMobi.
Japan-based enterprise and sales support software provider Smartcamp was bought by cloud accounting platform developer Money Forward for $18.3m in a deal giving an exit to telecoms firm KDDI, Mitsubishi UFJ, diversified trading firm Itochu, financial services firms Mitsubishi UFJ Financial Group and Sumitomo Mitsui Banking Corporation. Money Forward expects the deal to help extend its client base and the corporate will leverage Smartcamp’s expertise to drive customer acquisition campaigns for its products. Founded in 2014, Smartcamp runs an online marketplace called Boxil which hosts a range of cloud-hosted enterprise software applications intended to enhance productivity. The company has also built a cloud-hosted software tool dubbed Biscuit for customer relationship management and the Bales software platform for sales teams targeting customers over remote channels such as e-mail and web conferencing.
Percolate, a US-based enterprise content marketing platform backed by public relations firm WPP, was acquired by sales and marketing software publisher Seismic for an undisclosed amount. Founded in 2011, Percolate provides software that helps enterprise clients organise and publish marketing content, using its workflow planning interface to schedule tasks and audience response graphs to measure feedback. The merged business will have more than 800 employees and will combine Percolate’s granular marketing functionality with Seismic’s existing sales and marketing software offering.
Professional services firm Aon agreed to acquire US-based digital business insurance platform CoverWallet for an undisclosed sum. The company will join Aon’s New Ventures Group, where it will lend data and analytics expertise as part of a range of services Aon offers to growth-stage clients. Founded in 2015, CoverWallet operates an online platform that uses analytics to help small businesses purchase and manage insurance. It offers coverage for areas including general liability, workers compensation, product liability, cyber-liability and more.
Digital therapeutics firm Biofourmis paid an undisclosed amount to acquire Biovotion, a Switzerland-based wearable health tracker business backed by reinsurer Swiss Re and semiconductor maker STMicroelectronics. Founded in 2011, Biovotion has created an electronic armband called Everion that monitors 22 physiological indicators in real time, including the user’s blood oxygenation, skin temperature and heart rate. The product line will be integrated with Biofourmis’ analytics-equipped digital medicine ecosystem, with an upgraded Everion model currently under development to offer more health tracking parameters.
Alphabet exited online sport media platform The Players’ Tribune in an acquisition of undisclosed size by digital media and technology company Minute Media. Founded by ex-New York Yankees shortstop Derek Jeter, Players’ Tribune is an online media platform that gives professional athletes the chance to publish their own long-form articles discussing their experiences and viewpoints. The publication will be absorbed into a portfolio of sport media brands owned by Minute Media that includes 90min, The Big Lead and 12up. The Players’ Tribune will continue to operate under its own brand but will be able to access Minute’s international presence and audience engagement tools.
Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.