Over the summer months of July and August we tracked a total of 235 investment deals involving corporate venture investors, with an estimated $9.87bn of total capital involved. More than half of all tracked deals (142) took place in the US. Other important investment geographies were China (24) and India (16).
The number of deals involving corporate VCs in July (127) only slightly exceeded the number of such deals from the preceding month of June – 125. In August, investment activity went down to 108 deals in total, probably due to the summer holiday season.
When compared with the same months in 2015, however, there was a significant drop both in terms of total deal count and total size of rounds. At the very least, the results appears to indicate that corporate venturing investors are becoming increasingly cautious.
There were 167 deals in July 2015 with rounds totalling over $7.99bn, whereas July 2016 registered 127 deals with rounds totalling $2.42bn. While one may argue that some unusually large deals that took place in China during July last year – for example Didi Kuadi’s $2bn round or LY.com’s $966m round – and they skew the picture drawn by the data, the difference in the number of deals is too salient to be ignored.
The same applies also to August. A significant drop in the number of deals with participating corporate investors – 108 this year, down from 140 in August 2015. In terms of total capital raised in those deals, the difference appears even more stark – from $12.25bn last year to $7.45bn this year. However, it must be kept in mind that in August 2015, two deals accounted for almost half of the total monthly figure– Informatica’s huge $5.3bn round and the $1bn round Uber raised to expand in India.
The most active investors by numbers of deals in July and August this year were messaging platform Slack, diversified conglomerate Alphabet (Google), media group Bertelsmann, semiconductor manufacturer Intel and internet company Tencent. Those who led in terms of participation in large rounds – totalling over $1bn – were Tencent, media and entertainment company Walt Disney and ride-hailing platform Didi Chuxing.
Deals
Emerging enterprises from the IT, health, media and services sector turned out to be most attractive to corporate investors during July and August. On the other hand, as shown on the heatmap overleaf, the most active corporate investors were in the media, IT, financial services and health sectors.
Didi Chuxing announced it was set to invest $1bn in its US-based rival Uber, as part of a deal to acquire its Uber China subsidiary, as the Wall Street Journal reported. Didi Chuxing was valued at $28bn in its last funding round, while Uber values Uber China at $7bn. Uber China is to continue to operate under its own brand as a subsidiary of Didi Chuxing.
Walt Disney Company agreed to pay $1bn for a 33% stake in BamTech, an online video spinout of sporting organisation Major League Baseball. BamTech’s technology powers online video streaming platforms and also provides features such as data analytics and commerce management. The company’s clients, which include HBO Now, National Hockey League, Major League Baseball, PGA Tour and WWE Network, have collectively attracted almost 7.5 million paying subscribers.
Medical device developer Galvani was funded with $715m over seven years by GSK and Verily Life Sciences, Google’s life sciences unit. GSK is to own 55% of Galvani, with Verily taking the remainder. Galvani will develop miniaturised, implantable devices that can modify electrical nerve signals. The aim is to modulate irregular or altered impulses that can occur in illnesses.
Media and entertainment group Time Warner acquired a 10% stake in US-based television streaming platform Hulu for a price reported by the Wall Street Journal to be $583m. Hulu was founded in 2006 by media group News Corp and entertainment conglomerate NBC Universal.
A host of investors agreed to invest over $550m in Indonesia-based on-demand mobile platform Go-Jek. The syndicate included Rakuten Ventures, the venturing unit of the eponymous e-commerce company, KKR, Warburg Pincus, Farallon Capital, Capital Group Private Markets, Sequoia India, Northstar Group, DST Global, NSI Ventures and Formation Group. Go-Jek’s core offering is a ride sharing service using motorcycle taxis called ojeks. It has also built a mobile platform that offers a range of on-demand services.
Exits
We tracked 35 exits involving corporate VC investors globally. The majority of those exits (25) were companies based in the US. The total estimated capital involved in these transactions was over $9.57bn.
Big box retailer Wal-Mart sealed the acquisition of Jet.com, a US-based e-commerce company backed by e-commerce group Alibaba and Alphabet, as reported by TechCrunch. The transaction, made up of $3bn in cash, is to be paid in instalments and $300m in stock.
Internet and electronics group LeEco agreed to acquire US-based flat screen television producer Vizio in a $2bn deal, giving exits to contract manufacturers AmTran Technology and Foxconn. Founded in 2002, Vizio develops consumer electronics products such as smart televisions and sound bars which are assembled in China to be sold at relatively low cost.
Consumer goods manufacturer Unilever agreed to buy US-based grooming product seller Dollar Shave Club, in a deal reported by Fortune to be sized at $1bn in cash, giving an exit to mass media group Comcast. Founded in 2012, Dollar Shave operates an online platform that sells men’s grooming products through a subscription model.
Industrial auctioneer Ritchie Bros Auctioneers agreed to acquire US-based online equipment marketplace IronPlanet for $758.5m, giving an exit to industrial machinery manufacturers Caterpillar and Volvo Construction Equipment. Ritchie Bros is to pay $740m in cash, with additional funds to cover the assumption of unvested equity interests in IronPlanet. IronPlanet operates an online marketplace for industrial machinery with over 1.5 million registered users across the world.
Pfizer agreed to buy the remaining shares in US-based healthcare startup Bamboo Therapeutics, seven months after investing $43m for a 22% stake. Pfizer was to pay $150m upfront and another $645m in potential milestone payments. The other main participant in Bamboo’s $49.5m series A round was US nonprofit organisation CureDuchenne, which invested $1.5m through its impact venturing unit CureDuchenne Ventures.
People
Matthew Goldstein, principal at venture capital firm Trinity Ventures in San Francisco, joined Microsoft Ventures, the corporate venturing arm of software provider Microsoft. Goldstein specialises in cybersecurity, software-as-a-service, fintech and cloud infrastructure deals. Microsoft Ventures has been building its team under vice-president Nagraj Kashyap, who hired his former Qualcomm Ventures colleague Mony Hassid to run Israel for the unit back in June.
Inga Mueller took a position as investment manager at EnBW New Ventures, the corporate venturing arm of Germany-based energy utility EnBW Energie Baden-Württemberg. Mueller comes from I Am Consulting, where she had held an interim manager position since December 2015.
It was announced that Rich Miner, general partner at GV, formerly Google Ventures, would step down to work on an education initiative for Alphabet, as Fortune reported. Miner has been a general partner since 2009 when the unit was formed, having joined Google when it acquired Android. He also helped launch telecom firm Orange’s Orange Ventures, as principal.
Almost a month afterwards, it was announced that Bill Maris, also co-founder and managing partner of GV, would be leaving the fund and its parent company Alphabet. David Krane is taking the reins at GV and will oversee its global operations as CEO and managing partner. Krane originally joined Google as director of global communications and public affairs back in 2000.
Intel Capital chose Christine Herron and Trina Van Pelt to manage its $125m Intel Capital Diversity Fund, which invests in tech startups led by women and underrepresented minorities. As co-heads of the Diversity Fund, Herron and Van Pelt will replace Lisa Lambert, who left in May to become managing partner at Westly Group.
Troy Williams, former president of publisher Macmillan’s New Ventures unit until August last year, joined University Ventures as a managing director. Williams spent five years as president of Macmillan New Ventures before becoming CEO of its enterprise solutions division and leaving in July this year to join University Ventures.
Claudia Iannazzo announced she had set up a US-based venture capital firm, AlphaPrime, with a strategic limited partner in an undisclosed European bank. Iannazzo is managing partner and co-founder of New York City-based AlphaPrime with Alessandro Piol, who helped run US phone operator AT&T’s corporate venturing unit in the early 1990s but has been president of Vedanta Capital over the past decade.
Stéphane Roussel became managing partner at of Solvay Ventures, the corporate venturing unit of the eponymous France-based chemicals company. He joined Solvay after its acquisition of peer Rhodia in 2012 and integrated their corporate venturing units.
Anju Patwardhan joined China-based wealth management and online lending platform CreditEase as a venture partner. She will be making strategic investments through its CreditEase Fintech Investment Fund, established in 2015 and aiming to raise $1bn to provide funding for “global leaders in the financial technology industry”.
Michael Treskow joined Eight Roads Ventures, the proprietary investment branch of financial services conglomerate Fidelity International, from venture capital firm Accel Partners, as a partner. Treskow will be investing out of Eight Roads’ European office in London with a focus on financial, enterprise software and mobile technology developers.
Joe Chang left SoftBank China Venture Capital (SCVC), a Japan-based subsidiary of telecoms firm SoftBank, also to join Eight Roads Ventures. Chang had taken a partner position at SCVC in September 2014, after four years as managing director of networking equipment producer Cisco’s corporate development team.
Vosik Shamsiev left TEL Venture Capital, the corporate venturing unit owned by Japan-based electronics and semiconductor manufacturer Tokyo Electron. Shamsiev joined TEL VC in early 2014 as a venture partner after four years handling business development duties in Tokyo Electron’s solar photovoltaic division.
Eze Vidra, formerly a general partner and co-founder at corporate venturing unit Google Ventures’ European office in London, was appointed chief innovation officer of clinical trials sourcing platform TrialReach, according to the Financial Times.
Joydeep Bose, managing director of Cisco APJ, the Japan and Asia-Pacific branch of networking equipment producer Cisco left the company, the New Indian Express reported. Bose oversaw corporate business development for Cisco in the region, including mergers and acquisitions and the local venture capital deals of Cisco Investments. Bose did not reveal details about his future plans but he had taken an advisory board seat at new India-based startup accelerator Neoleap earlier.
Travis Skelly took a senior vice-president position at Citi Ventures, the strategic investment arm of US-based financial services firm Citi. Skelly had joined Citi from FinTech Collective, the fintech-focused venture capital fund where he had spent two and a half years as director of investments.
Olawale (Wale) Ayeni left France-based telecoms company Orange, where he led its North American startup investments as principal, to join the International Finance Corporation, the investment arm of the World Bank. Ayeni joined Orange in 2013 from financial services firm JPMorgan’s investment banking team, where he handled investments in the technology, media and telecom sector.
Prudential Retirement, a business unit of New York-listed financial services conglomerate Prudential Financial, closed its seed stage-focused venturing unit Gibraltar Ventures. Most of the team, however, including managing director George Castineiras, are going to be “repositioned” inside Prudential. They will help the company build a new innovation strategy around designing, acquiring and partnering with startups rather than investing in them at seed stage.
Aymerik Renard was made director of US-based data storage provider Western Digital’s corporate venturing unit, which has so far invested more than $250m in over 20 startups.
