The count of corporate-backed deals we reported from around the globe in May stood at 251, up 11% from the 225 funding rounds from the same month last year. Investment value also went up, by 48%, to $13.11bn – up from $8.86bn in April 2018.
In comparison with preceding months of 2019, the month of May registered similar, though somewhat lower results in terms of deal count (previous months had registered between 261-273 rounds each). However, the total estimated capital invested was higher than the $8.42bn in April but lower than the $14.47bn in February.
The US came first in the number of corporate-backed deals, hosting 100 rounds, while Japan was second with 39 rounds, China and India– third with 15 each.
The leading corporate investors by number of deals were travel booking platform Booking.com, telecoms firm SoftBank and diversified internet conglomerate Alphabet. In terms of involvement in the largest deals, SoftBank topped the list along with automotive vehicle manufacturers General Motors and Honda.
GCV Analytics reported 22 corporate-backed funding initiatives in May, including VC funds, new venturing units, incubators and accelerators. This figure is a significant decrease compared with April, when there were 32 such initiatives. The estimated capital raised in May’s initiatives was $1.36bn, less than the estimated $2.07bn in the previous month. More than 50 corporations with no venturing unit registered their first startup deal last month.
Deals
Emerging businesses from the health, IT, services and media sectors led in raising the largest number of rounds during the fifth month of 2019. The most active corporate venturers were from the financial services, IT, media, industrial and services sectors. Only two of the recorded top rounds were above $1bn.
US-based autonomous driving software developer Cruise Automation secured $1.15bn from investors including car makers General Motors (GM) and Honda, the SoftBank Vision Fund and investment manager T Rowe Price Associates. The round valued Cruise Automation at $19bn post-money. GM acquired Cruise for $1bn in 2016, three years after it was founded, and spun it off again in 2018. Cruise is working on software enabling driverless cars to process data from sensors and react.
SoftBank invested $1bn in Colombia-based logistics platform Rappi. The corporate’s $5bn Innovation Fund, currently raising funds, supplied half the capital while the SoftBank Vision Fund provided the rest. Founded in 2015, Rappi operates an on-demand delivery service in Colombia, Argentina, Peru, Chile and Uruguay. The company delivers consumer goods and is diversifying into other areas such as medicine deliveries and the establishment of a digital payment platform.
UK-based supply chain financing provider Greensill received $800m from the SoftBank Vision Fund. The transaction reportedly valued Greensill at $3.5bn, more than doubling its previous valuation of $1.64bn in 2018. The SoftBank Vision Fund also took board seats as part of the deal. Founded in 2011, Greensill provides supply chain finance to clients in North America, Europe, Africa and Asia, working with financial services firms and institutional investors. Greensill has extended more than $60bn in financing to date, covering more than 8 million clients in 60 countries. It also owns Germany-based commercial lender Greensill Bank, having acquired and rebranded financial services firm NordFinanz Bank in 2014.
China-based facial recognition software provider Megvii received $750m in series E funding from investors including e-commerce group Alibaba at a valuation of more than $4bn. The round was led by a $200m investment from Bank of China Group Investment, the private equity arm of state-owned financial services firm Bank of China. Investment banking firm Macquarie Group, sovereign wealth fund Abu Dhabi Investment Authority and ICBC Asset Management, a division of financial services firm Industrial and Commercial Bank of China, also invested. Megvii provides software platform Face-plus-plus which uses artificial intelligence to identify faces, people and objects.
US-based online food delivery service DoorDash raised $600m in series G financing from investors including the SoftBank Vision Fund at a $12.6bn post-money valuation. Hedge fund manager Darsana Capital Partners led the round and was joined by investment managers Sands Capital and Coatue Management, investment firms Dragoneer and DST Global, venture capital firm Sequoia Capital and Singaporean state-owned Temasek. DoorDash runs an online platform that enables users to order food from local restaurants for home delivery. It has ramped up its offering by forming delivery partnerships with several big restaurant chains.
UK-based online food ordering service Deliveroo raised $575m in a series G round led by e-commerce, cloud computing and consumer technology group Amazon. Investment and financial services group Fidelity Management and Research, asset management firm T Rowe Price and investment firm Greenoaks Capital also contributed. Deliveroo runs an app-based food delivery service spanning more than 500 cities and towns in 14 countries in Europe, East Asia, the Middle East and Australia. The series E proceeds will be put towards expanding the company’s delivery presence and growing its engineering team. It also plans to establish delivery-only kitchens.
US-based robotics software provider UiPath completed a $568m series D round featuring CapitalG, the investment arm of Alphabet. Investment manager Coatue Management led the round, which included Dragoneer, Wellington Management, Sands Capital, Accel, Sequoia Capital, IVP, Madrona Venture Group and funds and accounts advised by T. Rowe Price Associates. UiPath has developed robotic process automation (RPA) software that helps companies automate parts of their business by programming robots with new skills, enabling them to fulfil a wider range of repetitive tasks.
China-based network security products vendor Beijing Qianxin Technology raised more than RMB3.73bn ($548m) from telecoms equipment manufacturer China Electronics Corporation, which received a 22.6% stake. The deal valued Qianxin at $2.4bn. The company was spun out of Qihoo 360 to develop network security products and services that perform activities such as tracking phishing threats in real time and thwarting distributed denial of service attacks, in addition to a cloud-based antivirus and anti-malware platform. Clients include government departments, state-owned enterprises and large financial services firms in China. It has also expanded into Indonesia, Singapore and Canada.
The SoftBank Vision Fund led a $484m series E round for Germany-based travel activity booking platform GetYourGuide. The round also featured Swisscanto Invest, an asset management subsidiary of financial services firm Zürcher Kantonalbank, as well as Temasek, Lakestar, Korelya Capital and Heartcore Capital. It boosted the company’s overall funding to $655m. GetYourGuide runs an online platform where tourists can book tours and other attractions in 170 countries. It plans to expand its range of tours, improve search and booking capabilities and extend marketing activities.
SoftBank invested ¥46bn ($419m) in Japan-based mobile payment service PayPay, which was formed by SoftBank and internet company Yahoo Japan in July 2018. It operates a platform for users to transfer money online and pay for items using QR codes on mobile devices. The system was launched on the back of 40 million accounts held by users of both SoftBank and Yahoo Japan’s Yahoo Wallet platform. Part of its technology is based on that developed by India-based digital payment system operator Paytm, which counts the SoftBank Vision Fund as one of its main investors.
Exits
In May, GCV Analytics tracked 29 exits involving corporate venturers as either acquirers or exiting investors. The transactions included 14 acquisitions and 15 IPOs.
The number of exits was the highest this year so far. The total estimated value of exits increased significantly to $12.9bn, up from an estimated $3.07bn in the previous month. In May last year there were fewer exits (18) but estimated total value was a record $20.26bn.
Uber, a US-based on-demand ride service backed by a range of corporate investors, raised $8.1bn when it floated on the New York Stock Exchange. The company priced 180 million shares at $45 each, near the foot of the $44 to $50 range it had set. It was the largest public offering since Alibaba raised $25bn in 2014, and valued the company at $82.4bn. Digital payment services firm PayPal bought an additional $500m of shares through a private placement. Founded in 2009, Uber operates a ride-hailing platform with 91 million monthly users with additional services such as food and freight delivery. It recently spun off its autonomous driving subsidiary, Uber ATG, with $1bn of external funding.
Harry’s, a US-based razor retailer backed by beauty product distributor Grace Beauty, agreed to an acquisition by consumer products supplier Edgewell Personal Care for $1.37bn. Edgewell agreed to pay about 79% in cash and the remainder in common stock. Harry’s shareholders will own about 11% in Edgewell following the transaction. Founded in 2013, Harry’s runs an subscription-based online platform that sells men’s grooming products, including razors, shaving cream, post-shave balm, face wash and lotion, plus other accessories.
Cybersecurity technology provider Palo Alto Networks agreed to acquire container security software developer Twistlock for about $410m in cash, giving computing technology producer Dell an exit. Twistlock has built a cybersecurity platform that protects cloud-native container systems, such as Docker and Kubernetes, using machine learning to track normal and detecting changes that could point to security issues.
Pharmaceutical firm Pfizer agreed to acquire its portfolio company Therachon, a Switzerland-based developer of treatments for rare genetic disorders, in a $340m deal. Payment could rise to $470m with additional milestone payments. Founded in 2014, Therachon is developing therapies for rare genetic diseases.
Cybersecurity technology developer FireEye acquired US-based cybersecurity validation software developer Verodin in a $250m deal that gave an exit to networking equipment producer Cisco and banks Capital One and Citi. Founded in 2014, Verodin provides software for users to identify gaps and risks in their security controls by testing and assessing the effectiveness of endpoint, network, cloud and email security systems.
Beyond Meat, a US-based vegetarian meat developer with producer General Mills as an investor, went public in an IPO raising about $241m on the Nasdaq Global Select Market. The company priced more than 9.62 million shares at $25, at the top of an increased range of $23 to $25. Beyond Meat develops and supplies plant-based substitutes for beef, pork and poultry meats. Its best-known product is the Beyond Burger, simulating the taste and texture of ground beef.
Broadband communications and video services provider Altice USA agreed to acquire its portfolio company, US-based entertainment network Cheddar, for $200m. Cheddar operates an online television network that consists of two channels – Cheddar Business, which focuses on technology and the innovation ecosystem, and Cheddar News, which broadcasts general news stories. The network is accessible through online streaming platforms such as DirecTV Now, Hulu, YouTube TV, Snapchat, Facebook, Twitter, Twitch and Amazon, and through smart televisions in the US.
Fastly, a US-based content delivery technology provider backed by media group O’Reilly and telecoms companies Deutsche Telekom and Swisscom, floated in a $180m IPO on the New York Stock Exchange. The offering consisted of almost 11.3 million shares priced at the top of its $14 to $16 range, valuing it at about $1.45bn. Its shares closed at $23.99 after the first day of trading. Founded in 2011, Fastly is a developer of a cloud-based content delivery network with added security features such as web application firewalls and tools to combat distributed denial of service attacks.
SoYoung, a China-based cosmetic surgery booking and reviews platform backed by internet group Tencent, floated on the Nasdaq Global Market in a $179m IPO. SoYoung issued 13 million American depositary shares, each representing 10 normal shares, at $13.80 each, at the top of the IPO’s $11.80 to $13.80 range. SoYoung runs an online platform where users book cosmetic procedures while accessing reviews and before-and-after photographs posted by other users. It made an $8m net profit in 2018 from $89.8m in revenue.
TransMedics, a US-based medical device producer backed by pharmaceutical firm Pharmstandard International and steel conglomerate Posco, went public in a $91m IPO. The company issued 5.69 million shares at $16 each on the Nasdaq Global Market, achieving a market cap of $430m. Founded in 1998, TransMedics has developed a device that uses warm blood perfusion to preserve hearts, lungs and livers while they are being transported for transplant. The technology also allows physicians to assess the viability of an organ.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press