On Monday and Tuesday, in the first part and second part of this outlook in Global Corporate Venturing, we covered genome editing tools that could change life and their progeny, a possible future evolution of computing to support artificial intelligence through quantum computing and fuelling the mind and body through virtual reality and improved food production.

Of the three factors that have done most to help us evolve, improving our health and minds has been vital. The second area that has allowed us to dominate in what some are calling the Anthropocene – in which many geologically significant conditions and processes are profoundly altered by human activities – has been communications. (The third area is energy, which will be covered tomorrow.)

Two main parts of the communications tech disruption over the past year have been around people’s internet access and applications, with a whole area looking at the internet of (every)thing (IoT) connectivity to come in a separate post.

Access

The communications infrastructure enables people’s seemingly limitless desire to talk, listen and watch and increasingly interact through what is being termed affective computing – the human-computer interaction in which a device has the ability to detect and appropriately respond to its user’s emotions and other stimuli. And it is here where there is plenty of excitement forming. As research charity Nesta noted: “Up to 3,000 nanosatellites are set to launch between now and 2020. This is at least one order of magnitude higher than the last five years. 

Tracy Isacke, SVB, in an article, At the knowledge frontier, for Global Corporate Venturing said: “While typically a platform-potential company comes along every seven or eight years, we have seen three emerge in frontier tech in the past year – SpaceX, Magic Leap and OneWeb.

She said frontier tech was a “catchy name for the emerging wave of industries, or reinvention of industries, made possible by the advance of technologies that have the potential radically to affect how we live our lives – on Earth and in space”.

This series looked at virtual reality firm Magic Leap on Tuesday and given their past year, it is easy to see why Space Exploration Technologies (SpaceX) and OneWeb have attracted so much attention for how they can develop reusable rockets and provide global internet connectivity, respectively. 

SpaceX, the US-based space travel company formed by serial entrepreneur Elon Musk, raised $1bn, of which Google provided $900m, according to the Wall Street Journal, with financial services provider Fidelity providing the rest. The round reportedly valued SpaceX at $12bn and increased the company’s overall funding to about $1.25bn.

Peter Diamandis, a co-founder of the Singularity University based on US space agency Nasa’s flight centre in California, had SpaceX’s successful landing of the Falcon 9 first stage as its top breakthrough of 2015.

Diamandis’ optimistic view that the world is entering a period of abundance – albeit one that only a few will surf and the rest will be crushed by the changes coming – has partly been based that such rockets will help people explore and live outside of the Earth.

He had Nasa confirming evidence of water on Mars as his number 10 breakthrough last year but at number five was the world moving “one step closer to global internet connectivity” with a reference to OneWeb, a UK-based startup that aims to use satellites to increase worldwide internet coverage, earlier that week.

OneWeb raised $500m from semiconductor technology producer Qualcomm, Virgin Group, the conglomerate that owns space exploration company Virgin Galactic, aerospace company Airbus, conglomerate Bharti Enterprises, beverages producer The Coca-Cola Company, satellite communication company Intelsat, Hughes Network Systems, which operates as a satellite communications subsidiary of satellite service provider EchoStar, and Totalplay, a subsidiary of conglomerate Grupo Salinas.

OneWeb intends to establish a network of low earth orbit satellites with a total of 10 terabits of new capacity that will potentially be able to provide internet connectivity to billions of people worldwide.

OneWeb is competing with O3b Networks, a UK-based satellite operator backed by Google, satellite operator SES and diversified holding company Sofina, that closed $460m in incremental financing from undisclosed investors last year.

Founded in 2007, O3b operates a network of satellites used by 40 telecommunication network operators, internet service providers, business and government customers since it launched the service commercially in September 2014.

At a smaller scale, Planet Labs, a US-based satellite imaging company backed by media company O’Reilly Media, closed a $118m series D round last year from a consortium including International Finance Corporation (IFC), the World Bank’s commercial investment arm.

Planet Labs provides frequently updated images of the earth from a network of almost 100 of its satellites, known as Doves.

Spire, a startup formerly called NanoSatisfi backed by China’s Qihoo 360 in it’s A round, last year raised $40m in its series B round to move into mass-production of its nanosatellites filled with software-radio technology that can produce reams of data by listening instead of looking. Promus Ventures led by the B round, joined by Bessemer Venture Partners and Jump Capital and existing investors, including RRE Ventures and Lemnos Labs.

Box: Other access projects to watch

Also noteworthy are two intrapreneurially-driven projects, Facebook’s Internet.org developing drones and a satellite constellation and Google’s Project Loon to see if helium balloons can provide global internet connectivity (a project now under its Alphabet holding company), as well as Microsoft, which in November started a fund to support companies looking to help expand low-cost internet access to traditionally underserved markets. The fund, created as part of Microsoft’s Affordable Access Initiative, will provide an average of $75,000 for each successful applicant. It will consider commercial organisations with at least two full-time employees that can produce a working prototype of its technology and, if possible, paying customers.

Separately, Toronto-listed nanosatellite maker UrtheCast took on a powerful advisory board last year including Google’s Michele Weslander Quaid, while XO Markets, the parent company of NanoRacks, raised it’s A round back in 2013.

Using these hardware launches have been startups, such as US-based geospatial software developer Boundless, which secured more than $5m in a series B round led by Motorola Solutions Venture Capital. Existing investors Vanedge Capital, a venture capital fund backed by game producer Electronic Arts, and In-Q-Tel, the investment vehicle of the US intelligence community, also participated in the round.

And space has dedicated venture funds after UK-based venture capital fund Seraphim Capital secured corporate backers Airbus Space UK, a space technology subsidiary of aerospace company Airbus, electronic systems producer Thales, satellite services provider Telespazio, space equipment manufacturer Com Dev and satellite operator Avanti for an £80m ($125m) fund. This joins a similar space fund managed by Triangle on behalf of the European Space Agency.

Table: Top communication access companies

SpaceX

OneWeb

O3b

Planet Labs

Spire

Boundless

Applications

Fred Wilson, storied venture capitalist at Union Square Ventures, in his “what happened in 2015” review summed up the year as “sometime in the past year or two the consumer internet/social/mobile gold rush ended” becoming instead a period of consolidation.

Using figures from ComScore for the top US applications, Wilson noted that the top six mobile apps are owned by Facebook and Google and 10 of the top 11 mobile apps by Apple, Facebook, and Google, with the exceptions to this oligopoly being Pandora Radio.

Given this, many of the exciting deals have come from groups trying to expand their platform and so this list of exciting deals from 2015 primarily comes from that context.

Wilson said: “There isn’t a single ‘startup’ on that list and the youngest company on that list is Snapchat, which is now over four years old.”

Snapchat raised $537m from a consortium including China’s Alibaba’s contribution as part of what could be a $600m series F round.

Wilson added: “The most exciting things that have happened in tech in 2015 [were] in verticals like transportation, hospitality, education, healthcare, and, maybe more than anything else, finance, where the lessons and playbooks of the consumer gold rush are being used with great effectiveness to disrupt incumbents and shake up industries.

“The same is true of the enterprise which also had a great year in 2015. Slack, and Dropbox before it, shows how powerful a consumerish approach to the enterprise can be.”

For his “what is going to happen in 2016,” Wilson said: “Slack will become so pervasive inside of enterprises that spam will become a problem and third party Slack spam filters will emerge. At the same time, the Slack platform will take off and building Slack bots will become the next big thing in enterprise software.”

US-based online messaging platform Slack Technologies certainly has the cash to try having raised $160m in series E funding at a $2.8bn valuation from investors including internet company Google last April before launching an $80m corporate venturing fund that will invest in companies to build an ecosystem around its app.

Slack provided more than half the capital for the fund, according to the Wall Street Journal, with the rest coming from six of its existing investors: Accel Partners, Andreessen Horowitz (A16Z), Index Ventures, Kleiner Perkins Caufield & Byers, Spark Capital and Social+Capital Partnership.

Heavy backing and a corporate venturing fund are part of the playbook for building a communications platform developed by probably the most disruptive and transformative company in the industry, South Africa-based media and commerce group Naspers.

There is a genius in taking an underwhelming set of strategic assets – newspapers focused on a minority population in an emerging market – and turning it through corporate venturing of minority stakes and internal development in two decades first into a multimedia stable of assets and then into a diversified conglomerate built on online commerce driven by content, usefulness and functionality.

While Naspers’ trophy asset in this transition and success remains Tencent, the playbook has worked through local management in Latin America (Brazil-based Movile, which raised $40m last year), India (Flipkart’s $550m round), Russia (Mail.ru), South Korea (indirectly through Tencent into Kakao Daum, which bought social network Path, which has a sizeable Indonesian user base), among others and its sights are increasingly turned on the US, such as its a $100m series A investment in US-based mobile commerce platform developer Letgo in September.

WeChat, which also has a South Africa-focused venture fund in partnership with Naspers, had 549 million monthly active users (MAUs) among more than one billion registered users, almost all of them in Asia, since launching in 2011 to target mobile while Tencent’s QQ system focused on desktop computers and more limited success on phones after 2003.

To put that in context, A16Z’s Connie Chan, in a very good blog post, When one app rules them all, about Tencent’s WeChat platform said: “That’s only 150 million MAUs fewer than Facebook Messenger, almost three-times the MAUs of Japan’s Line, and 10-times the MAUs of Korea’s Kakao.”

Discussing the importance of its commerce portal or wallet, Chan said: “Most of the companies highlighted in the WeChat Wallet portal have taken investment dollars from Tencent, or were launched by them…

“WeChat and ride-sharing service Didi Dache incented users to sign up for payments by offering free ride giveaways and discounts for hailing a taxi via WeChat….

“This might explain why other Chinese internet giants with similar distribution power (Alibaba, Baidu, Qihoo360, and Xiaomi) have all been doubling down on early stage investments and going head-to-head with China’s top VC firms. Imagine what would happen if that trend moved to the US., and if Facebook or Snapchat ever decided to strike favorable deals through early stage investing.”

Last year, Tencent’s $50m investment in Kik valued the messaging app developer at $1bn and increased its overall funding to more than $115m.

Tencent and Japan-based messaging company Line also invested $110m in 4:33 Creative Labs. Line had set up a $100m gaming fund at the end of 2014 and in February added a $42m Gateway fund for startups.

Japan-based peer, Rakuten, which has increasingly focused on financial services over the past year in its venturing deals, used its messaging app Viber to buy Wolfson-backed gaming development software company Nextpeer.

One of the most active investors to build an enterprise apps and communications platform has been Salesforce. In a profile by Rob Lavine, Salesforce Ventures, the corporate venturing arm of enterprise cloud software provider Salesforce.com, had a busy 2015, ramping up its investments as it watched its portfolio gather value and other businesses in the enterprise space look to copy its strategic investment model.

Salesforce Ventures launched its first dedicated fund, the $100m Salesforce1 Fund, in September 2014 in order to back companies developing mobile apps and connected products that link to the firm’s Salesforce1 mobile platform, now called App Cloud. According to the company’s third quarter report, the estimated fair value of its investments in privately held companies ballooned from $280m at the end of January to $654m by the end of October, and the expenses allocated to strategic investments totalled $325m for the first nine months of 2015.

Perhaps significantly, two of the first four investments from the fund were in e-signature technology provider DocuSign, which was helped in closing a $115m series E round, and sales acceleration platform InsideSales, which went on to raise $60m in a Salesforce Ventures-led round in March 2015.

Facebook’s strategy of acquisition to develop its mobile strategy has been successful, along with hiring PayPal’s CEO to help develop its Messenger app on WeChat lines but, as Chan noted, its venturing strategy has been nascent so far.

However, Aaron Jacobson, principal at NEA, in his 2016 predictions warned: “Next year will see the launch of a serious effort by Facebook to penetrate the enterprise with ‘Facebook at Work’.  LinkedIn, Microsoft, and Slack watch out!“

Microsoft, through its Office, Xbox and Skype suite, therefore, could face competition from its former portfolio company, Facebook, and over the past few years has been building up its Ventures and accelerator programmes, as well as funds for specific purposes, such as internet access (above).

But as consolidation increases, the question asked by investors is, what will break them up? Fred Wilson said: “I am certain that something will come along, like the internet did in the mid-1990s, to bust up this oligopoly (which is way better than a monopoly). But it is not yet clear what that thing is.”

Tomorrow and Friday we will look at some of these disruptions.

Table: Top communication applications platforms to watch

Snapchat

Slack

Naspers

Tencent

Kakao

Line

Rakuten

Salesforce