What we learned from the 10 biggest CVC deals of 2023

Two big trends pushed forward at the top end of startup funding this year – one due to progress in technology and the other because of external factors. Generative AI and cleantech dominated.

1. OpenAI – Up to $10bn (January)

This was the year artificial intelligence became tech’s next big thing

This year wasn’t the first time OpenAI came onto the radar – it had raised $1bn from Microsoft back in 2019 – but the generative AI software provider set the tone this year when its main corporate backer came back with a deal to invest up to $10bn at a reported valuation of $19bn, two months before the company released the latest iteration of its ChatGPT AI bot. Suddenly, everyone was talking about artificial intelligence and every early-stage company was describing itself as an AI startup.

There are provisos – the $10bn figure is made up of several tranches and part of it is being supplied through cloud computing credits – and it’s hard to ignore some of the internal turmoil around CEO Sam Altman’s temporary ousting last month. However, OpenAI was reportedly discussing employee share sales at an $80bn valuation as of October, so it looks like this could end up being a bargain and a half for Microsoft even before you get into strategic tie-ups.

See the full list of CVC deals for 2023 here.

2. GTA Semiconductor – $1.8bn (September)

China is continuing to plough money into solving its semiconductor shortage

China Electronics Corporation and Huada Semiconductor were reportedly among the investors in a $1.8bn round for automotive chip manufacturer GTA, one of several Chinese semiconductor companies to raise big rounds this year. Why? Because China has big ambitions when it comes to technology, but its semiconductor industry lags behind that of the US, South Korea and Taiwan. Thousands of Chinese chip designers, meanwhile, are shutting down each year as US trade restrictions bite. China is responsible for under 10% of the world’s automotive chips despite being by far the biggest electric vehicle market.

GTA was not the only Chinese chipmaker to close a big round this year. Wafer manufacturer and testing services provider SJ Semiconductor nabbed $640m in series C funding while silicon carbide and gallium nitride semiconductor producer YASC secured over $560m in a massive series A round. Notably, these corporate-backed rounds were all made up entirely of domestic investors.

3. H2 Green Steel – $1.6bn (September)

Big industrial processes are the next big growth area in cleantech

H2 pulled in a little over $1.6bn from investors including Hitachi Energy and Schaeffler to finance construction of a flagship plant in Sweden that will produce steel using green hydrogen rather than coal, a method it says can reduce the CO2 emissions of steel production by up to 95%. That has the potential to have a sizeable impact on net zero targets considering steel manufacturing is responsible for some 7% of global emissions.

This deal came in a year where several companies raised big money for technologies that promised to make traditional industrial activities greener, including Kobold Metals, which uses AI to make mine location more efficient, Sublime Systems, which is working on technology that can make cement production cleaner, and Mighty Buildings, which utilises 3D printing to streamline home building.

4. Leapmotor – $1.6bn (October)

China is continuing to generate big electric vehicle startups

Chinese EV manufacturers dominated last year’s list of biggest deals, and Leapmotor made the running in 2023, agreeing a mega investment from Stellantis that gives the automotive manufacturer a 20% stake. It also formed a joint venture to distribute Leapmotor’s cars internationally.

Leapmotor was one of many Chinese EV companies raising money this year. Rox Motor received a billion-dollar investment from textile and aluminium manufacturer Weiqiao Pioneering just a month after releasing its debut vehicle, while Zeekr and Avatr collected over $1.2bn between them. EVs made up about a quarter of Chinese car sales this year so everyone knows the demand is there – the only question is how many of these brands the market can bear.

5. Inflection AI – $1.3bn (June)

OpenAI isn’t the only big player in the generative AI game

While several corporates, most notably Salesforce and Google owner Alphabet, invested heavily in AI this year, the two biggest CVC participants were Microsoft, which began incorporating generative AI heavily into search engine Bing, and Nvidia, the supplier of many of the more advanced microchips driving the progression of the technology. Both took part in a mammoth $1.3bn round for Inflection AI, which is developing a generative AI tool designed for personal interactions.

Microsoft also contributed to nine-figure rounds for Adept AI, Databricks, Typeface and D-Matrix, while Nvidia took the wraps off a newly formed CVC unit called Nventures, backing almost a dozen $100m-plus rounds for AI startups and expanding into new investment areas like pharmaceuticals. While 2024 promises to expand the range of areas in which generative AI is being used, what’s clear is that the sector has been anything but a two-horse race from the beginning.

See the full list of CVC deals for 2023 here.

6. Anthropic – $1.25bn (September)

Corporates are ready to make huge commitments to stake a position in the AI race

More or less every big tech company already involved in venture investing went big on AI in some way or other during 2023, with Anthropic one of the biggest recipients. The company, like OpenAI, had already raised substantial funds before the start of the year, but turbocharged that with corporate backing, bringing in over $2.6bn across multiple deals, with backers including Google, which put up $800m, SAP and SK Telecom.

Anthropic’s biggest backer ended up being Amazon, which provided an initial $1.25bn in September as the first step of a funding commitment that could reach $4bn. Why? Amazon doesn’t necessarily have the internal tech savvy to develop its own high-grade large language model but sees Anthropic’s text analysis chatbot as a route to improving its own internal services. The capper is that it also ties Anthropic in as a major customer of its AWS cloud computing services.

Most of the largest tech companies in the US saw hefty increases in share price this year, and while not everyone is backing more deals than, say, two years ago, they do seem willing to bet early and bet big in this space.

7. Northvolt – $1.2bn (August)

The automotive changeover is going to see car companies investing big in batteries

Volkswagen (VW) was among the investors as lithium-ion battery producer Northvolt added $1.2bn to the $1.1bn in convertible note financing it raised last year and commenced assembling battery systems at its Polish plant. Already an equity investor in Northbolt, VW placed a $14bn order for its battery cells back in 2021 before announcing a $20bn offshoot the following year to manage its battery supply chain.

Northvolt wasn’t the only battery developer to pull in big money from a carmaker this year. Verkor raised $906m in a Renault-backed round while GAC contributed to a $375m round for China’s Libode New Material and BMW took part in Our Next Energy’s $300m series B round. As the switch from combustion engines to plug-in electric continues, automotive manufacturers are having to secure battery capacity fast, and committing cash to the most promising startups is a useful way to do so.

8. EnergyRe – $1.2bn (December)

Government help is opening renewable energy up to a new investor base

Three-year old EnergyRe secured $1.2bn earlier this month from backers including Novo Holdings, and the US renewable energy developer will use the funds to add to its pipeline of wind and solar power generation as well as transmission and distributed energy projects. This came during a surge in activity that, in the US at least, was driven by tax cuts introduced by the Biden administration’s Inflation Reduction Act. Solar installation rates alone were expected to soar by over 50% there this year.

Other renewables companies raising big rounds included DSD Renewables, which pulled in $250m in investment from communications, media, and automotive group Cox in November, while commodities trader Vitol was part of a $350m round for India-based solar and wind project developer Juniper Green Energy in September, seven months after the Indian government unveiled a $4.3bn green energy investment plan. None of the corporate investors in these rounds were from the energy industry, signifying how open the sector is becoming as an investment target.

9. Redwood Materials – $1bn+ (August)

Gigafactories have raised the stakes for new hardware manufacturers

Northvolt may be the best funded of the battery startups but it wasn’t the only one to score a 10-figure round this year. Battery material recycler Redwood raised over $1bn in series D funding from investors including Caterpillar Venture Capital and Microsoft’s Climate Innovation Fund, having agreed a $2bn Department of Energy loan and a multibillion-dollar cathode material supply deal for Panasonic earlier in the year.

The money is being channelled into ongoing construction work on Redwood’s gigafactory, which is slated to produce enough cathode and anode components to power a million electric cars a year when it comes online in South Carolina’s ‘battery belt’. Practically every growth-stage battery and battery material producer has a massive-scale manufacturing facility either built or in progress, with hefty supply deals in place, and the economies of scale that can help them compete.

10. Stack AV – $1bn (September)

SoftBank hasn’t given up the ghost

One of the longest running startup sagas of recent years came to an end this year when WeWork finally shut down, having reportedly taken over $16bn in investment from SoftBank. It was only one of a string of bad deals that included robotic food preparation startup Zume, which shut down in June, and FTX, responsible for last year’s biggest startup scandal. SoftBank once reigned over the VC scene but slowed its investment rate considerably in the second half of 2022.

The company is still to regain its position of power there, but it was part of several nine-figure rounds this year, with CEO Masayoshi Son vowing in June to go on the ‘counteroffensive’. The biggest bet SoftBank made was to provide a reported $1bn for Stack AV. The autonomous trucking startup emerged from stealth in September having risen from the ashes of Argo AI, which went bankrupt in February after raising billions for its own autonomous driving technology. Whether that bet pays off remains to be seen, but what’s clear is that SoftBank is still at the table and unafraid to put its chips in.

See the full list of CVC deals for 2023 here.