Big rise in June

The world started 2021 with the hope it could leave the covid-19 pandemic behind, thanks to vaccines. This optimism has pervaded the investment world and investing is in full swing. The record rise in capital raised in June, following encouraging progress since March, shows how sustained this bullishness appears to be. Exits and funding initiatives also made significant inroads.

According to GCV Analytics, in June, the number of corporate-backed deals from around the world was 520, nearly 61% higher than the 323 rounds from the same month last year.

Investment value stood at nearly $32.88bn in total estimated capital – nearly three times the $11.36bn of June 2020. June was also a record-breaking month for 2021, registering the highest number of deals and total estimated dollars.

The US came first in the number of corporate-backed deals, hosting 205 rounds, while Japan was second with 66 and China – third with 43.

The leading corporate investors by number of deals were telecoms and internet conglomerate SoftBank cloud enterprise software provider Salesforce and diversified internet conglomerate Alphabet. In terms of involvement in the largest deals, financial services firm Fidelity was on the top of the list along with Softbank and Alphabet.

GCV Analytics reported 29 corporate-backed funding initiatives, including VC funds, new venturing units, incubators, accelerators and other. This figure was comparable with the one from May 2020, which registered 26 initiatives. The estimated capital stood at $4.94bn, nearly 34% up from $3.70bn from the same month last year.

Deals

Emerging businesses from the health, IT, business services and fintech sectors led in raising the largest number of rounds in June 2021. The most active corporate venturers came from the financial, IT, media and consumer sectors.

Automotive manufacturers Volkswagen invested $620m to co-lead a $2.75bn private placement for Sweden-headquartered battery producer Northvolt that also featured commercial vehicle producer Scania.

The round was co-led by investment bank Goldman Sachs’ Asset Management subsidiary, pension funds AP1, AP2, AP3, AP4 and Omers Capital Markets, a vehicle for pension fund manager Omers, among other investors.

Northvolt manufactures lithium-ion batteries for use in electric vehicles, portable electronics products such as drones and renewable energy storage. The financing will support the expansion of the company’s Gigafactory from a capacity of 40 GWh per year to 60 GWh per year. The company is considering building another two facilities by 2030 to handle a projected increase in demand.

Waymo, the autonomous driving technology developer spun off by US-based technology group Alphabet, raised $2.5bn in funding from investors including its former parent company. Automotive retailer AutoNation and automotive component manufacturer Magna International took part in the round, as did Fidelity Management & Research, among other investors.

Waymo is developing an autonomous driving system called Waymo Driver for use in driverless taxis, package delivery vehicles and freight trucks. It has launched an autonomous taxi service in the US city of Phoenix and has a logistics offshoot dubbed Waymo Via. The funding will be used to enhance Waymo Driver, which has powered test drives in some 25 US cities, in addition to upping headcount.

China-based semiconductor technology developer Horizon Robotics raised $1.5bn in series C7 funding from electronic parts manufacturer BOE Technology and chipmaker Will Semiconductor. The round was secured at a $5bn valuation, and came after a $300m series C6 round at an unspecified time that included Legend Capital, the venture capital firm formed by conglomerate Legend Holdings,  investment firm Huangpu River Capital and unnamed other entities.

Founded in 2015, Horizon is working on artificial intelligence (AI) algorithm-equipped chips for applications in areas including autonomous mobility, security cameras and internet-of-things devices.

Brazil-based digital bank operator Nubank secured $750m in an extension led by conglomerate Berkshire Hathaway to increase its series G round to $1.15bn. Absoluto Partners, Advent’s Sunley House Capital, Canada Pension Plan Investment Board, MSA Capital, Sands Capital and Verde Asset Management also took part in the extension, which reportedly valued the company at $30bn. The round’s $400m first close took place in January and featured internet group Tencent. It was co-led by Singaporean sovereign wealth fund GIC and investment advisers Whale Rock and Invesco at a $25bn valuation, investing alongside Dragoneer, Ribbit Capital and Sequoia Capital.

Founded in 2013, Nubank provides online bank accounts
that come with a no-fee credit card and which are accessible through a mobile app. It initially catered to customers in its home country and has since expanded into other Latin American countries including Mexico, Colombia and Argentina.

Germany-based digital insurance provider Wefox completed a $650m series C round that included online lending platform developer Creditease and Salesforce Ventures, the investment arm of Salesforce. The round was led by VC firm Target Global and included Omers Ventures, Gsquared, Merian and its Jupiter subsidiary, Horizons Ventures, Eurazeo, Mubadala, Speedinvest, LGT, Alma Mundi Ventures, Victory Park Capital, GR Capital, Mountain Partners, Seedcamp, Sound Ventures, Partners Group and FinTLV.

Wefox has built a digital insurance platform which offers coverage through intermediaries and which it says is already profitable. The round valued it at $3bn post-money and hiked its overall funding to roughly $940m. It is the largest series C round by an insurance technology provider.

Sweden-based payment software provider Klarna secured $639m in a round led by SoftBank’s Vision Fund 2. Adit Ventures, Honeycomb Asset Management and WestCap Group filled out the round, which valued the company at about $46bn.

Founded in 2005 as Kreditor, Klarna runs a payment scheme that enables e-commerce customers to pay per month after their purchase. It will use the cash for global expansion, having recently opened a branch in France.

SoftBank’s Vision Fund 2 co-led a $600m series D round for UK-headquartered surgical robotics technology developer CMR Surgical, along with healthcare investment group Ally Bridge. GE Healthcare, a subsidiary of power and industrial technology conglomerate General Electric, also took part in the round, which valued the company at $3bn, as did Tencent. RPMI Railpen and Chimera filled out the consortium with existing backers including LGT and its Lightrock affiliate, Watrium, Cambridge Innovation Capital (CIC) and PFM Health Sciences.

CMR is the creator of Versius, a surgical robotics system intended to make keyhole surgery possible for a significantly wider range of patients. The cash will support the commercialisation of its technology.

UK-headquartered low earth orbit satellite technology developer OneWeb secured $500m from diversified conglomerate Bharti Enterprises, which exercised a call option from a shareholder’s agreement to increase its stake to 38.6%. The company is developing a constellation of 650 low earth orbit satellites through which it intends to offer global broadband connectivity. The financing preceded the launch of 36 OneWeb satellites. The company filed for bankruptcy in March 2020 after failing to secure new funding in the wake of the pandemic.

Bharti and the UK government bought OneWeb’s assets for $1bn in July 2020. OneWeb has since raised funding from pre-bankruptcy investors including fellow satellite operator Eutelsat Communications, which agreed to invest $550m in exchange for approximately 24% of its shares in April 2021.

US-based blockchain payment platform developer Circle closed a $440m round that included cryptocurrency exchange FTX. It was reportedly the largest round so far for a crypto-focused company.

Financial services and investment groups Fidelity and Digital Currency Group also took part in the round, as did Atlas Merchant Capital, Breyer Capital, Intersection Fintech Ventures, Marshall Wace, Pillar VC, Valor Capital Group, Willett Advisors and Michael J Price and Friends.

Founded in 2013, the blockchain platform provides peer-to-peer financial software which helps users invest, transfer and trade virtual and traditional currencies. It claims to have supported more than 100 million transactions that total tens of billions of dollars altogether.

Canada-based identity authentication technology producer Trulioo secured $394m in a series D round valuing it at $1.75bn that included payment services provider American Express and financial services firm Citi. Growth equity firm TCV led the round, which included VC firms Blumberg Capital and Mouro Capital – the latter sponsored by financial services firm Santander. American Express and Citi invested through American Express Ventures and Citi Ventures respectively.

Founded in 2009, Trulioo has built a software tool that helps organisations such as banks to verify their clients’ identity to avoid money laundering and other financial frauds.

Exits

There was also record number of exits. GCV Analytics tracked 79 exits involving corporate venturers as either acquirers or exiting investors in June. The transactions included 43 acquisitions, 21 initial public offerings (IPOs), 12 other transactions (reverse mergers with SPACs), and three mergers.

The exit count was more than double the June 2020 figure (35). The total estimated exited capital stood at $27.74bn, considerably higher than the same month last year ($8.85bn).

China-headquartered ride hailing service provider Didi Global went public in a $4.44bn IPO on the New York Stock Exchange. The company has been backed by multiple corporates, including SoftBank, Tencent, e-commerce company Alibaba, insurance firms China Life and Ping An, electronics producer Apple, online travel agency Booking Holdings, car rental service eHi and social media company Sina Weibo. Didi increased the number of shares in the offering from 288 million to approximately 317 million American Depositary Shares (ADSs), with four ADSs equalling one class A share, pricing them at the top of the IPO’s $13 to $14 range.

Formed by the merger of peers Didi Dache and Kuaidi Dache in 2015 and formerly known as Didi Chuxing, Didi runs an on-demand ride service spanning its home country but has presence in Russia, Africa, Latin America, Central Asia and the Asia Pacific regions as well. It also offers food and package delivery in addition to automotive and financial services.

Payment services firm Visa agreed to acquire Sweden-based open banking software provider Tink for €1.8bn ($2.1bn), facilitating an exit for a host of corporates – postal service Poste Italiane, banking firms SEB, Nordnet, ABN Amro, BNP Paribas, Nordea as well as digital payment services provider PayPal.

The company has built an open banking platform that enables financial services companies to share customer data and build new features such as personal finance management tools.

It has integrated its application programming interface with more than 3,400 banks and financial services organisations.

Primary care provider One Medical agreed to buy Iora Health, a US-based peer backed by health insurer Humana and automotive and media group Cox Enterprises, in a $2.1bn all-share deal. The deal will give Iora’s shareholders a 26.1% stake in the merged business. One Medical floated in January 2020 in a $245m initial public offering giving it a valuation of roughly $1.7bn following venture funding from investors including Alphabet’s GV unit. Founded in 2010, Iora runs a network of 47 clinics offering healthcare to recipients on federal health insurance scheme Medicare, many of whom are senior citizens. Its activities will complement One Medical’s customer base, most of whom are privately insured.

E-commerce marketplace Etsy agreed to acquire Depop, the UK-headquartered social commerce platform developer backed by consultancy group Lumar, for more than $1.62bn. The deal came after roughly $100m in funding for Depop since it was founded in 2011. In 2016, it had a raised $8.25m round, which featured Lumar. Depop operates a mobile platform with 30 million registered users – 90% of whom are under 26 years of age – who can buy and sell secondhand and new fashion items in addition to offering styling services. It generated $70m in revenue in 2020.

China-headquartered trucking services platform developer Full Truck Alliance, also known as Manbang Group, secured almost $1.57bn in an IPO, giving an exit to corporates SoftBank, Alphabet, Baidu and Tencent. The offering consisted of 82.5 million ADSs, each representing 20 ordinary shares, issued on the New York Stock Exchange and priced at the top of its $17 to $19 range.

Ontario Teachers’ Pension Plan Board and an affiliate of Mubadala Investment Company bought $100m of shares each through a private placement. Full Truck Alliance operates a digital freight platform that gives shippers access to a network of some 2.8 million trucks, utilising artificial intelligence to increase efficiency. The company made a $532m net loss in 2020 from just over $395m in revenue.

Marqeta, a US-headquartered card-issuing platform developer backed by financial services firm CommerzBank, online lending marketplace CreditEase and payment services providers Visa and Mastercard, closed its IPO at approximately $1.41bn. The company raised an initial $1.22bn in the offering, issuing 45.5 million class A shares on the Nasdaq Global Select Market priced at $27 each. The underwriters also rook up the option to buy more than 6.8 million more shares. The IPO followed more than $526m in funding for the company, which had raised an undisclosed amount from Mastercard in October 2020.

Founded in 2010, Marqeta has built a technology platform that enables businesses issue physical or virtual payment cards as well as settle payment transactions. It made a $47.7m net loss in 2020 from $290m in revenue.

Customer engagement software developer Sinch agreed to acquire Australia-based mobile messaging platform developer MessageMedia in a $1.3bn transaction facilitating an exit for SoftBank. The deal consisted of $1.1bn in cash, with the remainder to be supplied in the form of 1.1 million new Sinch shares. It followed reports publicly listed Sinch had raised $1.1bn from investors including SoftBank and Singaporean state-owned investment firm Temasek. MessageMedia has built an online messaging platform that helps small and medium-sized businesses communicate and interact with their customers over mobile. It processes more than 5 billion mobile messages each year and is used by more than 60,000 customers. 

SentinelOne, a US-based cybersecurity technology producer backed by mobile chipmaker Qualcomm and consumer electronics manufacturer Samsung, raised more than $1.22bn in an upsized IPO. The offering consisted of 35 million shares issued on the New York Stock Exchange, increased from an initial allocation of 32 million, priced at $35.00 each, above its $31 to $32 range. Existing SentinelOne investors Tiger Global Management, Insight Partners, Third Point Ventures and Sequoia Capital had agreed to acquire $50m more shares through a concurrent private placement. The IPO price valued the company at approximately $8.92bn. Founded in Israel, SentinelOne provides extended detection and response services through a cybersecurity software platform that works across endpoints, containers, cloud workloads and connected devices.

Financial services group JPMorgan Chase agreed to buy UK-headquartered digital wealth manager Nutmeg, enabling financial services firm Fubon Financial Holdings and investment banks Goldman Sachs and Schroders to exit. Although the companies did not officially disclose the size of the transaction, a source close to the deal told Reuters it was sized at nearly £700m ($980m).

Nutmeg operates a digital platform which manages investments for some 140,000 customers, offering a range of products including passively managed exchange-traded funds powered by JP Morgan Chase’s asset management business, JPMorgan Asset Management. The company is being bought to be the centrepiece of JPMorgan Chase’s international retail digital wealth management activities as it prepares to launch Chase as a digital bank in the UK.

Kanzhun, a China-based online job portal operator backed by Tencent and insurance firm Sunshine Life, floated in a $912m IPO on the Nasdaq Global Select Market. The company issued 48 million American depositary shares (ADSs), each representing two ordinary shares, priced at the top of the IPO’s $17 to $19 range. The subsequent price action giving the company a market capitalisation of over $15bn. Founded in 2014, Kanzhun is the developer of a big data-equipped social recruitment platform called Boss Zhipin which focuses on corporate reviews, employer branding and employee information sharing.

Note: Monthly data can fluctuate as additional data are reported after each issue of GCV magazine goes to press.