CVC in 2020: The Trends, Part Two

Yesterday, in the first part of our 2020 roundup, we examined the macro trends in corporate venturing over the course of this year, but what about the more precise trends? Which areas of the tech and startup space made big jumps forward this year?

Telemedicine and digital health

It doesn’t take a genius to predict that digital health would be one of the most natural magnets for funding at a time when healthcare needs are intensifying while personal contact is being reduced.

The headline deals were perhaps Amwell closing a $194m series C round featuring Takeda and Allianz X in May before going public in a $742m IPO in September, and Teladoc Health paying $600m to acquire InTouch Health in January. Lyra Health, developer of a mental health wellness platform, pulled in $110m through an August series D round, and Mindstrong, creator of a rival service, had received $100m in an Optum Ventures-backed round three months earlier.

Health insurance provider Humana provided $100m for Heal in July through a strategic partnership and Baidu-backed Avail Medsystems secured $100m three months later. Other participants in the sector to raise decent amounts included MDLive, Truepill, Miaoshou Doctor, Eko Devices, Well Health, TigerConnect and K Health.

The technology also emerged as a crucial branch for more diversified healthcare service providers such as JD Health and Verily, in addition to digital health insurers like Oscar, which secured $140m last week and which has now confidentially filed to go public.

Digital health insurance

Oscar was one of several companies in the online health insurance space that did well this year, having combined health insurance with a digital model that utilises artificial intelligence technology to increase efficiency. It raised a total of $365m from investors including Alphabet and finished the year with a valuation of $16.7bn.

Another Alphabet portfolio company, Clover Health, agreed in October to execute a reverse merger with special purpose acquisition company Social Capital Hedosophia Holdings Corp III at a $3.7bn post-merger valuation.

UnitedHealthcare and Ascension Ventures-backed Bind received $105m in series B funding in October while China-based Waterdrop bagged a total of $380m from investors including Tencent and Swiss Re, doubling its valuation to $4bn in three months when it raised $150m in November.

Newer companies such as Nuanwa, Healthjoy, Sana Benefits and Sidecar Health began to emerge on the scene, while Accolade, the developer of a healthcare concierge platform intended to help users navigate the health insurance system, floated in a $220m initial public offering in July that provided exits for Comcast, McKesson, Humana and Independence Health.

RNA therapies

Moderna floated two years ago in a $604m initial public offering that stood as the largest biotech IPO ever at the time, but its investors were richly rewarded this year, as its share price shot up sixfold in the wake of it being one of the first companies to come up with a viable covid-19 vaccine.

That vaccine effectively functioned as the coming out party for RNA therapeutics, and its impact has been felt further down in the earlier stages as well, most dramatically with CureVac. The Germany-based company closed a $640m round in July that included $171m from GlaxoSmithKline, on the back of the potential for its messenger RNA technology to be used in covid-19 drugs or vaccines, and went public in a $213m IPO the following month valuing it at $2.8bn.

CureVac was far from the only company in that sphere to rake it in during the year. Alexandria Venture Investments took part in a $91.5m series A round for Korro Bio in September and contributed to an $81m round for Remix Therapeutics when it emerged from stealth three months later. China-based Ribo Life Science had already completed a $66.5m series C2 round back in April.

Online education

Healthcare wasn’t the only area to get a boost from social distancing in 2020. Online education providers also experienced a big jump, particularly in Asia where their technology was used to supplement existing solutions during coronavirus-related lockdowns.

A raft of Chinese companies raised big money in this sector in 2020, with Tencent making its presence felt as the largest investor in the space. It co-led a $1bn series G round for Yuanfudao in March that was followed by another $1bn in an October round valuing it at $15.5bn. The corporate also co-led an $80m series A round for Dami Wangxiao in January before leading a $100m round for Huohua Siwei in October.

SoftBank was also a prominent participant in China. Its Vision Fund took part in a $750m series E round for Zuoyebang in June, before its Vision Fund 2 vehicle led a $180m series C round for VIPThink last month.

In India meanwhile, Byju’s was the headline act, raising $900m across three rounds, the last a $500m series F round in October valuing it at $10.8bn, its earlier backers including Tencent, Naspers and Times Internet. Unacademy also managed to close three rounds, in the process pushing its valuation from $400m in a February round led by Facebook to $2bn last month, with Vision Fund investing in between.

Outside Asia, much of the funding was flowing toward adult learning and skills-based offerings. SoftBank paid $215m for a 9.7% stake in Kahoot in October, Bloomberg and WME-backed MasterClass secured $100m in a May series E round valuing it at over $800m, Skillshare closed a $66m round featuring Burda Principal Investments in August and Benesse and Naspers-backed Udemy raised $50m at a $3.25bn valuation in November.

The fintech boom

Financial technology was arguably the biggest growth sector of all, especially when you count the massive gains in market capitalisation by the likes of PayPal and Square over the course of the year. Both were also active investors, with Square backing the likes of Satispay, Oura and Transparent, while PayPal took part in nine-figure rounds for Neon Pagamentos, Paidy, Paxos and Tink, and committed $50m to diversity-focused venture firms in October.

In China, Alibaba affiliate Ant Group was two days away from floating in a $34.3bn initial public offering in November that would have qualified as the largest ever, before it was tugged back by Chinese regulators. Lufax, the digital financial services spinoff of insurance firm Ping An, had no such problem, going public in the US the same month and raising more than $2.36bn.

US-based Stripe meanwhile made a big jump towards the top of the valuation pile, pulling in $850m through an April series G round led by Alphabet unit CapitalG. By the time November rolled around, reports were suggesting it could target up to $100bn in its next round.

Fintech was the venue for some of the year’s biggest M&A deals, with Intuit paying $7.1bn to acquire CapitalG-backed Credit Karma in a deal agreed in February. Mastercard, Citi and American Express were set to exit Plaid, after PayPal agreed in January to buy it for $5.3bn, but with the US Department of Justice suing last month to block the acquisition over competition issues, it could be a long time before that one closes.

Digital banking took a big step forward however, despite uncertainty over the business model of some of its proponents. Tencent and Allianz helped N26 close a $570m round in May, Neon Pagamentos secured $300m from investors including PayPal and BBVA’s Propel Venture Partners firm in September and Varo Money closed a $241m series D round in June, featuring Progressive in June. Nine-figure amounts were also raised by Aspiration, Current, Monzo and Lydia.

Banking software also did well, with Thought Machine closing $125m in July, Alkami Technology taking $140m in September and Vida-backed Conductor snatching $170m in December, the same month Tink closed its latest round at $103m and Amount received $81m in a Goldman Sachs-led series C round. Salesforce Ventures saw a lucrative exit in July when portfolio company nCino went public in a $250m IPO.