The week's review of venturing activity across our three titles, Global Corporate Venturing, Global University Venturing and Global Government Venturing.
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Rich Miner helped to launch Google Ventures in 2009 as general partner but seven years later, he’s dropped down to a venture partner position so he can concentrate on a secretive edtech project within the Google organisation. Miner brought important corporate venturing experience to the unit, now known as GV, having previously been part of the Orange Ventures team, and will be missed. But neutrals will be curious to see what he comes out with next, especially as he initially joined Google as co-founder of Android, which has latterly become one of its key components.
Other Google news: Light captures $30m in GV-led series C
The Foxconn-backed multi-aperture camera developer took its total funding to almost $65m in a round that will support the expansion of its worldwide supply chain.
Microsoft Ventures continues to build up its team, the latest recruit being Matthew Goldstein who comes from VC firm Trinity Ventures where he was principal. Goldstein had been promoted from associate only four months before, and was active in cybersecurity, edtech, fintech and financial services investments. According to insights drawn from the GCV Analytics team, two of Microsoft Ventures’ first five deals under Nagraj Kashyap included Trinty in the syndicates so the two firms have a good working relationship it seems.
The first GCV Analytics ‘Data Digest’ monthly bulletin. The bulletin will be produced once a month for GCV Analytics subscribers, but as a taster, this first edition is available to all our contacts in the corporate venturing ecosystem. Each month, a special slide deck will be available to view and download. GCV Analytics presented findings and data insights at the GCV London Symposium 2016 in May to a standing room only audience. The attached in-depth presentation includes special features on Artificial Intelligence, the Internet of Things (IoT), and the Oil & Gas sector. You can find the slide deck here.
FUNDS
But Microsoft is not stopping at these Ventures deals – full profile in this month’s GCV magazine out in the next week – as it is continuing with the expansion of its corporate venturing activities, forming a $92m fund to invest in Brazil-based agribusiness technology startups. Monsanto’s Monsanto Growth Ventures unit and Qualcomm are partnering with Microsoft on the fund, which will supply up to $460,000 in convertible debt financing to each portfolio company.
For our next Brazil event will be on 24-26 October and having had venturing leaders from Microsoft, Qualcomm and Monsanto all speak at last year’s event curated by GCV and organized by Apex-Brasil it is perhaps no surprise that they were able to come together for this new fund: https://corporateventurebrasil.splashthat.com/
As Franklin Luzes, COO of Microsoft Participações in a testimonial for the last event said: “The Corporate Venture in Brasil 2015 [conference] was a great business networking opportunity to engage with well-known corporate ventures executives in Brazil and abroad, venture capital fund managers and thoughtful leaders in the industry.
“Moreover, it was an exceptional activity to nurture the entrepreneurship ecosystem in Brazil, due to the exchange knowledge sections and fireside conversations among important executives on the venture capital industry not only from Brazil but also international players with remarkable achievements.”
Franklin is the one in charge to manage the new fund in partnership with Mateus Barros and MSW Capital.
Kellogg is just one of the packaged food producers to launch corporate venturing units in the past year, and we spoke to its vice-president of investor relations Simon Burton about the formation of its new Eighteen94 Capital subsidiary and where the funding will go. 1894 has about $100m in capital to invest and will generally provide between $1m and $3m each time.
Hanmi hands over $8.7m to corporate venturing unit
Korea-headquartered drug producer Hanmi Pharmaceutical will back biotech and pharmaceutical startups through its newly formed Hanmi Ventures subsidiary.
University Corner:
Four universities partner Mercia
Four universities in the north of England and Scotland have entered into a partnership with Mercia Technologies to bring the total membership of its university partnership group to 18.
Mercia Fund Management has provided $400,000 in follow-on funding to Leicester University spinout MIP Diagnostics as it completes set milestones and sets up its sales pipeline.
Government Department:
UK venture capital firm Draper Esprit has listed on London’s alternative investment market and the Irish stock exchange, raising $138m for future investments.
EXITS
Recruit Holdings has bought classified job listings platform and search engine Simply Hired for an undisclosed amount, a month after the company announced it was to be acquired. Simply Hired had raised $34m from investors including IDG Ventures and Fox Interactive, and will partner Recruit’s Indeed.com subsidiary post-acquisition.
Two of conglomerate Legend Holdings’ investment affiliates – Legend Capital and Hony Capital – helped invest $15m in Chinese tyre manufacturer Shandong Linglong Tyre Co in 2010, and they’ve now exited in a $390m IPO on the Shanghai Stock Exchange. Linglong Tyre initially filed for the IPO in May 2014 and was one of almost 900 companies reportedly waiting to float in China, helping to illustrate the difficulties in a country that suspended IPOs for four months last year in order to help stabilise the markets.
Genomic medicine developer Syros Pharmaceuticals floated in the US last week, and since then its shares have risen in price by almost 50%, from the IPO price of $12.50 to $18 as of close of trading yesterday. Its underwriters have accordingly taken up the over-allotment option and enabled Syros to close the offering at $57.5m. Syros had previously raised about $125m in VC funding, $9m of which came from pharmaceutical company WuXi PharmTech.
Another gene therapy developer, GenSight Biologics, had less luck when it tried for an IPO in the US market last year, cancelling an offering set to raise up to $70m. The Novartis-backed company has now set its sights on more modest goals, and will aim to raise $44m in an IPO in its home country of France, with its existing backers set to buy almost $19m of shares in the offering.
China-based Android app store Wandoujia was valued at $1bn in early 2014, not long before Alibaba reportedly offered to buy it for $1.5bn. Two years on, the e-commerce firm looks to have netted a bargain by agreeing to acquire Wandoujia for a reported $200m in a deal that will boost its internet services business. SoftBank is among the investors that will exit Wandoujia through the transaction.
Speaking of valuation drops, India-based fashion e-commerce platform Jabong is in talks with a range of prospective buyers over an acquisition that will allow co-founder Rocket Internet to exit. Snapdeal, Flipkart, Aditya Birla, Future Group and Alibaba are all reportedly interested in Jabong, said to be worth in excess of $1bn just over 18 months ago, and the purchase price looks likely to range from $300m to only $75m depending on which source you believe.
The Alphabet and IDG-backed furniture e-commerce marketplace had raised $21m in the past two years but has now ceased operations.
Vyclone, a Los Angeles-based social video creation and collaboration app, is shutting down. The company had raised $2.7m in series A funding in 2012 at a $14.3 million pre-money valuation, from A-Grade Investments, Live Nation Entertainment, Thrive Capital and DreamWorks Animation SKG.
University Corner:
Cybersecurity spinout Quadmetrics acquired by Fico
Michigan University spinout Quadmetrics has been acquired by analytics company Fico to enable it to give companies a single cybersecurity risk assessment score.
INVESTMENTS
Instalment buying platform Qufenqi has changed its name to Qudian and raised $449m on the way to an IPO, just over three years after it was founded. Mobile app and smart device maker Hangzhou Liaison Interactive Information Technology co-led the round, following on from earlier investments by backers including Kunlun Tech and Ant Financial. The company closed the funding as it prepares to expand its services to capitalise on its large following among university students.
e-Shang raises $300M Corporate Minority round
The China-based real estate and warehouse management platform raised from Ping An Insurance.
Autonomous car startup Zoox has just raised $200m in funding, according to Business Insider, despite operating in super-stealth mode. Although no investors were disclosed it would be little surprise if corporate venturers are not involved from the startup by a co-founder of Tesla. Earlier reports on Zoox’s plans indicate that its fully autonomous vehicle won’t have windshields, a steering wheel or brake pedal; it will also be able to drive in any direction, with seating such that passengers face each other.
WuXi PharmaTech is among the investors to have put up $150m of series A funding for CStone Pharmaceuticals, a China-based startup looking to develop treatments for oncology, cardiovascular diseases, rheumatoid arthritis, haematology and autoimmune diseases, with a particular focus on immuno-oncology. The pharmaceutical firm participated in the round through its WuXi Healthcare Ventures subsidiary, investing together with Oriza Seed Venture Capital and Boyu Capital.
Media operator Network18 first invested in Bigtree Entertainment, the owner of cinema and live entertainment ticketing platform BookMyShow, in 2007 and it has returned to once again take part in its latest funding, an $81m round that values the company at more than $440m. BookMyShow sold some 100 million tickets in the year leading up to April 2016, and plans to expand its offering by adding a reviews platform.
SoftBank-backed budget hotel room booking platform Oyo Rooms is set to raise $61m from existing investors at a $460m pre-money valuation as part of an expansion drive that will involve it growing its presence in areas like bed and breakfasts and homestays. The news comes the week after Oyo’s rivals, FabHotels, raised $8m while another competitor, Treebo, is lining up a round expected to be sized at up to $25m.
SmartNews, a Japan-based mobile news aggregation app, has raised $38 million in Series D funding. Development Bank of Japan led the round, and was joined by SMBC Venture Capital and Japan Co-Invest. TechCrunch reports that the deal values SmartNews at between $500m and $600m (post-money), compared to its prior valuation of $320m.
University Corner:
Cyber threat detection and defense software provider Darktrace has secured $65m at a $400m valuation, four times that at which it last raised funding, in July 2015. Investors in the round, which will support international growth, include SB ISAT, the venture capital fund formed by Asian telecom companies SoftBank and Indosat. But not Invoke, a VC firm that had previously led its rounds and had wanted to provide resources to university spinouts. Mike Lynch, founder of Invoke, by email said: “There was not capacity for Invoke as KKR has a minimum [ticket] size and we wanted them in.”
Government Department:
Temasek Holdings investment in internet of things
Temasek Holdings, through subsidiary Pavilion Capital, has invested in internet-of-things telecommunications platform Soracom’s $5.7m round as it expands through Asia.
Temasek has multiple ways to play the private markets, including its Vertex venture unit but also through its listed holdings, with six agreeing to partner Microsoft Accelerators in order to see emerging startups. (GCv is partnering with the Singapore government through its NRF unit in order to bring CVCs to its conference on 21 September.)
Interestingly, Temasek’s portfolio was valued at S$242bn ($180bn) as at 31 March 2016 withone-year Total Shareholder Return (TSR) of -9.02% for the prior 12 months, “reflecting share price declines of our listed investments, offset by the performance of unlisted assets”.
Lee Theng Kiat, executive director and CEO of Temasek International, said: “Temasek continues to be an active investor. We invested S$30bn and divested a record S$28bn of our portfolio last year.”
The US accounted for the largest share of its new investments during the year, followed by China.
Temasek said its new investments were funded primarily with divestment proceeds plus dividend incomes, and guided by four investment themes:
· Transforming Economies;
· Growing Middle Income Populations;
· Deepening Comparative Advantages; and
· Emerging Champions
Within these investment themes, Temasek focused on financial services, telecommunications, media and technology, and life sciences and agriculture.
In the financial services space, it continued to expand into non-banking sub-sectors, including an investment in PayPal, a digital payment service provider operating in more than 200 markets worldwide, and “smaller but fast-growing technology-enabled companies, such as SoFi and C2FO in the US, Funding Circle in the UK, and BillDesk and Policy Bazaar in India”.
In terms of companies with “competitive advantages”, Temasek invested in Airbnb, a global marketplace for travel accommodation in 190 countries worldwide, and increased its investment in Didi Chuxing, a Chinese transportation network company, and Meituan-Dianping, an online-to-offline local service platform in China.
In life sciences & agriculture, Temasek invested in WuXi PharmaTech, a global provider of laboratory and manufacturing services to biopharma and medical device companies. Other investments included Alvogen, an international generics pharmaceuticals company, and an increased stake in Cofco International Limited, a holding company which owns the controlling stakes in international supply chain managers Nidera and Noble Agri, in conjunction with its buyout of the remaining Noble Agri minority stake.
Lee also said that Temasek would open a second office in the US, in San Francisco, later this year.
He said: “Our new office in San Francisco will give us a good window to tech-related investment opportunities in Silicon Valley. We look forward to more opportunities to deepen our connections with innovators and disruptive businesses in the world’s largest innovation hub.”
In May 2016, Temasek reorganised its management team by regrouping various units into a new Sustainability & Stewardship Group, brought together under a single integrated Investment Group its sector and market investment teams, and formed a new Portfolio Strategy & Risk Group to focus on long term portfolio resilience and risks.
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