Slowdown in June

The number of corporate-backed deals GCV reported from around the globe in June was 246, down 10% from the 274 funding rounds from the same month last year. Investment value plummeted even more, by 70%, to $8.2bn – down from $27.3bn in June 2018.

In comparison with preceding months of 2019, June registered the lowest monthly result for the first half of the year in terms of deal count (with other months registering rounds in the upper 200s). The same holds true for the total estimated capital invested, which was lowest in the first half of 2019.

The US came first in the number of corporate-backed deals, hosting 88 rounds, while Japan was second with 38, China third with 29 and the UK fourth with 19.

The leading corporate investors by number of deals were diversified internet conglomerate Alphabet, telecoms firm SoftBank and consumer goods producer Unilever. In terms of involvement in the largest deals, SoftBank topped the list along with Alphabet and e-commerce firm JD.com

GCV Analytics reported 22 corporate-backed funding initiatives in June, including VC funds, newly launched venturing units, incubators, accelerators and other. This figure suggested a slight decrease over May which registered 25 such initiatives. The estimated capital raised in those initiatives stood at $2.46bn, up 26% from the estimated $1.9bn of the previous month.

Deals

Emerging businesses from the IT, services, health financial and consumer sectors led in raising largest number of rounds during the sixth month of 2019. The most active corporate venturers came from the financial services, IT, industrial and services sectors, as shown on the heatmap.

China-based electronics recycling service Aihuishou raised a funding round sized at more than $500m, led by JD.com. Tiger Global Management, Morningside Venture Capital, GenBridge Capital, Tiantu Capital and Fresh Capital also participated in the round. As part of its investment, JD.com will merge its own second-hand e-commerce platform, Paipai, with Aihuishou. JD will become the largest shareholder in Aihuishou through the transaction, which valued the merged business at more than $2.5bn. Founded in 2011, Aihuishou operates a consumer-to-business platform that enables individuals to sell used electronics such as laptops and mobile phones through an online bidding process. Aihuishou then extracts rare materials from the devices and sells them back to manufacturers.

China-based electric car developer Bordrin Motor collected RMB2.5bn ($362m) from a consortium led by Silver Saddle Equity Investment Management, an investment arm of chemicals, oil and fertiliser conglomerate Sinochem International. The round included power tools manufacturer Positec and Sumitomo Corporation Equity Asia, a corporate venturing division of diversified conglomerate Sumitomo. Prosperity Investment, Pukou High Investment, Yuanxing Investment, China Science & Merchants Investment Management and other, unnamed investors also contributed to the round. Founded in 2016, Bordrin Motor is developing smart electric vehicles. The funding will go to product development and marketing activities.

Brazil-based fitness membership service Gympass secured a reported $300m in a funding round led by SoftBank Vision Fund, the $98.6bn investment vehicle managed by SoftBank. SoftBank’s $5bn Latin America Fund also participated, as did growth equity firm General Atlantic, investment group Valor and venture capital firm Atomico. Founded in 2012, Gympass operates a corporate fitness platform for employers to offer gym membership as a benefit to staff. The company has partnered fitness providers in 566 cities across the Americas and Europe, covering almost 47,000 gyms.

Ouyeel, an online steel trading platform created by China-based iron and steel producer China Baowu Steel, secured RMB 2.02bn ($294m) in funding from investors including its parent company. Logistics service Sinotrans, steel provider Benxi Group and industrial and mining group Beijing Jianlong Heavy Industry were joined by Citic Securities, China Merchants Group, the government-owned China Structural Reform Fund, and Baoshan Iron and Steel, a subsidiary of Baowu Steel. Founded in 2016, Ouyeel operates a cross-border platform covering 27 countries and regions that allows users to trade steel and related products and commodities, while businesses can enhance their supply chain capabilities. The company also offers supply chain credit and credit insurance through partners, as well as services such as maritime shipping, warehousing and processing.

Switzerland-based oncology drug developer ADC Therapeutics received $76m in additional series E financing, bringing the round, already backed by pharmaceutical firm AstraZeneca, to a $276m close. The additional capital was supplied by unnamed existing and new investors. The first tranche was led by private equity firm Auven Therapeutics in late 2017 and, apart from AstraZeneca, it also featured hedge fund Redmile, Wild Family Office and undisclosed additional backers. ADC is working on antibody drug conjugates that target haematological cancers and solid tumours, and has multiple assets in the clinic. The capital will support preparations for a phase 2 trial of a potential treatment for Hodgkin lymphoma. The funding will also go toward preparations for a possible biologic licence application for a candidate being developed to treat relapsed or refractory diffuse large B-cell lymphoma.

US-based digital manufacturing technology provider Carbon raised more than $260m in funding from investors including sporting apparel producer Adidas, chemicals provider Arkema, pharmaceutical group Johnson & Johnson and advanced materials manufacturer JSR. Venture capital firm Madrone Capital Partners and investment manager Baillie Gifford co-led the round, which also featured investment and financial services group Fidelity Management & Research (FRM), Temasek and Sequoia Capital. Adidas and Johnson & Johnson participated in the round through corporate venturing vehicles Johnson & Johnson Innovation – JJDC and Adidas Ventures. Carbon has created a method of additive manufacturing combining digital light projection, programmable liquid resins and oxygen permeable optics to produce 3D printed components. The cash will fund the completion of a facility to fuel research and development.

SoftBank’s Vision Fund led a $205m funding round for US-based workplace health management technology provider Collective Health. The round included GV, a subsidiary of internet and technology group Alphabet, as well as financial services firm Sun Life, PSP Investments, DFJ Growth, G Squared, Founders Fund, Maverick Ventures, Mubadala Ventures and New Enterprise Associates (NEA). Collective Health supplies software that helps businesses manage their employee health plans more efficiently and easily, providing analytics tools that helps them monitor and control costs. The capital will be used to boost technology capabilities, expand its range of healthcare partners and hire more staff.

Brazil-based consumer loan provider Creditas collected $200m in funding from SoftBank, reportedly at a $700m post-money valuation. Founded in 2012 as BankFacil, Creditas operates an online lending platform that provides secured personal loans sized between R$5,000 and R$2m ($1,250 to $500,000). It has issued more than $125m in loans to date. The company accepts cars and real estate as collateral, charging an average of 2% in interest on loans secured against the former and 1.25% interest on those against the latter, undercutting rates of up to 13% typically charged on overdrafts, credit cards and unsecured loans in Brazil.

China-based sports commentary platform Hupu Sports Shanghai Media received RMB1.26bn ($182m) in pre-initial public offering funding from digital media company ByteDance. The deal gave ByteDance, the owner of short video app TikTok and aggregated news app Toutiao, a 30% stake in Hupu, making it the single largest shareholder in the business. Founded in 2004, Hupu operates a sports commentary and news portal as well as an app that delivers near real-time text updates about the US National Basketball Association and an online sports apparel marketplace called Shihuo. ByteDance and Hupu will share their respective content and aim to connect users of each other’s platforms.

South Korea-based short-term accommodation services provider Yanolja received $180m in series D funding from online travel platform Booking Holdings and Singaporean sovereign wealth fund GIC. The round valued Yanolja at more than $1bn and followed reports that the company had raised as much as $200m in funding. The company is gearing up for an IPO as early as 2020. Founded in 2005, Yanolja converts rooms in guest houses, bed and breakfasts and love hotels into modern short-term accommodation aimed at millennial couples and tourists on a budget.

Exits

In June, GCV Analytics tracked 24 exits involving corporate venturers as either acquirers or exiting investors. The transactions included 15 acquisitions and nine initial public offerings (IPOs).

The exit count figure decreased compared with May, which registered 30 exits. The total estimated exited capital also dropped, drastically, to $6.01bn versus the $12.90bn in the previous month, representing a 53% decrease. In comparison with the same month of 2018, the exits count was higher 31 and so was the estimated total capital in exits – $8.18bn.

On-demand ride provider Uber agreed to acquire United Arab Emirates-based ride hailing service Careem for $3.1bn, providing exits for e-commerce company Rakuten, telecom firm Saudi Telecom, travel agency service provider Al Tayyar, ride hailing service provider Didi Chuxing and carmaker Daimler. The deal consisted of $1.4bn in cash and $1.7bn in convertible notes, which will be reportedly convertible to Uber stock at a price of $55 per share. Uber expects to file for its IPO. Careem operates a ride hailing platform that covers more than 100 cities in the Middle East, Africa, Turkey and Pakistan in addition to a digital payment business, Careem Pay, and a last-mile delivery service called Careem Now.

US-based on-demand ride provider Lyft, which counted several corporates among its investors, raised $2.34bn in an IPOin which it floated at the top of its range. Lyft issued 32.5 million shares priced at $72.00 each. It had initially planned to issue almost 30.8 million shares priced between $62 and $68 each, before upgrading the range from to $70 to $72. The company was valued at $24.3bn in the offering. Previous corporate backers of Lyft include Alphabet, e-commerce firms Rakuten and Alibaba, carmakers GM and Jaguar Land Rover, its peer Didi Chuxing, automotive parts maker Magna and holding company Icahn Enterprise. Founded in 2012, Lyft runs a ride hailing platform that facilitated rides for some 30.7 million users in 2018, through a network of about 1.9 million drivers. It made a $911m net loss in 2018 from approximately $2.16bn in revenue.

Video-based social media platform YY completed the acquisition of one of its portfolio companies, Singapore-based social video livestreaming platform developer Bigo, for more than $1.45bn. YY paid approximately $343m in cash, with the remainder made up of shares. YY had owned approximately 31.7% of Bigo ahead of the acquisition. Founded in 2015, Bigo’s flagship product is a livestreaming platform called Bigo Live. It also offers a short-form video-based social media service known as Like as well as a range of other apps such as gaming-focused streaming platform CubeTV. Bigo relies on artificial intelligence technology to remove sexually suggestive content from its platform and has unveiled plans to partner governments in order to utilise the same technology for cyber surveillance.

Verano, a US-based vertically integrated cannabis group backed by cannabinoid therapy developer Scythian Biosciences, agreed to an $850m acquisition by its peer Harvest Health and Recreation. The all-stock transaction assumes a Harvest share price of C$8.79 ($6.57) and is set to close within the first half of the year. It is subject to customary closing conditions including shareholder approval. Verano operates licensed cannabis cultivation and manufacturing facilities, produces a wide range of cannabis products such as edibles, extracts and concentrates, and owns dispensaries under the brand name Zen Leaf.

Online classified listings operator 58.com agreed to sell part of its stake in China-based automotive marketplace operator Chehaoduo to an unnamed third-party investor for more than $713m. The corporate did not identify the purchasing investor, but it released the news on the same day as Chehaoduo secured $1.5bn in funding from SoftBank Vision Fund. The transaction is subject to unspecified closing conditions. 58.com will continue to own a minority shareholding in Chehaoduo once the deal closes. Chehaoduo was spun out of classified marketplace Ganji in 2015 and runs two distinct offerings: second-hand vehicle auction and trading platform Guazi and after-sales services platform Maodou.

Application services provider F5 agreed to acquire US-based app development technology producer Nginx for approximately $670m in a deal allowing telecoms firm Telstra to exit. Nginx was founded in 2011 to market the open-source web server and application delivery software of the same name. The company offers a premium version helping enterprises deliver content rapidly and securely, and the software is used in some 375 million websites, often for load balancing, where multiple workloads are distributed across several computing platforms. The company’s brand will continue to exist independently post-acquisition, but its product will be strengthened by F5’s security and cloud technology.

IT networking technology provider Juniper Networks agreed to acquire Mist Systems, a US-based developer of artificial intelligence (AI)-equipped wireless networks, for $405m, allowing corporates Alphabet, networking equipment manufacturer Cisco and telecoms firm NTT to exit. Founded in 2014, Mist has created a wireless platform that utilises AI to make wifi more reliable and predictable. It also features an AI assistant called Marvis that can help with troubleshooting while supplying precise data on how the network is operating and how clients are acting. Juniper is acquiring the company in order to expand its capabilities in the cloud-managed wireless networking space.

Figure Eight, a US-based artificial intelligence (AI) technology developer backed by software producers Microsoft and Salesforce, agreed to an acquisition by machine learning datasets provider Appen for $300m. Appen will pay $175m upfront and up to $125m in an additional payment next year, contingent on its 2019 performance. Founded in 2007, Figure Eight has built a machine learning software platform it claims can annotate text, image, audio and video up to 50 times faster than through human labour alone. The datasets are used to train artificial intelligence algorithms. The company was initially formed as Dolores Labs, before rebranding as CrowdFlower and, in February 2018, announcing a final name change, to Figure Eight.

Alcon, an eyecare subsidiary of pharmaceutical firm Novartis, agreed to buy US-based eyecare technology developer PowerVision, a portfolio company of pharmaceutical firm Novartis, in a $285m transaction. Alcon intends to further develop the product and advance it through clinical trials to prepare it for commercial availability. Founded in 2002, PowerVision is developing an intraocular lens (IOL) implant aimed at improving the sight of elderly patients suffering from cataracts and presbyopia, a condition that gradually reduces the eye’s ability to actively focus. The implant is inserted into the eye’s capsular bag and reacts to the natural contractions of the eye muscles to help make fluid thicker when viewing nearer objects and thinner when focusing on farther distances.

Medical technology provider Stryker acquired Israel-based shoulder implant developer OrthoSpace for up to $220m, enabling Johnson & Johnson and medical equipment manufacturer Smith & Nephew to exit. The all-cash deal consisted of an upfront payment of $110m from Stryker, followed by future milestone payments that could reach $110m. OrthoSpace has created a biodegradable balloon implant that helps reduce shoulder pain and improve the range of motion in the joint for patients with rotator cuff injuries. The product fits between bones in the shoulder to reduce friction. It has been approved in the EU and is currently undergoing clinical studies in the US.

Note: Monthly data can fluctuate as additional data are reported after GCV goes to press