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Big Stories
1
Spencer Chavez, a GCV Rising Stars 2020 winner, has stepped down from his position as principal at Salesforce Ventures to join KKR.
KKR has been building its tech growth team under Dave Welsh as traditional private equity firms move down towards growth equity deals for opportunities and as a window on disruptive trends that might affect leveraged buyouts and other assets.
2
Intel Capital reported some spectacular progress in diversity representation, surpassing more than $300m invested in female and under-represented minorities-led businesses. The conversion of words into action is to be celebrated.
The bigger perspective is even better as Intel Capital remains confident to hit its investing targets of $300m to $500m this year, on par with the $466m it invested in 2019, despite the impact from the coronavirus on many parts of the economy and its clients. Technology and innovation remain relatively immune as digitalisation is only speeding up through the crisis.
Intel Capital has provided an update on its investments in 2020 thus far, unveiling eight new additions to its portfolio: Axonne, Lilt, MemVerge, ProPlus Electronics, Retrace, SmileSnap, Spectrum Materials and Xsight Labs. The businesses, together with four previously announced commitments, have attracted at least $132m in funding from the corporate between them.
3
It has been nearly a decade since down rounds in venture capital – effectively one where the value of the startup has declined even though more money has gone into the business – were common. Silicon Valley Bank’s State of the Markets report identified only about 2% of rounds going into the end of March were down rounds.
But could leap rapidly for portfolio companies if they are able to get any funding away at all.
For top companies flat or higher rounds are possible but the middle tranche remain vulnerable to down rounds and more onerous terms in preference and conditions if their 18 month funding cycle has coincided with the coronavirus-led economic shock.
For the bottom third, it’s a hope and a prayer time.
4
Deals – the challenging investment landscape and down-rounds are affecting many and so while deals are still happening the surge of very large rounds seems to be quietening at last unless you happen to have search engine provider Google and hence its parent, Alphabet, on your side.
Alphabet reaped hefty returns in the first quarter from floating some its healthcare portfolio companies – at least three – but its investment pattern is more concentrated on mobility currently.
That said, some companies might raise as much as $750m in a late-stage round. Some never raise such sums. And then there’s Waymo, which collected this amount as an extension to its first ever external round, bringing its total to $3bn. The money came entirely from new investors, such as Fidelity and accounts advised by T. Rowe Price, but the original $2.25bn tranche two months ago had featured Waymo’s parent company Alphabet, Magna International and AutoNation. Almost as notable as the extension and overall round size was the fact that Waymo announced the additional money through a blogpost only two paragraphs long, but if your technology and funding is this impressive you really don’t need to do much PR for everyone to take notice.
5
Gulati sets up Forecast Fund out of Comcast
While GCV Analytics data for last month showed a two-thirds drop in new funding commitments, not all hope is lost.
Daniel Gulati, managing director at Comcast Ventures (CV), the corporate venturing unit of mass media group Comcast, has set up Forecast Fund as an early-stage venture fund investing $500,000 to $2m in consumer startups.
Exits
Facebook has agreed to buy Giphy for a reported $400m after GV’s prior backing.
Idaptive never made a big splash in terms of funding – in fact, it does not appear to have raised any external capital since being spun off from Centrify in 2018 – but its technology has caught the attention of CyberArk, which has put down $70m in cash to purchase the artificial intelligence-powered secure access management technology developer. While it’s unclear just how big Centrify’s shareholding was before the acquisition, that’s likely a decent return.
When Kingsoft Cloud, the cloud services subsidiary of China-based enterprise software producer Kingsoft whose shareholders also include Xiaomi, filed for an IPO last week that was expected to raise as much as $450m, there was a question over whether the company had chosen the right economic climate to go public in the US. The answer could not be any clearer: not only did the company’s shares soar 27% on the first day of trading on Friday, but Kingsoft Cloud also upsized the offering from 25 to 30 million ADSs and raised $510m. It’s also upsized the number of shares allocated to the greenshoe option, so if underwriters take up that option in full (and at this point that seems highly likely) it could boost proceeds to more than $586m.
Vroom, the online used car marketplace backed by AutoNation that has raised $721m in funding to date, isn’t letting a pandemic get in the way of its ambition to list on the stock market and has reportedly filed, confidentially, for an IPO. Financial terms have not yet emerged, but its main rival, Carvana, floated three years ago after pricing shares at $15 and raising $225m – only to watch the share price climb steadily to more than $100 today. Carvana is bigger than Vroom, but the fact that the latter is seeking an offering in the midst of the worst economic crisis in a century clearly underlines its ambitions to be a major player.
Qingdao Victall Railway lays $172m IPO tracks
Another IPO filing from a Chinese company in the US. This time the honour is all Legend Biotech’s. The cancer and HIV treatment developer, a subsidiary of biotech producer Genscript Biotech, has so far only revealed a placeholder amount of $100m but considering it agreed to raise nearly $151m in series A funding just a month ago from Johnson & Johnson (with whom it has a partnership through Janssen Biotech) and Eli Lilly that gave the former a 1.3% stake and the latter a 0.5% shareholding, it is likely the targeted proceeds will turn out to be much higher once the company settles on a number of shares and their price. GenScript remains its largest shareholder for now, with a 76.9% stake.
Speaking of big numbers: Qi An Xin, a China-based cybersecurity technology spinoff of antivirus software vendor Qihoo 360, has filed for a $634m offering that will provide exits to China Electronics Corporation (CEC) and Red Star Macalline, though notably not to Qihoo 360 as the latter already cashed out in April last year when it sold its remaining 22.6% stake to CEC for $542m. Even with an IPO planned to be this large, that doesn’t sound like a bad decision.
Dada Nexus, which operates crowdsourced on-demand last-mile logistics service Dada Now and JD Daojia, a delivery service for third-party retailers, has filed for an initial public offering with a $100m placeholder amount, and sources have told Bloomberg the company could target as much as $500m in proceeds. The listing would offer exits to Walmart and JD.com, which owns a majority stake after not only investing but also selling Daojia to the company in 2016. Dada Nexus at one point operated as Dada JD-Daojia, but filed its prospectus under the former name.
Two Vietnamese startups file for bankruptcy
Deals
Market Kurly puts $160m in series E basket
Cafés may have been closed in most markets for weeks, but some more forward-thinking businesses were well prepared for this with mobile apps that let customers order and pick up drinks from nearby locations. One such business is Indonesia’s Kopi Kenangan, which has collected $109m in a series B round backed by Kunlun to further develop its technology, protect its staff and drive a domestic expansion from 324 locations to 500 by the end of the year, as well as an expansion into Malaysia, Thailand and the Philippines once the pandemic passes. It’s not the first time a coffee and bubble tea bar has raised serious corporate venture capital, but with food and beverage (F&B) suppliers continuing to be in demand by consumers stuck at home, it will be interesting to see how many more will follow (and indeed, news has also emerged that Tencent has invested an undisclosed amount in coffee retailer Tim Hortons).
Bought By Many procures $97.4m
It has been five years since Access Industries led an $83m series B round for US-based cloud infrastructure company DigitalOcean – half an eternity in venture funding. But the conglomerate has now returned to also lead a $50m series C round, raised to help DigitalOcean cope with increasing demand for its product as an ever-growing number of companies rush to accelerate their digital transformation in the midst of all their employees working from home.
University
Kriya kicks off $80.5m series A proceedings
Featurespace impresses for $36.8m round
Modulus unearths $25.2m
Immunai surfaces with $20m seed round
Funds
Linear Capital scores $110m fund
Atria University seeks students for VC fund contest
“Funky Chunk” Kevin MacLeod (incompetech.com)
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