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The Big Ones
China’s online education sector is one of the areas where growth is currently moving fastest. Yuanfudao raised $1bn in a series G round in March, and now Zuoyebang, which was spun off by Baidu five years ago, has pulled in $750m in series E funding from investors including SoftBank Vision Fund. The round, co-led by FountainVest Partners and Tiger Global Management, follows reports earlier this month that Zuoyebang was in talks for a round set to value it at $6.5bn pre-money.
We’ll get to IPOs in a few minutes (and wow, have there been a lot of IPOs again) but the biggest exit by value was fitness apparel brand Lululemon agreeing to buy home fitness equipment producer Mirror in a $500m transaction as it looks to build a fitness product ecosystem with itself at the centre. Lululemon had already invested in Mirror as part of its $34m series B-1 round in November, but a bigger influence may be another home fitness brand, Peloton, whose share price has tripled since the early days of the coronavirus lockdowns.
B Capital Group, the US-based venture capital firm affiliated with consulting firm Boston Consulting Group (BCG), has closed its second fund at $820m. Founded in 2014, B Capital targets growth-stage deals and pursues a portfolio management strategy that involves connecting its companies to corporates which can help them scale, through a network provided by BCG. The firm invests between $10m and $60m per round, at series B to D stage, and its areas of interest include enterprise software as well as financial, healthcare, consumer, transportation and logistics technology. B Capital now has $1.44bn of assets under management. It had closed an oversubscribed first fund at $360m in early 2018.
In crossover news (one of many crossover news, including IPOs, because that is the world we live in now…), McMaster University spinout Fusion Pharma raised $213m in its upsized IPO, which allowed Johnson & Johnson, Varian Medical and Nan Fung to exit the cancer radiotherapy developer after helping to contribute $158m in funding. The listing also offered an exit to FACIT, a commercialisation unit backed by Ontario Institute for Cancer Research and the province of Ontario.
Deals
Online grocery delivery platform Xingsheng Youxuan has reportedly secured existing investor Tencent for a $300m series C round that looks likely to close this month. The round is set to triple Xingsheng Youxuan’s valuation to $3bn but it operates in a crowded sector dominated by some very big players, and once the smoke clears it’s going to be no surprise at all to see some serious consolidation take place.
Oscar has been one of the main players in online insurance for quite a while, and its latest round has involved it securing $225m from investors including Alphabet. The corporate has been an Oscar backer since 2015 and injected $375m at a reported valuation of $3.75bn in late 2018. There’s room for growth too, given the company’s offering still only spans 15 of the 50 US states. Its overall funding now stands at $1.53bn.
Coty already owns a string of famous beauty and fashion brands but it made some major waves late last year when it announced it was paying some $600m for a 51% stake in Kylie Jenner’s beauty brand. It must have regarded that as a good deal because it’s paying $200m for a 20% stake in KKW Beauty, the brand formed by another member of the Kardashian family, Kim Kardashian West. The deal will involve Coty helping KKW expand an offering that already includes make-up, skincare, shapewear and fragrance products.
Freeline, a UK-based gene therapy spinout from University College London (UCL) formed by commercialisation firm Syncona, has closed a $120m series C round featuring the latter investor as well as Novo, which co-led the round with Eventide Asset Management and Wellington Management Company. Syncona had supplied $40m in a first tranche in December 2019 and retains a majority stake of 60%, down from 80%.
Caffeine is the operator of a livestreaming entertainment service that has built part of its reputation by hosting live rap battles. The company is however looking to widen its offering to additional content having already broadcast sporting content from partner Fox Sports. The latter’s parent company, Fox Corporation, has just co-led Caffeine’s $113m series D round with fellow corporate Cox Enterprises and Saudi Arabia’s Sanabil Investments. The round values Caffeine at $600m and follows a $100m investment by 21st Century Fox two years ago.
There’s an intriguing deal coming from Poseida Therapeutics as well. You may remember last week we talked about the company filing to go public through a $115m IPO, but it’s now slotted in almost that same amount in a series D round, raising $110m from investors led by funds advised by investment and financial services group Fidelity. Novartis wasn’t part of the consortium this time, however.
Stanford University spinout Annexon is developing treatments for autoimmune and neurodegenerative disorders and has raised $100m in a round that increased its overall funding to more than $250m. Redmile Group led a round that included another dozen named investors, though Novartis Venture Fund – an investor since its 2014 series A-1 round – was not among them.
Goldfinch Bio, a US-based kidney disease medication developer co-founded by faculty from Harvard and Yale, has closed an oversubscribed $100m series B round featuring Gilead Sciences to pay for three clinical trials of its two lead candidates aimed at kidney diseases.
Another sector that’s been boosted by potential customers staying home is online education, and one of the biggest names in the sector is India-based Byju’s. Its latest funding intake may not be as big as Xingsheng Youxuan’s – it’s raised less than $100m from VC firm Bond – but the deal reportedly values it at $10.5bn. Its existing investors include Tencent, Times Internet and Naspers, and recent reports suggested it was after $400m for its next round.
Exits
Although there’s no doubt the economy as a whole will suffer considerably from Covid-19 and the attendant lockdowns, several parts of the VC and tech space have prospered. There’s a neat snapshot of the kinds of businesses that have done well of late today, starting with drug developer Genor Biopharma, which has filed for a $320m initial public offering in Hong Kong. Pharmaceutical companies have been rushing to float in the US, and the target set by Genor, an autoimmune disease and cancer therapy developer backed by Charoen Pokphand, indicates the trend is moving into East Asia.
Lemonade has also achieved a successful initial public offering, the digital property and casualty insurance provider floating above an already increased range to raise $319m. That’s relative in this case however, as the $1.9bn valuation achieved in the IPO is still below that of its last round, a $300m series D led by SoftBank and backed by GV and Allianz last year. The company’s investors also include XL Catlin’s corporate venturing arm, XL Catlin.
Accolade, the developer of a digital concierge for the healthcare benefits system, has gone public in yet another upsized IPO, the company floating above its range in a $220m initial public offering having also increased the number of shares. It priced them at $22 each and the shares closed their first day of trading yesterday within touching distance of $30. Its investors include Comcast Venture, McKesson Ventures, Humana and Independence Health Group.
Akouos was one of two life sciences companies (the other being Fusion Pharma we talked about earlier) to raise $213m in an initial public offering, both having increased the number of shares by 50% before floating above their ranges. Investors in Akouos, a developer of gene therapy treatments for hearing loss, include Novartis Venture Fund and Partners Innovation Fund, and it had raised more than $160m pre-IPO.
Online automotive retailer Shift Technologies has so far raised some $300m in financing from investors including BMW i Ventures, Lithia Motors and Alliance Ventures, but is eschewing a straightforward IPO in favour of a reverse merger deal. It will merge with special purpose acquisition company Insurance Acquisition in a transaction that will be buoyed by $185m from investors including Fidelity and ArrowMark Partners.
Lidar technology developer Velodyne Lidar has also eschewed an IPO in favour of a reverse merger, one that will involve it merging with NYSE-listed special purpose acquisition company Graf Industrial in a deal that will value the merged entity at $1.8bn. Velodyne raised $150m from Ford and Baidu in 2016, $25m from Nikon two years later and another $50m from Hyundai Mobis late last year.
It now seems ages since augmented reality was being touted as the next big thing. Magic Leap seems to have stalled after raising some $3bn in funding, and now North Wearables, the AR glasses developer formerly known as Thalmic Labs, has been bought by Google for a reported $180m. North had received about $170m from investors including Intel Capital and Amazon Alexa Fund, but the deal is perhaps more interesting because it indicates Google’s interest in the space is still alive some five years after it withdrew the consumer version of its Google Glass from sale.
QuantumCTek, a China-based quantum technology spinout of University of Science and Technology of China, is seeking $102m in an initial public offering on the Star Market. The company plans to issue 20 million shares at $5.12 each. It had originally anticipated to raise $42.8m when it first revealed plans to go public in November 2019. The IPO will also offer an exit to Legend Capital, which had supplied an undisclosed amount in 2016. The university’s USTC Holdings owns an 18% stake in the spinout, which will be diluted to 13.5%.
Berkeley Lights, a US-based digital cell biology developer based on research at University of California, Berkeley, has filed to raise up to $100m in an initial public offering that would enable corporates Nikon and Varian Medical Systems to exit. Berkeley Lights has created technology that captures single-cell specific information to support the development of cell-based products including antibody therapeutics or cell therapies.
Funds
Seeds Capital, a venture capital arm of government agency Enterprise Singapore, has agreed to partner with institutions including three corporate venturing units to co-invest S$50m ($36m). The initiative is backed by the Maritime and Port Authority of Singapore and will involve Seeds Capital and the consortium investing the money in some 50 maritime technology startups in order to improve efficiency and safety in the industry. Innoport, the investment vehicle for ship operator Schulte Group, is one of the six partners, as are KSL Maritime Ventures, a subsidiary of conglomerate Kuok Group, and PSA Unboxed, which represents port manager PSA International. The partners also include incubator operator Rainmaking, marine technology venture builder TecPier and ShipsFocus-Quest Ventures, which was formed by shipping intelligence provider ShipsFocus and VC firm Quest Ventures.
“Funky Chunk” Kevin MacLeod (incompetech.com)
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