The Big Ones
It is always good to get the insights from The Economist’s World in 2021 report, even if the paper acknowledges JK Galbraith’s wisdom that forecasting is a job for those who do not know or do not know they do not know.
If oil prices and the economy bounce back and inflation lifts then it could be a hot year for those prepared to invest heavily.
Regardless of the shorter-term gyrations, it is good to see financial markets catching up to the “rise of intangible assets, which now account for over a third of all American business investment – think of data, or research”.
Accountants treat these costs ($700bn to $1.5 trillion) as an expense rather than an investment that creates an asset, and many miss that these firms can scale up quickly and exploit network effects to sustain high profits, as The Economist noted.
This means the gap between successful and laggard firms will only grow this year, unless innovation venturing can help those being left behind.
What is exciting is stock market investors are finally catching up to this. As Cathie Wood, founder of Ark, said in a Financial Times article in December: “Any company not investing aggressively in one or more of five major platforms of innovation will lose its way. In harm’s way are companies that have engineered their financial results to satisfy the short-term demands of short-sighted investors.
“Those that have leveraged their balance sheets to buy back shares and pay dividends are at particular risk as they will have less balance sheet flexibility to invest in response to the technological shift.
“Seeded during the tech and telecom bubble more than 20 years ago, the five main platforms of innovation that we think will transform the global economy are: DNA sequencing, robotics, energy storage, artificial intelligence (AI) and blockchain technology.”
You might quibble with the platforms Ark has identified – GCV’s news editor, Robert Lavine, has identified areas to watch in his preview of the year – but change is definitely coming.
It is, however, hard to put into context how much is coming this decade. Last year’s covid-19 pandemic saw unprecedented amounts of public funding to support people and economies while university scientists, startups and corporations led in identifying the coronavirus and developing novel vaccines. Particularly exciting was the use of messenger RNA to develop a response, and the scaling up of manufacturing.
In one sense it was achieved in record time. Developing a vaccine in a year is extraordinary. But, of course, the intellectual breakthroughs by University of Oxford, Moderna, BioNTech and other corporations often took decades to prepare.
What is exciting is the abundance of capital now available to startups and innovators. From tens of billions of dollars in the 2000s to hundreds of billions each year in the late 2010s.
Given the blurring of public and private capital markets now underway, as investors chase growth from innovation to drive the equity, and hence borrowing opportunities, the capital could potentially soon be in the trillions of dollars.
This superabundance of capital effectively means we are in a world where missions or objectives become critical. How does the narrative or story develop to require buy-in from enough stakeholders to unlock the capital and interest in making the change happen?
Whether batteries and electric vehicles for climate change (see this month’s sector report on transport and the latest Global Energy Council quarterly report), Bitcoin as a form of non-fiat capital or developing AI and quantum computing to solve pressing health and other needs, the story is vital.
Too few corporate venturers have thought enough about their marketing strategies and positioning. It has been enough to talk internally about meeting the strategic and financial needs of the parent corporation and think through their advantages in supporting entrepreneurs’ main needs for capital, customers, product development, hiring, regulatory support and an exit.
But as the playing field levels as the best VCs start to offer similar support, the ability to unlock the larger capital amounts, as shown by, say, SoftBank or Tencent, creates a competitive advantage.
Amazon, Alphabet and Samsung are among those who grasp the power of the message and using societal interests to develop the stakeholders to scale up new businesses.
The broader industry has answered one question in the past year: whether it can as a whole continue to support innovation through an economic crisis (supported by a roaring stock market in the second half of the year). That about a thousand active CVCs were effectively shuttered last year as parent corporations closed off funding to “satisfy the short-term demands of short-sighted investors,” as Wood put it, indicates the issues many will face.
As Francis Bacon, the 17th century father of empiricism, said: “Everyone is the maker of their own fortune”.
At such a crucial time for the industry, Claudia Fan Munce, former head of IBM Ventures and now senior adviser to venture capital firm NEA as well as a board director of public companies, reflected in her keynote before yesterday’s GCV Rising Stars and Emerging Leaders Awards on how far the corporate venturing community has come over the past decade and opportunities that lie ahead in partnership with other investors.
From being a small gathering of people on the sidelines of the main venture capital events and never being invited onstage, CVCs have blossomed in the past decade. Fan Munce led the shift in professionalism and approach and became in 2012 the first CVC board member of US-based trade body National Venture Capital Association (NVCA) as well as later the inaugural chairwoman of the GCV Leadership Society Advisory Board.
The then-chairman of the NVCA was Scott Sandell, managing partner of NEA, who recognised the need and opportunity from bringing investors from all sections together. With one proviso: they had to being adding value to the entrepreneurs.
Sandell was one of the first VC leaders to visit the GCVI Summit in California and between 2016 and 2020’s events saw its growth to 900 people from about 350.
His changed mindset on how CVCs can be professional investors and add value crystallised the potential to form a community where the world’s best investors of all stripes can meet together and share best practices.
Sandell had hoped to tall his personal story of engagement with GCV in yesterday’s keynote but an accident to his beloved daughter, Anna, meant Fan Munce was able to kindly step in to spotlight how this can happen through a new Global Innovation Venturing platform and community.
NEA is taking steps to strengthen global relations with all sources of capital and Sandell will chair Global Innovation Venturing to bring in the world’s best VCs and other investors alongside the top 20% of CVCs grandfathered in through the GCV Leadership Society.
As VCs, such as Sequoia, Andreessen Horowitz, Khosla Ventures and Menlo Ventures as well as NEA, have hired in-house talent to spearhead corporate partnerships to support portfolio growth, so CVCs have become more experienced in delivering financial as well as strategic returns.
SET Squared: Four of the best scaleups in healthcare, 3D design software, energy and foodtech, supported by this collaboration between five of the UKs leading universities.
EBRD Star Venture Programme: 11 great startups from the Southern & Eastern Mediterranean and West Balkans region supported by the European Bank for Reconstruction and Development. Young companies disrupting sectors from IT, robotics, energy and AI to foodtech, finance, ecommerce, biotech and transport.
UC-XTC Startup Innovation Challenge: The University of California has selected 10 finalists (5 early stage and 5 later stage) for its 2021 Startup Innovation Challenge, held in partnership with Extreme Tech Challenge (XTC), the world’s largest tech-for-good startup competition. The chosen finalists are comprised of companies with game-changing ideas for fighting climate change, feeding the world, curing diseases and saving the day with robots that can be airdropped into disaster zones.
GCV Connect, Powered by Proseeder. Energy Storage/Transport and Data analysis/cyber security startups from around the world, as chosen by a panel of CVCs. Two 30-minute videos show highlights of their pitches.
To see their full pitches go to https://gcvconnect.proseeder.com/ (look out for an email from Proseeder for your login details). There you will also see details of many other great companies that applied to pitch in these sessions plus the EBRD and UC-XTC startup
The Global Corporate Venturing Rising Stars Awards profiles the top 50 people who have entered the industry in the past five years with aplomb and notable success. As the industry grows it becomes potentially easier to attract quality talent.
The Global Corporate Venturing Emerging Leaders Awards profile the top 50 people who have been in the industry for more than five years. They get harder to pick each year with levels of professionalism and standards remaining exemplary, set by those who have been fortunate to work over years in the industry.
The process involved researching more than 20,000 industry professionals across more than 2,000 corporate venturing units. GCV was looking for those below the top rank of the venturing hierarchy with a focus on their deals and career development so far. For both categories, as well as the longer list of potential candidates and nominations received and examined, the input of their managers was important. As nominators and with their feedback, they can share why these Rising Stars and Emerging Leaders are so good.
Unlike in previous years, on this occasion the awards ceremony is being held digitally due to the ongoing effects of covid-19. Some video highlights from the winners will be available on the GCV website and YouTube channel in the near future.
A raft of drug developers have recently filed for initial public offerings, including Vor Biopharma, an oncology therapy developer backed by PureTech Health, Johnson & Johnson Innovation – JJDC and Novartis Institutes of Biomedical Research. Vor has filed to raise up to $150m in an offering on the Nasdaq Global Market having received $152m in funding in the past two years.
Decipher Biosciences to penetrate public markets
UnitedHealth Group and Merck & Co are both in line for exits as Decipher Biosciences files for a $100m initial public offering.
Bolt Biotherapeutics is one of a host of drug developers that have recently filed to go public, setting an initial target of $100m for an initial public offering that will follow some $216m in funding from investors including Novo, Pfizer, and Nan Fung Life Science’s Pivotal BioVenture Partners Fund. Novo is also the cancer therapy developer’s largest investor, with a 17.9% stake
Terns tracks $100m in IPO
Immunocore plots course to $100m IPO
Sensei looks to master public markets
NexImmune elects to launch initial public offering
Merck & Co is demonstrating that sometimes, the corporate venturing game really is a very long one. The corporate was the majority shareholder in Preventice when it merged with ECardio Diagnostics in 2014 and now, a whole seven years later, Boston Scientific has swooped in to buy Preventice for a cool $925m – plus potential milestone payments of up to $300m. The move by Boston Scientific, which first backed Preventice in 2015, will also provide exits to Novo and Samsung.
Proto Labs locks in 3D Hubs for acquisition
A1 Group acquires Invenium
Blue Horizon blows fund up to $220m
Electric truck developer Rivian has been the biggest recipient of venture funding outside China in the past two years, having just secured $2.65bn from investors including Amazon to take its haul to $8bn in that time. The round also bumped Rivian’s valuation up to $27.6bn, a roughly eightfold increase in just over 18 months. Steep for a company yet to commercially release a product, but perhaps less so when you take a look at Tesla’s share price and consider Rivian’s potential to end up being the Tesla of larger-sized vehicles.
4Paradigm is a Chinese company deploying AI technology to support digital business transformation and increase efficiencies in pretty much every sector from retail and manufacturing to energy and health. To accelerate those plans, it has added $700m in series D funding to its coffers although none of its corporate backers – China Three Gorges, Cisco and Lenovo – chose to take part this time.
Although it’s still early days, there are signs autonomous driving might be a key driver in some of 2021’s biggest rounds. WeRide boosted its latest round to $310m last week and now Cruise, the driverless vehicle technology developer spun off by General Motors four years ago, has secured $2bn in funding. GM was among the investors, as were Honda and newly minted strategic partner Microsoft. Cruise is now valued at $30bn, up from $19.5bn in its last round, in mid-2019.
PPRO is the latest digital payment technology provider to raise money, taking in $180m through a round valuing it above $1bn. Eurazeo Growth, Sprints Capital and Wellington Management were the participants in the round, and the company’s earlier backers include corporate investors PayPal and Citi Ventures.
Corporate travel and expenses management can seem like a thing from a bygone era in our working from home world, but with vaccines now being rolled out it may not be too much longer before we are all jetting around the world again. And when we do, TripActions will hope it gets a slice of the pie – and so will its investors that just put in $155m in series E financing. Lufthansa backed the company a year ago, when it expanded into Europe, and since then TripActions has added a host of useful tools such as the ability for companies to blacklist certain locations and keep tabs on current travel restrictions.
Globality gulps down $138m in series E
It also looks as if telemedicine is nowhere near its funding peak. K Health raised $42m in a November series D round that doubled its valuation to $700m and, just two months later, it’s closed a $132m series E round that increased that valuation again to $1.5bn. GGV Capital and Valor Equity Partners co-led the round, which took the company’s overall funding to $260m, its earlier investors including Comcast Ventures and Anthem.
Volta operates a network of free-to-use electric vehicle charging systems sponsored by advertisers, and has just raised $125m in series D funding from investors including Invenergy’s corporate venturing vehicle, Energize Ventures. The round lifted Volta’s overall equity funding to $200m and follows a $55m series C in 2019 backed by Energize Ventures, as well as Ørsted, SK E&S, Schneider Electric Ventures and GE Ventures.
Aledade is the latest medical care provider to hike its valuation, securing $100m in a series D round reportedly valuing it at $2.2bn post-money. Alphabet’s GV unit is among Aledade’s earlier investors but was not named as a participant in the latest round, which was led by Meritech Capital Partners and which boosted the company’s overall funding to approximately $275m.
Already the world’s largest video game distributor, Tencent has carved out a niche as the biggest corporate edtech investor in recent months, particularly in its home country of China. Its newest portfolio company is Jiliguala, the developer of an English language learning platform, which has just raised nearly $100m in series C funding. Jiliguala, which counts Bertelsmann Asia Investments among its earlier backers, is putting the capital towards expanding its product range.
OUI provides fourth quarter update
BlueSphere Bio brings in $45.6m