Our Leadership Series interview where we talk to Girish Nadkarni & Demi Edosomwan of TCNV about their investment strategies and the impact of COVID-19 and climate change.
There are occasional silver linings even for the blackest clouds. One was as the Covid-19 disease broke out this year competition for deals became a little lighter.
TDK Ventures, the corporate venturing unit of the Japan-based materials group, stepped toward this light. Nicolas Sauvage, head of TDK Ventures, said it had four deals in its pipeline about to or just closed.
First up for TDK is a bridge round for Origin, a US-based three-dimension (3D) printer of advanced materials from open sources founded by Chris Prucha, formerly a software engineer at Apple and co-founder at Notion, and Joel Ong, formerly a software engineer at Google X, and with prior venture capital backing by DCM, Floodgate and Haystack.
But just because competition has lessened it is usually for a reason. Getting comfortable the startup’s business and management can survive and thrive and there is a strong fit with the parent’s often-evolving strategic needs is usually hard.
Here Anil Achyuta, one of two investment directors at TDK’s $50m first fund, said Origin (its fifth deal overall) shone. “The pain point for 3D printing is 90% target prototype not mass manufacturing. Origin took a SaaS [software-as-a-service] approach to partner with material companies, such as DSM, Henkel and BASF and now TDK, so it could scale up and cut costs.
“Then, when Covid-19 hit there was a massive shortage of swabs in the US as they were all provided by one Italian company. Swabs are hard to make as there are a mix of soft and hard materials to get down the throat.
“Origin in four to six weeks went from a napkin sketch to proof of concept to Harvard study and FDA [US Federal Drug Agency] approval to mass manufacture. Origin is now producing 250,000 swabs per week and scaling up to one million per week.”
TDK with more than one factory around the world has had relatively little need to understand such 3D printing or distributive manufacturing before but again the Covid-19 crisis brought the need to understand or shorten supply chains to customers to senior management attention.
In turn, TDK’s manufacturing expertise and use of advanced materials for electronics is complementary for Origin’s open source strategy, although it will also look at other deals to potentially do metal 3D printing, such as Markforged or Modumetal.
Sauvage added Origin would not replace existing factories but bring new capabilities and systems to TDK and the wider industry, such as potentially replacing lead zirconate titanate (PZT) with polymers.
This was part of his king of the hills strategy – finding startups at the top of an interesting niche but which TDK can turn into a mountain of revenues.
For as the clouds eventually lift the view from the top is even better.
It is an unpleasant term and practice but the so-called brain rape of another company’s technology or ideas is part of the challenge of doing business.
It goes beyond startups finding their feet with investors or exploring strategic and merger deals and affects even the largest – for example trying to break into China, corporations have to commit to transfer of intellectual property.
It is clearly marked and expected corporations will try and reverse engineer another’s products or copy successful launches but bait-and-switch corporate venturing tactics is unsavoury and risks destruction of a unit’s only real asset: its reputation.
Bad money quickly pushes out good – as its cost of capital is underpriced and return expectations are often different – and so the Wall Street Journal’s longread on how “some companies regret sharing information with tech giant [Amazon] and its Alexa Fund; ‘we may have been naïve’” is an important article and follows on from Harvard Business Review’s earlier piece by former Prof Thales Teixeira.
Amazon clearly told the WSJ the company does not use confidential information that companies share with it to build competing products but with dozens of entrepreneurs, investors and deal advisers telling the journal they felt otherwise there is enough alleged smoke to cause concern in the wider community.
The timing of the piece is especially awkward for Amazon as a highly anticipated antitrust hearing including its top executives along with peers from Apple, Facebook and Google was held this week – Facebook bearing the brunt looking at the clippings.
A notice filed by the House Judiciary Committee set no new date for the hearing, “Examining the dominance of Amazon, Apple, Facebook and Google”.
As lawyer Dror Futter in a blog post following the WSJ article noted: “Assuming the accuracy of this article (and I am reasonably familiar with one of the cases discussed), this is the nightmare scenario of working with a strategic investor or potential investor.
“You would like to think that reputational risk would prevent this type of behaviour, but the reality is that the prospect of gaining an Amazon-level investor or strategic partner may cause many ventures to ‘take their chances’.
“The article also highlights that contractual protections are only as good as your ability to enforce, as several ventures acknowledged that they did not have the resources to fight Amazon for breach of their confidentiality agreement.
“Although there are no guarantees, ventures talking to strategics in their space should try to get a sense of the ‘walls’ that CVCs have put in place that govern sharing of information with their business units.”
Entrepreneurs have to ask the tough questions of all potential investors and find ways to fight back if they can – as Jim Clark did at web browser developer Netscape when software company Microsoft tried to browbeat it into submission and investment in the mid-1990s. Netscape still struggled (it lives on through Firefox) but Microsoft arguably allowed Apple and Google to survive as it dealt with antitrust actions in the wake of Clark’s lifting the lid.
But prevention is better than cure and for the industry as a whole this is no time to hide its head in the sand if there are challenging practices out there. Sadly, too few CVCs are prepared to go through the development or have the support of C-suite and business units to operate as professionally as the managers would often like.
It has been great to see so many new and existing CVCs step up through the Covid-19 crisis and support portfolio companies and do new deals but there are no short cuts to long-term support to the entrepreneurs otherwise reputations can be broken in days.
Wu snaps up her former assets
New York-listed industrial conglomerate General Electric (GE) still limps on, but after $500bn in value destruction over little more than 20 years the “downfall of America’s industrial giant is a cautionary tale for all big firms,” according to this week’s Economist.
The rump is a little smaller again after GE agreed to sell its investments in 11 startups to 40 North Ventures, a venture affiliate of Standard Industries. It also reunites the portfolio companies, Aras, Carbon, Catalant, Desktop Metal, Enbala, Menlo Micro, Nexar, Proterra, Tamr, Upskill, and Volta, with Marianne Wu, former president of GE Ventures.
GE in November had agreed to sell 16 health care investments to an affiliate of Leerink Revelation Partners at the time Wu left. She then joined 40 North as co-managing director with Marc van den Berg.
Van den Berg said: “We are on the cusp of a modern industrial revolution, and venture capital is uniquely positioned to help catalyze that change.
“The addition of these 11 remarkable companies supports 40 North Ventures’ mission to bring disruptive change to established industries and to empower innovators eager to reimagine these sectors.”
Wu added: “I am looking forward to reuniting with these transformative companies, given the time I spent working with them at GE Ventures.”
She did not add comment to two Wall Street Journal reporters, Thomas Gryta and Ted Mann, on their book, Lights Out, that seeks to find out how “success theatre” blinded GE to achieving their strategic vision. The challenges GE and other traditional conglomerates have faced is in contrast to the private equity model they have tried to copy in part.
Blackstone, KKR, Carlyle, TPG and Apollo and other alternative asset managers sailed through the global financial crisis and have dry powder to invest more through the latest one.
Which structure Standard Industries is trying to emulate – GE or Blackstone – might foretell part of its future.
One of the more narrow-minded approaches to looking at innovation and growth is the argument we live on a planet with finite resources so we have to cut back and retreat to a prelapsarian age.
This is a defeatist argument to challenges, such as climate change, that, once recognised, can then be tackled. As Elon Musk once said of Mars, it is “a fixer-upper of a planet” (and perhaps undisclosed inspiration behind one of film Frozen’s songs released a year later?).
Certainly attention on the worlds beyond our atmosphere is increasing.
A year ago, investment bank Morgan Stanley’s report, Space: Investing in the Final Frontier, asked: “Will declining launch costs, advances in technology and rising public-sector interest position space exploration as the next trillion-dollar industry [by 2040, up from $350bn currently]?”
The report gave the analogy of how lifts transformed cities. In 1854, when Elisha Otis demonstrated the safety elevator, the public couldn’t foresee its impact on architecture and city design. But roughly 20 years later, every multistory building in New York, Boston and Chicago was constructed around a central elevator shaft. Adam Jonas, equity analyst at Morgan Stanley, in the report said: “We think of reusable rockets as an elevator to low Earth orbit (LEO).
Our usual news editor Robert Lavine is on holiday this week, so filling in was Thierry Heles, the editor of Global University Venturing – hence him being a bit busy to join this week’s podcast. Our data analytics guru Kaloyan Andonov is also taking a well-deserved break, so there will be no GCV Analytics section in this newsletter for the next few weeks.
That doesn’t mean news has slowed down. First up is Nurix Therapeutics, a US-based oncology therapy developer backed by pharmaceutical firm Celgene, which priced its shares at $19 on Thursday to raise $209m when it went public on Friday. The company priced shares above its range and issued more shares than initially planned, and it will use the majority of proceeds for clinical trials of its two lead assets. Celgene’s parent Bristol-Myers Squibb holds a 4.4% stake in Nurix following the flotation. Nurix commercialises research from UC Berkeley and UC San Francisco.
iTeos Therapeutics took similar steps, upping the number of shares and – having priced its shares at $18 earlier last week – ended up settling for $19 a pop to bring in more than $201m in proceeds. 6 Dimensions Capital, the investment firm co-founded by pharmaceutical company WuXi AppTec, was not among the company’s notable shareholders despite having contributed to $74m series B and $125m series B2 rounds. iTeos was spun out of Université catholique de Louvain and Ludwig Institute for Cancer Research nine years ago and will use the cash for ongoing and planned trials of its cancer drugs.
Hefei Jianghang Aircraft Equipment, a China-based aircraft equipment manufacturer backed by aerospace conglomerate Aviation Industry Corporation, has only ever quietly raised funding from investors including Aviation Industry Corporation, but has made a splash with a $148m IPO on Shanghai’s Star Market. Aviation Industry Corporation retains a majority stake in the business, holding 41% and 14.2% through separate vehicles.
CureVac files for IPO
Li Auto charges onto public markets
Cerevel Therapeutics, co-founded by Pfizer, is set to undertake a reverse merger with Nasdaq-listed Arya II in a deal that will give Cerevel a market cap of $1.3bn.
Sun Asterisk rises to public markets
Money Forward goes ahead with corporate venturing – The accounting platform operator’s investment subsidiary has unveiled Hirac Fund’s $11.7m initial close with multiple corporate LPs on its way to a $29m ceiling.
Most businesses might be looking at an acquisition or initial public offering after 10 years, but it looks like TransferWise has no such ambitions (yet). The international remittance service – backed by Virgin and Mitsui – has undertaken another secondary transaction, this time involving $319m and boosting its valuation to $5bn. That is a significant increase on the $3.5bn the company fetched last time around, in a $292m secondary transaction in May 2019, and more than three times as much as its $1.6bn valuation for its $280m series E round in 2017. Notably, TransferWise has been profitable for three years so its need to access public markets for capital is less pressing than for some other startups.
The travel industry is undoubtedly one of the sectors that has been hit hardest by the pandemic and Traveloka, an Indonesia-based online travel booking platform backed by JD.com and Expedia, is no exception. But the good news is the company has managed to raise $250m – albeit, reportedly, at a down valuation – led by an unnamed backer said to be Qatar Investment Authority. With restrictions in some of Traveloka’s key markets, most notably Vietnam, easing, it looks like the company is as good a shape as it can be considering the circumstances.
On the other end of the spectrum, a sector that has done well amid lockdowns is healthcare. Ro, a US-based online healthcare services provider backed by publisher Forbes, has seemingly trebled its valuation from $500m to $1.5bn through a $200m round led by General Catalyst. The money will enable the telehealth company to hire more full-time doctors and nurses.
Pharmapacks operates an e-commerce business that allows emerging brands to sell through its own portal and third-parties such as Amazon and eBay, and it seems the boom in online deliveries during lockdowns has put the company in a favourable place with investors: JPMorgan Chase and GPI Capital have put $150m into the company, following a $32.5m series A round from Reckitt Benckiser, McKesson Ventures, Sealed Air and Emerson Group two years ago.
Financial services have seen a mixed response from investors over the past few months – some valuations are up, others are down – and while it’s unclear where cloud banking software provider Thought Machine stands in that regard, the fact that it has added $42m in a series B extension from investors including its client SEB to bring the round to $125mcertainly bodes well. The initial $83m series B tranche four months ago had featured another client and bank: Lloyds.
There is yet to be any sign of a summer slowdown as companies continue to raise nine-figure rounds (see also corporate-backed Thrive Earlier Detection on GUV below) and a first one is Sema4’s $121m series C round that turned the health information company into a unicorn. The company was spun off from Mount Sinai Health System, which previously also invested in the company, and collected the money following an expansion of its offering to include Covid-19 screening.
Praxis Precision works out $110m series C1 – Novo Holdings returned for a $110m series C1 round for Praxis Precision Medicines, four months after the gene therapy developer emerged from stealth with $100m in funding.
Another corporate spinoff that has raised big bucks is Line Man, the Thailand-based on-demand delivery and ride hailing subsidiary of internet company Line, which has collected $110m from BRV Capital Management, the growth equity affiliate of venture capital firm BlueRun Ventures. The round was revealed at the same time as Line Man said it was merging with Wognai Media, a restaurant review and discovery portal that operates across nine cities in Thailand. Line Man hasn’t revealed details of earlier financing but said in its press release that the $110m investment was the largest yet for any overseas Line division.
Heal, a US-based telemedicine and in-home primary care provider, has inked a strategic partnership with Humana to help it expand into additional US markets and netted a $100m investment from the corporate. The round substantially increased Heal’s funding, which previously had raised some $67m altogether. No word on a valuation, but with telemedicine being one area that has done very well during the pandemic, the likelihood is Heal’s shareholders won’t have any complaints.
Ceros, a US-based digital content creation platform backed by CNF Investments (the investment firm affiliated with construction firm Clark Enterprises), raised $100m in funding led by Sumeru Equity Partner. The round included some of Ceros’ management and existing shareholders, though none were named. The round is by far the largest yet for Ceros, which has now raised just over $130m altogether.
Thrive prospers with $257m round
Forge Biologics computes $40m series A
Bright Peak ascends to $35m series A
Our Leadership Series interview where we talk to Gen Tsuchikawa of Sony about their investment funds and COVID-19.
CureVac has officially closed a $640m round, adding $126m to recent investments that included $171m from GlaxoSmithKline through a strategic partnership. That’s one of the biggest venture rounds ever in the life sciences sector, and the interest likely stems from the potential of its messenger RNA therapies to form the basis of a Covid-19 vaccine, though it could eventually also be used in vaccines or antibody treatments for a range of diseases including cancer and rabies.
The surge in online shopping has led to substantial growth for companies like Instacart but that growth is, if anything, even more pronounced in China. Xingsheng Youxuan was formed by supermarket chain Furong Xingsheng at the start of 2018 but the group buying platform has gone from strength to strength and is reportedly in line to close $800m in a series C-plus round featuring Tencent at a $4bn valuation. That’s less than a month after a Bloomberg report stating that it was raising $300m in a series C round valuing it at $3bn.
And now another big player in China’s online grocery market, MissFresh, has confirmed it has secured $495m in funding, in a round previously reported to value it above $3bn. The round was led by China International Capital Corporation but MissFresh’s earlier investors include Tencent and Lenovo Capital and Incubator Group.
Smart electric vehicle manufacturer Xiaopeng Motors revealed today it has secured about $500m in a series C-plus round featuring Aspex Management, Coatue, Hillhouse Capital and Sequoia Capital China. The company has two models in production and has raised roughly $2.2bn altogether, its earlier investors including Alibaba, Foxconn, UCar and Xiaomi.
Anti-tumour drug developer HaiHe Biopharma raised about $147m early last year in one of the biggest series A rounds for a life sciences company in recent times. It’s now added $171m in a series B that included returning investor CSPC Pharmaceutical Group in addition to Legend Capital. HaiHe has an 11-strong pipeline of drug candidates and the capital will support the continuation of their clinical development and, theoretically, their commercialisation.
Innovium produces network infrastructure technology for data centres and has secured $170m in a series E round backed by Qualcomm Ventures, an investor since series A stage. The round more than doubled Innovium’s overall funding to about $335m and the company said it expects the latest capital influx to sustain operations for the next few years. With increased online activity a given over that time, it looks like a decent bet from here.
Online insurance has stealthily become one of the fastest growing sectors of the tech space in recent years, with a series of companies targeting different parts of the industry. Hippo Enterprises’ focus is on home insurance and it has closed a $150m series E roundfeaturing Standard Industries, Comcast Ventures, Lennar and the BBVA-backed Propel Venture Partners. The round boosted Hippo’s valuation from $1bn in its series D round a year ago to $1.5bn today.
One of the interesting things about the coronavirus-era landscape in venture capital is that it seems to be hurrying along the adoption of technologies in a range of areas that involve the reduction of direct human interaction. Take Talkdesk, the Salesforce-backed call centre software provider that has just raised $143m in series C funding. As the scope for direct contact with customers is reduced, it facilitates the need for online and phone-based customer service to be more proactive, making its product a more attractive proposition. It is now valued at more than $3bn.
Encoded embeds $135m in series D round
Coursera enrols in $130m series F round
Gett parks $100m in its account
Antengene accesses $97m series C
Contextual data software provider Quantexa has bagged $64.7m in a series C roundfeaturing long-time investor HSBC as well as corporate venturing units ABN Amro Ventures and Accenture Ventures. Proceeds from the round, which lifted the UK-based company’s overall funding to $90m will go to international expansion.
Purdue packs a punch with 22 new spinouts
Mingdu Intelligent manufactures series A-plus funding
TileDB structures $15m series A
Mori reaps $12m series A
It’s been a crowded IPO season as tech companies scramble to go public amidst heady demand. Cell biology technology provider Berkeley Lights has had one of the most successful however, pricing an upsized offering above its range and then watching as it shares nearly tripled in price on their first day of trading. The IPO generated more than $178m and is set to shortly close at over $205m. Nikon and Varian Medical are among Berkeley Light’ fortunate investors.
Pandion stands up in $135m IPO
The Roche and GSK-backed autoimmune disease drug developer has also gone public in an upsized initial public offering after at least $138m in venture funding.
There’s been speculation for a few months that Ant Group – the Alibaba affiliate also known as Ant Financial – was considering an initial public offering, but Ant has revealed it’s prepping a dual listing set to take place on the Hong Kong Stock Exchange and the Shanghai Stock Exchange’s Star Market. China Life and China Post are also among Ant’s investors, and recent reports have suggested it will aim to increase its valuation from $150bn in 2018 to about $200bn in the IPO.
Indian online insurance aggregator PolicyBazaar is reportedly looking at 2021 for its own IPO, and in the meantime is eyeing $250m in funding at a $2bn valuation. PolicyBazaar’s parent company ETechAces also operates financial services portal PaisaBazaar and had raised $417m from investors including SoftBank Vision Fund and Info Edge prior to a secondary share purchase in November that valued it at $1.5bn.
Pharmaceutical firm Novo is in line for a couple of IPO exits, from Checkmate Pharmaceuticals and also from gene therapy developer Freeline Therapeutics, which has filed for a $100m offering. Checkmate joins the IPO game with $75m filing a month after its last funding round.The interesting thing is that Novo only recently came in as an investor to Freeline’s series C round something like three weeks ago. Then again, with the hit rate from several recent IPOs being very high, it may be seeking some quick returns.
HealthQuad Announces First Close Of Its $73 Mn Healthtech Fund
India-based venture capital firm Quadria Capital has made the first close of its second HealthQuad fund at $68m, including a commitment from US-based pharmaceuticals company Merck and Belgium-based conglomerate Ackermans & van Haaren (AvH).
Essity Ventures formation
Indico Capital Partners launches €12 million pre-seed fund to invest in Portuguese startups selected for joint Accelerator with Google for Startups
Our Leadership Series interview where Jacqueline LeSage-Krause of Munich Re Ventures talks about how COVID-19 has affected her work.
The Big Ones
Jio Platforms was spun off by Indian conglomerate Reliance Industries late last year to build a mobile network tailored for 5G and the internet of things, and everyone seems to want a slice. The latest is Google, which is paying $4.5bn for a 7.7% stake in Jio, the deal coming in the wake of parent company Alphabet’s recent pledge to invest some $10bn in India over the coming years. Qualcomm Ventures and Intel Capital had supplied a total of $350m for it earlier this month – Qualcomm’s actually came only a few days before Google’s investment. Meanwhile Facebook paid $5.7bn for a 10% stake in April.
Alphabet announced that it intends to channel up to $10bn into India through a newly formed vehicle dubbed Google for India Digitization Fund. That commitment will include equity funding for domestic companies, though as yet it’s unclear whether that will be deployed through the corporate’s investment subsidiaries. One of them, CapitalG, has already invested in several Indian companies but GV is yet to establish a presence in the region.
There’s been more IPO action this past week, beginning with electric vehicle battery producer Farasis Energy, which raised approximately $486m in an offering on the Shanghai Stock Exchange’s Star Market. It raised a reported $193m from investors including strategic partner Daimler earlier this month, and the corporate venturing arm of another carmaker, BAIC, is also among its shareholders.
On GUV, Paige, a US-based cancer pathology software spinout of Memorial Sloan Kettering Cancer Center, extended its series B round to $70m with commitments from Goldman Sachs Merchant Banking Division and Healthcare Venture Partners. Both were returning investors from previous tranches. The initial series B close last year had also featured Brey Capital, private investor Kenan Turnacioglu and undisclosed funds. Leo Grady, chief executive of Paige, told GUV: “The past year has underscored the need for pathology to adopt a digital workflow. As hospitals and labs look for solutions, they are seeing Paige as uniquely positioned: providing an enterprise solution for digital pathology images across sites and scanners while leveraging advanced cancer detection and characterisation solutions to provide additional information to the pathologist during diagnosis.”
RobinHood has seen demand for its share trading platform skyrocket during the Covid-19 lockdown, so much so it’s delayed the app’s UK launch. It has added 3 million new accounts and has followed that by adding $320m to a series F round that now stands at $600m. The company, which is backed by Alphabet unit CapitalG and Roc Nation, secured the capital at an $8.3bn valuation and has now raised a total of nearly $1.5bn in venture funding.
UiPath, a developer of robotic process automation technology that facilitates the automation of repetitive tasks like data entry, can also be said to be a company with a lockdown-relevant product. It has pulled in $225m through a series E round featuring Tencent that boosted its valuation from $7bn in May 2019 to $10.2bn post-money. CapitalG is also among UiPath’s investors, having first backed it in a 2018 series B round.
In Japan, ride hailing platform Mobility Technologies (MoT) has agreed up to $211m in corporate funding, with the lion’s share to come from mobile network operator NTT Docomo. The round included Dentsu and Tokyo Century and it shows the benefits of pivoting when the time is right. MoT began life as a taximeter software producer but has raised money from investors also including Toyota and Kakao Mobility since it switched tack.
Another Salesforce-backed company, Auth0, is also valued at $1.9bn, following a $120m series F round led by corporate VC vehicle Salesforce Ventures. Telstra Ventures also took part in the round, as did Deutsche Telekom’s DTCP unit, and the user authentication software provider intends to leverage Deutsche Telekom’s resources as it expands internationally. It has now secured more than $330m altogether.
Qumulo, developer of a cloud-based data management system, has completed a $125m series E round led by BlackRock that took its total funding above $350m. The cash was secured at a valuation of more than $1.2bn and it comes roughly two years after a series D round featuring disk drive manufacturer Western Digital. The cash will support product development and international growth.
We already had one huge fund but there was another last week: 23 biopharmaceutical companies have provided a total of almost $1bn in capital for AMR Action Fund, a vehicle tasked with helping to combat antimicrobial resistance by investing in companies developing new antibiotics. Those backers include Pfizer, Merck & Co and Johnson & Johnson, which are each supplying $100m. AMR Action Fund is slated to begin operations in the fourth quarter of 2020.
Small molecule cancer drug developer Relay Therapeutics has bagged $400m from its initial public offering, increasing the number of shares by more than a third and floating above its range. Its shaves have also risen post-IPO, providing a success story that’s badly needed for its largest investor, SoftBank Vision Fund. Although Vision Fund’s consumer-facing investments have been somewhat patchy, its life sciences deals seem to be paying off.
Banking software provider nCino has raised $250m in a flotation that saw it float a full $7 above its range. Its shares then nearly tripled in their first day of trading yesterday to give it a valuation of more than $1.9bn. The IPO is also a success for Salesforce, which owns a 12% stake having invested $72m in nCino between 2016 and late last year.
Our Leadership Series interview where Tracy Isacke of Silicon Valley Bank talks to Tony Askew from REV Venture Partners.
The Big Ones
Now ride hailing has matured past the stage where it requires multi-billion dollar rounds, one of the biggest fundraisers in recent months has been Rivian, an electric truck and SUV developer that won’t even have a product out until next year. It has however struck a deal to sell 100,000 electric delivery vans to strategic partner Amazon, and Amazon was among the investors that have provided $2.5bn in financing for the company. It has now raised a total of more than $6.1bn from an investor base also including Ford, Cox Automotive, Sumitomo and Abdul Latif Jameel.
UK-based oil and gas company BP revealed it intends to provide $70m for India and UK-focused cleantech investment vehicle Green Growth Equity Fund (GGEF). GGEF was formed to invest in India-based technology developers operating in fields such as renewable energy, energy efficiency, energy storage, electric mobility and resource conservation. It has a target size of $700m and BP’s investment is set to close later this year. The government of India’s National Investment and Infrastructure Fund (NIIF) and the UK Department for International Development are anchoring the vehicle, having each made a £120m ($170m) commitment at its April 2018 launch. The fund is managed by Eversource Capital, an India-based joint venture created by BP’s solar power subsidiary, Lightsource BP, and private equity and real estate investment firm Everstone Capital.
Ant Financial was valued at a gargantuan $150bn when it last raised money, through a $14bn series C round in 2018, but Alibaba’s financial services spinoff is reportedly seeking to go public as soon as this year in an initial public offering set to take place at a projected valuation exceeding $200bn. In addition to Alibaba, which owns about a third of the company, Ant’s shareholders include insurance group China Life and postal service China Post.
Vor Biopharma, a US-based cancer treatment developer spun out of Columbia University, has raised $110m in a series B round featuring spinout-focused investment firm Osage University Partners. RA Capital Management led the round, which also included healthcare group Johnson & Johnson, pharmaceutical companies PureTech Health, life science real estate investment trust Alexandria Real Estate Equities and financial services group Fidelity, as well as Pagliuca Family Office, 5AM Ventures and undisclosed backers. Vor Biopharma is working on engineered haematopoietic stem cell (eHSC) therapies that have biologically redundant proteins removed – essentially making the stem cells invisible to complementary treatments that target those proteins. The company’s lead asset, Vor33, is aimed at acute myeloid leukaemia and is expected to avoid toxicity to blood and bone marrow associated with current treatments.
Epic Games is no slouch, the Fortnite developer having secured $250m from Sony at a reported valuation not far from $18bn. Epic was reported last month to be in talks with institutional investors to raise $750m at a $17bn valuation, but Sony’s interest may well be linked to the forthcoming release of the Playstation 5 this Christmas. It’s worth mentioning Fortnite has been a goldmine not only for Epic but also for Sony, which gets a 30% cut of every sale made through its online store. The Playstation 4 has, by the way, sold more than 100 million units since its late 2017 debut.
Instacart has added $100m from T.Rowe Price to a late-stage round that now stands at $325m and which values it at $13.8bn post-money. The grocery delivery service’s earlier investors include American Express Ventures, Comcast Ventures and Whole Foods but none of them have invested since 2016, during which time its valuation has climbed from $2bn. General Catalyst, DST Global and D1 Capital Partners supplied the first $225m for the round.
There aren’t too many companies at the top end of the sector but developers of vegan dairy and meat substitutes have raised some big rounds in recent years. Perfect Day, which uses microflora in its vegan dairy proteins, has just secured another $160m from investors including Canada Pension Plan Investment Board to take its series C round to $300m. Perfect Day’s earlier backers include Continental Grain, which backed the company’s series A round two years ago.
Intel Capital has invested about $253m in Jio Platform, the mobile network service provider spun off by conglomerate Reliance Industries, getting a 0.4% stake at a valuation of more than $63bn. Jio has picked up a series of large investments in recent weeks including $5.7bn from Facebook and additional capital from the likes of Saudi Arabia’s Public Investment Fund, the Abu Dhabi government, L Catterton, TPG, Silver Lake Partners, General Atlantic, KKR and Vista Equity Partners.
Primary care provider VillageMD has received $250m in equity funding from pharmacy group Walgreens Boots Alliance as part of a three-year $1bn financing commitment that will involve the corporate providing a mixture of equity and convertible debt, giving it a 30% stake. The two have also formed a strategic alliance that will involve VillageMD opening clinics at hundreds of Walgreens Boots Alliance outlets over the next few years.
Newlink provides car refuelling and electric vehicle charging services in China through an online platform, and has received $129m in a series D round that included electronics producer Xiaomi and Nio Capital, the investment arm of smart EV manufacturer Nio. Xiaomi has pursued a long-term strategy of investing in consumer hardware developers to build an ecosystem around its products, but Nio has been an increasingly active investor in the transport tech and AI space, indicating it may well have similar ideas.
Multiple unnamed university endowments were yesterday revealed to have backed US-based venture capital firm Rethink Impact’s $182m second impact fund. The fund has also pulled in contributions from financial institutions including UBS in addition to Pivotal Ventures, the investment firm founded by Melinda Gates, and philanthropic investment offices Ford Foundation and WK Kellogg Foundation.
University of Colorado’s Anschutz Medical Campus yesterday closed a $50m healthcare-oriented fund with commitments from multiple university departments and affiliates. CU Healthcare Innovation Fund has been backed by University of Colorado along with its healthcare system UCHealth, medical school CU Medicine and Children’s Hospital Colorado. All the LPs have a presence at Anschutz Medical Campus.
The latest decacorn to make the leap looks to be big data technology provider Palantir which said yesterday it has confidentially filed to go public. It’s still unclear whether Palantir, which rised $550m from Sompo Holdings and Fujitsu last month, will pursue an initial public offering or a direct listing but it will likely be among the year’s biggest listings either way. Its other backers include Relx subsidiary REV (née Reed Elsevier Ventures).
Orbital internet service developer OneWeb filed for bankruptcy in March having raised $3.4bn from investors including SoftBank, Qualcomm, Totalplay, Bharti Enterprises, Airbus, Virgin, Coca-Cola, Intelsat and Hughes Network Systems. Now however, one of those corporates – Bharti – has combined with the UK government to acquire the company at auction for just over $1bn. The deal is expected to formally go through by the end of the year once regulatory approval is provided by the US.
Open source software provider Suse has agreed to acquire Rancher Labs in a deal sources told CNBC will be in the $600m to $700m range. Rancher has developed a deployment and management tool for Kubernetes containerised application management software, and has raised $95m from investors including Telstra Ventures. This’ll be a fast exit for the unit too. It led Rancher’s $40m series D round less than four months ago.
Cambricon Technologies has priced its own initial public offering, which will raise $368m for the AI chipmaker. The company chose Shanghai’s Star Market, which is rapidly becoming a big player in world markets, particularly due to increased restrictions on Chinese tech companies looking to float in the US. It followed more than $200m in funding for Cambricon from investors including iFlytek, Alibaba, Lenovo, Tuling Century and Chinese Academy of Sciences.
University of Tübingen spinout Immatics has opted for neither option to get a public listing, instead executing a reverse merger with a Nasdaq-listed special purpose acquisition company. The Germany-based immuno-oncology drug developer had raised about $250m in equity funding from investors including Amgen but its market cap is currently hovering around the $5.6bn mark.
Another cancer drug developer, Nkarta Therapeutics, has set the range for an offering set to raise between $140m and $160m, though going by recent IPOs that figure may well end up rising. Nkarta’s investors include GlaxoSmithKline unit SR One and Novo – which each own a 13.3% stake – as well as Amgen Ventures. It last raised money through a $114m series B round in November.
Ucommune, generally regarded as China’s answer to WeWork, is however set to secure a US listing, through a reverse merger with special purpose acquisition company Orisun Acquisition Corp that will value the combined company at $769m. That in itself is significant. Ucommune doesn’t represent the same kind of disaster as WeWork but Covid-19 has hit its takings hard and that valuation is a big decline from the $1.5bn valuation at which it raised money in 2018. Its backers include Beijing Xingpai, Aikang, Dahong Group, Star Group, Junfa Group, Prosperity Holdings and Yintai Land.
Our Leadership Series interview where we talk to Jon Lauckner also from GM Ventures.
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.
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.
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.
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.