In this week’s episode of the Leadership Series podcast, we talk to George Baxter, chief executive of Edinburgh Innovations about the strengths of the Scottish ecosystem, leading a tech transfer office that also handles student startups and the importance of public funding (and giving the taxpayer their money’s worth).
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
We have teamed up with 500 Startups’ CVC Insider to bring you an interview with our very own James Mawson, founder and CEO of Mawsonia. James is interviewed by Nicolas Sauvage who we interviewed in an earlier episode of our Leadership Series.
The Big Ones
EQRx formally launched a year ago with $200m from investors including GV and Nextech, and all its series A investors have now returned for a $500m series B round. The startup is collaborating with stakeholders including pharmaceutical companies to develop more affordable medicines, with late-stage cancer drugs a particular focus. It is also part of an increasingly diverse portfolio of early-stage life sciences companies in GV’s portfolio.
Mobile network operator Orange is the latest corporate to spin off its venture capital unit with a healthy addition to its funding allocation. Orange Ventures will henceforth operate as an independent entity, and has received $426m in capital from its former parent company in addition to the portfolio of its predecessor, Orange Digital Ventures. That portfolio includes Monzo, Raisin and Actility.
Qualcomm Technologies has agreed to buy silicon chip technology developer Nuvia for $1.4bn less than two years after it was founded. Nuvia had raised $293m across two rounds pre-acquisition, both of which included Dell’s corporate venturing subsidiary, Dell Technologies Capital. It could well be an early marker of some of the M&A activity that will spring up as 5G technology begins to get a real foothold in the mainstream.
Dice Molecules, a US-based biopharmaceutical spinout of Stanford University, has closed an $80m series C round featuring spinout-focused investment firm Osage University Partners. RA Capital Management led the round, which also attracted Sanofi Ventures and Alexandria Venture Investments on behalf of pharmaceutical firm Sanofi and real estate investment trust Alexandria Real Estate Equities. Founded in 2014, Dice Molecules has developed a drug discovery platform leveraging technology dubbed DNA-encoded library, which it hopes will make it possible to target a range of conditions with oral treatments rather than requiring injections. Its lead asset is aimed at psoriasis, and the company has been collaborating with Sanofi since 2016.
WeWork aside, Vision Fund’s biggest failure was perceived as OneWeb, the satellite internet operator that declared bankruptcy early last year after SoftBank had pumped some $2bn into the company. However, Bharti Enterprises joined the UK government to buy it for $1bn in the resulting auction, and now SoftBank is back, putting in $350m of a $400m investment expected to help OneWeb complete its initial satellite constellation. It will come out with a 30% stake, and the other $50m was put up by another pre-bankruptcy investor.
Online fitness was earmarked as one of the big growth sectors in our 2021 preview, and the first company in the space to raise big money this year is Keep, which has bagged $360m in series F funding at a valuation of about $2bn. SoftBank Vision Fund led the livestreamed fitness class provider’s latest round, which also featured existing backers Tencent and Bertelsmann Asia Investments.
Autonomous driving software developer WeRide raised $200m in series B funding from bus manufacturer Yutong Group last month and it has now added $110m to close the round at $310m. The round comes after earlier funding provided by investors including Nvidia GPU Ventures, SenseTime, Johnson Electric and Alliance Ventures.
Digital lending software provider Blend has closed a $300m series G round that doubled its valuation to $3.3bn in just five months, which is very impressive. The round was co-led by Tiger Global and Coatue, though no mention of existing corporate backer Salesforce.
Blend isn’t the only fintech developer to have experienced a huge jump in valuation last week. Cross-border payment platform developer Rapyd has also received $300m, in a series D round also led by Coatue. The series D boosted the valuation of Rapyd, which counts Stripe as an earlier investor, to $2.5bn post-money, more than double that of a year ago.
Tessera Therapeutics is the latest in a series of life sciences startups that have raised nine-figure amounts for their first external rounds, having pulled in $230m for its gene writing technology, which aims to prevent disease by rewriting the genome. The series B round was co-led by SoftBank Vision Fund 2, which may itself be looking to get more involved in the sector.
Elsewhere in China, employee management software provider WorkTrans has announced over $190m in funding, $140m coming in a Tencent-backed series D round. The round was disclosed together with a $50.5m series C round and it increased WorkTrans’ overall funding to approximately $236m. It will support further development of the company’s HR management product, which makes use of deep learning and cloud computing technology.
SoftBank’s $5bn Latin America fund has given it a sizeable foothold on the continent, and it has co-led a $190m round for one of its portfolio companies, furnishing and home decor marketplace MadeiraMadeira. The corporate also led MadeiraMadeira’s last round, in which it secured $110m, and the funding is set to fund the expansion of the company’s brick-and-mortar footprint and a prospective range of own-brand products.
GV was among the participants in a $160m funding round for distributed database technology provider Cockroach Labs that valued it at $2bn. The Alphabet subsidiary has been a Cockroach investor since its $6.3m series A round in 2015 and has been along for every round since, as the company has hiked its total funding to $355m.
It seems amazing now that just a year ago it looked like the losses suffered by SoftBank’s Vision Fund could have severely impacted its corporate parent as a whole. There have been few bigger winners from the boom in the public markets and VC spaces, and its next exit could be from Auto1. The online car dealership has announced it plans to launch an initial public offering in Frankfurt that could raise some $1.2bn alongside a private placement. Vision Fund invested $565m in Auto1 at a $3.56bn valuation in 2018 and it’s going to be interesting to see how that valuation compares to the company’s market cap when it does float.
Dynamic window producer View announced plans for a reverse merger in November that would be boosted by $300m in PIPE financing. That amount is set to be boosted to $500m after Singaporean sovereign wealth fund GIC committed a further $200m, adding to some $1.8bn in earlier debt and equity financing. That capital was provided by investors including SoftBank Vision Fund 1, Corning and Seagate.
Cryptocurrency services provider Bakkt was launched by financial exchange operator Intercontinental Exchange (ICE) in 2018 and less than three years on, it has agreed to a reverse merger set to value it at $2.1bn once the deal closes. It will also take an NYSE listing and $325m in PIPE financing from investors including ICE. It had raised more than $480m in venture funding from backers also including Microsoft unit M12, PayU and Boston Consulting Group.
Germany-listed food delivery service Delivery Hero has committed €50m ($61m) to set up an independently-managed, early-stage corporate venture capital firm called DX Ventures. DX Ventures will invest in sectors including on-demand services, food technology, sustainable innovation, artificial intelligence, financial technology and logistics. It will be led by managing director Duncan McIntyre.
We have teamed up with 500 Startups’ CVC Insider to bring you and interview with Aaron Brandt of Hypertherm Ventures. Aaron is interviewed by Nicolas Sauvage who we interviewed in an earlier episode of our Leadership Series.
The Big Ones
One of the big shifts in 2020 was the surge in educational technology providers, with China leading the way. That was before a flurry of large rounds in the space right before the end of the year, the biggest being a $1.6bn series E round for online tutoring platform developer Zuoyebang that included Alibaba and SoftBank Vision Fund 1. Zuoyebang’s overall funding now stands at roughly $2.9bn, some 80% of which has come in the past seven months.
Andre Maciel, former managing partner at Japan-headquartered telecommunications and internet group SoftBank’s $5bn Latin America-focused fund, has raised $50m for the first close of an independent venture capital firm. Maciel set up Volpe Capital in 2019 with SoftBank’s backing, and its first fund also has investment bank BTG Pactual as a cornerstone limited partner. Marcelo Claure, head of SoftBank LatAm, and the $5bn fund’s managing partners, Paulo Passoni and Shu Nyattta, have also invested in the fund. Volpe Capital plans to invest in up to 20 early stage companies at series A stage, with a primary focus on the Brazilian market, according to regional trade body Lavca.
SoFi has come a long way since it started as a student loan refinancing specialist, having expanded into a multi-pronged financial services platform that offers lending, investment and insurance products. The company, which has raised some $2.4bn from investors including SoftBank and Renren, has also agreed a reverse merger with a SPAC called Social Capital Hedosophia Holdings Corp V and will be listed on the New York Stock Exchange. The deal will be boosted by $1.2bn in PIPE financing and the merged company will be valued at $8.65bn once the deal closes, double the valuation at which SoFi last raised money.
On GUV, the biggest deal was Hinge Health, a US-based digital therapeutics company backed by commercialisation firm IP Group, which closed a $300m series D round co-led by Coatue Management and Tiger Global. The round valued Hinge at $3bn. Founded in 2014, Hinge Health has built a digital healthcare platform for people living with chronic musculoskeletal conditions, such as back and joint pain. The offering consists of an app, wearable sensors and access to remote health coaching to deliver physical and behavioural health therapy. Hinge Health was co-founded by chief executive Daniel Perez, who gained a PhD in medical sciences from University of Oxford in 2013, and president Gabriel Mecklenburg, who obtained an MPhil in bioengineering from Imperial College London in 2014. But the company was only founded after both had graduated and worked together at Oxbridge Biotech Roundtable, an organisation looking to connect academia with industry since 2011.
B2B e-commerce marketplace Udaan has pulled in $280m from investors including Tencent for the second tranche of a series D round now standing at $865m. Tencent also took part in the round’s 2019 first close, as did Citi Ventures, and the extra funding came at a $3.1bn post-money valuation. Its overall funding has been increased to $1.15bn.
Online food delivery and restaurant listings platform developer Zomato has pulled in $660m through a series J round valuing it at $3.9bn post-money. Info Edge and Ant Financial, the two corporates that have historically been its two key investors, do not however appear to have participated in the round, the funding coming from Fidelity, Tiger Global Management, Luxor Capital, Kora Management, D1 Capital Partners, Baillie Gifford, Mirae Asset and Steadview Capital.
Cloud cybersecurity platform developer Lacework has closed $525m in funding from investors including Snowflake Ventures, which provided $20m, and existing backer Liberty Global Ventures. The company had previously raised less than $75m but said it increased revenue 300% in 2020, and that big jump in funding is indicative of how the ongoing public markets tech boom is having an impact further down the pyramid.
As 2020 drew to a close, game creation platform developer Roblox had put its initial public offering on hold, citing erratic post-IPO share movement of other tech companies. Now we can see what the results are. Roblox has secured $520m in a series H round featuring Warner Music Group valuing it at $29.5bn – a more than sevenfold increase on the $4bn valuation in its series G round under a year ago. The company has also revealed it’s eschewing an IPO in favour of a direct listing, which suggests it really wasn’t happy with its underwriters for the offering.
DXY, the Chinese operator of an online medical community, has completed a $500m round featuring Tencent Investment, at the end of a year when it established a real-time information service covering covid-19 that aimed to combat harmful rumours. Tencent had originally invested $70m in DXTY through a 2014 round that preceded a $100m series D round four years later.
Chinese AI chipmaker Horizon Robotics secured $150m in series C funding just last month but has already added $400m in a series C2 round co-led by lithium-ion battery maker Contemporary Amperex Technology. Recent reports suggested the company was targeting a total of $700m across multiple tranches, its earlier backers including Intel Capital and SK Global subsidiaries SK China and SK Hynix.
Grab is one of two big players in Southeast Asia’s on-demand ride market, and it has also been arguably the quickest in the sector worldwide to expand into other areas. It has reportedly raised $300m for Grab Financial Group, a spinoff that encompasses a range of financial services including digital payment technology, lending, insurance and investment management. Conglomerate Hanwha is leading the round through its Hanwha Asset Management subsidiary.
Chinese AI chipmaker Enflame Technology has raised $279m in the biggest round announced so far this year. Enflame produces artificial intelligence chips for data centres and has now secured a total of over $470m since it was founded in 2018. Tencent, which participated in the $279m series C round, has backed it in all four rounds it has disclosed.
Aeva develops lidar sensor technology for use in autonomous driving systems, and two months ago it agreed a reverse merger with a SPAC called InterPrivate Acquisition Corp set to value it at about $2.1bn once the deal closed. Now the company, which is backed by Porsche and Lockheed Martin, has agreed a $200m investment by one of InterPrivate’s shareholders, technology investment firm Sylebra Capital, that will close when the other deal does. It’s an interesting symptom of the ongoing public markets boom.
Divvy is the developer of an offering that combines business expense management software with smart credit cards, helping companies track and manage their expenses and spending. It has secured $165m in a series D round featuring Hanaco and PayPal Ventures at a $1.6bn valuation. The round increased Divvy’s overall funding to $410m, $200m of which came in a 2019 series C round.
Dremio, developer of a data management platform for data lake storage, has received $135m in series D funding from backers including Cisco Investments at a $1bn valuation. The corporate also took part in Dremio’s $70m series C round 10 months ago, and the latest round boosted its total funding to $250m. We’ve had a host of big enterprise software IPOs over the past year or two, but it looks as if the next wave of unicorns in the space is emerging.
Antibody therapy developer Boan Biotech has raised $106m from investors including Bank of China’s BOCG investment vehicle at a pre-money valuation a touch over $750m. The company was founded in 2013 and acquired by Luye Pharma Group six years later, the latest round representing the first it has closed since then.
US-based sports franchises the Green Bay Packers, Milwaukee Bucks and Milwaukee Brewers have backed an impact investment fund for minority-run startups. The franchises committed to Equity League as “a new impact investment division of venture capital fund TitletownTech,” alongside software producer Microsoft.
Arvelle Therapeutics was spun off in 2019 by drug developer Axovant to commercialise an epilepsy drug licensed from pharmaceutical company SK Biopharmaceuticals. The company bagged $208m in series A and project funding last year but its investors will exit after Angelini Pharma agreed to acquire it in a deal that could hit $960m. SK Bio will also get a nice return from its 12% stake in Arvelle.
The Big Ones
Ant Group may not have been able to successfully go public but China’s other hugely valuable VC-backed private company, ByteDance, is reportedly in the process of raising $2bn at a $180bn valuation. KKR and Sequoia Capital are co-leading the round, but no word yet on whether it’s set to include SoftBank, a participant in its last round, in 2018, which valued it at $78bn.
Luxembourg-headquartered venture capital fund European Circular Bioeconomy Fund (ECBF) reached a €175m ($213m) second close on Tuesday with €93m from limited partners including corporates Volkswohl Bund Versicherungen, Nestlé and Neste. Insurance provider Volkswohl Bund Versicherungen, packaged food and beverage producer Nestlé and oil processor Neste were joined in the second close by promotional bank NRW Bank and an unnamed family office. ECBF was launched by the European Commission and European Investment Bank in November 2019. The European Investment Bank has provided a total of €100m for the vehicle as a cornerstone investor. The fund is focused on late-stage investments in bioeconomy technology developers located in Europe. It is two thirds of the way towards a targeted close of €250m.
Roblox and Affirm may be putting their initial public offerings back to 2021, but that hasn’t stopped mobile commerce platform developer Wish pricing an IPO that will net it just over $1.1bn. The JD.com-backed company is floating at the top of its range after pumping its revenue up 32% in the first nine months of 2020, at a valuation about 50% higher than in its last round, in August 2019, so the outcome of this one is going to be very interesting. Were the others priced badly or is the market just supercharged right now?
University of British Columbia-linked AbCellera was one of the recent IPO candidates that saw a huge first-day pop, pricing an upsized $483m IPO at $20 per share early in the week only for its shares to open at more than three times that price. The Eli Lilly-backed antibody therapy developer eventually closed that offering at $556m after the underwriters unsurprisingly took up the over-allotment option. It won’t be the last time that happens this year.
Google X may not have been the goldmine some at its parent company hoped for, but an unqualified success at this point has to be Verily, the company applying big data technology to healthcare and life sciences. Verily has just raised $700m from existing investors including Google owner Alphabet, representing its third mega round in total. Alphabet was joined by Temasek, which invested $800m in Verily in 2017, as well as Silver Lake and Ontario Teachers’ Pension Plan, which had added $1bn two years later.
Xingsheng Preference Electronic Business, the group buying platform mainly known as Xingsheng Youxuan, has agreed to raise $700m from e-commerce group JD.com through a strategic collaboration agreement. The news was revealed in a regulatory filing without a valuation attached, but Xingsheng Youxuan was reportedly in the process of securing $800m in a Tencent-backed round in July at a $4bn post-money valuation.
Apex Microelectronics, a chipmaker spinoff of printing and imaging technology producer Ninestar, has raised $489m from investors including Gree Electric Appliance’s Zhuhai Gree Financial Investment Management vehicle. The round was led by the $31bn China Integrated Circuit Industry Investment Fund II, and Gree Financial Investment Managementsupplied $53.5m in return for a 1.8% stake.
StockX runs an e-commerce marketplace that specialises in collectible and high-grade goods such as sneakers, handbags and electronics, and has raised $275m in series E funding at a $2.8bn post-money valuation. Tiger Global Management led the round, and StockX’s earlier investors include GV, the Alphabet subsidiary formerly known as Google Ventures, which has had some year it’s fair to say.
With vaccines beginning to be rolled out, it feels like the tech space is finally looking forward to a 2021 where some dormant sectors will be making big returns (potentially in both senses of the word). That could be part of the impetus behind the $182m in funding just raised by ride hailing service Bolt. Daimler and Didi Chuxing-backed Bolt has diversified its business model by leaning more heavily on logistics in recent months, and the round looks to have more than doubled its valuation to roughly $4.3bn.
Tencent has co-led a $153m funding round for Yonghui Fresh Food, a business-to-business fresh produce distribution subsidiary of supermarket chain Yonghui Superstore, with China International Capital Corporation’s CICC Qizhi fund. The round also featured Yonghui Superstore itself, which retains a 32% stake in the company having also backed its $145m series A round two years ago.
China-based venture capital firm BeFor Capital has amassed RMB700m ($107m) of capital across two funds, one backed by solar cell manufacturer Canadian Solar. The firm pulled in approximately $76.4m for the first close of its Fund III and $30.5m for the close of Fund IV. It now has over $306m of capital under management across four funds and a number of special purpose vehicles. Canadian Solar contributed to Befor Capital’s Fund III alongside funds backed by the government of China’s Inner Mongolia and Hohhot regions.
Boehringer Ingelheim has agreed to acquire one of its portfolio companies, oncology therapy developer NBE-Therapeutics, in a transaction that could reach $1.43bn once milestone payments are factored in. NBE is working on antibody-drug conjugates to treat cancer, and has raised approximately $68m from investors including Boehringer Ingelheim Venture Fund and pharmaceutical firm Novo.
Lidar sensor and software provider Innoviz has chosen the reverse merger route, one boosted by $200m in PIPE financing from investors including corporate backers Magna International and Phoenix Insurance. The combined company will be valued at about $1.4bn once the deal closes, and Innoviz’s existing investors also include Samsung Catalyst, SoftBank Ventures Asia, Naver, Delek Motors, Delphi Automotive and Harel Insurance Investments and Financial Services.
Upstart, the owner of an online lending platform that utilises artificial intelligence in its activities, is also valued above $2bn, following a $240m initial public offering. Its shares rocketed up 47% in their first day of trading yesterday and its pre-IPO backers include Rakuten, Progressive and GV, which sold $1.6m of shares having backed Upstart’s $1.75m seed round eight years ago. Its remaining stake is worth about $28m at the current share price.
The second half of 2020 has been a bonanza period for IPOs, and things don’t show any sign of slowing down either, not with the sky-high valuations companies are seeing as soon as they hit the market. UiPath, a provider of robotic process automation software, has filed confidentially to go public, five months after a Tencent-backed series E round valuing it at $10.2bn. It has so far raised some $1.3bn in funding, with Alphabet’s CapitalG also among its investors.
Coinbase is the other unicorn to have confidentially filed to go public in the last day or so, the crypto trading platform having been valued at $8bn in its last round two years ago. Now that figure looks sure to rise, given the increasing activity in blockchain technology and the recent shooting up of Bitcoin prices. It has raised approximately $517m from investors that include New York Stock Exchange, NTT Docomo, BBVA and USAA.
In this week’s episode of the Leadership Series podcast, we talk to Larry Loev, chief executive of Ariel Scientific Innovations, about leading a tech transfer office for a young but ambitious university, the opportunities of tech transfer in a country famed for its startup ecosystem and how to bring innovation to oenology.
The Big Ones
2020 has been a year when, for obvious reasons, innovative drug development has taken a leap forward. Tempus combines artificial intelligence and molecular data to come up with precision therapeutics, and has secured $200m in series G2 funding from investors including Novo and Google at an $8.1bn post-money valuation. That’s a 62% leap from its $100m Novo-backed series G round nine months ago.
University of Bristol is supporting a £15m ($20m) incubator and venture fund intended to anchor a deep tech epicentre in the west of England. Science Creates includes the Science Creates Ventures EIS Fund 1 that will focus on Bristol-based pre-seed and seed-stage deep tech startups in areas such as therapeutics, advanced materials, hardware and software. The incubator is an evolution of the existing University of Bristol-linked science innovation hubs Unit DX and Unit DY. It will connect resident companies to mentoring and strategic partnerships aligned with science and engineering-oriented objectives. Science Creates’ founding team includes Harry Destecroix, who previously co-founded University of Bristol-founded diabetes treatment developer Ziylo, acquired by pharmaceutical firm Novo Nordisk in 2018.
Food delivery app developer DoorDash has floated in one of the year’s largest tech IPOs, one that will net it almost $3.37bn at a valuation more than double that of the $16bn achieved in its June 2020 series H round. That jump has been described by some onlookers as insane, though it’s worth noting that few companies DoorDash’s size can boast of trebling revenue year on year while slashing their net loss by over 70%. It’s also a victory for DoorDash’s largest backer, SoftBank Vision Fund, which first invested at an $865m pre-money valuation.
Isar Aerospace, a Germany-based satellite technology launch services spinout of TU Munich, has raised €75m ($90.8m) of series B funding from investors including Unternehmertum Venture Capital (UVC) Partners, an affiliate of the university’s tech transfer arm UnternehmerTUM. The round also featured Airbus Ventures, among others. Founded in 2018, Isar is working on a two-stage launch vehicle designed to deploy satellites into low-earth orbit. Its rockets use light hydrocarbon and liquid oxygen-based fuel that has a lower environmental impact than common propellants. The company will use the funding for research, development and production activities ahead of its first commercial launches, which are planned for early 2022. UVC Partners and Airbus Ventures previously backed a $17m series A round for Isar in December 2019
Nuance Pharma has secured $181m in series D funding from investors including Konruns Pharma to advance its lead candidate, a small molecule anti-tumour drug, through early clinical trials. Nuance is also working on treatments for respiratory diseases, iron-deficiency anaemia and post-operative pain.
Brazil-based Conductor has bumped its latest round to $170m by raising a further $20m from Singaporean government-owned Temasek. It raised the first $150m last month in a first close led by Viking Global Investors, and Visa is also a backer, having invested in the banking and card issuing software provider two years ago.
Cityblock Health was spun off by Alphabet’s urban innovation subsidiary, Sidewalk Labs, three years ago and has already raised some $300m in funding, $160m coming in a series C round valuing it above $1bn. The round was led by venture firm General Catalyst and the company’s investors also include EmblemHealth and Echo Health Ventures.
In a year full of unpredictability and uncertainty, detailed information can make all the difference, so it’s no surprise risk intelligence provider FiscalNote has pulled in new funding, raising $160m in a debt and equity round featuring Renren and SoftBank in addition to The Economist Group, Jipyong and S&P Global Ventures. FiscalNote, which has more than 4,000 customers, is putting the money into strengthening its technology and growing its services.
Intel Capital helped Pico, a provider of IT systems and technology for financial market operators, complete a $135m series C round today that also featured CreditEase’s Fintech Investment Fund. Pico’s investors and clients include Wells Fargo, UBS, Goldman Sachs, JP Morgan, Nomura, DRW Venture Capital, Chicago Trading Company, Capital Markets Trading and Simplex Investments.
Beijing Snowball Finance Information Technology provides cross-border data on financial markets as well as the means to invest in funds, bonds, trusts and cryptocurrency. It has just secured $120m in series E financing from private equity firm Orchid Asia, adding to over $170m in earlier funding from the likes of Ant Group and Renren.
The cybersecurity sector is increasingly moving towards the industrial space, as the internet of things makes large infrastructure more vulnerable to cyber attacks. Dragos is one of the companies offering an industry-focused cybersecurity product, and it has raised $110m in a series C round co-led by National Grid Partners and Koch Disruptive Technologies. The round also featured fellow corporate investors Schweitzer Engineering Labs, Hewlett Packard Enterprise and Saudi Aramco Energy Ventures.
Airbnb has timed its flotation perfectly, raising $3.49bn at a price comfortably above its range. Alphabet-backed Airbnb has had a miserable year earnings wise due to worldwide social distancing measures, but investors will be betting on a big rebound in 2021 as covid-19 vaccinations begin to be distributed and governments start easing travel restrictions.
Uber has sunk some big money into its autonomous driving technology unit, Advanced Technologies Group, over the years, which was what led the corporate to spin it off last year with $1bn from Denso, Toyota and SoftBank Vision Fund. It has now agreed to merge Uber ATG with another self-driving technology developer, Aurora, through a deal that will involve it investing $400m in the company and taking a 26% stake in the merged business at a $10bn valuation. It’s a similar model to the one Uber has used to divest regional businesses in China, Southeast Asia and Russia.
Silverback Therapeutics has had a very successful IPO too. It floated a week ago, pricing an upsized offering above the range, and has since seen its share price shoot up over 50%. The underwriters have accordingly boosted the size of the IPO to almost $278m, adding to $211m in venture funding from investors including Celgene, Bristol-Myers Squibb and Alexandria Venture Investments.
China-based 17 Education & Technology Group has floated in the United States, in an initial public offering that raised nearly $288m. The company, which secured $250m nearly three years ago from investors including ByteDance, provides in-class learning software and after-class tutoring services. It priced the IPO at the mid-point of its range, and the offering came after 17EdTech nearly quadrupled its revenue year on year in the first nine months of 2020.
Fintech as a whole is having a moment right now, Affirm having agreed to pay $264m to acquire instalment payment service PayBright in a deal that will allow GoEasy to exit. Consumer finance provider GoEasy invested $25.5m in PayBright in September last year, which makes the transaction a relatively early exit.
In this week’s podcast episode of the Leadership Series, we talk to Mike Zimmerman, partner at Main Sequence Ventures, about improving commercialisation activities in Australia, the importance of deep tech over the next few decades and developing a plant-based burger in partnership with Hungry Jack’s at breakneck speed.