28 September 2020 – Roche Pays $448m to Buy Inflazome

The Big Ones

Congratulations to Mike Cavanagh at Comcast for taking up the reins of its ventures unit after Amy Banse’s decision to retire next year. Thanks goes to Banse for her support to the community over the past decade and glad she’s staying engaged through Comcast to deliver on sustainability, gender equality and mentorship.
My thanks to Ken Gatz, CEO at deal management software platform Proseeder, for running the past two days’ pitch events covering sustainability and mobility on September 22 and financial and deep technology yesterday. The GCV Connect powered by Proseeder platform reviewed the applications thanks to the expert corporate venturing judges and then showcased the finallists with the recordings edited and showreeled at the GCV Digital Forum next week, 29th.

Sweden-listed investment holding company Kinnevik’s history is one of pivots. From its initial switch from pulp and paper into telecoms and media in Sweden in the 1990s and then into online companies such as Avito, Rocket Internet and Zalando in the 2010s now comes the push into privately-held startups as it sells its $2bn stake in telecoms asset Tele2.

Exits

Roche has paid $448m to buy Inflazome, the Novartis-backed developer of treatments for chronic inflammatory conditions ranging from Alzheimer’s and Parkinson’s diseases, hepatitis B, Crohn’s disease and many others. Inflazome was spun out of University of Queensland just four years ago and also commercialises research from Trinity College Dublin. Novartis had contributed to its two only rounds that brought in a total of just over $62m.

TriNetX had raised $102m in funding from investors including Merck & Co, Mitsui and Itochu before agreeing to a purchase by Carlyle.

You may have all but forgotten about WeWork, the beleaguered co-working space provider, and in a world struggling to keep a pandemic at bay, sharing an office with strangers is hardly appealing. Yet, Trustbridge seems confident there is money to be made still and has acquired a majority stake in WeWork China for… $200m. Not only had WeWork China raised $1bn from investors including SoftBank and its Vision Fund, but was also once valued at $5bn. A source told TechCrunch layoffs had already started and “many things” remained uncertain, so we’ll see how this one pans out. In any case, it’s hardly an exit to celebrate for the investors, but they were likely prepared for that already anyway.

Even if you don’t drive an electric car, you have likely come across the term range anxiety – the fear that the battery’s charge will not last all the way to the driver’s destination. It is often considered a significant barrier to large-scale adoption of EVs, so seeing ChargePoint – which operates an international charging network – agreeing to a reverse merger with SPAC Switchback Energy Acquisition can only be good news. The deal values ChargePoint at $2.4bn and will, once it closes in Q4, net the business $683m in fresh funding. That’s a smidgeon more than the $667m it had raised in equity financing from backers such as AEP, BMW, Chevron, Constellation Energy, Daimler, Siemens, The Hartford and Toyota.

Speaking of the transportation sector: Ninebot – best known for the Segway brand – is looking to go public in China through a $295m IPO on Shanghai’s Star Market. The Xiaomi and Intel-backed company’s move is intriguing not so much for the IPO’s target size (though that is notable, too) but because it’s the first company with a variable interest entities (VIE) structure that’s been approved to list using Chinese Depository Receipts. VIE is a framework that enables foreign investment in companies that are restricted from accepting overseas capital due to their sensitive nature. Typically, the structure is employed by China-based companies undertaking a listing elsewhere and up until now Beijing made companies unwind this structure if they sought to list at home – but rising tensions with the US have seemingly provoked some flexibility from the central government.

Tencent-backed low-cost retailer has put a $100m placeholder figure in its filing for an IPO on the New York Stock Exchange, more than a year after its plans first emerged.

Compass Pathways, a UK-based depression medicine developer backed by pharmaceutical group Otsuka Pharmaceuticals’ McQuade Center for Strategic Research and Development, achieved a different kind of exit as it went public in an upsized IPO worth more than $127m on Friday. The company is working on something rather unusual: a synthetic version of psilocybin, the psychedelic compound in magic mushrooms, to treat mental health disorders that have proven resistant to other therapies. McQuade had backed an $80m series B round in April 2020 and its bet paid off, as shares in Compass shot up to $29 on the first day of trading.

If you were looking forward to whatever blockbuster terms Grail was going to set for its IPO when it first filed with a $100m placeholder amount earlier this month, you’ll be sorely disappointed with today’s news. However, the $8bn put down by Illumina (though when accounting for its existing stake it’s closer to $7bn) to acquire its cancer diagnostics spinoff is impressive in its own right – particularly considering that Grail raised just under $2bn, so Illumina could have saved a decent chunk of cash if it had kept the development internal – but that’s the nature of these things. WuXi AppTec, Tencent, Amazon, Alphabet, Varian Medical Systems, BMS, Celgene, Merck & Co, Memorial Sloan Kettering Cancer Center, Johnson & Johnson and McKesson are all among the corporates celebrating an exit.

Speaking of China: Zhonggu Logistics, a container logistics services provider backed by liner operator Zhonggu Shipping and telecommunications group SoftBank, is targeting a $218m initial public offering after pricing its shares at $3.28 a pop. It will list on the main board of the Shanghai Stock Exchange, and Zhonggu Shipping will remain a majority shareholder at 63.1%, with a tiny slice (2.2%) also left for SoftBank. CICC is the lead underwriter.

The Washington State University neurological drug developer has gone public after issuing 12 million shares priced at $17 each.

Deals

News continues coming in at a rapid pace, proving that the summer lull – however much there was one, considering the flurry of IPO filings as discussed earlier – is well and truly over. If you live in the west, you’d be forgiven for thinking Tesla is the only real contender in the EV space but there are other noteworthy companies in the east. One of these is WM Motor, which has picked up $1.47bn in a series D round backed by SAIC Motor – adding to some $1.8bn in funding previously raised from investors such as Baidu, Tencent and China Minmetals. The money has been allocated to R&D, marketing, sales and branding activities.

There really is no stopping Robinhood, the US-based share trading app developer backed by Alphabet and Roc Nation: the company has now pushed its series G round to $660m thanks to a $460m extension supplied by D1 Capital Partners (which had provided the $200m initial tranche last month), a16z, Sequoia, DST, Ribbit and 9Yards. The extension has moved Robinhood’s valuation up to $11.7bn from $11.2bn a few weeks ago – that seems like a marginal increase hardly worth mentioning but in July the company was actually worth “only” $8.2bn when it closed its $600m series F. It’s now collected some $2.36bn in funding altogether.

Challenger bank Chime has become the most valuable American fintech aimed at retail consumers after raising $485m in a series F round that pushed its valuation to $14.5bn – a good chunk of change more than previous leader Robinhood, which attained an $11.2bn valuation last month. If $14.5bn seems a lot – and it is – consider this: Chime claims it has been adding hundreds of thousands of customers per month as the pandemic has made people less inclined to go into a physical bank branch. Consider this, too: the company was worth a mere $1.5bn just 18 months ago. Access Industries returned for the latest round but Chime’s early investors, which include Northwestern Mutual Future Ventures, will also all be in for a phenomenal exit at this rate.

Munich Re has returned for a $250m series D round raised by online insurance platform Next Insurance, while CapitalG led the round. Next Insurance has grown to more than 100,000 customers across all 50 US states and will use the money to improve its existing offering, add more products and hire an additional 200 employees. Next has now raised $631m in total – Munich Re previously injected $250m in series C financing a year ago – and its investors also include Nationwide (the US insurer, not the UK financial institution), Markel and American Express Ventures.

Apple’s silicon in iPhones and iPads is notably because the chips manage to squeeze an astounding amount of processing power out of small real estate at low power usage. The team that led the development of these chips left last year to found Nuvia in an effort to bring their expertise to semiconductors in data centres. While its technology is still very much in development, it clearly has done enough to entice investors for a $240m series B round that featured returning backer Dell Technologies Capital.

Children’s debit card provider Greenlight is valued at $1.2bn after raising $215m in a funding from a host of investors, though none of its corporate backers participated this time.

Xingyun has picked up $200m in a series C round co-led by Taikang Insurance, Shanghai United Media Group and Highlight Capital, while GLP and C&D Group also invested.

There was a $133m series C round secured by Beyond Limits, an AI technology developer based on research at Caltech’s Nasa-aligned Jet Propulsion Lab that is notable not only because it’s repeatedly convinced BP Ventures to invest but also because it actually managed to attract BP Ventures’ Meghan Sharp as COO about a year ago (as long-time subscribers will remember). Another corporate, Group 42, joined BP for the series C round.

SoftBank’s Latin America Fund and General Atlantic have co-led a $107m series B round for Accesso Digital, a facial recognition technology developer that will use the money to scale.

Digital Garage has helped launch mobile gaming platform Playco with a $100m series A round and a valuation of more than $1bn.

Recycling electronics is big business – rare earth minerals needed to build devices such as laptops or smartphones are expensive to mine, but old gadgets too often just end up in that junk drawer we all have in our houses. This is where Wanwu Xinsheng – né Aihuishou – comes in: it runs an online and brick-and-mortar recycling service for consumers to sell their second-hand devices. The company’s now raised $100m in series E-plus financing from JD.com, its JD Logistics unit and others, to accelerate growth and seek additional partnerships internationally. The round brings the company’s overall funding to more than $1bn, and JD.com is a repeat investor.

Another nine-figure sum was revealed by Nucarf, a China-based logistics fleet refuelling management platform that has collected $100m in combined series A and A-plus capitalfrom investors including Xiamen C&D. The cash has been allocated to accelerating the development of its digital infrastructure, and it comes after multiple rounds of undisclosed size in 2017 and 2018.

Foot Locker-backed sneaker marketplace Goat Group has completed a $100m round from D1 Capital Partners, bringing its overall financing to almost $300m in five years.

University

UW mental health spinout Owl Insights secured funding to advance its product development and distribution.

Funds

The website development tool provider’s Wix Capital subsidiary will invest in early-stage startups that are developing AI, e-commerce, web design and automation technologies.

Pureos Bioventures has backed five spinouts so far from its inaugural biotech-focused fund, which has reached its final close.

Unnamed corporates have provided capital for Panlin’s $148m fund that will focus on healthcare, digital transformation and smart hardware.

Legal & General is among the limited partners for Kindred Capital’s second fund, which also attracted University of Chicago and will invest in early-stage European startups.

Alsa Ventures is targeting a $150m final close for its inaugural biotherapeutics fund, which has already backed university-linked companies.


“Funky Chunk” Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 3.0

04 May 2020 – FIS Commits $150m to its Corporate Venturing Unit

The Big Three

As highlighted in last week’s podcast, some sectors are flying high and, certainly relative to the global financial crisis a dozen years ago, banking and financial services is one of them.

New York-listed financial technology (fintech) provider FIS has committed $150m to its corporate venturing unit as part of a joined-up approach to open innovation including its FIS FinTech Accelerator and FIS Innovatein48 research and development competition in addition to innovation labs.

Under Joon Cho, FIS Ventures will invest up to $150m in fintech startups over the next three years targeting artificial intelligence and machine learning, digital enablement and automation, data and analytics, security and privacy, distributed ledger technology and financial inclusion.

The blurring of lines between corporate and independent venture capital is continuing apace as all parties consider how best they can support entrepreneurs while fulfilling their five needs: capital, customers, product development, hiring and an exit.

This naturally brings the best investors together with the corporations best able to scale startups and then potentially acquire them, so it is little surprise in many ways to see US-based coffee retailer Starbucks form a co-investment partnership with venture capital firm Sequoia Capital China.

Starbucks said it would also look to form “commercial partnerships with next-generation food and retail technology companies” in China through a statement announcing the agreement.

The average worldwide population increase is currently estimated at 81 million people per year – a figure at this stage fortunately unlikely to be dented much by the Covid-19 pandemic – and all those people require feeding.

As GCV’s agtech supplement in March noted, modern farming practices, such as the use of soil-based and aerial sensors as well as drones, data analytics, and pest and pathogen detection systems, are taking hold. When combined with advanced fertiliser formulations, digital farming technologies developed by startups can substantially reduce nitrogen and nutrient loss and mitigate water pollution.

Enter Pivot Bio, a US-based agriculture technology developer that is trying to harness the power of naturally occurring microbes to provide more nutrients to crops. It has raised $100m in its series C round from a consortium including Bunge Ventures and Continental Grain but is apparently missing one of its earlier corporate backers.

Deals

Fintech on the other hand does not seem to have been affected by the coronavirus to the same extent. Investment and financial advice app developer Stash has raised $112m in a series F round led by $80m from lending marketplace LendingTree. The funding was bagged at an $800m valuation and lifted Stash’s overall funding to more than $290m. CEO Brandon Krieg told Bloomberg it intends to grow its customer base along with brand awareness as finances constrict in the US.

Consumer and business lender DMI Finance likely won’t lack customers in the downturn, and it has just pulled in $123m from video game publisher Nexon at a reported valuation that topped $1bn. India-headquartered DMI secured $200m in non-convertible debenture financing just last month and its commercial partners include Samsung, which is based – like Nexon – in Korea.

And another is business-focused neobank Cross River Bank, which has raised $100m of its own. The series C round comes less than 18 months since Cross River received $100m from backers including corporate CreditEase. The latest round is being co-led by investment adviser V Capital, which will help Cross River expand in its home country of Malaysia.

Inceptio loads up $100m

Paytm is among India’s most valuable startups having been valued at $16bn in a November series G round featuring Ant Financial and SoftBank Vision Fund. The mobile financial services provider is reportedly in talks to raise $100m or more from Microsoft to add to the series G. The round was sized at $1bn but Paytm has only received $720m of the cash so far, and Ant Financial will reportedly need government clearance to supply its share due to new foreign investment regulations.

Although corporates have not been keen on joining in the rush to back cannabis-focused startups, an interesting test case for tech based on traditionally illicit drugs may be Compass Pathways, which is working on a treatment for depression that utilises psilocybin from mushrooms (magic mushrooms, to be precise). The company just pulled in $80mthrough a series B round featuring Otsuka Pharmaceutical’s McQuade Center for Strategic Research and Development, and has received breakthrough therapy designation for its lead product from the FDA. That should be as good a go-ahead sign as any, you’d think.

University

Taysha stakes out $30m seed round

LifeSprout bolts on series A funding

Exits/Losses

SoftBank’s woes continue, the corporate announcing this morning that it expects to booka mammoth loss of nearly $6.6bn on its investment in WeWork over the last financial year – a period when it pledged a $9.5bn financing package to make sure the workspace provider could continue operations. The value of that deal has been hit hard by the shutdowns of WeWork locations across the world in the face of the coronavirus, and it’s worth noting the $6.6bn figure is separate to SoftBank Vision Fund, which has announced a projected loss of more than $16bn over the same period.

D2iQ has raised a touch over $250m from investors including Microsoft, Hewlett Packard Enterprise and Koch Disruptive Technologies since being founded as Mesosphere in 2013, but the cloud software and services provider is reportedly in talks with Google to be acquired. In a sign of the effect the Covid-19 shutdown is having, D2iQ reportedly laid off 34 team members recently, and the prospective purchase would likely value it at more than that $250m, but less than the $775m valuation in its last round two years ago.

To IPO or not to IPO? Right now it seems less of a question than a foregone conclusion for many companies but interestingly, the ones that are opting to go public in this economic downturn seem to be benefitting from the lack of competition. Oncology therapy developer Oric Pharmaceuticals has done so in a $120m initial public offering, floating at the top of its range having increased the number of shares by 50% and then seeing them open more than 60% higher. It had previously raised more than $175m in funding from investors including Taiho, Hartford HealthCare and Memorial Sloan Kettering Cancer Center.

Acacia circles over Woodford assets

Funds

Michigan State to administer $3m pre-seed fund


“Funky Chunk” Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 3.0