01 February 2021 – Xerox Sets Up $250m Corporate Venture Capital Fund

The Big Ones

GCV Digital Forum 2021 event had a host of highlights, including awards, the World of Corporate Venturing annual review, magazines and to bring together such luminaries to share insights and deal flow through the GCV Connect powered by Proseeder platform as well as commercially bring in the subscribers, sponsors and attendees.

To have about 1,000 at the forum and Mach 49 workshop and hundreds of meetings and engagement with the pitch sessions is awesome, particularly through the regional and sectoral meetings, such as for the hydrogen roundtable and Global Energy Council meeting and report.

The event also showcased the launches of our professional development and community platforms for venture investors of all types to meet up, the GCV Institute and Global Innovation Venturing, respectively.

We have together really set out the stall for this year for the growth of the GCV Leadership Society, GCV Connect powered by Proseeder platform, Global Innovation Venturing, GCV Institute including Academy and a boost to readers across our titles, with my colleague, Thierry Heles bringing out the latest quarterly report for Global University Venturing.
Let us work together to achieve our common goals. There is strength in unity.

Xerox sets up $250m corporate venture capital fund

Xerox’s has now set up a reported $250m corporate venture capital (CVC) fund. The timing is notable for a few reasons.

First, Tolga Kurtoglu, Xerox’s head of research, left late last year, to this month join computer maker HP – probably Silicon Valley’s original archetypal company having been founded by Stanford University students from their garage – as chief technology officer.
Second, Xerox is back into CVC after one of the most seminal journeys into CVC.

As CB Insights in its excellent history of the industry noted: “Xerox had had an active CVC program since the 1960s, operating an internally managed fund that invested in some of the most legendary figures in Silicon Valley, including Raymond Kurzweil [proponent of the singularity between people and machines] and Steve Jobs [founder of Apple]….

“Xerox started Xerox Technology Ventures (XTV) in 1988 to exploit and monetize the technology created in Parc and its other research labs, funding it with $30m.

“The company’s chairman said at the time that it was ‘a hedge against repeated missteps of the past’. Apple was one of several examples in which technology initially developed by Xerox was commercialized by more nimble competitors.”

But Parc also developed the laser printer among a host of projects and XTV was an enormous financial success, netting capital gains of $219m on the company’s initial investment, an astounding net internal rate of return of 56%, CB Insights’ history notes.

XTV was terminated, reportedly due to politics, and replaced with Xerox New Enterprises, which did not relinquish control of firms or allow for outside investment and had less success.

Which direction Xerox’s new fund takes will showcase whether the new management since the 1990s has learned the right lessons and there are now plenty of examples of groups setting up for success and longevity, as identified in the GCV Digital Forum over the past week.

Thanks to the 1,000 or so investors, including those part of the GCV Leadership Society who joined this Festival of Corporate Venturing and helped with the pilot and roll out of the GCV Institute launched to provide the professional development to recruit, retain and train CVCs and their business units and executive on the right approaches. In innovation we trust and we welcome Xerox and its CEO, John Visentin, back into the community

Focus on large acquisitions

There are certainly all these elements to Preventice’s acquisition by Boston Scientific for up to $1.025bn. But the conditions for these deals are set by the animal spirits in the wider public markets.

And here the music is certainly playing as Silicon Valley Bank notes in annual healthcare report.

The boom in diagnostics (dx/tools as a subsector) was set by last year’s flotation of  digital disease management company Livongo in an $355m initial public offering. The following year saw telehealth group Teladoc acquire Livongo for $18.5bn.

And behind both Preventice and Livongo was US-listed drugs group Merck’s corporate venturing unit, Global Health Innovation (GHI).

William Taranto, head of Merck GHI, noted by email: “This is our second unicorn for GHI in the last 18 months (Livongo and Preventice). We were majority owner of Preventice.”

Jon Otterstatter, co-founder and CEO of Preventice Technologies, and Taranto in a session moderated by Heidi Mason of Bell Mason Group spoke at length at the GCV Symposium a few years ago. Mason when asked by email remembered it well. “I recall being on your London Symposium stage with Bill and Jon some years ago, talking about strategic vision and gainful implementation before [the] ‘CVC ecosystem investor model’ was common wisdom.

“Bill and Jon discussing how their strategic innovation partnership was forged with vision of new digital health market [and] new sector…and even then, they were anticipating this type of M&A or IPO as a future rung in their strategic platform ‘ascension’ story.”

Merck operates a $500m GHI Fund and added a $700m private equity fund to be able to buy-and-build and take larger stakes across the ecosystem. For his GCV Powerlist 2016 award, Taranto said: “We are focused on using our growth equity firm to create ecosystems around oncology and infectious disease.

“We are very proud to have acquired and merged Preventice Solutions and eCardio, then bringing in Boston Scientific as our partner.”

After a merger with eCardio and a spin-out after acquisition, Joe Volpe, general manager of Merck’s $700m fund and a GCV Rising Star 2016, said the Preventice asset deal paid Merck back more than 80% of what was invested and left it still owning about 48% of the asset with significant value. This was increased to majority control in last year’s $137m round, while Boston Scientific owned about 22% stake in Preventice pre-takeover.

As SVB notes in its annual healthcare report: “Historically, we have seen few, if any, large private dx/tools acquisitions….

“However, in 2020, we saw three multi-billion dollar private M&A (ArcherDX [bought for $1.4bn by Invitae], Grail [acquired by Illumina for $8bn] and Thrive Earlier Detection taken over by Exact Sciences for $2.2bn]), two of which were pre-commercial….

“All three deals exited in less than five years from the close of their series A….

“We anticipate [this year] an even split between $1bn-plus IPOs and M&A, as big-deal IPO/M&A optionality has arrived in the sector.”

Just in the past week has been a further 11 venture-backed healthcare companies filing details on their IPOs and another four trade sales, with the majority backed by corporate venturers.

The stem cell therapy developer Sana Bio filed to go public to raise $150m seven months after closing $700m in funding from investors including Alphabet unit GV.

WuXi AppTec and New World Development-backed Adagene plans a $125m IPO.

Cambrian Biopharma is the largest investor in cancer immunotherapy developer Sensei Biotherapeutics, which has filed to raise up to $100m.

The immunotherapy developer Immunocore plans to go public in the US with $100m IPO.

PureTech Health, Johnson & Johnson and Novartis are in line for exits after the cancer drug developer Vor Biopharma filed for its initial public offering.

Lilly Asia Ventures is the largest shareholder of liver disease therapy developer Terns, which has filed for $100m IPO.

UnitedHealth Group and Merck are both in line for exits as Decipher Biosciences files for a $100m initial public offering.

Amgen and Pfizer-backed oncology therapy developer NexImmune has filed to raise up to $86.3m in an IPO on the Nasdaq Global Market.

Novo and Pfizer are among the investors set to exit the cancer therapy developer Bolt Biotherapeutics, which has set a $100m target for its initial public offering.

Non corporate-backed Lucira Health and Landos Biopharma also announced pricing of their IPOs.

On trade sales, Biohaven has purchased the 58% stake cancer immunotherapy developer Kleo Pharmaceuticals it did not already own, while Haemonetics acquired Cardiva Medical in a deal worth up to $510m, Thermo Fisher Scientific bought Mesa Biotech for $550m and Philips acquired Capsule Technologies for $635m.

With the rapid flow of capital back to investors at a faster pace, the appetite for more dealmaking is increasing.

SVB noted healthcare company investment surged more than 50% last year from 2019 to set a new high at $52bn so GCV is delighted to announce Taranto and Rob Coppedge, head of Echo Health Ventures (EHV), will co-chair the new Global Health Council being formed next month. You can catch up with Merck and EHV at our GCV Digital Forum this week, which includes an invite-only healthcare roundtable and public discussion moderated by Neil Foster at Brown Rudnick and including Hitachi’s US chairman.

Funds

Los Angeles County Employees Retirement Association supplied $100m for Lilly Asia Ventures’ LAV Biosciences Fund V fund two years ago, and it has now put up another $100m that will be spread across its LAV Fund VI and LAV Fund VI Opportunities funds. Lilly Asia Ventures, a spin off of pharmaceutical firm Eli Lilly, is looking to raise a total of $1.35bn for the two funds.

Arch structures $1.85bn Fund XI

Xiamen C&D backs $441m Qiming fund

Fireside Ventures finalises $118m second fund

Exits

Kuaishou has priced a $5.4bn initial public offering that will take some beating in 2021, even bearing in mind how bullish the markets are right now. The Tencent and Baidu-backed short-form video app developer will be valued at roughly $61bn in the offering, which will take place early next month in Hong Kong, though reports of the retail portion of the share subscription being 1,200 times oversubscribed suggest that market cap is going to skyrocket.

Decibel sounds out public markets

University

Landos aims for $100m IPO

Electric carmaker and mobility technology provider Faraday Future has had an uneven history, raising a reported $2bn before property developer China Evergrande acquired a 45% stake through subsidiary Evergrande Health Industry for $860m. However, Faraday looks set to snatch a public market listing, having agreed a reverse merger with special purpose acquisition company Property Solutions Acquisition Corp. The transaction will be buoyed by $775m in PIPE financing and will value the merged company at about $3.4bn.

Content recommendation engine developer Taboola failed in its bid to merge with peer Outbrain last year but has agreed to go public through a reverse merger with a special purpose acquisition company to form a $2.6bn business. The deal will also include $150m of shares bought from existing Taboola shareholders that could potentially include corporate investors DMGT, Baidu, Advance Publications, Yahoo Japan and Comcast.

Latch unlocks public listing with reverse merger

SAP signals Signavio acquisition

Shell shoots for Ubitricity acquisition

Loon comes back down to earth

Deals

SenseTime looks set to be one of the big tech IPOs of 2021, and news has emerged that the artificial intelligence software producer reportedly raised funding in late 2020 at a $12bn valuation. The size of the round has not been disclosed and nor have the investors, but reports in August suggested SenseTime was targeting $1.5bn in a pre-IPO round, and its existing backers include Alibaba, Qualcomm, SoftBank, Suning and Dalian Wanda.

Elsewhere in China, electric vehicle producer Leapmotor has received $665m in series B funding from investors including a Hefei government fund, SDIC Chuangyi Industrial Fund Management, Hangzhou Jiuzhi Investment Management and Shanghai Yonghua Capital Management. The company was spun off by Dahua Technologies and counts corporates Shanghai Electric and CRRC among its earlier investors.

Investors have been looking out for a resurgence in the cleantech sector for a while now, and the bull market for electric carmakers could pull up an adjacent part of the market: battery technology. Sila Nanotechnologies, which is developing more effective forms of battery chemistry, has raised $590m in a series F round that more than tripled its valuation to $3.3bn. The round was led by Coatue but none of Sila Nano’s corporate backers – Daimler, Siemens, Samsung and Amperex – were named as participants.

The covid-19 pandemic has boosted business for food ordering apps and grocery delivery services, and Finland-based Wolt has taken advantage, expanding from the first group to the second. It has also just raised $530m from investors including Prosus to hike its total funding to $856m. The round comes as the company disclosed that it roughly tripled revenue during 2020.

The digitalisation of the financial services sector is continuing apace, with neobanks still raising big money. The latest is Brazil-based Nubank, which has bagged $400m in a series G round featuring Tencent that boosted its valuation to $25bn. Tencent also took part in Nubank’s last round, a $400m series F in mid-2019 that valued it at $10bn. The latest capital influx will support its Latin American expansion.

Didi digs up $300m for autonomous driving unit

Samsung-backed cloud networking technology provider DriveNets has pulled in $208mthrough a series B round valuing it at over $1bn. D1 Capital Partners led the round, which follows $117m in series A funding DriveNets had raised at a reported valuation of about $500m. Samsung Venture Investment Corporation lists it as a portfolio company but has not confirmed when it invested.

Tourism and leisure booking platform developer Klook is in one of the sectors hit hardest by covid-2019 but has accordingly added features like interactive video content and a contact tracing tool to its offering. It’s been rewarded with $200m in series E funding from investors including Softbank Vision Fund 1. It had secured $225m in its last round, which was led by Vision Fund 1 in 2019.

Lyra Health wires in $187m

In China, autonomous driving technology developer Uisee has received $154mfrom investors including the corporate-backed National Manufacturing Transformation and Upgrade Fund. It had raised an undisclosed amount of series B funding from investors including Robert Bosch Venture Capital last February.

Bloomreach, developer of digital experience technology that helps online retailers drive sales, has raised its first funding in five years, taking $150m from Sixth Street Growth at a reported $900m valuation. That earlier round was a $56m series D that included Salesforce Ventures, increasing Bloomreach’s overall funding to nearly $100m. The latest round supported the company’s acquisition of customer experience software developer Exponea.

Huohua Siwei has become the latest Chinese digital education provider to raise money, having secured $150m in a series E3 round featuring Tencent that reportedly valued it at $1.5bn post-money. Trustbridge Partners led the round, which expanded the company’s overall series E funding to $400m over the past six months. Online tutoring service Yuanfudao backed its series E1 round back in August, and its total funding is near the $600m mark.

Agile Robots manoeuvres to $130m

Digital health insurance has been doing big numbers of late, and Sidecar Health has pulled in $125m through a series C round led by Drive Capital. Sidecar, which counts Comcast Ventures among its investors, is present in 16 US states and intends to expand that reach over the course of 2021.

Design Therapeutics discovers $125m in series B

Melio gets $110m payment

Stripe makes Fast work in $102m round

TScan hangs up $100m in series C

Albert absorbs $100m in series C funding

Yunxuetang yanks in $100m from Tencent

University

Soci cements $80m series D

Deerfield sets Nuvalent in motion with $50m series A


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

26 September 2016 – Deals for LeEco and Airbnb, Finance Wales Launches Wales Business Fund plus much more

Deals

LeEco, has announced a $1.08bn funding round backed by Lenovo and Macrolink, and will use the funding to further develop LeSee, an autonomous electric car it is working on with Aston Martin and Faraday Future among others.

Airbnb has reportedly closed an $850m round.

Grab has picked up $750m in a SoftBank-led series F round.

U51.com, China-based credit card management platform backed by e-commerce company JD.com, has closed a $310m series C round that values it at $1bn.

Pay-per-mile auto insurance provider Metromile has been relatively quiet on the funding front, but all that changed yesterday when it disclosed $191m in equity financing it has received in the past two years.

Solar film producer Heliatek has secured some $89m in financing, including about $47m in series D equity funding that will be used to scale up its manufacturing capacity.

Funds

A total of 51 companies and institutional investors have collectively provided R1.5bn ($112m) of funding for a South Africa-based fund that will invest in small and medium-sized (SME) businesses.

Thailand-based financial services firm Kasikorn Bank will establish a strategic investment fund of undisclosed size during the fourth quarter of 2016 to invest in fintech services and products.

South Korean entertainment company Huayi Brothers, a subsidiary of China-based Huayi Brothers Media, is set to launch a $45m CVC arm to invest from as early as the end of the month.

Trumpf, a German industrial product manufacturer, launched a corporate venturing unit called Trumpf Venture which aims to build up a $45m portfolio over the next five years.

Baidu, China’s answer to Google, is reportedly putting together a $150m fund to invest in businesses developing content that could be distributed on its media offerings.

GE Healthcare has put together an accelerator called Five.Eight in order to back startups developing technology that can benefit patients in developing regions.

Australia’s industry minster Greg Hunt has hinted at a $380m fund, which would be the third VC fund launched through the country’s National Innovation and Science Agenda, following the $150m Csiro Innovation Fund and $380m Biomedical Translation Fund.

Finance Wales meanwhile officially launched its Wales Business Fund, a $177m investment vehicle that will provide equity and debt to businesses already located in Wales or willing to move there.

Vietnam also popped up on our radar last week with news that it is set to establish a government venturing fund to co-invest in local startups and help create more of an ecosystem.

International Finance Corporation is looking to invest $25m in Maison Capital’s inaugural US dollar-denominated fund, which is targeting a $200m close.

Exits

Corporates Itochu, Yahoo Japan, FISL and Kodansha are set to exit Uzabase, developer of an online business database and curated news app, in a flotation on the Tokyo Stock Exchange Mothers Market next month.

Dermatology product developer Novan has become the latest healthcare company to go public, raising $45m in a Nasdaq IPO.

People

Hearst Ventures, the corporate venturing unit of the eponymous US-based media group, which has restructured after the departure of its president, putting Kenneth Bronfin and Scott English in charge and building out its international network.

Andreas von Richter has left Ecomobility Ventures, the VC firm set up by Total, Orange, Peugeot and SNCF, to join another firm backed by a range of corporates, Aster Capital.

Jim Lussier, managing director and head of corporate venturing unit Dell Ventures, has left to run his own advisory and venture capital firm ahead of computer maker Dell’s merger with EMC.

Simon Johnson, previously senior investment executive at NEL Fund Managers, has joined Rivers Capital Partners as head of strategic debt funds.


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