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

22 April 2019 – Pinterest and Zoom both Float Above Their Ranges

The Big 3

Innogy Innovation Hub was formed in 2014 and its first fund was supplied with €300m (roughly $385m at that point) from Innogy, but it has told GCV that it is getting ready to raise a second fund and is exploring partnerships with additional corporate LPs from the energy sector as well as potentially outside. In a wide ranging interview, Innovation Hub also said it has moved from an incubator/VC model to more direct investment, and detailed why its focus beyond energytech is so crucial to the future of the sector.

It’s a big week for IPOs, with two big unicorns both floating above their respective ranges. The larger offering involves Rakuten-backed visual social media platform Pinterest, which has raised approximately $1.43bn in an offering on the New York Stock Exchange.

Zoom on the other hand is profitable, and it floated in a $751m IPO in which Qualcomm sold more than $30m of shares – pretty impressive considering it first invested in the video conferencing software provider in its $6m series A round

University

Analysis: Slow and steady does it in the first quarter

AskBio pops $235m question

Exits

Turning Point Therapeutics has gone public in a $167m initial public offering in which it floated at the top of its range. The precision cancer therapy developer had raised $145m in funding from investors including Lilly Asia Ventures and SR One, corporate VC vehicles for Eli Lilly and GlaxoSmithKline, which each owned 8.2% stakes pre-IPO.
Applied Therapeutics pushes for public markets

Sonim sounds out Nasdaq for IPO

Willow Biosciences follows public path

Axcella Health accelerates towards IPO

Cortexyme craves public markets listing

Jumia has floated in a $196m IPO in the US, with almost half the shares being bought by existing investors Axa, Orange and Pernod Ricard Deutschland. Mastercard acquired even more shares through a private placement, and despite the online marketplace currently recording losses that surpass its revenue, its shares popped on Friday.

SolarWinds has agreed to buy Samanage, a provider of IT service desk management software, in a $350m deal that will represent Salesforce Ventures’ latest exit.

PayU onboards Wibmo in $70m acquisition

Salesforce locates MapAnything for acquisition deal

Vimeo has agreed to snap up Magisto for a reported $200m in order to add the company’s easy-to-use video creation and editing technology to its online video streaming platform.

Funds

Globis maps out $321m for sixth fund

Vtron takes a seat at $72m education fund

Deals

SK Group has made a $250m strategic investment in Londian Group, which is aiming to become the world’s leading copper foil supplier as it looks to nail down a prominent position in the materials supply space for products such as lithium-ion batteries and communications technology.
Shift moves series D round to $180m

Sila Nanotechnologies is preparing to commercialise its advanced battery materials, which it estimates can improve the performance of lithium-ion batteries by up to 20%, and in the meantime it has secured $170m in a series E round led by Daimler.

Lyric, the owner of a short-term accommodation booking platform for business travellers, has taken a big jump forward, raising $160m in a series B round led by Airbnb.

Outreach re-engages with investors to raise $114m

Dianrong is among the Chinese peer-to-peer lending platforms waiting to see if they will be among the companies issued lending licences from the government, but in the meantime it is seeking $100m in funding, reportedly from a group that includes existing investors Orix and Standard Chartered.

Black Sesame racks up $100m

Gen.G generates $46m round


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