15 February 2021 – Nationwide Increases Nationwide Ventures Allocation to $350m

The Big Ones

1

I was catching up with a former corporate venturing leader this month as she described a healthy portfolio of activities covering public and private board roles and “forming a SPAC – isn’t everyone?”

Yes, is probably the answer to working on a special purpose acquisition company (SPAC), if you are part of the financial in-crowd at least.

The latest report is that LinkedIn co-founder Reid Hoffman and tech entrepreneur Mark Pincus are nearing a deal to merge their blank cheque company with Joby Aviation, valuing the flying taxi developer at about $5.7bn, according to the Financial Times.

Joby, which has raised more than $800m from investors including corporate backers Toyota, Uber, JetBlue and Intel among others, is hoping to start operations from 2024, similar to peers Lilium and Archer.

Archer recently secured a $3.8bn public listing through a SPAC and a $1bn order from United Airlines that will come into play when its flying taxis are approved by the US regulators.

You can see what is attractive to the promoters of the SPAC, as they might receive up to 20% of the offer as shares. In a $5.7bn deal that is a lot of money, and even if the aftermarket underperforms for some reason, Hoffman and Pincus will have earned a fortune.

For Joby, it provides new capital to cover development costs. As to why public market investors want access at this stage of risk, that is baffling, but the promise of growth in a potential market seems to be enough for now.

You can see why SoftBank Group, which is heavily committed through its $100bn-plus Vision Funds, has urged some of its high-profile portfolio companies to accelerate plans for stock market listings.

“They are being fairly transparent in their agenda that they would like everybody to list,” an executive at a company backed by Vision Fund told Nikkei Asia, the owner of the FT, earlier this week. The person described the argument as very logical: “This is a once-in-a-lifetime opportunity, and you should take it.”

But for corporate venturers trying to do deals, SPACs are throwing out the calculations for new potential deals. As one new CVC head said: “Everything is different. We used to focus on potential revenues and let the equity return equation sort itself out over five years. SPACs are impacting on valuation.”

But when capital is this abundant everyone is looking at allocating cash to the potential winners.

2

But, if innovation is speeding up, capital is abundant and invention is the root of success in driving equity, why did a record number of corporations stop investing last year?

Management changes, internal politics, not-invented-here antibodies, financial pressures on corporate cashflows and balance sheets, tensions between long-time horizon investing and business unit and C-suite strategy, and a host of other issues still bedevil the community.

Corporate venturing leaders with scars on their backs know how to manage these concerns, and spend at least half their time managing internal fires and stakeholders, even if this means leaving less time for building a team and investing in startups that will be relevant in the future for both financial and strategic reasons.

The most powerful tool, however, remains the use of mimetic desire. Being able to point to a peer senior managers respect who is doing corporate venturing successfully is a powerful argument, just as it was when Claudia Fan Munce at IBM was able to do so in referencing Dan’l Lewin at Microsoft in the wake of the dotcom crash after 2001.

But referencing is just a start. The community has been collaborative and supportive to new personnel within experienced units as well as the 800 or so newer units executing their first deal last year.

The sharing at the Global Corporate Venturing events and Connect powered by Proseeder digital tool drives the dealmaking and community, and the mentoring and learning now happens throughout the year through the GCV Institute, our new professional development program launched last month.

The webinar today will update the community on the planned courses for how corporate leaders can understand why and how best to use the corporate venturing tools, as well as train up the CVCs and help land the value back into the parent. My thanks to Liz Arrington, Patty Burke and James Gunnell for leading the webinar, and to all the Institute’s advisers and mentors for showing where the proverbial puck is heading and helping us all skate there beforehand.

3

It would have made for interesting few months for Tina Nova, a director at Nasdaq-listed genomic diagnostics company Veracyte.

Nova is also president and CEO of Decipher Biosciences, a peer specialising in urologic oncology that markets genomic tests for prostate and bladder cancers.

Veracyte has agreed to acquire Decipher, formerly known as GenomeDx Biosciences, for $600m. Nova has now left Veracyte’s board and will become general manager of its urologic cancer business unit.

Nova ran a dual track process at Decipher. Investment bank Evercore had advised on the trade sale as well as an initial public offering.

Decipher had filed last month for a $100m IPO as a price discovery mechanism and to keep Veracyte fair in its valuation given Nova had been on its board.

It is also another exit for US-listed pharmaceutical firm Merck & Co in the diagnostics and tools space. Merck owned 8.8% of Decipher having sold Preventice to Boston Scientific for up to $1.025bn last month.

UnitedHealth Group Ventures, the investment arm of UnitedHealth Group, holds an 11.4% stake in Decipher.

But with both the M&A and IPO markets heating up there will be plenty of chances for the other corporate-backed startups in the space to capitalise.

Funds

Nationwide began forming a corporate venturing team back in 2015, and in 2017, after forming investment vehicle Nationwide Ventures the previous year, it put aside roughly $100m for corporate venture capital deals. It has since invested in 25 financial and insurance technology developers and must like what it has seen, because it has upped its VC allocation to $350m. The company’s portfolio already includes Next Insurance, BlueVine and Hover.

Astia marshals Mastercard for $100m fund

Exits

Oscar Health is the latest highly valued tech company to file for an initial public offering, having raised almost $1.7bn in venture funding from investors including Alphabet and Ping An since it was founded in 2012. The digital health insurer was valued at $3.75bn in 2018 and has subsequently secured $365m in funding at a valuation that was surely higher. Interestingly, one of its largest rivals, Hippo, is reported to be in talks to list through a reverse merger.

The IPO market is still at a fever pitch of course. Immunotherapy developer Immunocore has gone public in a $258m offering in which it increased the number of shares while floating above its range. The Eli Lilly and WuXi AppTec-backed company has since seen its shares shoot up by 66%, taking its market capitalisation near to the $1.8bn mark.

Bolt Biotherapeutics has had a similarly successful IPO, increasing the number of shares by 30% and pricing them above the range to raise $230m. All its main shareholders, including Novo and Nan Fung’s Pivotal BioVenture Partners, bought shares in the offering, and the oncology drug developer’s shares also rose considerably on their first day of trading to increase its market cap to more than $1bn.

Vor Biopharma forces through $177m IPO

Terns directs itself on to public markets

Sensei graduates to $133m IPO

Matterport has almost as many corporate backers, all of whom are set to score an exit after the 3D modelling technology provider agreed to a reverse merger with special purpose acquisition company Gores Holdings V. The deal will involve Matterport listing on the Nasdaq Capital Market and will value the merged company at $2.9bn. Its investors include Qualcomm Ventures, CBRE, Ericsson Ventures, AMD Ventures, News Corp and PTC.

Hyzon Robotics will also get a Nasdaq Capital Market listing through its own reverse merger transaction, with this one set to value it at $2.1bn. The company was only spun off by Horizon Fuel Cell Technologies a little over a year ago, subsequently raising an undisclosed amount from investors including Total Carbon Neutrality Ventures in October. It is preparing to ship its first hydrogen fuel cell-powered trucks to customers later this year.

Pet care services provider Rover has had its issues over the years but nevertheless looks set to make it on to the public markets after agreeing a reverse merger with special purpose acquisition company Nebula Caravel Acquisition Corp. The transaction looks set to value the merged company, Rover Group, at about $1.6bn. It comes after some $280m in venture funding from investors including pet product retailer Petco.

Hyperconnect meets Match in $1.73bn deal

Deals

Digital health remains a big growth point in the venture capital space, and Yuanxin Technology has just completed a $466m series E round co-led by Tencent. Yuanxin offers telemedicine consultations, prescription medication payment tools and a health insurance offering, and this is its fourth round in just over two years. Tencent has been an investor since at least 2015.

Horizon Robotics has pulled in $350m through a series C3 round backed by Sunny Optical and automotive manufacturers BYD Auto, Great Wall Motors, Changjiang Automobile Electronic, Changzhou Xingyu Car Light and Dongfeng Motor’s Dongfeng Asset unit. The round boosted the AI chipmaker’s overall series C funding to $900m, all of which was raised in the past two months. Its existing investors include Contemporary Amperex Technology, Intel Capital, SK China and SK Hynix.

Advertising dollars continue to be tricky in digital media unless you occupy a specific niche, and if Google dominates the search engine space and Facebook social media, Reddit is effectively the leader in what was once known as online forums. It’s boosted advertising revenue 90% in the last year on the back of some increasingly prevalent mainstream press coverage. It has also bagged $250m in a round led by Vy Capital at a $6bn valuation. That’s double the valuation at which it last raised money, in a Tencent-led round two years ago.

Transport technology has been the big mover in the first few weeks of 2021, and the latest company in the sector to close a nine-figure round is Plus, developer of an automated trucking system it plans to begin shipping later this year. The company has raised $200m in a round co-led by Wanxiang International Investment and backed by existing investor Full Truck Alliance (AKA Manbang Group). The presence of automotive parts producer Wanxiang and trucking services marketplace Full Truck also hints at the kind of strategic partners with which it is working.

Nexthink, a developer of workplace experience management software, has secured $180m in series D funding at a $1.1bn valuation. The company, whose earlier investors include Mannai Corporation, has now raised at least $325m altogether, with the series D round led by investment firm Permira’s Growth Opportunities Fund.

Day One Biopharmaceuticals emerged from stealth nine months ago with $60m in series A funding from investors including Access Biotechnology, which has returned for the oncology drug developer’s $130m series B round. The proceeds will support the progress of Day One’s lead paediatric cancer treatment candidate, which has just entered phase 2 studies.

Cybersecurity technology producer Armis also had a productive 2020, being acquired by Insight Partners in January in a $1.1bn deal that included a $100m investment by Alphabet’s CapitalG subsidiary. It’s still raising money however, and has received a reported $125m from investors including CapitalG at a $2bn valuation. The round was led by Brookfield Technology Partners, and Armis said it has now raised $300m in funding altogether.

Stash stores $125m in series G round

PGDx picks up $103m in series C

Pony.ai pins down $100m

Clear queues up $100m round

Dailyhunt chases down $100m in series H

Powin powers up with $100m


“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