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

13 July 2020 – Rivian Strikes Deal with Amazon for 100,000 Electric Delivery Vans

The Big Ones

Now ride hailing has matured past the stage where it requires multi-billion dollar rounds, one of the biggest fundraisers in recent months has been Rivian, an electric truck and SUV developer that won’t even have a product out until next year. It has however struck a deal to sell 100,000 electric delivery vans to strategic partner Amazon, and Amazon was among the investors that have provided $2.5bn in financing for the company. It has now raised a total of more than $6.1bn from an investor base also including Ford, Cox Automotive, Sumitomo and Abdul Latif Jameel.

UK-based oil and gas company BP revealed it intends to provide $70m for India and UK-focused cleantech investment vehicle Green Growth Equity Fund (GGEF). GGEF was formed to invest in India-based technology developers operating in fields such as renewable energy, energy efficiency, energy storage, electric mobility and resource conservation. It has a target size of $700m and BP’s investment is set to close later this year. The government of India’s National Investment and Infrastructure Fund (NIIF) and the UK Department for International Development are anchoring the vehicle, having each made a £120m ($170m) commitment at its April 2018 launch. The fund is managed by Eversource Capital, an India-based joint venture created by BP’s solar power subsidiary, Lightsource BP, and private equity and real estate investment firm Everstone Capital.

Ant Financial was valued at a gargantuan $150bn when it last raised money, through a $14bn series C round in 2018, but Alibaba’s financial services spinoff is reportedly seeking to go public as soon as this year in an initial public offering set to take place at a projected valuation exceeding $200bn. In addition to Alibaba, which owns about a third of the company, Ant’s shareholders include insurance group China Life and postal service China Post.

Vor Biopharma, a US-based cancer treatment developer spun out of Columbia University, has raised $110m in a series B round featuring spinout-focused investment firm Osage University Partners. RA Capital Management led the round, which also included healthcare group Johnson & Johnson, pharmaceutical companies PureTech Health, life science real estate investment trust Alexandria Real Estate Equities and financial services group Fidelity, as well as Pagliuca Family Office, 5AM Ventures and undisclosed backers. Vor Biopharma is working on engineered haematopoietic stem cell (eHSC) therapies that have biologically redundant proteins removed – essentially making the stem cells invisible to complementary treatments that target those proteins. The company’s lead asset, Vor33, is aimed at acute myeloid leukaemia and is expected to avoid toxicity to blood and bone marrow associated with current treatments.

Deals

Epic Games is no slouch, the Fortnite developer having secured $250m from Sony at a reported valuation not far from $18bn. Epic was reported last month to be in talks with institutional investors to raise $750m at a $17bn valuation, but Sony’s interest may well be linked to the forthcoming release of the Playstation 5 this Christmas. It’s worth mentioning Fortnite has been a goldmine not only for Epic but also for Sony, which gets a 30% cut of every sale made through its online store. The Playstation 4 has, by the way, sold more than 100 million units since its late 2017 debut.

Instacart has added $100m from T.Rowe Price to a late-stage round that now stands at $325m and which values it at $13.8bn post-money. The grocery delivery service’s earlier investors include American Express Ventures, Comcast Ventures and Whole Foods but none of them have invested since 2016, during which time its valuation has climbed from $2bn. General Catalyst, DST Global and D1 Capital Partners supplied the first $225m for the round.

There aren’t too many companies at the top end of the sector but developers of vegan dairy and meat substitutes have raised some big rounds in recent years. Perfect Day, which uses microflora in its vegan dairy proteins, has just secured another $160m from investors including Canada Pension Plan Investment Board to take its series C round to $300m. Perfect Day’s earlier backers include Continental Grain, which backed the company’s series A round two years ago.

Intel Capital has invested about $253m in Jio Platform, the mobile network service provider spun off by conglomerate Reliance Industries, getting a 0.4% stake at a valuation of more than $63bn. Jio has picked up a series of large investments in recent weeks including $5.7bn from Facebook and additional capital from the likes of Saudi Arabia’s Public Investment Fund, the Abu Dhabi government, L Catterton, TPG, Silver Lake Partners, General Atlantic, KKR and Vista Equity Partners.

Primary care provider VillageMD has received $250m in equity funding from pharmacy group Walgreens Boots Alliance as part of a three-year $1bn financing commitment that will involve the corporate providing a mixture of equity and convertible debt, giving it a 30% stake. The two have also formed a strategic alliance that will involve VillageMD opening clinics at hundreds of Walgreens Boots Alliance outlets over the next few years.

Newlink provides car refuelling and electric vehicle charging services in China through an online platform, and has received $129m in a series D round that included electronics producer Xiaomi and Nio Capital, the investment arm of smart EV manufacturer Nio. Xiaomi has pursued a long-term strategy of investing in consumer hardware developers to build an ecosystem around its products, but Nio has been an increasingly active investor in the transport tech and AI space, indicating it may well have similar ideas.

Funds

Multiple unnamed university endowments were yesterday revealed to have backed US-based venture capital firm Rethink Impact’s $182m second impact fund. The fund has also pulled in contributions from financial institutions including UBS in addition to Pivotal Ventures, the investment firm founded by Melinda Gates, and philanthropic investment offices Ford Foundation and WK Kellogg Foundation.

University of Colorado’s Anschutz Medical Campus yesterday closed a $50m healthcare-oriented fund with commitments from multiple university departments and affiliates. CU Healthcare Innovation Fund has been backed by University of Colorado along with its healthcare system UCHealth, medical school CU Medicine and Children’s Hospital Colorado. All the LPs have a presence at Anschutz Medical Campus.

Exits

The latest decacorn to make the leap looks to be big data technology provider Palantir which said yesterday it has confidentially filed to go public. It’s still unclear whether Palantir, which rised $550m from Sompo Holdings and Fujitsu last month, will pursue an initial public offering or a direct listing but it will likely be among the year’s biggest listings either way. Its other backers include Relx subsidiary REV (née Reed Elsevier Ventures).

Orbital internet service developer OneWeb filed for bankruptcy in March having raised $3.4bn from investors including SoftBank, Qualcomm, Totalplay, Bharti Enterprises, Airbus, Virgin, Coca-Cola, Intelsat and Hughes Network Systems. Now however, one of those corporates – Bharti – has combined with the UK government to acquire the company at auction for just over $1bn. The deal is expected to formally go through by the end of the year once regulatory approval is provided by the US.

Open source software provider Suse has agreed to acquire Rancher Labs in a deal sources told CNBC will be in the $600m to $700m range. Rancher has developed a deployment and management tool for Kubernetes containerised application management software, and has raised $95m from investors including Telstra Ventures. This’ll be a fast exit for the unit too. It led Rancher’s $40m series D round less than four months ago.

Cambricon Technologies has priced its own initial public offering, which will raise $368m for the AI chipmaker. The company chose Shanghai’s Star Market, which is rapidly becoming a big player in world markets, particularly due to increased restrictions on Chinese tech companies looking to float in the US. It followed more than $200m in funding for Cambricon from investors including iFlytek, Alibaba, Lenovo, Tuling Century and Chinese Academy of Sciences.

University of Tübingen spinout Immatics has opted for neither option to get a public listing, instead executing a reverse merger with a Nasdaq-listed special purpose acquisition company. The Germany-based immuno-oncology drug developer had raised about $250m in equity funding from investors including Amgen but its market cap is currently hovering around the $5.6bn mark.

Another cancer drug developer, Nkarta Therapeutics, has set the range for an offering set to raise between $140m and $160m, though going by recent IPOs that figure may well end up rising. Nkarta’s investors include GlaxoSmithKline unit SR One and Novo – which each own a 13.3% stake – as well as Amgen Ventures. It last raised money through a $114m series B round in November.

Ucommune, generally regarded as China’s answer to WeWork, is however set to secure a US listing, through a reverse merger with special purpose acquisition company Orisun Acquisition Corp that will value the combined company at $769m. That in itself is significant. Ucommune doesn’t represent the same kind of disaster as WeWork but Covid-19 has hit its takings hard and that valuation is a big decline from the $1.5bn valuation at which it raised money in 2018. Its backers include Beijing Xingpai, Aikang, Dahong Group, Star Group, Junfa Group, Prosperity Holdings and Yintai Land.


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