Corporate Global Venturing

Quarterly data analysis

l Intel most activel Sequoia busiest VC partner

l Deals decline

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Global Corporate Venturing April 2013 9

Analysis

There were 222 investments in corporate venturing-backed companies worth $4bn in the first quarter. This compared with 231 investments in the fourth quarter of 2012 worth $3.6bn, and 249 investments worth $5.2bn in the first quarter of 2012.

There were 22 exits worth $1.4bn, compared with 34 exits worth $6.3bn in the fourth quarter of 2012 and 249 invest-ments worth $5.1bn in the first quarter of 2011.

Asian activity at 28 deals is approaching the 37 deals in Europe, although the US continues to be the main area of activity with 146 deals. There were three deals in each of the Middle East, South America and eastern Europe.

Information technology was the most active sector with 51 deals, followed by consumer with 46. Healthcare and serv-ices were next most active, with 35 and 34 deals respectively. Clean-tech and energy deals are languishing, with only nine deals tracked during the quarter.

Asian activity is particularly strong in the consumer sector, with 10 deals. Europe also had 10 consumer deals. In the media and services sectors Asia is ahead of Europe in terms of activity. North America was the most active location for all activity. Media investments were the most popular at seed stage.

The US was even more dominant in exit activity than in terms of investments, accounting for 82.6% of exits. The most active sector for exits was IT.

The most common type of deal was A round (46). There were also 45 each of B rounds and individual stake pur-chases. There were 18 C rounds, 17 D rounds and 7 E rounds and beyond, as well as 14 seed deals.

Consumer and services activity was particularly marked at an early stage, making up many A and B rounds. n

0 200 400 600 800 1000 1200

Quarterly investment activity by number of deals

2011

2012

2013

Q1 Q2 Q3 Q4

0 5 10 15 20 25 30

Quarterly investment activity by value ($bn)

2011

2012

2013

Q1 Q2 Q3 Q4

0 30 60 90 120 150

Quarterly exit activity by number of deals

2011

2012

2013

Q1 Q2 Q3 Q4

0 5 10 15 20 25 30 35 40

Quarterly exit activity by value ($bn)

2011

2012

2013

Q1 Q2 Q3 Q4

Includes $18.4bn Facebook IPO

Deal data is global. It tracks all rounds where there are minority investments in entrepreneurial companies by corporationsExit data tracks money raised from the public markets, trade sales, buyouts and stake sales

Quarter shows deal decline

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Global Corporate Venturing April 2013 10

Analysis

US 143

Canada 4

Australia 1

Austria 2

Brazil 3

UK 9

India 8

China 6

Denmark 1

Estonia 1

Switzerland 4

Taiwan 2

Finland 1

France 3

Israel 3

Singapore 2

South Korea 1Spain 1

Japan 9

Russia 3

Turkey 1

Germany 13Ireland 1

Global corporate venturing activity last quarter

A round

B roundC round

D round

E round and beyond

M&A

Seed

Stake purchase

Undisclosed

Clean-techConsumer

Financial servicesHealth

IndustrialIT

MediaServices

TransportUtilities

The largest deal of the quarter was the $700m round of private equity funding for China-based e-commerce site 360Buy, as eye-catchingly large Asia deals continue to be a staple of our coverage. This e-commerce company secured quasi-corporate venturing backing – investors included corporate-backed Digital Sky Technologies (DST) and investment manager Tiger Global Management.

Other backers of the round were Ontario Teachers’ Retirement Fund, a Canadian state-backed investment fund, along with new investor Kingdom Holdings, founded by Saudi Arabia’s Prince Alwaleed Bin Talal Alsaud,

This round followed a $400m series D round in Decem-ber, which included Tiger Global Management. That round of financing valued the company, also known as Jingdong Mall, at $7.3bn. 360Buy has now raised $2.3bn since 2007. Earlier investors include Capital Today, Bull Capital, Pak-to Leung, DST and Tiger Fund.

The next biggest round was the $444m raised by US-based questionnaire company SurveyMonkey. Early investors sold stakes, secured a valuation of $1.35bn for a consortium including search engine provider Google.

David Goldberg, chief executive of SurveyMonkey, and Tiger Global Management co-led the transaction, which

also included venture capital firm Iconiq Capital, which manages money on behalf of social network Facebook’s co-founder Mark Zuckerberg. A further $350m was raised in debt from a syndicate including JPMorgan, Bank of America Merrill Lynch, Goldman Sachs and SunTrust Bank. The proceeds from the debt will also be used to buy shares from employees and shareholders as well as retire SurveyMonkey’s existing debt.

The third-largest deal was the $200m raised by Pinter-est, a US-based online scrapbooking website backed by Japan-based e-commerce company Rakuten, at a com-pany valuation of $2.5bn. Social media continues to be a source of eyecatching deals, with social messaging service Twitter reportedly brokering a deal for mutual fund manager BlackRock to buy up to $80m of shares from its employees at a $9bn valuation. If enough employees accept the tender offer to hit the $80m limit, BlackRock will own just less than 1% of Twitter, according to news provider Financial Times.

Hedge fund Valiant Capital Management, which has also backed Dropbox and Evernote, led the latest round as a new investor. The consortium also included Rakuten and venture captial firms Andreessen Horowitz, Bessemer

360Buy in biggest deal

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Global Corporate Venturing April 2013 11

AnalysisVenture Partners and FirstMark Capital as well as angel investors. In May last year, Rakuten led a $100m invest-ment in Pinterest, according to a regulatory filing, as part of a strategic partnership with Pinterest to help it expand in Japan and Rakuten’s 17 other markets (see feature on consumer sector).

Other big deals included the A$170m ($180m) raised by Mesoblast, an Australia-listed regenerative medicine com-pany, in a private placement of shares including to “exist-ing strategic investors”, and Partners Group, a Switzer-land-based private equity firm, paying $130m for 30% of Softonic, an online software guide to media content incu-bated by Grupo Intercom, a Spain-based internet-focused conglomerate.

Truphone, a UK-based mobile network backed by media groups Independent News & Media and Hubert Burda Digital Ventures, the venturing unit of the Germany-based media group, now spun off, raised £75m ($118m) primarily from Roman Abramovich, owner of Russia-based oil major Sibneft.

LivingSocial, a US-based discount coupon provider backed by online retailer Amazon, raised $110m from a group of exist-ing investors. News provider Fortune said Amazon invested in the latest round and refers readers to LivingSocial’s Dela-ware filing with details on the round’s terms.

Nest Labs, a US-based maker of thermostats, reportedly raised $80m from a consortium led by Google Ventures at an $800m valuation, according to news provider GigaOm. On Deck, a US-based small business loans company, raised $42m in its series D round, to take its total since launch to $80m, from a consortium including SAP Ven-tures, the corporate venturing unit of the Germany-based software provider.

Other deals not in the top 10 included Warby Parker, a spectacles retailer, which raised $41.5m from a consor-tium including credit card company venturing unit Amex Ventures, and Sungevity, a US-based residential solar business that raised $40m in D round equity from back-ers including home improvement retailer Lowe’s as part of $125m raised through equity and project financing. n

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The two big corporate venturing units of Intel and Google both had busy quarters, while German-based firms and financial institution-backed corporate venturing units were also busy.

Intel Capital, the corporate venturing unit of the US-based chipmaker, was the most active unit, in line with its status as the largest corporate venturing unit globally, hav-ing invested more than $10bn in its history

Ten of Intel Capital’s deals were in technology, including participation in the $30m D round of US-based data analyt-ics company Guavus and the $20m round of semiconductor company Invisage Technologies. Following a cross-sectoral approach designed to fuel markets to strengthen demand for semiconductors, the unit backed a typically varied range of deals, including the latest round of Ireland-based wireless network company Altobridge, the $5.8m B round for vacuum robot company Persimmon Technologies and the $15m B round for social media management company Sprinklr.

Intel Capital also was alongside a number of corporates in the syndicate backing mobile banking and payment solutions company Mfoundry, which was sold to banking and payments technology company Fidelity National Infor-mation Services for $165m.

Intel Capital’s deals varied from early to late stage, with two A rounds, four B rounds, three D rounds, five stake purchases and one portfolio company acquisition.

The next most active was Google Ventures, including support for the $5.7m spin-out of About.me from AOL, the

seed round of video chat company Rabbit, the $21.6m B round of social media company NextDoor, as well as an exit from social TV service Miso, which was sold to Dijit Media, a US-based maker of the NextGuide iPad applica-tion for television.

Google itself took part in one of the largest corporate venturing deals of the quarter, the $444m round raised by questionnaire company SurveyMonkey.

Google Ventures’ deals were also varied, including the exit through an $80m initial public offering from smart grid networking company Silver Spring Networks. Other Google Ventures’ deals included the $80m B round for heating

Intel, Google most activeMost active corporate venturers Q1 Investments ExitsIntel 15 1Google 12 3Qualcomm 11 2NorwestVenturePartners(WellsFargounit) 8 0High-TechGruenderfonds 6 0Bertelsmann 5 0JPMorgan 4 1SAP 4 1AOL 4 0Samsung 4 0Comcast 4 0CondeNast 4 0Cisco 3 1Paypal 3 1Correction: An earlier version of this table omitted Qualcomm

Global Corporate Venturing April 2013 12

Analysis

Sequoia Capital was the venture capital firm (VC) most active along-side corporates in the first quarter. It was in the syndicate backing Xoom, which raised $101m in its initial public offering, at a market capitalisation of $509m, as was SVB Capital, the private equity division of Silicon Valley Bank.

Sequoia’s other two exits along-side corporates were India-based education provider TutorVista Global, and cloud infrastructure management company Nimbula. TutorVista was entirely sold to Sequoia’s syndicate part-ner, education company Pearson, for an undisclosed sum.

Tutor Vista also received backing from corporate venturing investor Manipal Education and Medical Group. In Nimbula, Sequoia was a syndicate partner of technology company VMWare, and the busi-ness was sold to US-based tech-nology company Oracle.

Sequoia was an investor in the $35m C round for US-based home refurbishment company Houzz alongside Comcast Ventures, the corporate venturing unit of the US-based entertainment business.

Sequoia also backed the $20m round for US-based social lending website Prosper, joining a syndicate with

Most active VCs with corporates in Q1 Investments ExitsSequoiaCapital 9 3KleinerPerkinsCaufield&Byers 8 1KhoslaVentures 6 1AccelPartners 5 1FirstRoundCapital 5 0500Startups 5 0IndexVentures 5 0LightspeedVenturePartners 4 3DAGVentures 4 2BessemerVenturePartners 4 0

Sequoia keeps busiest

company Nest, and an $8m round backing oncology data platform FlatIron Health – one of a number of deals the group has made backing healthcare data companies.

German firms are active, with the corporate venturing units of Germany-based media company Bertelsmann, Germany-based software company SAP and Germany-based corporate-backed state venture fund High-Tech Gruenderfonds which was also the most active multicor-porate fund in the top 10.

Of the most active companies, exit winners included US-based IT company Cisco, which was one of the corporates backing Tensilica, which was sold for $380m to US-based chip design software manufacturer Cadence Design Sys-tems (see report).

Financial companies were active in the quarter. The busiest corporate venturing unit of a bank was Wells Far-go’s Norwest Venture Partners. Three of Norwest’s deals were in healthcare, with it backing the $30m round of US-based ear, nose and throat treatment company Intersect, the $11m round of India-based cancer detection company Perfint Healthcare and the $4m round of India-based radi-ology diagnostics company Nueclear Healthcare.

The group’s largest investment tracked by Global Cor-porate Venturing during the quarter was the $50m round raised by FireEye, the US-based provider of cyber attack protection, which was also joined by banks Goldman Sachs and Silicon Valley Bank – at the same time as Fire-Eye has been linked to an initial public offering.

JPMorgan, the next most active bank, was involved in consumer-based portfolio company Zalora raising $25m from Tengelmann Ventures, the corporate venturing unit of the Germany-based corporate. Zalora was one of a

number of portfolio companies of feted Germany-based incubator Rocket Internet that JPMorgan backed last year.

US-based payments company PayPal’s deals included the Mfoundry sale mentioned above, the $21.5m B round raised by bill payments company BillFloat

South Korea-based industrial conglomerate Samsung was the only Asian corporate in the top 10 for activity, with deals including the $22.5m E round raised by online advertising company OpenX and the $31m round raised by mobile security company Fixmo.

The corporate venturing unit of chipmaker Qualcomm’s deals included the $85m sale of UK-based location-aware software company Arieso to JDSU, while it also backed the C round of media company Verve Mobile, and the $14m G round of US-based provider of online answers to questions company ChaCha, among other deals.

Media company Conde Nast continues to make a big corporate venturing push into the consumer sector, includ-ing the $20m round raised by fashion company FarFetch and the $4.4m series C extension raised by fashion hire company Rent the Runway, taking that round to $24.4m. The Rent the Runway deal was also joined by financial services firm American Express, which is also pushing in the consumer sector, helping spectacles retailer Warby Parker raise $41.5m.

Technology company AOL’s deals in the quarter included AOL Ventures backing the $19m B round of big data com-pany Sailthru, and the $12m round raised by the US-based mobile application problem solver Crittercism.

US-based entertainment company Comcast sealed deals including the $35m round backing US-based home renovation company Houzz. n

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Global Corporate Venturing April 2013 13

Analysis

Corporate venturing participants near 1,000Thenumberofcorporateventuring units, trackedbyGlobalCorporateVen-turing, has now risen to971.Perhapsmost interest-

ingly,thenumberofunitsinChinaat52isnowonlyone shy of Germany at53. Japan is second interms of the number ofunits,with87.This issymptomaticof

the wider trend of cor-porate venturing inAsiacatching up with devel-oped economies, whichhave generally investedin corporate venturingforlonger.LastyearAsiaovertookEuropeandtheUS as the fastest grow-ing region for the firsttime, although so far in2013 the trendhasbeenlesspronounced.As corporate ventur-

ing has boomed, themostmaturemarket, theUS, has risen to nearly400 units. The UK has62 units, Germany has53, Francehas 42,whileIndiahas31.There were 21 new

entrants in 2013 – theindustry has welcomedatleast210newentrantssince the beginning of2010.The fastest-growing

sector since the begin-ning of 2012 is media,followed by industrial.New entrants in IT havedropped – it was themostactivelygrowingsectorin2010and2011.

Where corporate venturing units are based worldwideAustralia 10Austria 3Belgium 9Bermuda 1Brazil 3Canada 25Chile 1China 52Denmark 10Dubai 2Estonia 1Finland 5France 42Germany 53HongKong 1India 31Ireland 6Israel 13Italy 13Japan 87Korea 2Kuwait 3Luxembourg 1Malaysia 3Mexico 4Netherlands 16NewZealand 2Norway 10Poland 1Qatar 1Russia 13SaudiArabia 6Singapore 5SouthAfrica 4SouthKorea 9Spain 11Sweden 7Switzerland 25Taiwan 18Thailand 2Turkey 1UK 62UnitedArabEmirates 1US 396

financial company CompuCredit. In the $17.7m series C round of real-time security analytics business Click Security, Sequoia partnered Citi Ventures, the corpo-rate venturing unit of the US-based bank.

Three of Sequoia’s deals with corporates were finan-cial, although like many of the most active VCs, IT was its most active sector with corporates.

Sequoia was closely followed in the most active cor-porate partner rankings by venture firm Kleiner Perkins Caufield & Byers, which was one of the syndicate in US-based smart-grid company Silver Spring Networks, which raised $80.75m in its initial public offering. Kleiner was alongside Japan-based technology group Hitachi, US peer EMC and Google Ventures, the corporate ven-turing unit of the search engine.

Kleiner was one of the backers of the $80m B round raised by heating start-up Nest, alongside US-based tech-nology company InterTrust and Google Ventures. Kleiner was another member of the Houzz syndicate, mentioned above in respect of Sequoia, while it also invested in two companies that secured strategic backing, US and Can-ada-based mobile risk management company Fixmo, and Puppet Labs, which received $30m from US-based tech-nology company VMWare in a strategic partnership. In Fixmo, Kleiner is in a syndicate with Samsung Ventures, which invested an undisclosed sum as part of a strategic tie-up, and Motorola Solutions Venture Capital.

Khosla Ventures was the third most active VC with corporates, and partnered US-based technology com-pany Microsoft in the $75m round raised by Appnexus, and SAP Ventures in the $42m series D round raised by On Deck, a US-based small business loans company.

Accel Partners partnered Samsung Venture Invest-ment Corporation and SAP Ventures in the $22.5m E round raised by OpenX Software, a US-based provider of advertising revenue products and services. Accel also invested in the $13.6m extension of US-based clothing retailer Bonobos’ latest $30m round, in which it invested alongside retailer Nordstrom. It was also in the Prosper syndicate mentioned in respect of Sequoia.

In a telling sign of the growing importance of early-stage firms, two of the most active firms with corpo-rates were First Round and 500 Startups, which are best know for investing in A rounds and seed rounds respectively.

First Round was in the AppNexus and On Deck syn-dicates mentioned in respect of Khosla, as well as the OpenX round mentioned above. First Round was also a backer of US-based micro-credit provider BillFloat, which raised a $21m B round, in a syndicate alongside EBay’s payments subsidiary PayPal.

500 Startups was joined by Motorola Solutions Ven-ture Capital and Opt, a Japan-based digital advertising agency, backing Retailigence, a US-based local mar-keting and e-commerce service, which raised $6.3m in its series B round.

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Global Corporate Venturing April 2013 14

AnalysisLargest corporate venturing investments in Q1Company Sector Round Round

size ($m)Venture participants

360Buy Consumer Eandbeyond 700 DigitalSkyTechnologies,TigerGlobalManagement,KingdomHoldings,OntarioTeachers’PensionPlanBoard,CapitalToday,BullCapital

SurveyMonkey Media Stakepurchase 444 Google,TPG,TigerGlobalManagement,BainCapitalVentures,Social&CapitalPartners,IconiqCapital,LaurelCrownPartners,SpectrumEquityInvestors

Pinterest Media D 200 RakutenGroup,AndreessenHorowitz,ValiantCapital,FirstmarkCapital,Bessemer,angels

Mesoblast Health Stakepurchase 150 TevaPharmaceuticalIndustries,undisclosedstrategicSoftonic IT Stakepurchase 130 GrupoIntercom,PartnersGroup,DigitalRiver,BonsaiVenture

Capital,EspigaTruphone Utilities Stakepurchase 118 IndependentNews&Media,HubertBurdaMedia,Roman

Abramovich,EdenVentures,WellingtonPartners,VollinHoldingsLivingSocial Consumer Stakepurchase 110 Amazon,TRowePrice,Revolution,USVenturePartners,

InstitutionalVenturePartners,GrotechVenturesTwitter Media Eandbeyond 80 BlackRockPrivateEquityPartnersNestLabs Clean-tech B 80 GoogleVentures,IntertrustTechnologies,KleinerPerkinsCaufield

&Byers,LightspeedVenturePartners,ShastaVentures,GenerationInvestmentManagement

OnDeck Financialservices

D 42 SAPVentures,RREVentures,InstitutionalVenturePartners,KhoslaVentures,ContourVenturePartners,SFCapital,VillageVentures,FirstRoundCapital,LighthouseCapitalPartners

Largest corporate venturing exits in Q1 Company Sector Round Round

size ($m)Venture participants

Tensilica IT Exit 380 CiscoSystems,Fujitsu,NTT,Matsushita,FoundationCapital,MeritechCapital,OakInvestmentPartners,WorldviewTechnologyPartners,ConexantSystems,Altera

Mfoundry Financialservices

Exit 165 FidelityInformationServices,PayPal,MotorolaMobility,NCR,Mastercard,Intel,Apax,IgnitionPartners

Skyfire IT Exit 155 Verizon,LightspeedVenturePartners,MatrixPartners,TrinityVentures

MarinSoftware IT IPO 108 SAP,DAGVentures,CrosslinkCapital,Benchmark,TrianglePeakPartners,FocusVentures,AmicusCapital

Xoom Financialservices

IPO 101 SVBCapital,TRowePrice,Sequoia,NewEnterpriseAssociates,FidelityVentures,DAGVentures

Arieso IT Exit 85 QualcommVentures,CarbonTrust,OxfordCapitalPartners,AddPartners,TopTechnology

SilverSpringNetworks

Clean-tech IPO 80.8 Google,Hitachi,NorthgateCapital,KleinerPerkinsCaufield&Byers,Boldt,GSVCapital,FoundationCapital

Kalobios Health IPO 70 MitsubishiUFJCapital,GenzymeVentures,MPMCapital,SofinnovaPartners,AlloyVentures,LehmanBrothers,GBSVenturePartners,DevelopmentBankofJapan,5AMVentures,Bio*OneCapital

LipoScience Health IPO 45 GECapitalEquity,AgilentTechnologies,PiperJaffray,InvescoPrivateCapitalGroup,PappasVentures,SightLinePartners,CamdenPartners

Baxano Health Exit 23.6 KaiserPermanenteVentures,ProspectVenturePartners,CMEACapital,AffinityCapitalManagement,ThreeArchPartners,KearnyVenturePartners

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Global Corporate Venturing April 2013 15

Analysis500 Startups was also an investor in Life360, a US-based

provider of safety applications, which raised an undisclosed amount from Germany-based car maker BMW’s corpo-rate venturing unit, I Ventures, as well as in Samba Ads, a Brazil-based online video advertising network, which raised $500,000 from four investors, including Brazil-based Grupo RBS’s holding company, E.Bricks Digital.

Index Ventures was the only non-US firm in the top 10, alongside corporates, reflecting its growing reputation as one of the hottest European venture firms. Index was in the OpenX syndicate and was a backer of the $20m round raised by fashion retailer FarFetch, which was led by publisher Condé Nast International. Index was also in a syndicate alongside Presidio Ventures, the corporate venturing unit of Japan-based conglomerate Sumitomo, backing RightScale, a US-based provider of enterprise cloud management serv-ices, which raised $15.6m in its series D round.

Lightspeed Venture Partners was in the syndicates back-ing Nest Labs, Bonobos, Click Security and TutorVista, all mentioned above. It was also a backer of Verizon-backed Skyfire Labs, a US-based mobile video optimisation com-pany, which was sold to Norway-based technology com-

pany Opera Software for up to $155m. DAG Ventures was a backer of Xoom, OpenX and Right-

Scale, all mentioned above. It was also alongside SAP Ventures in the syndicate for US-based marketing soft-ware company Marin Software, which raised $108m in its initial public offering.

DAG was also alongside Nextdoor, a US-based private social network for neighbourhoods, which raised $21.6m in its series B round from a consortium including Google Ventures.

Bessemer invested with Japan-based e-commerce com-pany Rakuten in the $200m round raised by social network Pinterest. It was also a backer of Life360, mentioned above, as well as Intel Capital-backed Apperian and Discoverly, a US-based social enterprise tool developer, which raised $750,000 in its seed round from a consortium including enterprise software-as-a-service provider Salesforce.

Andreessen Horowitz was also a backer of Pinter-est, and invested alongside the Junos Innovation Fund, a venture fund run by the Juniper Venture Investments, the corporate venturing vehicle for the US based network equipment company, in the $8m series A for cloud security start-up Illumio. n

Tensilica is lucrative exitUS-based chip design software manufacturer Tensilica, backed by Japan technology companies Fujitsu and NTT, and US-based technology company Cisco, was the biggest sale of the quarter, in an exit to US-based chip design software manufacturer Cadence Design Systems for $380m.

In 2010 Japan-based electron-ics company Fujitsu used its cor-porate venturing fund to make a strategic investment of undis-closed size in Tensilica. The previous year, Japan’s national phone operator NTT made a similar strategic investment through its Docomo Capital corporate venturing fund. Other backers of the company included US-based logic device company Altera, semiconductor company Conex-ant Systems, Japan-based electronics company Pana-sonic (formerly Matsushita Electric Industrial) and Japan-based technology company NEC.

The biggest initial public offering (IPO) of the quarter was the $108m raised by US-based marketing software com-pany Marin Software. The company’s backers included SAP Ventures. Half the top 10 deals were IPOs, reflecting

a robust rebound in the public markets.

The second-biggest exit of the quarter was the $165m sale of Mfoundry, a mobile banking and payment solutions provider for financial institutions and retail-ers, to Fidelity National Infor-mation Services (FIS), a bank-ing and payments technologies company, which acquired the remaining 78% stake it did not already own. Mfoundry’s back-ers included corporates PayPal and NCR Corp.

The sale of Skyfire Labs, a US-based mobile video opti-misation company, for up to $155m,to Opera Software, a Norway-based technology company spun out of Telenor in 1995, provided an exit for US-based telecommunica-tions company Verizon. Skyfire had raised about $40m. In January last year, Verizon’s corporate venturing unit led Skyfire’s $8m funding round.

Xoom, a US-based money transfer service backed by SVB Capital, the corporate venturing unit of Silicon Val-ley Bank, and Volition Capital (formerly Fidelity Ventures, a corporate venturing division of financial services cor-

ATensilicabasebandengine

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Global Corporate Venturing April 2013 16

Analysisporation Fidelity Investments, before its spin-off) raised $101m in its Nasdaq flotation.

Arieso, a UK-based provider of location-aware software for mobile carriers backed by chip maker Qualcomm’s cor-porate venturing unit, was sold to JDSU, a Nasdaq-listed networks company, for $85m. A report by news provider PE Hub said it was a 4.7-times return for investors.

Silver Spring Networks, a US-based smart grid network-ing company backed by Japan-based technology group Hitachi, US peer EMC and Google Ventures, the corpo-rate venturing unit of the search engine, sold 4.75 million shares at $17 each to raise $80.75m.

KaloBios Pharmaceuticals, a developer of monoclonal antibody therapeutics for cancers and respiratory diseases backed by corporate venturing units Genzyme Ventures and Mitsubishi UFJ Capital, raised around $70m in its IPO.

US-based medical diagnostics company LipoScience, previously backed by corporates including General Electric, raised $45m in its IPO. One of the largest shareholders in LipoScience is Agilent Technologies, which holds 5.8%.

Also sold was Baxano, a US-based developer of spinal devices backed by healthcare provider Kaiser Perma-nente’s corporate venturing unit. TranS1, a Nasdaq-listed medical device maker, is paying $23.6m. n

Corporate fundraisingCorporate Amount raised ($m) FundGE 150pa GEVenturesNokia 250 ThirdNokiaGrowthPartnersfundChinaAerospaceScienceandTech 158 AerospaceHi-techVentureCapitalFundSamsung 100 CatalystFundPerfectWorld 65 UndisclosedFujiTV 17 FujiStartupVenturesMesa 10 Mesa+Rakuten 10 StartupStrategicFundNewJerseyHealthFoundation 5 FoundationVentureCapitalGroupAlchemy&Science 2 BostonBeerCompanyTwilio Undisclosed TwilioFundEurope

Corporate-backed venture fund closes Amount raised ($m) Fund Main corporate backer(s)GalenaAssetManagement 275 Miningfund TrafiguraLuxCapital 245 LuxVenturesIII UndisclosedcorporatesEmeraldTechnologyVentures 130 CleantechFundIII EvonikIndustries,Mahle,CofisaDeltaPartnersCapital 100 EmergingMarkets NTTDocomo TMTGrowthFundIIRibbitCapital 100 Firstfund BBVA,SiliconValleyBankAllosVentures 40 Secondfund Cintrifuse(corporatebackedfundof

funds)4DiCapital Undisclosed FundI EOppenheimer&SonInternationalCapnamic Undisclosed Undisclosed DumontSchaubergAllianceHealthcarePtnrsMngmt Undisclosed AllianceHealthcare LinkageVentures InvestmentFund

Funds being raised with corporate backing Amount raising ($m) Fund Main corporate backer(s)SVBCapital 300 StrategicInvestorsFundVI SiliconValleyBankSanderlingVentures 250 SanderlingVII GlaxoSmithKlinePeregVentures 50 Firstfund NielsenIncubateFund 21 Secondfund DeNABigIssueInvest 0.5 SparkCorporateSocial NominetTrust,Salesforce, VenturingChallenge Mitie,UnityTrustBank,MerrillLynch

andLloydsDevelopmentCapitalLoolVentures Undisclosed Undisclosed DLD(HubertBurdadigitaldivision

unit)

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Global Corporate Venturing April 2013 17

Monthly analysis

March deals slow as Cyprus scares marketsCorporate venturing investments slowed in March by number and value as exits were boosted by three initial public offerings (IPOs).

The slowdown in deal activity came as nerves appeared to creep back into wider market trading, as eurozone country Cyprus negotiated a bailout that involved haircuts for bank depositors. The jitters came even as the Dow Jones Industrial Average con-tinued to set record highs, suggesting many in the wider market were bet-ting the resurfacing eurozone difficulties would be consequential.

During the month, Global Corporate Venturing tracked 62 investments worth $833.4m, com-pared with 80 investments worth $1.8bn in February and 75 investments worth $1.7bn in March last year.

There were six exits and three IPOs during March worth $898.4m, compared with seven exits and IPO in February worth $364m and 75 exits worth $1.7bn in March last year. The largest exit was the $380m sale of Tensilica, backed by corporates including Japan technology companies Fujitsu and NTT. Corporate-backed IPOs involved Marin Software, Silver Spring Networks and Enanta Pharmaceuticals.

The largest investment of the month was the $150m raised by Australia-listed regenerative medicine company, Mesoblast, from unnamed “existing strategic investors”.

The second-largest deal was the $60m D round raised by PTC Therapeutics, from a consortium including health-

care companies Celgene and Novo.The third-largest deal was South

Africa-based media group Naspers’ $50m investment in Russia-based operator of online

classified advertising Avito, as part of the group being merged with Slando and Naspers-owned OLX,

valuing the combined company at $570m.The most active sector was consumer, with 17 invest-

ments, followed by health with 15, and services with 12. Just 10 information technology deals meant that sector was less active than usual.

A rounds were the most common type of deal, at 15 (24%), followed by B rounds with 14 (21%), and stake pur-chases with 12 (19%). As there were also six seed rounds, more than half the activity involved early-stage, suggest-ing either an increased risk appetite or an unwillingness to deploy large sums.

The US took more than two-thirds of activity, with 42 deals. The second most active region was the UK with 10 deals (10%). Russia had three, while Germany and Swit-zerland had two each. n

These pages summarise last month’s deal activity with a corporate venturing involvement. For full coverage on each deal as well as all other news, visit www.globalcorporateventuring.com. To report a deal or add your data, email Toby Lewis at tlewis@globalcorporateventuring.com

Global Corporate Venturing April 2013 18

Monthly analysis

This big deal analysis focuses on publisher Macmillan’s corporate venturing unit’s investment in two Brazil-based education technology companies, Veduca and Easyaula.

The deals bring to mind UK prime minister Harold Mac-millan’s speech to South Africa’s parliament in 1960, when he said: “The wind of change is blowing through this con-tinent [Africa]. Whether we like it or not, this growth of national consciousness is a political fact.”

The speech heralded the independence of British colo-nies, dependencies and dominions in Africa and elsewhere in the world that decade, but in a different context, Macmil-lan’s words could be applied to the explosion of national consciousness concerning innovation and regional diversity.

Or, as a corporate venturing head at a Japan Ven-ture Capital Association (JVCA) event hosted by the UK embassy in Tokyo put it, referring to the local entrepre-neurial ecosystem: “The Silicon Valley model is not nec-essarily transferable to Japan. We need to find our path.” (see Innovative region: Japan).

UK publisher Macmillan, owned by German publisher Holztbrinck, has invested in three technology-led corporate venturing and incubation businesses over the past two years – Macmillan Digital Education, which invests in and builds consumer-focused educational services, such as Tutoria; Digital Science, which specialises in providing software solu-tions for scientists since its launch in 2010 and has also made corporate venturing investments in BioData, SureChem, Labtiva, 1DegreeBio, Bioraft and Symplectic; and Macmillan New Ventures, which discovers and develops technologies for educational development, such as I>clicker, Educational Benchmarking and PrepU, and was launched in June.

Veduca, a Brazil-based online video platform for educa-tional content, raised $740,000 in its seed round from a consortium including Macmillan Digital Education, whose parent has been active in the country since 1994.

Matthias Ick, managing director of Macmillan Digital Education, which was founded in 2012 as a UK-based subsidiary of Germany-based publisher Holtzbrinck, said: “This is a major step in our intention to provide a cata-lyst for the next phase of our ambitious plans in Brazil and the wider region. Together with Veduca and Easyaula, we will support and enhance the development of technology driven-education in Brazil. Both brands will play an impor-tant role in helping us reach our goal to support people in their life-long learning journey.”

Veduca shows videos in their original English language format, subtitled in Portuguese, while Easyaula is an online educational marketplace that claims to makes it easy for people to learn anything from anyone.

Macmillan said it could help the companies internation-alise. This is part of the wave ot local-to-global entrepre-neurs that develop in one region but through the internet can apply their models more globally, either as reverse innovation into richer countries or as part of an emerging-to-emerging markets business model, perhaps best exem-plified by South Africa-based media group Naspers’ corpo-rate venturing unit MIH.

This topic of regional innovation and globalisation will be a key strand of discussion at the next Global Corporate Ven-turing Symposium in London in May, when Naspers’ Charles Searle will give a keynote address and we welcome a host of industry leaders from around the world (see agenda). n

Has Macmillan published in Portu-gueseorarethesedealsanentryintothatmarket?Macmillan has a long and rich history of commitment to the teaching of English at all levels and has been active in Brazil since 1994. Through Macmillan Educa-tion, it has been giving special attention to producing teaching materials that reflect the cultural conditions and country specific curriculum, providing teachers, students and educational institutions a wide range of high-quality, tailor-made materials in print and electronic format for

almost 20 years. These two investments constitute the entry of Macmillan Digital Education into Brazil and we will focus on further opportunities in new technology and service-driven areas of the education market.

Is it more about seeing great ed-techentrepreneurs in any space, backingtheideasandmaybetakingthemmoreinternationalthroughyournetwork?

Obviously having a great team is an important investment criterion for us. Both Diego Álvarez [chief executive and

Q&A with Matthias Ick, Macmillan Digital Education

The big deal

Macmillan’s wind of change

Global Corporate Venturing April 2013 19

Monthly analysis

US 42

Brazil 1

UK 6Russia 3Germany 2

Switzerland 2France 1

Israel 1

Singapore 1

Japan 1

India 1

Australia 1

Global corporate venturing activity last month

A round

B round

C round

D round

E round and beyond

M&ASeed

Stake purchase

Undisclosed

Clean-techConsumer

Financial servicesHealth

IndustrialIT

MediaServices

TransportUtilities

Source: Global Corporate Venturing

founder] of Easyaula, and Carlos Souza [co-founder of Veduca in partnership with Andre Tachian] are among the great new wave of Brazilian ed-tech entrepreneurs devel-oping new platforms to make learning more accessible and more effective for Brazilians. Beyond funding we strive to facilitate the growth of our portfolio companies by leverag-ing our network and expertise. Macmillan’s global footprint can be of great help to internationalise successful services quicker. Both companies are currently laser-focused on the Brazilian market, but once they internationalise we will fully support them.

Holtzbrinckseemstohavemultipleventuringunits–Macmillan’sDigital Sciencedivision,MacmillanNewVentures–andyetitspunoffHoltzbrinckVenturesattheheadquarters.Howdotheyfittogether?Macmillan Digital Education’s investments are part of a broader initiative to invest in start-up businesses within Macmillan’s science and education division. Under its chief executive Annette Thomas’s direction, the division has invested in three technology-led start-up businesses over the past two years – Macmillan Digital Education, which invests in and builds consumer-focused educational services, Digital Science, which specialises in provid-ing software solutions for scientists, and Macmillan New Ventures, which discovers and develops innovative and proven technologies for educational development. We have a long and rich heritage in providing content for sci-

ence, education and scholarly businesses. These more established businesses have all built strong brands and an enviable track record for editorial excellence by taking a content-led, technology enabled approach. With our new digital businesses, we have started to play on the strengths we have in those markets to extend the brands we have into technological products and services. We have been investing heavily in digital counterparts for each of these areas with a brief to optimise, innovate and transform the markets. It is the fusion of the disruptive technology start-up businesses with the editorially-rich established players that enables Macmillan to evolve its overall business and fuel quicker access to new markets and new opportunities.

Doyouconnecttouniversityventuringfundsinthisarea? Massive open online courses (Moocs) andhighereducationseemgreatareasfordisruption.The Moocs currently raise a lot of attention, mainly driven by impressive usage statistics. So it is being demonstrated that people are interested and actually see the benefits of accessing even the highest-quality university courses online. The potential to reach worldwide learners with a single course is fascinating. We are following the market, and with Veduca we have already invested in one of the leading Moocs in Brazil. For universities, Moocs offer a great opportunity to increase their reach and it will be inter-esting to see what models prove to be mutually beneficial and sustainable. n

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