THE H1 2016 CORPORATE VENTURE CAPITAL REPORT A comprehensive data-driven look at the first half of 2016’s corporate venture capital activity globally.
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TABLE OF CONTENTS #
SECTION
5
Summary
6
Global Data
19
Country Recaps
24
USA
48
Sector Recaps
All monetary references contained in this report are in USD
4
SUMMARY OF FINDINGS H1’16: CORPORATE VCs PARTICIPATE IN $12.7B ACROSS 633 DEALS: Deals involving corporate VCs fell 6%
GOOGLE VENTURES SURPASSES INTEL CAPITAL AS THE MOST ACTIVE GLOBAL CVC IN FIRST HALF OF 2016 GV (Google
when compared to the same period in 2015, while dollar funding from those deals increased 3%. In 2016, CVCs participated in a range of $100M+ deals including those to Lu.com, Magic Leap, Oscar Health Insurance, Slack Technologies, and many others.
Ventures) leads all CVCs in the first half of 2016. In terms of geographic focus, 91% of GV’s investments took place in the United States while roughly 9% took place in Europe.
CORPORATE VENTURE ACTIVITY RISING IN THE UK AND INDIA: Deals with CVC participation to UK and Indian startups reached all-time highs in Q2’16. Californiabased Qualcomm Ventures was the most active CVC investor in both countries.
2016 ON TRACK TO SEE RECORD NUMBER OF NEW CVCs: Globally, 53 new CVC units made their first investment in 2016, continuing a steadily upward trend in the number of new CVCs since 2011. Furthermore, 76 CVCs made investments in seed stage companies in H1’16. This puts 2016 on track for a record in new CVCs, as well as CVC investment at the seed stage.
CVC AVERAGE DEAL SIZES ARE LARGER THAN VCs’ AVERAGE DEAL SIZE: Globally, the average CVC deal size has consistently been larger than the average VC deal size over the last 14 quarters. The same is true for US-based deals, with CVC deal sizes above $20M+ the last 5 quarters.
GLOBAL CVCs’ DEAL SHARE BY STAGE DOMINATED BY EARLIER STAGES: In Q2’16, seed stage companies accounted for 20% and Series A stage companies accounted for 26% of global deal share from CVCs. Additionally, Series B deals took a significant portion of the pie accounting for 24% of CVC participation.
CVCs INVOLVED IN $8.6B ACROSS 376 US DEALS IN H1’16: Corporate venture capital deal activity into US-based startups fell by 14% when compared to H1’15. Furthermore, on a quarterly basis, dollar funding from these deals fell 35% in Q2’16.
NOTE: REPORT ONLY INCLUDES INVESTMENT BY CVC ARMS. With the exception of pg. 18, this report only covers the funding activity of specific, separately demarcated corporate venture arms. Corporates making strategic investments directly are not included.
5
Global Corporate Venture Capital: FINANCING TRENDS
6
CVC DEAL ACTIVITY FALLS TO 9-QUARTER LOW H1’16 corporate VC participation hit $12.7B across 633 deals. CVC-backed deal activity fell 11% in Q2’16 on a quarterly basis, while overall funding from deals with CVC participation fell 41% from Q1’16.
Quarterly Global CVC Financing Trend Q1’12 – Q2’16 340
253 219 190
191
212
268
283
377 334
303
350 325
313
298
227 $11.3
160
$8.0
$7.4
$1.7
335
$2.1
$2.3
$2.2
$1.7
$2.7
$2.6
$2.7
$3.8
$5.1
Investment ($B)
$3.5
$4.5
$4.9
$5.5
$4.7
Deals
7
CORPORATE VENTURE IN EUROPE ON THE RISE In Q2’16, European startups took 19% of all deals with CVC participation, a 5-quarter high. North America still accounted for more than 60% of deals involving CVCs.
Quarterly Global CVC Deal Share By Continent Q2’15 – Q2’16 1%
1%
1%
1%
1%
14%
16%
17%
15%
19%
21%
17%
17%
20%
23%
68%
63%
59%
63%
62%
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
North America
Asia
Europe
Other
8
EARLY-STAGE CVC DEAL SHARE REMAINS STEADY IN H1’16 Early-stage (seed/angel and Series A) deals accounted for 46% of all deals with CVC participation in Q2’16. Across the 5 quarters, at least one-fifth of deals involving CVCs were at the Series B stage, with the exception of a drop in Q1’16.
Quarterly Global CVC Deal Share By Series Q2’15 – Q2’16 5% 6% 7%
7% 7% 5%
14%
11%
22%
26%
6% 5% 4% 9%
20%
25%
27%
28%
14%
17%
24%
18%
21%
24%
21%
Q2'15
Q3'15
Q4'15
Seed / Angel
7% 4% 4%
9% 4% 5%
Series A
Series B
Series C
26%
33%
20%
14% Q1'16 Series D
Series E+
Q2'16 Other
9
INTERNET AND MOBILE CONTINUE TO DOMINATE CVC DEAL SHARE In Q2’16, the internet and mobile sectors accounted for 63% of all deals with CVC participation. Deal share to healthcare startups topped the share of software and computer hardware in each of the past 5 quarters.
Quarterly Global CVC Deal Share By Sector Q2’15 – Q2’16
11% 2% 7% 11%
15%
16%
14%
3% 7%
3% 5%
4% 6%
17% 1% 7%
12%
16%
13%
15%
15%
48%
45%
48%
Q4'15
Q1'16
Q2'16
17% 19%
16% 16%
50%
Q2'15 Internet
41%
Q3'15 Mobile & Telecommunications
Healthcare
Software (non-internet/mobile)
Computer Hardware & Services
Other
10
CVCs PARTICIPATE IN A FIFTH OF ALL VC DEALS IN H1’16 Corporate venture firms participated in 20% of the 3113 venture-backed financing rounds in the first half of 2016.
Quarterly Global Corporate VC vs. Overall VC Financing Activity Q1’13 – Q2’16
1731
1715 1543 1364
1541
1723
1754
1841
1848 1675
1566
$29.9
1414
1577
1536
$28.1
$23.0 $20.6
$19.7
$21.9
$19.4 $17.2
$16.9 $13.8
Q1'13
$2.7
Q2'13
$2.6
Q3'13
$11.3
$2.7
Q4'13
$3.8
Q1'14
CVC Funding ($B)
340
303
283
268
253
227
212 $1.7
$10.8
$10.0
$8.8
$12.0
$5.1
Q2'14
334
350
325
377
$7.4 $3.5
Q3'14
$4.5
Q4'14
VC Funding ($B)
$5.5
$4.9
Q1'15
Q2'15
CVC Deals
Q3'15
313 $8.0 335
Q4'15
298 $4.7
Q1'16
Q2'16
VC Deals
11
CVC DEAL SHARE AT 19%+ FOR 8-STRAIGHT QUARTERS THROUGH Q2’16 On a quarterly basis, CVC deal share topped out at 19% in Q2’16, which is down from the alltime high in Q1’16 of 21% of deal share, but still consistent with previous quarters.
Quarterly Global Corporate VC Share Of All VC Deals Q1’13 – Q2’16
16%
16%
16%
17%
18%
18%
20%
19%
19%
19%
20%
19%
21%
19%
84%
84%
84%
83%
82%
82%
80%
81%
81%
81%
80%
81%
79%
81%
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Other VCs
CVC Deal Share 12
ACTIVE CVCs MORE THAN DOUBLE FROM Q1’12 TO Q2’16 Since Q4’14, there have been at least 160+ corporate VCs completing deals with Q3’15 hitting an all-time high of 191 corporate VCs making an investment.
Quarterly Global Active Corporate VC Investors Q1’12 – Q2’16
85
98
95
112
104
111
124
125
147
140
157
164
171
166
191
177
188
176
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Unique CVC Investor
13
2016 ON TRACK FOR FRESH RECORD IN NEW CVC ARMS 53 new corporate VC units globally made their first investment in the first half of 2016, including firms like General Mills Ventures and NBC Sports Ventures. The number of new CVCs making first-time investments will surpass 100 at the current run rate.
Number Of New Corporate Venture Capital Groups 2011 – H1’16
77
85
67 53
47 37
2011
2012
2013
2014
2015
H1'16
14
CVC ACTIVITY AT THE SEED STAGE ON TRACK TO SURPASS 2015 HIGHS In H1’16, 76 unique CVC arms completed at least one seed VC round worldwide, already surpassing 2012 full-year totals and on track for a new annual high.
Global Active Corporate VC Investors at the Seed Stage 2012 – H1’16
122
131
96 76 53
2012
2013
2014
2015
H1'16
15
CVC DEAL SIZES CONSISTENTLY LARGER THAN VC Average deal size with CVC participation has fallen to a 5-quarter low at $19M in Q2’16. Despite this, CVC deal size has consistently been larger than VC deal sizes over the last 14 quarters.
Global Corporate VC vs. Overall VC Average Deal Size Q1’13 – Q2’16
$37 $27
$25 $16 $10
$19
$18
$13
$8
$9
$9
Q1'13
Q2'13
Q3'13
$13
$9
Q4'13
$11
Q1'14
$14 $13 $12
Q2'14
Q3'14
Corporate VC ($M)
$18
$15
Q4'14
$17
$18
$20 $22
$14
Q1'15
Q2'15
Q3'15
$17
Q4'15
$16
Q1'16
$19 $13
Q2'16
Overall VC ($M)
16
THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS GLOBALLY GV (Google Ventures) led all CVCs in global activity, investing in more than 30 companies, roughly 17% more than second-place Intel Capital through the first half of 2016.
RANK CVC INVESTOR
RECENT* NEW INVESTMENTS IN FIRST HALF 2016
1
2
3
4
5
17
CORPORATIONS (APART FROM CVCs) ARE INCREASING THEIR DEAL AND FUNDING ACTIVITY Beyond dedicated venture arms, corporations themselves are also deploying dollars into VC-backed startups. In H1’16, corporates participated in $11.5B in financings across 394 deals. Corporations’ activity has ticked up in the last two quarters, in which they have been involved in 195+ deals.
Global Corporate VC vs. Corporation Financing Activity Q1’12 – Q2’16 540 492
241 160
277 190
277 191
298 219
308 212
338 227
366 253
364 268
396 283
$1.4 $2.1
$1.3 $2.3
$0.7 $2.2
$1.2 $1.7
490
$1.6
$1.8
$1.6
$2.7
$2.6
$2.7
$3.8
$2.8 $5.1
497
$10.4
415 303
530 488
340
334
325
350
377 313
$5.5
$5.5
$6.5
298
$6.2
$11.3
$3.9 $3.5
335
$5.3
$5.9
$2.8 $0.9 $1.7
498
556
$4.5
$4.9
$7.4
$5.5
$8.0 $4.7
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 CVC Funding ($B)
Corp Funding ($B)
CVC Deals
CVC+Corp Deals
18
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Country Recaps: UK, INDIA, & CHINA
20
UK CVC DEAL ACTIVITY REACHES RECORD LEVELS IN Q2’16 In Q2’16, UK deal activity hit a record high of 21 deals, despite funding participation falling 33% on a quarterly basis.
UK Quarterly Corporate VC Financing History Q1’12 – Q2’16 21
15
15
14 12
12
8
8 6
4
7 5
$58
$43
$61
$78
$37
$76
$104
8 $432
5 $225
$127
13
$657
10 7
14
$147
$177
$65
Investments ($M)
$553
$313 $209
$107
Deals
21
CVC DEAL ACTIVITY IN CHINA HITS 8-QUARTER LOW Corporate VC firms participated in roughly $2B across 29 deals in China in the first half of 2016. In Q2’16, CVCs were involved in 12 deals to China-based startups, the lowest quarterly total since Q2’14.
China Quarterly Corporate VC Financing History Q1’12 – Q2’16
27
24 19 17 14
13 8
8
8
2 $10
$98
$38
$14
$95
12
9 7
7
2 $30
$4.2B
11
10
17
$75
$106
$139
$161
Investment ($M)
$386
$245
$324
$1.7B
$1.4B $628
$282
Deals
22
INDIA CVC DEAL ACTIVITY HITS ALL-TIME HIGH IN Q2’16 Corporate VC firms participated in $205M across 20 deals in the first half of 2016. Both deal and funding participation rose on a quarterly basis in Q2’16 with CVCs involved in $171M across 13 deals.
India Quarterly Corporate VC Financing History 13
Q1’12 – Q2’16 11 9 8 7
7
7
6 5 3
5 3
5
$287
3
$35
$9
$20
5
3 2
$56
$298
$65
$9
$89
$111
$13
Investment ($M)
$96 $36
$171 $66
$34
$34
Deals
23
MOST ACTIVE CVCs IN UK, CHINA, & INDIA Qualcomm Ventures was the most active investor in India and the UK. Legend Capital was the most active CVC investor in China while Intel Capital rounded out the second spot for both China and India.
Most Active CVCs in the UK 2012-H1’16
Most Active CVCs in China 2012-H1’16 CVC INVESTOR
Most Active CVCs in India 2012-H1’16
RANK CVC INVESTOR
RANK
RANK
1
1
1
2
2
2
2
3
3
4
4
4
5
5
5
CVC INVESTOR
24
US CORPORATE VC TRENDS H1’16 25
US CORPORATE DEAL ACTIVITY FELL TO 10-QUARTER LOW Corporate VCs participated in $8.6B across 376 deals to US-based companies in the first half of 2016, a 14% drop in deals when compared to the same period in 2015.
US Quarterly Corporate VC Financing History Q1’12 – Q2’16 211 172 128
128
132
140
145
202
203
212
225
202 180
176
$5.6 $3.5
$3.0 $2.0
$1.6
$1.5
$1.9
$2.1
$2.0
Investment ($B)
$5.2
$4.9
$4.3
$1.6
174
158
105
$1.4
233
$3.7
$3.6
$3.4
$2.2
Deals
26
CALIFORNIA DEAL SHARE HITS 5-QUARTER HIGH Across the 5 quarters, California accounts for at least 48% of all US deals with CVC participation. New York is taking an increasing percentage of deals, with its proportion reaching as high as 20% in Q1’16.
US CVC Deal Share By State Q2’15 – Q2’16 19%
19%
20%
17%
3% 4%
3% 3% 8%
2% 1% 12%
3% 5% 8%
13%
12%
20%
55%
53%
11% 12%
52%
Q2'15 California
Q3'15 New York
Q4'15 Massachusetts Texas
48%
Q1'16 Washington Other
16% 2% 4% 5% 16%
58%
Q2'16
27
MID-STAGE DEALS TAKE PLURALITY OF SHARE IN THE US IN Q2’16 Investment flowed into the mid-stage with Series B and Series C stage deals attracting 46% of CVC investment in Q2’16. More than 1/5 of deals went to Series A stage companies in Q2’16.
US CVC Deal Share By Series Q2’15 – Q2’16 3% 7% 9% 17%
3% 9% 5%
2% 8% 7%
14%
11%
6% 4% 7%
7% 5% 7%
14%
21% 27%
22%
23%
32%
18% 26%
23%
29%
18%
21%
16%
Q2'15
Q3'15
Q4'15
Seed / Angel
Series A
Series B
Series C
21%
30%
16%
10% Q1'16 Series D
Series E+
Q2'16 Other
28
INTERNET CONTINUES TO DOMINATE IN US IN H1’16 Among US deals, the internet sector took the highest concentration of deals from corporate VCs. Healthcare and mobile took 15% and 14% of deals, respectively, in Q2’16.
US CVC Deal Share By Sector Q2’15 – Q2’16 13% 2% 8%
12% 3% 6%
16%
17%
3% 4%
1% 7%
5% 7%
16%
17%
14%
14%
14%
13%
20%
47%
Q2'15 Internet
Healthcare
42%
Q3'15 Mobile & Telecommunications
14%
48%
Q4'15
18%
12%
15%
42%
47%
Q1'16
Q2'16
Software (non-internet/mobile)
Electronics
Other
29
CVCs PARTICIPATE IN OVER A FIFTH OF US VC DEALS IN H1’16 In the first half of 2016, corporate VCs participated in 22% of the 1600+ US VC deals.
US Corporate VC vs. Overall VC Financing History Q1’13 – Q2’16 1106 975 866
889
941
1088
1104 1032
958
988
1040
$17.9
928
866
$15.5 $14.2
816
$13.7 $12.7
$12.4
$12.4
$11.5
$11.0 $9.8 $8.8 $6.7
140 $1.5
Q1'13
$7.5
$7.7
145
172
$1.9
Q2'13
$2.1
Q3'13
158 $2.0
Q4'13
211
176 $3.0
Q1'14
CVC Funding ($B)
$4.3
Q2'14
202 $2.2
Q3'14
$3.5
Q4'14
VC Funding ($B)
$3.7
Q1'15
233
225
212
203
$4.9
Q2'15
CVC Deals
$5.6
Q3'15
202
180 $3.6
Q4'15
$5.2
Q1'16
174 $3.4
Q2'16
VC Deals
30
CVC US DEAL SHARE AT 19% OR HIGHER FOR 9- STRAIGHT QUARTERS CVC quarterly deal share in the US topped out at 23% during the peak of Q1’16 and leveled out to 21% in Q2’16.
US CVC Deal Share Of All VC Deals Q1’13 – Q2’16 16%
16%
18%
17%
18%
19%
19%
20%
21%
20%
22%
19%
23%
21%
84%
84%
82%
83%
82%
81%
81%
80%
79%
80%
78%
81%
77%
79%
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Other VC
CVC Deal Share
31
NUMBER OF ACTIVE CVCs IN US FALL STEEPLY AFTER PEAK IN Q1’16 The number of active corporate VCs hit a 8-quarter low in Q2’16, with just 107 unique CVCs completing a US-based deal.
US Quarterly Active CVC Investors Q1’12 – Q2’16
104 61
67
67
75
73
82
85
86
100
111
108
115
126
132
118
131 107
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Unique CVC Investors
32
CVC DEAL SIZES LARGER THAN OVERALL VC DEALS IN US The average size of deals with CVC participation was larger than overall US VC deals, mirroring the global pattern. The last 5 quarters saw US CVC deal sizes above $20M+ while each quarter in 2013 was below $20M in average deal size.
US CVC vs. Overall VC Average Deal Size Q1’13 – Q2’16
$28
$28 $22
$21 $12
$16
$14
$14
$9
$9
$9
Q1'13
Q2'13
Q3'13
$10
Q4'13
$11
Q1'14
$24
$21 $14 $13
Q2'14
$19 $15
$11
Q3'14
Corporate VC ($M)
Q4'14
$18 $14
Q1'15
$22
$22
Q2'15
$17
Q3'15
$15
Q4'15
$16
Q1'16
$15
Q2'16
Overall VC ($M)
33
THE MOST ACTIVE CVCs IN THE US Google Ventures was the most CVC investor in the US through the first half of 2016. They are invested across a range of industries like healthcare and frontier tech; their portfolio includes Orbital Insight, Magic Leap, and ARMO Biosciences, among many others.
RANK
CVC INVESTOR
RANK
1
5
2
5
3
8
4
9
5
9
CVC INVESTOR
34
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US Corporate VC State Recaps: CALIFORNIA
36
CALIFORNIA: $4.5B ACROSS 197 DEALS DEALS IN H1’16 In Q2’16, total funding involving CVCs in California rose to $2.4B across 101 deals, a 17% increase in funding and 5% increase in deals on a quarterly basis.
California Quarterly CVC Financing History Q1’12 – Q2’16 110
127
113
99
116 106 95
90 75
69 60
65
$3.1
$2.9 $2.0 $1.0
$1.0
$0.8
$0.9
$0.9
96
$2.1
$2.1
101
74
67
49
$0.7
95
$1.3
$1.6
$1.7
$1.8
$3.6 $2.4
$1.0
Investment ($B)
Deals
37
CORPORATE VENTURE ARMS ACTIVE IN CALIFORNIA MID-STAGE MARKET Series B deals only made up 17% of all California CVC participation in Q1’16, but grew to 34% in Q2’16. In contrast, Series A deals went from a 30% peak in Q1’16 to a 5-quarter low of 18% in Q2’16.
California CVC Deal Share By Series Q2’15 – Q2’16 3% 9%
3% 11%
3% 11%
6%
5%
7%
19%
17%
14%
20%
24%
24%
20%
24%
20%
Q2'15
Q3'15 Seed / Angel
Series A
Series B
8% 3% 10%
22%
16%
17%
26%
19%
6% 4% 9%
34%
30%
18%
15%
11%
12%
Q4'15
Q1'16
Q2'16
Series C
Series D
Series E+
Other
38
CALIFORNIA CVC DEAL ACTIVITY CONCENTRATED ON INTERNET; MOBILE & SOFTWARE INCREASING In the first half of 2016, the internet sector received 44% of all California deals with CVC participation. Healthcare peaked in Q1’16 at 21% but dropped to 10% in Q2’16, while both mobile and software increased over the same quarters.
California CVC Deal Share By Sector Q2’15 – Q2’16 16% 3% 7% 10% 17%
10% 5% 6% 11%
17%
13%
4% 4%
5% 6%
12%
19%
21%
14% 14%
Internet
47%
49%
49%
Q2'15
Q3'15
Q4'15
Mobile & Telecommunications
Healthcare
Software (non-internet/mobile)
18% 2% 8% 10% 17%
42%
46%
Q1'16
Q2'16
Computer Hardware & Services
Other
39
US Corporate VC State Recaps: NEW YORK 40
NEW YORK: $1.7B ACROSS 68 DEALS IN H1’16 In Q2’16, funding to New York-based companies involving CVCs fell by 66% while deal count fell by 30% on a quarterly basis. In Q2’16, CVCs participated in deals like the Via Transportation $70M Series C and the US HealthVest $50M Series B, among others.
New York Quarterly CVC Financing History 40
Q1’12 – Q2’16 31 25
24
14
$52
19
$768
7 $79
$141
$1.3B
17
15 12
11 7
28 22
19
17
30 27
$155
$185
$301
$266 $114
$206
$336
Investment ($M)
$465 $202
$229
$294
$438 $176
Deals
41
EARLY-STAGE DEALS INVOLVING CVCs SEE A REBOUND IN NEW YORK In Q1’16, Series B deals accounted for 28% of NY-based deals with CVC participation, and this share increased to 32% in Q2’16. Early-stage (seed/angel and Series A) CVC deals fell to a 4-quarter low of 36% in Q1’16, but recovered to 47% in Q2’16.
New York CVC Deal Share By Series Q2’15 – Q2’16 4%
3% 3%
15%
5% 5%
13%
9%
7% 19%
4% 7% 4% 7%
5% 10%
9%
23%
9%
27%
32% 27%
28%
20% 18%
37% 28%
36%
33%
29%
19% 8%
Q2'15
Q3'15 Seed / Angel
Series A
Q4'15 Series B
Series C
Q1'16 Series D
Series E+
Q2'16 Other
42
MOBILE & SOFTWARE EACH TAKE 1/5 OF NEW YORK CVC DEALS The internet sector accounted for 57% of deals involving CVCs in Q2’16. Mobile as well as software deals have been in decline since Q4’15 but each still took 20%+ of deals in Q2’16.
New York CVC Deal Share By Sector Q2’15 – Q2’16 11% 11%
5%
10%
13%
32%
30%
28%
4% 7% 21% 11%
3%
13%
32% 30%
21%
28% 78%
Q2'15 Internet
40%
Q3'15 Mobile & Telecommunications
57%
59%
47%
Q4'15 Healthcare
Q1'16
Software (non-internet/mobile)
Q2'16
Business Products & Services
Other 43
US Corporate VC State Recaps: MASSACHUSETTS 44
MASSACHUSETTS: $512M ACROSS 24 DEALS IN H1’16 In H1’16, deal activity from CVCs fell by 52% when compared to the same period in 2015. In Q2’16, deal count from CVCs investing in Massachusetts-based companies fell to a staggering 17-quarter low.
Massachusetts Quarterly CVC Financing History Q1’12 – Q2’16 26 24 19 17
16
16
24
23
22
20 18
19
18
16
16 11 $533 $457
6 $177
$231 $133
$229
$210 $132
$274
$153
Investment ($M)
$470 $360
$297
$272
$596
$87
$390
8
$122
Deals
45
MASSACHUSETTS CVC ACTION LEANING TOWARDS SERIES A AND SERIES B DEALS Over the last 5 quarters, Series A and Series B deals have accounted for at least 43% of CVC deals in Massachusetts. Seed/angel stage activity is taking an increasing share of CVC deals growing from 4% in Q3’15 to 11% in Q2’16.
Massachusetts CVC Deal Share By Series Q2’15 – Q2’16 8%
4%
13%
21%
5% 8%
7%
12%
11%
10% 3% 10%
4%
5%
12%
11% 11%
25%
27% 31%
33%
21%
28% 35% 15%
32%
31%
29%
8%
4%
7%
12%
11%
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Seed / Angel
Series A
Series B
Series C
Series D
Series E+
Other
46
HEALTHCARE TAKES 1/3 OF MASSACHUSETTS CVC INVESTMENTS IN H1’16 In Massachusetts, healthcare has consistently taken the largest portion of CVC deals peaking in Q3’15 at 63%. In Q2’16, CVCs were involved in healthcare deals like Morphic Therapeutic (Series A, $51.5M), Imara (Series A, $31M), and Daktari Diagnostics (Series D II, $7M).
Massachusetts CVC Deal Share By Sector Q2’15 – Q2’16
19%
5% 5%
23%
11% 8% 4%
42%
5% 5%
19%
31%
25%
13%
36%
63%
13%
38%
9% 12% 15% Q1'15 Internet
38%
5%
25%
23%
11% Q3'15 Mobile & Telecommunications
Q4'15 Healthcare
Software (non-internet/mobile)
Q1'16
Q2'16
Computer Hardware & Services
Other 47
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Global Corporate VC Sector Recap: INTERNET 49
INTERNET DEAL ACTIVITY REACHES 5-QUARTER LOW Corporate VC involvement in the internet sector dropped to involvement in $5.7B of funding across 294 deals in the first half of 2016. Notable internet deals with CVC participation include the $200M Series F of Slack, the $70M Series E of SoundCloud and the $50M Series C of Paymax.
Global Quarterly CVC Financing History: Internet Q1’14 – Q2’16 156
176
167
152 151
136
128
142
126
113 $4.1
$3.9
$2.0
$1.6
$1.6
$1.6
$2.5
$1.9
Investment ($M)
$3.9
$1.8
Deals
50
EUROPE GAINS GREATER SHARE OF CVC INTERNET DEALS IN Q2’16 Corporate VC deals in the internet sector have remained relatively consistent across the top 3 continents with North America capturing the majority of all investments. Europe accounted for 20% of deals in Q2’16 after taking 16% or less in the previous four quarters.
Global CVC Deal Share By Continent: Internet Q2’15 – Q2’16 1% 14%
1% 14%
1% 13%
2% 16%
20%
23%
21%
25%
23%
18%
63%
64%
60%
59%
61%
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
North America
Asia
Europe
1%
Other
51
CVC EARLY-STAGE INTERNET DEALS HIT 5-QUARTER LOW For deals in the internet sector involving CVCs, early-stage deals (seed/angel and Series A) fell to 46% of the total in Q2’16, a 5-quarter low. Meanwhile, internet deals involving CVCs at the Series B stage hit a 5-quarter high at 27% in Q2’16.
Global CVC Deal Share By Series: Internet Q2’15 – Q2’16 4% 4% 7% 13%
20%
30%
22% Q2'15
3% 6% 5% 12%
4% 5% 5% 9%
19%
25%
7% 5% 3% 12%
8% 4% 5% 17%
27%
18% 28%
27%
28%
26%
Q3'15
Q4'15
Seed / Angel
Series A
Series B
Series C
Series D
31%
25%
17%
21%
Q1'16
Q2'16
Series E+
Other
52
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Global Corporate VC Sector Recap: MOBILE 54
MOBILE SECTOR DEAL ACTIVITY TRENDING DOWNWARDS Deal count in the mobile sector fell to a 14-quarter low with CVCs investing in 45 deals in Q2’16. Funding to mobile from deals with CVC participation dropped in the first half of 2016, after the Q3’15 spike which was driven by CVC involvement in $1B+ rounds to Didi Kuaidi and Ucar Group.
Global Quarterly CVC Financing History: Mobile & Telecom Q1’13 – Q2’16 72 63 57 48
61
71
68
66
62
57 49
46
49
45
$4B
$1.7B $310
$334
$589
$387
$697
$1.2B $386
$636
Investment ($M)
$685
$922
$680
$699
Deals
55
ASIA CATCHING ALMOST ¼ OF CORPORATE VC DEALS IN MOBILE Mobile deals in North America involving corporate VCs took at least 53% of mobile CVC deals across the 5 quarters. Asia took at least 1/5 of deals in the 5 quarter-trend and ended Q2’16 on a high note taking roughly 1/4 of all mobile deals.
Global CVC Deal Share By Continent: Mobile & Telecom Q2’15 – Q2’16 3% 17%
21%
59%
Q2'15
15%
16%
21% 31%
65%
53%
Q3'15
Q4'15 North America
Asia
Europe
16%
16%
22%
24%
61%
60%
Q1'16
Q2'16
Other
56
CVC EARLY-STAGE MOBILE DEAL SHARE DOMINATES OVER 5 QUARTERS Early-stage deals consistently accounted for roughly 60% of CVC deals in the mobile sector. In Q2’16, mid-stage (Series B + Series C) deals took 30% of CVC participation with deals like Cabify (Series C, $120M) and Meta (Series B, $50M) drawing CVC involvement.
Global CVC Deal Share By Series: Mobile & Telecom Q2’15 – Q2’16 6%
1% 3%
6%
2% 2% 6%
2% 1% 2% 4%
21%
23%
35%
35%
29%
39%
35%
34%
37%
Q3'15
Q4'15
Q1'16
Q2'16
3%
5%
2% 5% 13%
2% 2% 15%
15%
24% 33% 27%
32%
Q2'15
Seed / Angel
Series A
Series B
Series C
Series D
Series E+
Other
57
Global Corporate VC Sector Recap: HEALTHCARE 58
HEALTHCARE DEAL ACTIVITY SLIGHTLY DOWN IN H1’16 Corporate VC involvement in the healthcare sector totaled 91 deals adding up to $2.6B in H1’16, a 2% decrease in deal activity over the same period in 2015.
Global Quarterly CVC Financing History: Healthcare Q1’13 – Q2’16
65 56
53
51 43
45
43 38
33
31
29
$682 $423
$565
$696 $437
$1.9B
$1.1B
$956
38
37
37
$896
$1.3B
$1.4B $1.1B
$1.2B
$565
Investment ($M)
Deals
59
30% OF HEALTHCARE DEALS HAPPENING IN EUROPE AND ASIA Healthcare deals primarily took place in North America with the continent notching at least 68% of all deals in the last 5 quarters. CVCs have increased their deal activity in Asia-based healthcare startups over the past 5 quarters going from 5% in Q2’15 to 18% in Q2’16.
Global CVC Deal Share By Continent: Healthcare Q2’15 – Q2’16 11% 5%
84%
Q2'15
2%
13%
23%
22%
15%
5%
11%
15%
18%
72%
68%
68%
68%
Q3'15
Q4'15
Q1'16
Q2'16
North America
Asia
Europe
Other
60
CVCs ARE BETTING ON HEALTHCARE DEALS AT THE EARLY-STAGE In Q2’16, early-stage deals accounted for 37% of CVC deals in the healthcare sector, up from 29% in Q2’15. Series C healthcare deals are trending downwards going from 17% in Q3’15 to 11% in Q2’16.
Global CVC Deal Share By Series: Healthcare Q2’15 – Q2’16 3% 8%
3% 8% 6%
11%
17%
16%
14%
6% 8%
8% 5%
13%
3% 5% 11%
14% 31%
32%
5%
6%
Q2'15
Q3'15 Seed / Angel
Series A
34%
43%
32%
30%
29%
24%
30%
27%
5%
3% Q4'15 Series B
Series C
Q1'16 Series D
Series E+
Q2'16 Other
61
APPENDIX: 100 Most Active Corporate Venture Capital Firms Of The First Half Of 2016 (Global) 100 Most Active CVCs Of H1'16 1-25
26-50
51-75
76-100
Google Ventures Intel Capital Comcast Ventures Salesforce Ventures Cisco Investments GE Ventures Qualcomm Ventures Pfizer Venture Investments Bloomberg Beta CyberAgent Ventures F-Prime Capital Samsung Ventures Ping An Ventures Johnson & Johnson Innovation Roche Venture Fund Verizon Ventures SR One Citi Ventures Brand Capital Springboard Rakuten Ventures NTT DoCoMo Ventures Microsoft Ventures Novartis Venture Funds Telstra Ventures AXA Strategic Ventures
In-Q-Tel Tengelmann Ventures Orange Digital Ventures Lilly Asia Ventures American Express Ventures Nokia Growth Partners Hewlett-Packard Ventures Legend Capital WuXi Venture Fund AbbVie Biotech Ventures Bertelsmann Digital Media Investments SingTel Innov8 Saison Ventures 301 INC Caixa Capital Wipro Ventures Capital One Growth Ventures Google Capital Santander InnoVentures Hearst Ventures SMBC Venture Capital American Family Ventures WME Ventures Boehringer Ingelheim Venture Fund Time Warner Investments
Robert Bosch Venture Capital Corigin Ventures Merck Global Health Innovation Fund BlueCross BlueShield Venture Partners Nissay Capital YJ Capital Bertelsmann India Investments Unilever Ventures SAIC Capital Chevron Technology Ventures Morgan Stanley Expansion Capital Autodesk Forge Fund Recruit Strategic Partners DG Incubation Total Energy Ventures International Gibraltar Ventures WPP Digital Globalive Capital Motorola Solutions Venture Capital Aviva Ventures Reaktor Ventures IBM Watson Group Renren Lianhe Holdings Innovacom CAA Ventures
Kaiser Permanente Ventures UMC Capital Leta Capital Aster Capital Baxalta Ventures XL Innovate Monsanto Growth Ventures Ascension Ventures Astellas Venture Management Broadway Video Ventures Yamaha Motor Ventures Health Insight Capital LDV Capital Simon Venture Group DvH Ventures Twitter Ventures Liberty Global Ventures Xiaomi Ventures MassMutual Ventures Amgen Ventures Maxim Ventures Shea Ventures McKesson Ventures SPH Media Fund MediaTek Ventures
Where is all this data from? The CB Insights platform has the details on all the 2016 corporate venture deals included in this report.
Click here to sign up for free
Some of our happy customers
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64
