Transcript of "DealMarket DIGEST Issue 118 // 21 November 2013"
Venture Capital Evolution: Intel Capital
Asian-Pacific Family Office Trends: Private
Equity and Real Estate Rising
Billion Dollar Bid for Dutch Software
How Much is Really Going Into Secondaries?
Two Dozen Billion Dollar Startups You’ve
Never Heard Of
KPMG Enters Venture Capital World to Tap
Big Data Trend
Quote of the Week: Beating The Odds
November 21, 2013
VENTURE CAPITAL EVOLUTION: INTEL
CAPITAL GOES PUBLIC
It used to be that corporate venture investors did not even disclose private company investments, except in special cases. Now they regularly announce such deals. Intel’s corporate venturing unit is going
further, standing out above other corporate VCs, not only in terms of dealmaking but also in what it
does to help portfolio companies meet customers, network, and get some media attention. A case in
point is the Intel Capital’s annual conference for portfolio companies, which once was a very exclusive
clubby event but is now a very public affair. Its most recent gathering was professionally produced. It
had 1,000 participants including CEOs, entrepreneurs, venture capitalists, industry executives, customers, partners, press and Intel Capital’s portfolio company leaders (See a video of the kickoff fireside chat) . As a result of that kind of effort, one journalist said that Intel is now in a category with Andreesen, Horowitz, one of the new generation of game-changing VC firms in Silicon Valley. Andreesen
Horowitz, for example, employs a staff of 66 to provide assistance in design, marketing, human resources, and promotion through its blog magazine.
We can assume Intel Capital has the budget for this kind of thing because it has been generating
returns. It leads corporate VCs with the most M&A and IPO exits in 2013, and did well last year too, according to CB Insights. Recent notable exits of Intel’s corporate venture arm include YuMe, which went
public in August and energy management startup JouleX, acquired by Cisco for USD 107 mn. It is also
an investor in many upcoming tech IPOs, according to CB Insights. The developments at Intel Capital
and its more public profile is another sign that venture capital is changing, evolving into something
less intransparent. We have written about this trend here.
ASIAN-PACIFIC FAMILY OFFICE TRENDS:
PRIVATE EQUITY & REAL ESTATE RISING
Asia-Pacific’s wealthiest investors are allocating more money into direct investments and away from
capital markets, says a new report from survey entitled Growing Towards Maturity: Family Offices in
Asia-Pacific Come of Age. Those surveyed (25 family offices completed an extensive questionnaire) are
attracted to private company and real estate investments, rather than equity and bond markets. The
APAC region is similar to European trends where direct investing has also been rising in the last few
years, according to the analysts.
• Real estate accounts for 16% of allocations this year, compared with just under 9% in 2012 .
• Allocations to venture capital and direct private equity grew to 15%, compared with 4% in 2012.
• Equity market allocations down by 7% to 14% of total assets.
• Hedge fund investing down by 50%.
• Cash holdings among family offices were still strong in all countries, but particularly in Hong Kong.
• The analysts said that it is not surprising that APAC family offices are attracted to private equity
because many of the wealthiest own family businesses.
• Asia’s wealthy families are more optimistic about investment prospects than a year ago.
• Hong Kong and Singapore are prominent wealth centers in Asia-Pacific, and are where the majority of family offices are being set up – more than 75% of those established in the last 10 years in the
region have been launched in the two cities.
In a separate report reflecting an increase in wealth in APAC, UBS said that the number of billionaires
is increasing fastest in APAC, faster than any region worldwide. It increased by 13 percent, year on
year. Asia has also had 18 more billionaires, the largest number of additional names this year. (See
graphic from the Wealth Census from UBS for a trend line.)
BILLION DOLLAR BID FOR DUTCH
This week’s private equity deal of the week is one reported by Reuters, which involves a USD 1.6 billion
bid for Dutch software firm by the internationally active buyout house, Advent . The plan is to take private UNIT4, which is traded on the Amsterdam stock exchange. The plan is to invest for expansion of
UNIT4, which is a profitable cloud computing company that competes with Oracle, and employs more
than 4,000 people.
HOW MUCH IS REALLY GOING INTO
Private equity firm Ardian said on Wednesday it had spent USD 4.3 billion on acquiring stakes in buyout
funds since September last year, according to Reuters. This large figure for just one fund manager in
the market makes it clear that there is still some dealmaking underway. It also shows that there is not
a lot of certainty in the trend figures announced by Setter Capital and Cogent Partners who track dealmaking in the secondary market. Is dealmaking declining or growing? It is not clear. On the one hand,
industry insiders are saying things like, “Assets seem pretty sticky in owners’ hands todays sellers”,
implying that sellers have the attitude of holding because they believe they can get a higher price and
higher NAV in the future, according to a new PEI Secondaries Whitepaper. On the other hand, some of
the world’s most experienced secondary investors are raising massive new funds in anticipation of a
healthy dealflow, according to PI Online. There is also the fact that there are growing number of secondary deal platforms, more than four at our last count, which suggests there is quite a bit of activity
KPMG ENTERS VENTURE CAPITAL WORLD
TO TAP BIG DATA TREND
Hoping to be able to capture the next big
technology-driven disruption in banking and
finance, some banks, credit card companies,
and even consulting companies are allocating
100s of millions to venture capital direct investing. This kind of corporate venturing used
to be the territory of high tech companies and
life science companies, but now even consultancies like KPMG is getting into the venture
game. KPMG Capital launched last week with
the aims to “accelerate innovation in data and
analytics (D&A) that will help clients of member firms unlock tangible value from their data”. KPMG is betting big on big data, some USD 100 million will be invested. It is not based on the idea that the digital realm is redefining how banking will be
done, according to Global Corporate Venturing magazine in a reports that looks at other recent entrants, such as Citi Ventures and American Express Ventures.
QUOTE OF THE WEEK - BEATING THE ODDS
“It’s really hard, and highly unlikely, to build or invest in a
billion dollar company. The tech news may make it seem
like there’s a winner being born every minute — but the
reality is, the odds are somewhere between catching a foul
ball at an MLB game and being struck by lightning in one’s
lifetime. Or more than 100x harder than getting into Stanford. ”
Who said it: Aileen Lee, founder CowboyVC
Context: Lee’s venture firm has done some research
on the characteristics of billion dollar exits for venturebacked companies. She says the chances of a consumer
oriented Internet venture achieving a billion dollar valuation was 0.07 percent. She came up with a profile of the
typical entrepreneurial team, mid 30s, track record of
working together, and based in San Francisco, but she
warns strongly that it is not that simple, to simply tick the boxes, and that is where the above quote
Where we found it: CowboyVC blog
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Editor: Valerie Thompson, Zurich
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