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DFS Venue Venture Capital Update for November 2016
- 1. 1 PITCHBOOK & DONNELLEY FINANCIAL SOLUTIONS NOVEMBER 2016 UPDATE Venue Venture Capital Update CORPORATE VENTURE A GROWING TREND IN VC Concurrent with the growth seen in the overall VC market during recent years, corporate venture activ- ity has also expanded noticeably as corporations look to utilize minority investments in startups as a pivotal learning and growth strategy. The number of active CVCs has increased from just 367 in 2006 to approximately 700 during 2015. Through October, corporate venture groups have partic- ipated in 886 venture rounds in 2016 that have totaled over $27.5 billion in VC invested, a figure on pace to break the record level of capital invested in 2015. Further, it’s important to note that the corporate venture model has gained increased popularity from many companies outside of giant tech firms. While stallworth’s such as Intel capital, which has deployed roughly $12 billion over its entire CVC history, have grown to serve companies as both a financial partner and a strategic advisor, companies such as 7-Eleven and Sesame Street have launched VC funds employing a more traditional approach, with the former looking to gain exposure to new products and business models that enable its own strategic initiatives, and the latter look- ing to back companies sharing a similar mission. While startups have been able to raise seed rounds at a faster clip than what we’ve experienced historically, there are also many examples of companies running into issues raising subsequent funding rounds due to challenges hit- ting certain performance and growth metrics. CVCs can provide resources such as distribution channels, manu- facturing and cost synergies, as well as strategic expertise to help companies mitigate potential roadblocks to future Intel Capital 571 41 GV 478 49 SoftBank Capital 201 11 Comcast Ventures 195 35 Qualcomm Ventures 179 12 Salesforce Ventures 160 21 GE Ventures 134 28 Novartis Venture Fund 132 8 Investor Completed deals since 2006 Completed deals in 2016* $6.37 $7.69 $12.01 $11.10 $13.51 $23.05 $32.65 $27.52 465 550 699 799 1,035 1,229 1,267 886 0 200 400 600 800 1,000 1,200 1,400 $0.00M $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 2009 2010 2011 2012 2013 2014 2015 2016 Deal Value ($B) Deal Count$6.37 $7.69 $12.01 $11.10 $13.51 $23.05 $32.65 $27.52 465 550 699 799 1,035 1,229 1,267 886 0 200 400 600 800 1,000 1,200 1,400 $0.00M $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 2009 2010 2011 2012 2013 2014 2015 2016* Deal Value ($B) Deal Count Corporate VC in US deal activty by year Most active CVCs since 2006 Source: PitchBook *As of 10/31/2016 Source: PitchBook *As of 10/31/2016
- 2. 2 PITCHBOOK & DONNELLEY FINANCIAL SOLUTIONS NOVEMBER 2016 UPDATE Donnelley Financial Solutions (NYSE: DFIN) provides software and services that enable clients to communicate with confidence in a complex regulatory environment. With 3,500 employees in 61 locations across 18 countries, we provide thousands of clients globally with innovative tools for content creation, management and distribution, as well as data analytics and multi-lingual localization services. Leveraging advanced technology, deep-domain expertise and 24/7 support, we deliver cost-effective solutions to meet the evolving needs of our clients. For more information about Donnelley Financial Solutions, visit dfsco.com. Our Venue® secure online workspace provides a powerful set of features and an intuitive design that allows you to easily organize, manage, share and track all of your sensitive information. Venue® data rooms provide complete control, allowing you to manage who has access to your data room, which documents they see, and how they can interact with those documents. Venue® gives you access to hands-on, start-to-finish service that’s unique in the industry and that earns us a satisfaction rating of more than 97% from our demanding users. Get full Venue® room service or manage your room yourself, with our experienced in-house team ready 24/7/365. As part of Donnelley Financial Solutions, the global leader in managing time- sensitive, highly confidential documents, Venue provides the control you need with the security you demand. Donnelley Financial Solutions is the sponsor of the Venue Venture Capital Update. All information contained in this publication is for informational purposes only and should not be construed as legal, accounting, tax, or other professional advice of any kind, on any subject matter. Donnelley Financial Solutions expressly disclaims all liability in respect to actions taken or not taken based on any or all the content herein. funding. This strategic difference in how many CVCs are structured can serve as a significant incentive for many startups looking to raise private capital. In addition, since corporate VC is typically deployed alongside tradi- tional VC in investment rounds, the presence of a strategic-type investor can give startups credibility and help ease some of the concerns a traditional VC may have before putting capital to work. Historically tending to source deals in the later stages, CVCs have begun cap- turing emerging technologies earlier by offering financing at all stages in the development cycle. Corporations such as Google and Microsoft have even added incubator and accelerator arms in an effort to establish a relationship with startups early on, allowing them to offer ample advice to help compa- nies grow within their respective eco- system, while also helping these CVCs penetrate early-stage deal networks. That said, corporate venture groups aren’t immune from the spikes we’ve seen in funding rounds across all stag- es. The median deal size for venture rounds with CVC participation current- ly sits at $12 million, the highest figure we’ve seen over the last decade. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2009 2010 2011 2012 2013 2014 2015 2016* Materials & Resources Information Technology Healthcare Financial Services Energy B2C B2B Yearly CVC activity by sector SELECT VC DEALS (OCTOBER 2016) Company Series Deal Date Size ($M) Select Investor(s) HQ Payoneer E 10/3 $180 TCV, Wellington Man- agement New York Postmates E 10/31 $141 Founders Fund San Francisco Ofo C 10/13 $130 Didi Chuxing, Coatue Mangement Beijing, China Zymergen B 10/17 $130 SoftBank Group, True Ventures, DFJ Emeryville, CA Unity Biotechnology B 10/27 $116 ARCH Venture Partners, Mayo Clinic Ventures San Francisco Source: PitchBook Source: PitchBook *As of 10/31/2016