News > Venture Capital

VCs tech investments trump exits for the first time in years
<p>&nbsp;</p> <p>Investors are now pumping more money into US startups than they are getting back in the form of exits.</p> <p>According to a report by CBInsights, total funding for this year has reached $42 billion, about $16 billion more than the $26 billion generated through exits.</p> <p>What's more, the VC investment total for the year to date has already surpassed that of 2014, and is more than double that of the 2010.  Exits meanwhile are less than a fifth of what they were in 2012.</p> <p>Fluctuations in exits and investments are to be expected over a long period. VC investments typically have a 5-year lifespan, while the fund life-cycle is anywhere between 8-10 years.</p> <p>Many of the VC funds making exits and returning capital to investors during 2012 have since returned to the market with follow-on funds. This means a lot of those VCs exiting investments in 2012 have raised and are spending the next three to four years deploying capital.</p> <p>That said, there are other trends to consider. Companies are staying private longer and funding rounds are getting larger, pushing up private market valuations. The upshot is that the funding aggregate is exceeding exit valuations faster -- even if we witness a number of large liquidity events in the fourth quarter.<br /> Photo: Indigo Skies</p>
Startup heavy-hitters in Indonesia launch $150 million fund for early stage companies
<p>Three top startup investors are putting together a new band with support from the Indonesian family conglomerate Lippo Group.</p> <p>The new firm, Venturra Capital, will target Series A and B deals in Southeast Asia raising between $2 million and $5 million -- but will also consider seed candidates.  This will be an interesting group to follow -- the founders have impressive credentials: Stefan Jung is co-founder of German incubator Rocket Internet; Johny Riady, was a director at Lippo Group, and Rudy Ramawy was in charge of Indonesia for Google.</p> <p>Tech in Asia reports the fund has already raised $15o million, mostly from  Lippo. The fund is successor to Lippo Digital Venture (LDV) - Lippo's corporate VC arm where Ramawy was managing partner.</p> <p>Venturra has absorbed LDV's portfolio of investments previously made off of Lippo's balance sheet. However, Lippo's role will be restricted to limited partner.</p> <p>Between them the founders have an investment track record the covers start-ups such as GrabTaxi, Traveloka, HappyFresh, Bridestory, Munchery, and MatahariMall. The fund will focus on e-commerce, fintech, and healthcare.  Jung - who last set up Monk's Hill Ventures' Jakarta office - says the firm is open to earlier stage investments:<br /> "We are considering ourselves agnostic in terms of stage preference. We are still keeping ourselves open to early stage and seed rounds. If we’ve known the entrepreneur for a while and want to support them from day one, then we will surely consider investing.”<br /> Photo: The Diary of a Hotel Addict<br /> &nbsp;</p>
PLDT builds SoftBank-style web of influence
<p>&nbsp;</p> <p>The recent decision by PLDT (Philippines Long Distance Telephone Company) to launch its own venture capital unit is the latest in a series of moves by telecoms giant that are reminiscent of its larger Japanese counterpart SoftBank.</p> <p>Just as SoftBank has grown its internet and media empire by drawing on an expanding global web of early stage investments, PLDT is also turning to venture capital to help build its own kingdom.</p> <p>The new investment unit - PLDT Capital - will not be based in the Philippines but instead it will be based in Los Angeles. But its remit will be to try and tap innovative Silicon Valley and Southeast Asia-based startups that can contribute to its own ecosystem. Winston Damarillo, Managing Director of PLDT Capital, had this to say:<br /> “The PLDT Group serves more than 70 million mobile and internet customers in the ASEAN region,”In addition to investments, PLDT Capital aims to become the gateway for the most promising startups to expand their opportunities to the fast growing digital consumers in the ASEAN region.”  <br /> This is by no means its first foray in venture capital. The firm made headlines earlier this year when it bought a 10% stake in Rocket Internet, the German incubator and venture capital investor that is currently driving an e-commerce revolution in Southeast Asia and other emerging markets globally.</p> <p>The firm also recently swallowed up Singapore's Paywhere, the start-up  behind TackThis, an ecommerce platform that operates on a software-as-a-service (SaaS) model, through its digital innovations unit: Voyager Innovations.</p> <p>Corporations using venture capital investments to tap innovation is neither new nor unique. That said, the way PLDT (a telecoms company like SoftBank) is using VC to broaden its global influence and access new verticals - notably e-commerce - shares a few parallels with the Japanese giant.</p> <p>Of course PLDT has nowhere near the size, or the war chest, of a firm like SoftBank. Perhaps PLDT looking for that one big hit in same the way SoftBank had its home run with Chinese e-commerce Alibaba. Setting up shop in Silicon Valley certainly increases their chances of finding it.<br /> Photo: Rod </p>
Bill Gates, Li Ka-shing take a second helping of fake burger maker
<p>Impossibe Foods, the startup famous for creating a vegan cheeseburger that actually "bleeds", has whet the appetites of two of the world's wealthiest men - Microsoft co-founder Bill Gates and Hong Kong tycoon Li Ka-shing - and raised a fresh $108 million Series D round of funding.</p> <p>The round was led by UBS and also included Viking Global Ventures, the firm said. Exisiting investors Gates and Li - who got involved via  his VC firm Horizon Ventures - also re-upped for the round alongside Khosla Ventures.</p> <p>Impossible makes plant-based foods that look and taste like their meat or dairy equivalents but take fewer resources to produce. It is a part of cluster of food start-ups that have emmerged in recent years looking to disrupt unethical meat and diary alternatives.</p> <p>This isn't Li's first foray into hi-tech food. His Horizon Ventures also backed Modern Meadow, a start-up that experiments with bioengineering animal cells to make cruelty-free leather and meat products.</p> <p>The firm also backed Just Mayo maker Hampton Creek, as did Khosla Ventures.  Hampton is looking provide a range of dairy-free alternnatives to egg-based products. Samir Kaul, partner at Khosla,said:<br /> "To achieve a sustainable future, we need to further invest in companies like Impossible Foods that minimize the environmental impact of our food system through innovation without compromising taste,"<br /> Photo: stu_spivack<br /> &nbsp;</p> <p>&nbsp;</p>
The 10 big challenges for emerging market start-up ecosystems by Dave McClure
Dave McClure, co-founder of global accelerator 500 startups, recently put out a slideshow listing some of the  challenges faced by emerging market startup ecosystems. The slides accompanied a talk at  StartupIstanbul, a four-day event that took place at the beginning of the month. It is no surprise that McClure has a few things to say about emerging markets, his  firm is
Temasek pumps $62m into Singapore VCs, takes it own fund global
<p>While some investors might be shying away from venture capital right now, it looks as if Singapore state-backed investment fund, and prolific VC investor, Temasek is doubling down.</p> <p>It has just invested 90 million Singapore dollars ($62 million) in four venture capitals funds, at the same time it’s putting  $600 million into its own VC unit - Vertex Venture Holdings - in a bid to take the firm global.</p> <p>According to the Straits Times, Singapore has backed early stage investors NSI Ventures, Monk's Hill Ventures, Jungle Ventures and Golden Gate Ventures but did not disclose how much each would get. The last two, Jungle and Golden Gate, are in the process of raising $50 million and a $100 million, respectively, for their latest vehicles.</p> <p>This comes two days after it was revealed that Temasek's own VC unit, Vertex Venture, got a $600 million injection from its parent to fund its global expansion. </p> <p>The extra capital will allow Vertex to expand its focus - which has so far comprised Singapore and Southeast Asia - to include the United States, Israel and China. It will also broaden it tech and media sector focus to include healthcare investments. </p> <p>Vertex’s early investments include luxury e-commerce portal Reebonz and mobile taxi app GrabTaxi (yes, it's part that group) , it has also listed four start-ups, including mobile game developer IGG. </p> <p>However, it will be a tough call hoping  for futures IPOs in this current environment, which may explain the renewed focus on the healthcare sector which has been somewhat isolated from the recent IPO drought.<br /> Photo: Shubhika Bharathwaj</p>
A visual breakdown of VC activity in 3Q 2015
<p>Venture capital invested globally increased for a second straight quarter, from $25.6 billion in 1Q to $30.1 billion in 3Q, while deal count fell for a second straight quarter, including a major drop from 2Q to 3Q (down 24%). Exit activity also continues to decline. Quarter-over-quarter, completed exits slipped by 22% in 3Q, while capital exited dropped by 37%. Valuations, of course, are flying high; but not just at the late stage. The median Series B valuation in 3Q—$58.6 million—jumped 65% from the same quarter last year. For a breakdown of global VC activity in 3Q, check out the datagraphic below.</p> <p>&nbsp;</p> <p>This article was originally published by ValueWalk. <br /> Photo: frankieleon <br /> &nbsp;</p>
Asia challenges North America as most active continent for venture capital deals in Q3
<p>Venture capital deals in Asia comprised 38% of the global number, and 45% of global deal value in the quarter, while North America represented 44% of both global number and value</p> <p>The venture capital industry in Asia has seen strong growth over the past year, and in Q3 the aggregate value of deals was comparable to the total value of deals in North America. India and China, the largest part of the Asian industry, marked 709 financings in the quarter, worth a combined $16.9bn. There were 932 venture capital deals in North America in the same period, worth an aggregate $17.5bn. Asia’s share of global deal flow has increased by seven percentage points from Q2 to Q3 2015, and its share of deal value has increased by nine percentage points. At the same time, the North American market share of the number of deals dropped by six percentage points from Q2, while the aggregate value that the region contributed to the global total fell by nine percentage points from 53% in Q2 to 44% in Q3.</p> <p>Other key venture capital deal market facts:</p> <p> Worldwide Figures: Globally, there were 2,121 venture capital financings in Q3 2015, worth a combined $39.8bn. Although this marks a 9% drop in deal numbers from Q3 2014, the aggregate value is 88% higher than the same period last year.<br /> European Decline: Europe witnessed 297 deals in Q3, a 7% drop from last quarter. In 2015 YTD, 980 deals have been seen in the region, a 25% decrease from the 1,307 deals in the first three quarters of 2014.<br /> Chinese Growth: In Q3 2015, the aggregate value of deals in Greater China increased 88% from Q1. In that quarter, there were 252 deals worth a combined $6.9bn, while in Q3 there were 437 deals, worth $13bn.<br /> Financing Rounds: Angel and seed investments comprised 22% of venture capital deals in Q3, unchanged from Q2. Series A deals comprised 20% of the number of deals, and series B comprised 10%. Add-on deals decreased from 8% of the number of deals in Q2 to 5% in Q3.<br /> Average Deal Size: The mean value of venture capital deals has increased across all financing stages from 2014 to 2015 YTD. Average series A deal value has increased 35%, from $7.9mn in 2014 to $10.7mn for 2015 YTD. Average venture debt deal size was stable in 2013 and 2014, at $9.7mn and $9.6mn respectively, but has now increased to $40.9mn in 2015 YTD.<br /> Biggest Deals: The two largest investments in Q3 2015 were both in Chinese transport technology firm Didi Kuaidi. The company received $2bn in July, and a further $1bn in September, from a consortium of investors including Alibaba and CIC. The next largest financing was $1bn to Uber Technologies Inc., from Microsoft Corporation (NASDAQ:MSFT) and Times Internet. Nine of the ten biggest venture capital deals in Q3 were based in Asia.<br /> Dry Powder: The unspent capital available to venture capital firms currently stands at $143bn globally, up slightly from the $141bn in dry powder recorded at the end of last quarter.</p>
As the US IPO market tanks, VC M&A deals hit $5.1b
<p>The rate of VC-backed start-ups going public in the US may have dwindled rapidly in recent months but a new report by the National Venture Capital Association (NVCA) suggests M&amp;A deal flow has had its strongest quarter this year.</p> <p>There were 90 venture-backed M&amp;A deals in the third quarter, 20 of which had a total value of  $5.1 billion - a 39% jump from the previous quarter. Deal volume meanwhile saw a 42% uptick.</p> <p>The tech sector led the charge, accounting for 69 of 90 deals, with a disclosed aggregate deal value of $3.4 billion.</p> <p>Headline deals included EMC Corp's $1.2 billion purchase of Virtustream,  an enterprise cloud solution provider back by the likes of Blue Lagoon Capital, Columbia Capital, and SAP Ventures. The other big deal was the $675 million acquisition of Warburg Pincus-backed cloud supply chain platform  Gt Nexus by Infor Inc.</p> <p>Its a stark contrast to the amount of IPO activity in the space. VC-backed public offerings raised a total of $1.7 billion for period - a 55% drop from the previous quarter - thanks to global markets being sent into a tailspin by China economic turmoil.</p> <p>In total there were 13 venture-backed IPOs, 11 of which listed in NASDAQ, the rest on the NYSE. Interestingly it was the life sciences industry that accounted for the lion's share of offerings. The most recent to go public on NASDAQ was Austria-based Nabriva Therapeutics which raised $92.3 million on September 17th.</p> <p>Bobby Franklin, president and CEO of NVCA, thinks there is still cause for optimism regarding IPO exits. He noted the two-thirds of those who did IPO are trading above their offering price, indicating the of quality of VC-backed IPOs.. Franklin added: <br /> “In addition to market volatility weighing down IPOs, another recent and important trend that has impacted the venture-backed IPO market is the increased activity of both VCs and non-traditional investors making late-stage investments into private companies that might otherwise file for an IPO.  While these so-called ‘private IPOs’ are weighing down the current IPO market, it also means the venture-backed IPO pipeline is deep and we are hopeful exit activity picks up steam in future quarters.”<br /> Photo: 드림포유</p>
Are "honey badgers" the new unicorns?
<p>Unicorns - startups valued at over $1 billion - are so common now that their cachet has waned. In an age of frothy private market valuations a new, even more elite breed of startup is on the rise: the honey badger. </p> <p>Fortune's Dan Primack has coined the term to describe startups that have raised over $1 billion or more in equity funding. They are not to be confused with Decacorns - startups valued over $10 billion - but there is some overlap.</p> <p>Fintech start-up SoFi is the newest member of the honey badger sett. raising $1 billion in round led by SoftBank this week - the startup has now raised $1.42 billion plus $400 million in debt financing.</p> <p>Of all the firms to raise $1 billion or more in private funding, research firm Mattermark puts SoFi at number 26 - 21 of these companies are still privately held. The five that have since gone public are Facebook, Alibaba, Groupon, Clearwire, and Fisker Automotive.</p> <p>Unsurprisingly, Uber tops the list of private honey badgers. Other members of this exclusive group include Chinese Uber rival Didi Kuaidi, AirBnb, and India's Flipkart.</p> <p>This may be the group to watch in the coming months. Looking at the middling public performance of those who have already listed - and the prospect of VC-backed IPO drought - there is as big question mark over where these honey badgers are headed.</p> <p>They may turn just around and give their late stage investors a nasty bite.<br /> Photo: Laurens</p>