Financing Trends Q2 2014 ( US ) Corpotate Venture Capital Activity Report

1. Financing Trends – Q2 2014 (United States)

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Q2 continued the trend of massive funding activity with corporate venture participation. Compared to the same quarter last year, CVC funding in Q2 2014 more than doubled as CVC balance sheets are helping in late stage mega-financings.
California took 66% of all CVC funding dollars invested across the country on the back of mega-financings to Bay Area-based companies from corporate investors. Both Mass and NY bounced back after funding share fell drastically in Q1’14. After a multi-year high in Q1 for CVC activity, corporate VC participation reached new highs as 92 corporate VCs completed an investment in Q2, a 39% rise from the same quarter last year and a 51% jump from the same quarter two years ago – Q2 2012.
Corporate venture activity accounted for 29% of the $13.9B total venture capital funding in Q2. CVC’s participated in 19% of all VC deals, a five-quarter high. Google Ventures led all corporate VCs, investing in over twice as many U.S. venture deals as the second most-active corporate VC, Intel Capital, in Q2 2014. Behind multiple $50M+ deals, average deal size with corporate venture participation reached $23M, falling off Q1’s five-quarter high of $24.2M but marking the second straight quarter with a $20M+ average.
Healthcare CVC funding jumped to a five-quarter high, increasing over 200% on a sequential basis. CVC deals in the healthcare sector also peaked at 40 deals, up 74% from Q1’14. Internet CVC deal activity rebounded from a slow Q1, rising to 76 deals, a growth of 62%.
Corporations making strategic investments in companies but not as part of a specific separately demarcated venture group are not included. Page 47 details the rules and definitions we use.

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5. Corporate VCs continued to invest in the broader VC market in Q2 as CVC funding hit a nine- quarter high and jumped nearly 34% on a sequential basis, while deals increased 45%. Compared to the same quarter last year, CVC funding more than doubled.
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6. June saw corporate VCs participate in the highest monthly funding total invested in the last two years driven by Google Ventures’ participation in Uber’s $1.2B mega-deal. April saw the highest number of monthly CVC deals since 2013 with over 70 in total.
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7. Massachusetts CVC deal share reclaimed the #2 spot from New York after a 9% deal share in Q1’14. California has taken 50%+ of all U.S. corporate venture capital deals in three of the past five quarters.
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8. California took 66% of all CVC funding dollars invested across the country on the back of mega-financings to Bay Area-based companies from corporate investors. Massachusetts saw modest growth after funding share fell drastically in Q1’14.
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9. Early-stage activity (Seed/Series A) regained share in Q2 as deal share grew back to 43% cumulatively. Late-stage (Series D/Series E+) deal share hit a five-quarter low at 20% after a high of 26% in Q1’14.
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10. 10 Uber’s $1.2B Series D largely contributed to the dominance of late-stage funding share, with Series D investments accounting for 43% of funding share in Q2’14.

11. Corporate venture capital deal activity share to the internet sector reached a five-quarter high at 41%, while mobile fell to a five-quarter low at 14%. Healthcare CVC deal share rose for the third straight quarter to take over 1/5th of all CVC deals in Q2’14.
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While CVC deal share to the mobile sector may have fallen, funding share saw a significant jump to hit a five-quarter high at 35%.

13. 13 Behind multiple $50M+ deals, average deal size with corporate venture participation reached $23M, falling slightly from Q1’s five-quarter high of $24.2M, but marking the second straight quarter with a $20M+ average deal size.

14. 14 Corporate venture activity accounted for 29% of the $13.9B total venture capital funding in Q2. CVC’s participated in 19% of all VC deals, a five-quarter high.

15. 15 Corporate VC participation hit a multi-year high as 92 corporate VCs completed an investment in Q2, a 39% rise from the same quarter last year and a 51% jump from the same quarter two years ago.

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Google Ventures led all corporate VCs, investing in over twice as many deals as second place Intel Capital in Q2’14.
RankInvestorSector of Highest Investment Volume1Google VenturesInternet2Intel CapitalInternet3Qualcomm VenturesMobile & Telecommunications; Internet3SR OneHealthcare3SalesforceInternet6Bloomberg BetaInternet6Samsung VenturesElectronics6Novartis Venture FundsHealthcare9Siemens Venture CapitalEnergy & Utilities9CAA VenturesInternet9Comcast VenturesInternet9Johnson & Johnson Dev CorpHealthcare13GE VenturesInternet13Cisco InvestmentsInternet

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18. CVC funding to internet companies in Q2 fell 33% on a sequential basis, but internet CVC deal activity made a notable jump from Q1’14 levels, rising from 47 deals to 76 deals.
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19. San Francisco topped the list of U.S. cities for Internet corporate venture capital deals. Google and Salesforce each participated in two of the top five Internet CVC deals in Q2’14.
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Note: Venture capital deals included in the ranking may be tranched fundings.
CompanyRoundAmount ($M)Top CitiesDealsDollars ($M) Flatiron HealthSeries B$130San Francisco19$349InsideSales.comSeries C$100New York11$283AnaplanSeries D$100Mountain View3$8MapR TechnologiesSeries D$80Sunnyvale3$16WishSeries B$50Atlanta2$4Top Internet Deals: Q2 2014Top Cities for Internet: Q2 2014

20. Despite a second straight quarter of decline, California still accounted for over 50% of corporate VC Internet deals. Interestingly, non-major markets including Utah accounted for 28% of Internet CVC share.
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21. California saw over $550M invested in the Internet sector in Q2 by corporate VCs, as its share of Internet funding fell from a high of 86% in Q1. New York jumped from 5% in Q1 to 26% in Q2 behind Flatiron Health’s $130M Series B led by Google Ventures.
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22. Mid-stage financings (Series B/C) hit a five-quarter high as Series C deals grew from 11% to 15% on a sequential basis. A number of early-stage Internet companies (Seed – Series A) pushed the share of deals from 40% in Q1’14 to 50% in Q2.
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23. Corporate VC funding share to the Internet sector largely went to Series B/Series C rounds, which accounted for 62% of all Internet funding dollars in Q2’14. Overall funding share across stages returned to 2013 ranges after Cloudera’s $900M Series F skewed Q1’14 figures.
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25. Uber’s $1.2B round of financing buoyed mobile as funding peaked to a five-quarter high of nearly $1.4B. Despite increased deals, removing Uber’s round would mark a five-quarter low in the mobile sector.
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26. San Francisco leads the list of U.S. cities for Mobile & Telecom corporate venture capital deals. Top mobile CVC deals spread across marketing from mobile app development, gaming and deep-linking.
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Note: Venture capital deals included in the ranking may be tranched fundings.
CompanyRoundAmount ($M)Top CitiesDealsDollars ($M) UberSeries D$1,200San Francisco10$1,268KonySeries E$50Austin2$7CrittercismSeries C$30Orlando1$50OrbotixSeries E$16Boulder1$16URXSeries A$12Concord1$10GlympseSeries C$12Top Cities for Mobile: Q2 2014Top Mobile Deals: Q2 2014

27. California’s share of corporate venture deals to the mobile sector fell drastically off its Q1 five- quarter high to 52% in Q2. NY mobile CVC deal share dropped to a low as well at just 4%.
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28. California’s share of mobile CVC dollars rose from 82% in Q1’14 to a whopping 91% in Q2’14. However, excluding Uber’s $1.2B financing, California’s share drops to a three-quarter low of 60%.
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29. 42% of Mobile CVC deals came at the Seed stage in Q2’14, a five-quarter high. After taking 28% of all Mobile CVC deals in Q1’14, Mobile Series B deal share fell to just 8%. Cumulatively, late-stage (Series D+) hit a five-quarter high in deal share at 19%.
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30. As in Q1’14, mega-deals at the Series D stage changed the complexion of the CVC funding distribution quite drastically. In Q2’14, Series D jumped to a whopping 86% of aggregate CVC mobile funding.
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32. Healthcare CVC funding jumped to a five-quarter high, increasing over 200% on a sequential basis. CVC deals in the healthcare sector also peaked at 40 deals, up 74% from Q1’14.
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33. Aduro Biotech and Coherus BioSciences’ $55M Series C financings were the largest healthcare CVC financings of the quarter, while Cambridge led all cities in deals in Q2.
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Note: Venture capital deals included in the ranking may be tranched fundings.
CompanyRoundAmount ($M)Top CitiesDealsDollars ($M) Aduro BioTechSeries C$55Cambridge8$115Coherus BioSciencesSeries C$55South San Francisco4$118Principia BioPharmaSeries B$50San Diego2$70OtonomySeries D$49Ann Arbor2$24PanopticaSeries B$45Top Cities for Healthcare: Q2 2014Top Healthcare Deals: Q2 2014

34. After Massachusetts took just 9% of all healthcare CVC deals in Q1 2014, the Bay State bounced back with 25% deal share in Q2’14. California held its lead with a 45% deal share.
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35. California took 50% of all CVC healthcare funding in Q2’14, down from a 78% share in Q1’14 which was driven by a steep drop off for MA-based healthcare funding. Massachusetts rebounded in Q2’14, garnering 18% of healthcare CVC dollars
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36. Series D healthcare CVC deal share increased from 5% to a five-quarter high of 21% in Q2’14 while early-stage and mid-stage deal share remained largely range-bound versus Q1’14.
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37. Despite a five-quarter high for Series D funding share, late-stage (Series D+) share fell to a five-quarter low of 31%. Mid-stage funding share (Series B/Series C) expanded to 45%, as Series A funding share fell for the second straight quarter.
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39. California corporate VC deals jumped 31% on a sequential basis and 59% from the same quarter a year ago. CVC funding participation in California-based companies topped $2B for the second straight quarter.
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40. The Greater Bay Area dominated the top 5 California cities in terms of CVC deals and dollars. While tech took the top 3 California CVC deals, green tech and healthcare took the next.
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Notes: - Venture capital deals included in the ranking may be tranched fundings. - MapR Technologies raised an additional $30M in debt financing alongside their $80M equity financing.
CompanyRoundAmount ($M)Top CitiesDealsDollars ($M) UberSeries D$1,200San Francisco33$1,697AnaplanSeries D$100Sunnyvale10$82MapR TechnologiesSeries D$80Santa Clara5$87SungevityGrowth Equity$70Menlo Park5$26Aduro BioTechSeries C$55South San Francisco4$118Coherus BioSciencesSeries C$55Mountain View4$12Top Cities in California: Q2 2014Top Deals in California: Q2 2014

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42. After hitting a quarterly funding low in Q1’14, Massachusetts saw CVC funding participation increase 126% on a sequential basis, while deal activity reached a five-quarter high on 83% deal growth.
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43. Cambridge led all cities for deals, while healthcare dominated the top Mass. CVC deals including GE Ventures-backed Chrono Therapeutics’ $32M Series A and Fidelity-backed Dimension Therapeutics’ $30M Series B.
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Note: Venture capital deals included in the ranking may be tranched fundings.
CompanyRoundAmount ($M)Top CitiesDealsDollars ($M) Chrono TherapeuticsSeries A$32Cambridge11$137Dimension TherapeuticsSeries B$30Waltham3$37Navitor PharmaceuticalsSeries A$24Boston1$11Daktari DiagnosticsSeries C$20TamrSeries A$16Top Deals in Massachusetts: Q2 2014Top Cities in Massachusetts: Q2 2014

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45. Corporate venture funding in NY grew 58% on a sequential basis behind Flatiron Health’s $130M financing, while deal levels increased modestly by 1 deal.
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46. Google Ventures’ participation in Flatiron Health’s $130M Series B marked the largest NY based CVC financing round in Q2’14, while Intel Capital-backed Sprinklr and Citi Ventures- backed Betterment rounded out the top 3.
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Note: Venture capital deals included in the ranking may be tranched fundings.
CompanyRoundAmount ($M) Flatiron HealthSeries B$130SprinklrSeries D$40BettermentSeries C$32LearnVestSeries C$27IoxusSeries C$21Chase PharmaceuticalsSeries B$21Top Deals in New York: Q2 2014

47. 47 Measuring corporate venture activity is important. We encourage you to review the methodology and definitions employed by us to better understand the numbers presented in this report. If you have any questions about our definitions or methodological principles, please reach out to us directly.
What is included? Equity financings into emerging companies. Funding must come from corporate venture groups. Fundings of only private companies. Public companies of any kind on any exchange (including Pink Sheets) are excluded from our numbers even if they received investment by a venture firm(s) Companies must be headquartered in the USA. Our geographic data is based on the city and state where the company receiving investment is headquartered. If a company has a satellite office/presence in multiple cities or was founded in a particular city but has moved its HQ, our results reflect only this HQ address. Only include the investment made in the quarter for tranched investments. If a company does a second closing of its Series B round for $5M and previously had closed $2M in a prior quarter, only the $5M is reflected in our results. Round #s reflect what has closed – not what is intended. If a company indicates the closing of $5M out of a desired raise of $15M, our numbers reflect only the amount which has closed. Only verifiable fundings are included. Fundings are verified via (1) various federal & state regulatory filings (2) direct confirmation with firm or investor, or (3) press release. Funding close date matters. Fundings are provided based on funding close date and not on announcement date.
What is not? Strategic corporate investments. Corporations making strategic investments in companies but not as part of a specific organized venture group are not included. Angel investment. These are not included in numbers unless an investment round included Angels investing alongside a corporate venture group. No contingent funding. If a company receives a commitment for $20M subject to hitting certain milestones but first gets $8M, only the $8M is included in our data. No business development/R&D arrangements whether transferable into equity now, later or never. If a company signs a $300M R&D partnership with a larger corporation, this is not equity financing nor is it from a venture capital firm. As a result, it is not included. Buyouts, Consolidations and Recapitalizations. All three of these of transaction types are commonly employed by private equity firms and are tracked by CB Insights. However, they are excluded for the purposes of this report. Private equity investments into companies which may have received venture capital investment prior are also not included. Private placements. These investments also known as PIPEs (Private Investment in Public Equities) even if made by a corporate venture group(s) are not included. Debt/loans of any kind. Venture debt or any kind of debt/loan issued to emerging, startup companies even if included as an additional part of an equity financing is not included. If a company receives $3M with $2M from venture investors and $1M in debt, only the $2M is included in these statistics. Government funding. Grants, loans, equity financings by the federal government, state agencies or public-private partnerships to emerging, startup companies are not included. Strictly corporate venture outfits. Incubator investments. Investments of money as equity or debt and/or services by incubators are not included.

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