Q4 2020

Events

GCVI Summit 2021
29th September 2021
GCV Symposium 2021
3rd November 2021
GCV Asia 2021
9th November 2021

It is no overstatement to say that 2020 was a tumultuous year that will be remembered for a long time in the post-pandemic future. Part of this tumultuousness was the enormous economic shock caused by the covid-19 pandemic and stay-at-home orders across the globe.

While macroeconomic indicators in the past of couple years seemed to hint at the possibility of being in a rather late stage of the business cycle and there were some fears of a looming downturn, very few would have imagined the exact turn of events we witnessed last year. The year was also marked by the impact of social movements like Black Lives Matter and an increased awareness of climate and health issues.

In 2020, GCV Analytics tracked 3,450 deals worth an estimated $128.56bn of capital raised. While the deal count registered a modest increase on a year-on-year basis (5%) versus the 3,296 transactions reported in 2019, the total value of corporate-backed VC rounds decreased modestly, by 7%, down from the estimated $138.52bn in the previous year.

Nearly four out of every 10 tracked corporate-backed transactions in 2020 took place in the US (a total of 1,314). Other notable innovation geographies were Japan (551). China (327), the UK (180) and India (170).

Over the past decade, corporations around the globe have reaped a lot of benefit from venturing activity or have seen themselves forced to use it as part of their innovation toolkit. The growth of the number of active corporate venturers tracked by GCV Analytics illustrates this. Since 2011, GCV has tracked more than 4,800 distinct corporate investors – with or without a formal unit – which have taken a minority stake in at least one deal.

The number of corporate venturers per year increased sixfold in the past decade – from 360 in 2011 up to 2,126 in 2020. GCV Analytics also found a record 744, or 35%, of all corporate investors tracked doing at least one minority stake deal in 2020 were first-timers. This was up from the 28% and 26% in 2019 and 2018, respectively.

GCV Analytics found about 43% corporate investors that participated in at least one deal during 2019 returned to do a deal last year, across all sectors. In some sectors, such as telecoms (60%), financial services (51%) and transport (50%), there was a significantly larger proportion of returning investors. This was offset by others, including industrial (35%) and business services (32%).

Emerging businesses from the traditional sectors raised the largest number of corporate-backed rounds – IT with 707 deals, health with 703, financial services with 433, business services with 423, media with 295 and industrial with 288. But over the past decade there has been greater diversity in new and emerging sub-sectors.

Looking at 2020 on a quarterly basis, the deal count remained stable in the 800s – from 829 deals in Q1 up to 888 transactions in the third and fourth quarters. In terms of total value, the total estimated capital in corporate-backed deals went up from $25.06bn in Q1 to $40.77bn in the last quarter.

The pandemic has had virtually no negative effect on the relative proportions of deal size categories – deals below $10m and between $10m and $99m remain broadly similar to levels in 2018 and 2019. Interestingly, the proportion of $100m  plus deals registered a spike in Q4 2020.

The top corporate investors for 2020 included diversified internet conglomerate Alphabet with 146 deals, telecoms company SoftBank with 96 investments, internet company Tencent (67) and enterprise software producer Salesforce (61). The top three investors involved in the largest rounds were Alphabet, financial services and investment group Fidelity and SoftBank.

GCV also tracked 321 funding initiatives that received corporate backing throughout 2020, including 193 venture funds, 68 venturing units (most of them newly launched), 39 corporate-backed accelerators, 15 other initiatives and six incubators. Most of these initiatives were set up in Asia (144), North America (77) and Europe (67). The countries that hosted the largest number of initiatives were the US (72), Japan (64), China (35), Singapore (16) and the UK (15).

The top funding initiatives we reported last year ranged in scope of their targeted sectors from IT and health through consumer and media. However, one notable trend last year was the rise of climate change funds – shown by both Amazon and Microsoft’s climate-oriented funds, as well as the emergence of impact-oriented funds, though of smaller size, focusing on diversity, propelled by the prominence of the Black Lives Matter movement and a pressing need for further social inclusion.

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