Corporate Venture Capital Report – Q2 2014 – CVCs Participated in $4B of Funding Across 187 Deals

Corporate venture capital boomed once again last quarter led by top investors Google Ventures & Intel Capital, and large rounds of financing for the likes of Flatiron Health and Anaplan among others. In Q2’14, CVC investors participated in $4.02B of financings across 187 deals. On a sequential basis, this represented 34% growth in financings and 45% growth in financing transactions. Compared to the same quarter last year, CVC funding more than doubled the $1.73B of funding in Q2’13.

Highlights from this quarter include:

• CVCs fund $4.02 billion across 187 deals
• California takes 2/3 of corporate VC share
• CVCs are involved in 29% of total VC funding
• Number of corporate VC participation continues growth to multi-year high
• Corporate venture funding to healthcare rebounds to five-quarter high
• Internet CVC deals skyrocket in Q2
• Google Ventures and Intel Capital are most active CVCs
• Corporate VC deal sizes top $20 million for second straight quarter

California took 50%+ of all US corporate venture capital deals for the second straight quarter. Massachusetts rebounded with a 12% deal share on over 20 deals in the quarter, while New York fell to just 9%. Texas led all other states with 7 deals in the quarter with Skyonic and SCIenergy, two green tech companies, leading The Lone Star State in funding.

Early-stage activity (Seed/Series A) surged in Q2 with 43% of total deals. Conversely, late-stage (Series D/Series E+) deal share hit a five-quarter low at just 20% after a high of 26% in Q1’14.

Uber’s $1.2B Series D largely contributed to the dominance of late-stage funding share in Q2 which as otherwise might be expected took a majority of funding accounting for 54% of total CVC funding in the quarter . Series B and C funding share increased in part to Flatiron Health ($130M Series B) which saw investment from Google Ventures and Insidesales.com. Salesforce, who formally announced the launch of their corporate VC arm recently, participated in the Insidesales.com $100 million Series C.

Corporate venture capital deal share to the internet sector reached a five-quarter high at 41% with over 70 deals in Q2. Mobile fell to a five-quarter low at 14% deal share, while healthcare rose for the third straight quarter to take over 1/5th of all CVC deals in Q2’14.

While CVC deal share to the mobile sector may have fallen, funding share saw a significant jump (largely skewed by Uber) to hit a five-quarter high at 35%. Healthcare bounced back in Q2 to take 22% of funding versus 10% in Q1.

Corporate venture capital activity accounted for 29% of the $13.9B total VC funding in Q2. CVC’s participated in 19% of all VC deals, a five-quarter high.  The upward trend in both funding and deals underscores the rising prominence of corporate VC investors in the funding landscape.

The number of corporate VCs participating in deals hit a multi-year high with 92 unique corporate venture arms participating in a deal in Q2’14. This was a 39% jump from the same quarter last year, and a 51% jump from the same quarter two years ago.

Google Ventures led all corporate VCs in Q2, investing in over twice as many deals as second place Intel Capital. Beyond their investments in Uber and Flatiron Health, a few other notable Google Ventures investments in the quarter include Puppet Labs, One Medical Group and drone company, Skycatch.

CVC funding to internet companies in Q2 fell 33% on a sequential basis to $1.1B, but deal activity made a notable jump from Q1’14 levels, rising from 47 deals to 76 deals.

Uber’s $1.2B round of financing buoyed the mobile sector, as funding peaked to a five-quarter high of nearly $1.4B. If Uber’s round was removed, corporate VC activity in the mobile sector would have been at a five quarter low on a funding basis.

Healthcare CVC funding jumped over 200% versus Q1 to a five-quarter high behind multiple $50M+ deals including Aduro Biotech and Coherus BioSciences’ Series C financings. CVC deals in the healthcare sector also peaked at 40 deals, up 74% from the previous quarter.

California CVC deal activity reached a five-quarter high, jumping 31% on a sequential basis and 59% from the same quarter a year ago to 94 deals in Q2 2014. On the funding front, CVC funding participation in California-based companies topped $2B for the second straight quarter.

After hitting a quarterly funding low in Q1’14, Massachusetts saw CVC funding participation increase 126% on a sequential basis. Deal activity reached a five-quarter high of 22 deals which represented 83% deal growth versus Q1.

Corporate venture funding in New York grew 58% on a sequential basis to $323M, behind Flatiron Health’s $130M financing, as well as multiple $20M+ deals including rounds for Sprinklr, Betterment, and Learnvest. Deal levels remained within the historical range.

All of the data above is from CB Insights corporate venture capital database. Login or create an account below.