By, Neil Foster, ESQ. - Partner at Baker Botts & Tim Davison, ESQ. - Special Counsel at Baker Botts
2016 marked the second successive year where venture capital deal value topped $100 billion. In aggregate, $134 billion in deal value was spread across 9,717 transactions in 2016. Corporate venturing represented two-thirds of the total deal value.
Although deal activity decreased in the U.S. by 12% compared to 2015, more than half of all global deals recorded in 2016 occurred on U.S. soil. Other principal geographies included China, India, and the U.K.
Despite China lagging behind the U.S. in terms of deal volume, the top three investors by aggregate deal value in corporate venturing were all based in China, led by Alibaba with $16.2 billion.
Of the ten largest investments of 2016, each exceeding $1 billion, seven were made in China with the other three occurring in the U.S.
The most active CVCs in 2016 by deal volume continued to be Intel and Google Capital, each participating in over 50 deals. They were followed by Salesforce Ventures and Comcast Ventures who each participated in over 40 deals.
A record 89 new CVC funds made their first investment in 2015 but this increased yet further with 107 making their first investment in 2016.
While the large transactions grabbed the headlines, average CVC deal size was down 10% compared to 2015.
For 2016, the most notable sectors in terms of number of deals included IT (546 deals), Health (319 deals), and Consumer (218 deals).
The largest corporate venturing deal of 2016 was the consortium investment made in the ride-hailing service in China, Didi Chuxing, raising $7.3 billion in debt and equity. Of the $4.5 billion raised, $1 billion came from Apple and $600 million from insurer China Life.
In 2016, Saudi Arabia’s sovereign Public Investment Fund announced a $3.5 billion investment in Uber, representing the Public Investment Fund’s largest single investment ever made in a private company. The Public Investment Fund received a 5% stake in Uber in exchange for its investment.
There were 211 exits in 2016 that involved corporate venture capital investors and companies in which such investors had invested, the highest level seen since 2011 and a slight increase in the amount of capital deployed in 2015. The U.S. dominated the number of exits with a total of 137.