Cashback News – Mar 1: Venture Capital – Where’s VC money going in 2016?

Cashback News – Mar 1: Venture Capital – Where’s VC money going in 2016?

- in Slider, VC, Mergers, Acquisitions

VC investmentThere’s lots of conflicting opinion about another technology/dot-com bubble and today’s post highlights those differences of opinion. But if you can believe the news, there’s still lots of venture capital to go around when it comes to e-commerce, new technology, retail and mobile commerce. Check out today’s news roundup as we show you where the VC money is going early in 2016.

Alibaba is seeking up to $4 billion in capital to expand global operations, continue strategic acquisitions and make new investments. China’s Cheetah Mobile plans a series of Indian investments, encouraging some Indian e-commerce companies. Israeli billionaire Haim Saban will invest up to $100 million in Israel’s mobile, e-commerce, digital media and technology sectors. According to an Internet Retailer report, affiliate marketing has attracted more than $4 billion in investment.

E-commerce investments in China were up 78% in 2015 according to a report by IT OrangeKPMG and CB Insights 2015 Venture Capital Report noted a drop in overall VC investment in Southeast Asia, particularly in China and India. Indonesian women’s e-commerce platform MoxyBilna received $12 million in new VC investment. Blackrock plans a new Asian private equity fund although the amount is not yet announced.

Baker & McKenzie reported India, China and Japan were the biggest buyers of US companies in the first three quarters of 2015, investing more than $344.5 billion. The theme for e-commerce companies in India might very well be “Honey, I multiplied my losses” according to Suresh Kabra, Founder of mobile app Pricemap. With all that, Vinay Menon of JP Morgan India said several recent IPOs still received strong investor interest.

Alibaba Talking to Banks for $4B Loan is reportedly after a $4 billion loan from banks as it seeks backing for its expansion plans, according to unnamed sources who spoke to The Wall Street Journal. The news hints at what’s next for the Internet giant, which could include further acquisitions that Alibaba may want to get its hands into, the sources said. This follows Alibaba’s recent surge of spending — somewhere in the billions — on major expansion/acquisition plans in its home country of China — and abroad.

Sources have indicated that Alibaba was initially after a $3 billion loan, but recent updates indicate that was bumped to $4 billion. The loan could be finalized as soon as next month, one source said. Alibaba’s most recent publicized investment was its 5.6 percent stake in the Groupon — a company that today (Feb. 26) announced the sale of its billionth deal. Speculation in the financial media has centered on whether Groupon may be a strategic investment or whether Alibaba may, in fact, be looking to take the company, lock, stock and barrel, through complete ownership. Via

Indian tech startups are eyeing the Chinese to save them anxious Indian startups seeking to raise capital as their country’s tech bubble deflates, the investment plans of companies such as China’s Cheetah Mobile could hardly come at a better time. “The consensus in China seems to be that India will be the next growth engine for the entire global internet market, because of its population, economic growth and rising internet penetration,” says Alex Yao, senior vice president at the Beijing-based group, which makes utility software for Android smartphones.

To tap that opportunity, Cheetah is planning a flurry of Indian investments, a process it began last November by leading a Rs880m ($12m) round for GOQii, the wearable fitness device maker founded by Indian entrepreneur Vishal Gondal. Via

Haim Saban to invest $100m in Israeli startups billionaire Haim Saban has set up a new fund to invest $100 million in Israeli startups. The fund will invest in startups in the mobile, social networks, ecommerce and digital media sectors in which there is synergy with Saban’s other businesses including Israeli mobile operator Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). The fund does not automatically reject the idea of investing in other fields such as cloud computing and fintech, which are popular with venture capital investors.

The Saban Ventures fund will be managed by Barak Pridor who has more than 20 years of experience in communications and technology market. Pridor was formally a senior manager at Reuters after it acquired Clearforest where he was CEO. Via

Why affiliate marketing has attracted $4 billion in recent investment has resulted in the larger marketing world waking up and realizing, OMG, there’s real, legitimate money to be made here. The proof is in the purchase; all you have to do is take a look at the recent merger and acquisition activity that’s occurred.

Commission Junction (and all its subsidiaries) were acquired by digital marketing firm Conversant (formerly known as ValueClick) which was then acquired by data marketer Alliance Data for $2.3 billion. Ebates was then acquired by Japanese ecommerce firm, Rakuten, for $1 billion. And, most recently, eBay Enterprise Marketing Solutions acquired our own AffiliateTraction, which combined, were acquired by investment firms Banneker Partners and Permira Funds for $985 million.

In all, that’s over $4 billion invested in a space that many have traditionally labeled the black sheep of the online marketing world and thank youthat’s only the transactions where the amounts where publicized. Via

More Chinese e-commerce startups attract capital number of investments into e-commerce startups in 2015 jumps 78% in China. The 2015 slowdown in the Chinese economy didn’t stop investors from putting money into e-commerce startups in China.

The number of such deals increased 78% to 627 in 2015 from 353 a year earlier, according to a report by IT Orange, a Chinese market research firm. The report did not disclose the value of the deals. Entrepreneurs and investors have strong faith in the fast-growing e-commerce section. Cross-border e-commerce and mobile-commerce also act as a strong drivers to this sector, according to the report. Via

Slowdown in the East: Venture Deals and Funding Sputter in India and China funding and deal activity in Asia took a serious dip in Q4’15 compared to Q3’15. Not surprisingly, this also held true in Asia’s two largest markets: China and India. In the KPMG and CB Insights 2015 Venture Capital Report, we dug into global investment data including regional looks at Europe, Asia, and North America, as well as analyses of the funding climates in China and India.

Deal volume in China fell nearly 39% quarter-over-quarter in Q4’15 to 71 deals, the lowest amount for deal activity in at least 5 quarters (a more dramatic drop than the 13% fall in deal count globally). In terms of funding dollars invested, there was a 29% drop in China over the same period (roughly the same as the 30% drop in venture funding globally). h/t

MoxyBilna, now Orami, gets $15m from FB co-founder Saverin, SMDV, Gobi Partners, others Asia based ecommerce platform for women MoxyBilna today announced that it had secured $15 million funding together with a strategic rebranding under the name ‘Orami’. The funding round was led by SMDV, with Gobi Partners, Facebook co-founder Eduardo Saverin, Ardent Capital and Velos Partners.

“It is great to have such a diverse combination of investors – with SMDV’s local Indonesian strength, Ardent Capital’s regional breadth, Gobi Partners’ know-how in social commerce and women economics, and the addition of global powerhouses, Eduardo Saverin and Velos Partners,” Jérémy Fichet, CEO of Orami, said. Via

BlackRock Plans Asian Private Equity Fund

BlackRockBlackRock Inc., the world’s largest asset-management firm, plans to raise a new private equity pool focused on Asia, said people with knowledge of the matter.
The company is planning to raise a multi-strategy pool this year, said the people, who asked not to be identified because the information is private. The fund will invest in buyout funds currently being raised, while also co-investing in underlying companies and taking stakes in existing pools, the people said.

The new pool, which does not yet have a fundraising target, will be the first Asian-focused pool raised by BlackRock since its acquisition of Swiss Re AG’s private equity business in July 2012, which helped it expand in Asia, the people said. That transaction created a business with about $15 billion in assets under management. Via

China, Japan & India are among top 10 buyers of US companies: Baker & McKenzie deal activity by foreign buyers seeking US assets is rising quickly, said Baker & McKenzie in the inaugural edition of its quarterly Cross-Border M&A Index report In 2015, up to Q3, deal value has hit at $344.5 billion, nearing 2014’s full-year post-crisis record of $380 billion.

“If the upward trend continues, it’s likely that 2015 will become the biggest year for US inbound deals since the heady days of 2007,” the law firm added. The interest to acquire in the US market has levelled up in key Asian markets, as China, Japan and India become among the top ten acquirers in the US. Via

What Every VC Funded E-Commerce Startup Might Just Say to Their Investors’s a common thread in all these pieces of news. They are all e-commerce start-ups. They are all booking major losses year after year and as they grow, they are already setting the expectation of multiplying their losses!

The e-commerce industry was touted as the next big game changer after the IT industry. Well, to give the credit where it’s due, it has brought a shift in the Indian customer buying behaviour. Customers have started going online to meet their every need. However, the above figures on losses suggest that although e-commerce firms are tempting the customers, the business dynamics is somewhere severely broken.

You will often hear folks defend all this by the usual cliché “the market opportunity is huge in India.” However, for someone coming from the old school who believes that businesses are run to deliver profits and thereby take care of their employees, it looks more like an “opportunity to ride on VC money and deliver perpetual losses is huge” in the etail market! The writing is on the wall – e-commerce firms will keep on struggling for a very very long time to come and the reasons are crystal clear. Via

Recent IPOs see strong interest in weak, volatile markets“A good equity story with right valuations will generate high interest from investors. That has been the key learning from Quick Heal’s IPO. The success of recent IPOs also lent support and you will see appetite for good quality IPOs in the future. The mandatory ASBA process has benefitted not just the companies but also investors by reducing the time gap in an IPO and refund of money upon unsuccessful application,” Vinay Menon, managing director and co-head, investment banking coverage, JP Morgan India Pvt. Ltd, told Mint after the Quick Heal issue concluded.

On 9 February, Mint had reported that TeamLease and Quick Heal also attracted high investor interest in the grey market as high networth individuals (HNIs) were willing to pay a premium to buy shares even before the shares listed on exchanges. Quick Heal shares were quoting a premium of Rs.60-70 per share before dropping to Rs.40-50. TeamLease fetched a premium of Rs.240-250 per share on Monday but the premium marginally declined after that, tracking the fall in secondary markets. Via

Interesting Times Ahead

There’s no question we have interesting times ahead for venture capital. In 2016, we could see a growing number of voices expressing concerns about profitability and return on risk investment in many markets.

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