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Public market data. Express Scripts' M&A spree. Food-delivery watchlist.
Research Team Notes
May 31st, 2017, Volume 13

Hey <<First Name>>,

Last week, we asked you what you use for public markets data. Here are the results.




Interestingly, several of you wrote saying you buy all 4 — Bloomberg, Factset, CapIQ, and Thomson.

I've set up calls with several of you to understand the gaps in public market data or what you wish you had.  

I'm also curious why folks are buying all 4. Do they each do one thing really well?

If you have a perspective on these questions, let me know as I'd love to chat.


Sneak peek - Earnings Transcript Analysis

Our engineering team has started parsing and doing text analysis of earnings transcripts to see what they might tell us about corporate strategy, areas of focus, sentiment, etc.

Below is a very very very rough chart for Citi looking at the geographies mentioned in their earnings calls for the 10+ years covering Q1 2006 to Q1 2017.

Did I mention the chart was rough?



There is a lot we need to fix about this graph (colors, readability, geographic taxonomy, etc) but our first focus is the technical challenge of programmatically extracting things like geos, product names, business units, sentiment, strategic areas of focus, etc in some meaningful way.

In the above graph, we do see Citi's increased talk about Mexico as a market but decreasing to no attention on the rest of Latin/South America.

Again, we're not production ready with this but wanted to use the client newsletter as a way to highlight some things we're working on and hear your thoughts.

If you have ideas on how you'd like to see earnings transcript data parsed and analyzed or if you do this manually in your work now, I'd love to chat.

As a reminder, this newsletter is only for paid clients. Please don't share it.

On with the show.

Have a great week,
Anand

P.S. We're hungry to hear your product & research ideas and feedback. Please don't be shy. Off-the-wall and/or critical feedback is welcome.


1.  FAMGA's unicorn investments

In our recently released Asia Tech Investment report, we highlighted that China's largest internet giants — Baidu, Alibaba, Tencent, and JD.com (BATJ) — were poised to benefit when the current crop of unicorns in China eventually exit. In total, BATJ has invested in 46% of China's private companies currently valued at $1B+.

Some of you asked how the total compared to the US. So, we mapped out the unicorn portfolio of the five largest US tech companies Facebook, Amazon, Microsoft, Google, and Apple (FAMGA). Here's the breakdown:

  • Facebook’s fbFund (now defunct) - 1, Lyft
  • Amazon - no current private unicorn investments
  • Microsoft (includes Microsoft Ventures) - 5 unicorn investments (InsideSales, Flipkart, AppNexus, CloudFlare, Uber)
  • Google (includes GV, capitalG and Google’s investments) - 23 unicorn investments (see Business Social Graph below)
  • Apple - 1, Didi Chuxing
     


Of the five, Google and its two investment vehicles clearly dominate. Microsoft ranks second, with five portfolio unicorns including India e-commerce giant Flipkart. Apple has not invested in any US unicorns but is a backer of Softbank's Vision Fund and made a direct investment in Chinese ride-hailing app Didi Chuxing.
 
Netflix, which is sometimes lumped in with some of these companies as the FANG companies (excluding Microsoft), has no unicorn investments.
 
Run a company search of FAMGA's unicorn bets here.


2. Google making headway in pharmaceuticals

Google’s interest in healthcare is not new, and the company has invested in dozens of healthcare startups in the past. The tech giant now appears to be laying the groundwork for a future in pharmaceuticals and is attacking this industry from two directions, including direct investments and internal development of pharma-targeted efforts. 

Regarding the former, Google Ventures has made 17 deals to pharmaceutical startups in the past 3 years. This is a shift given that from 2009-2014, the company only completed 7 deals. Recent first-time deals completed in 2017 include Fulcrum Therapeutics (gene therapy), Arsanis (anti-bacterials), Spero Therapeutics (anti-bacterials), and BlackThorn Therapeutics (neurobehavioral disorders). 
 
Here is a search showing Google's investments into pharma companies since 2009, pictured in the chart below. The deal search includes all of Google's biotechnology deals, a few of which are outside pharmaceuticals.




The factors behind this surge of investment are two-fold.
  1. Through Verily and Calico Google has begun to build out its own pharmaceutical pipeline and so it may seek strategic developmental partnerships with these startups.
  2. While Google's healthcare acquisitions have been limited, most recently acquiring Lift Labs in 2014, the company may seek to acquire pharma startups for either their valuable IP or talent. 
Google's internal pharmaceutical pipeline is still in its very early stages. Verily and Calico are both engaged in numerous partnerships with ambitious goals. Examples include Calico's partnership with C4 Therapeutics to develop therapeutics targeting protein degradation and Verily's partnership with GlaxoSmithKline to develop implanted devices that treat disease by modulating electrical signals to peripheral nerves. 
 
To view all pharmaceutical startups tracked by CB Insights, please refer to the Pharma Startups Collection and see the tag #google-backed, to find the specific companies Alphabet is related to.

 



3. Express Scripts strategic M&A spree

Also in an adjacent space, Express Scripts is the nation's largest pharmacy benefits manager and saw over $100B in revenue in 2016. However, the company is threatened by the potential loss of their multibillion dollar contract with health insurer Anthem by 2019. Not to mention that Amazon is reportedly considering a push into the pharmacy market, threatening industry stalwarts such as Express Scripts and CVS Health, among others. 
 
Recently Express Scripts announced they will be hunting for future revenue growth via strategic acquisitions, including companies targeting, "cost-containment, payer services, worker's compensation, specialty pharmacy, and health care analytics."
 
After a 5-year M&A lull since 2012, Express Scripts acquired a minority stake in Mango Health (medication adherence, health analytics) this March and then acquired MyMatrixx (worker's compensation) earlier this month. To view all of Express Scripts investments, see this deal search
 
Below are a few companies working across the fields being targeted by Express Scripts which may be potential targets for investment or acquisition. Blink Health, a prescription drug startup that offers drug savings to consumers, would have been a candidate but may be too troubled as it is facing a new lawsuit related to alleged securities irregularities.
  • Truveris: Develops software to drive cost-containment and transparency in the prescriptions claims process. Helps payers of pharmacy benefits negotiate agreements with PBMs, validate claims, and ensure compliance.
     
  • HealthReveal: Partners with providers, payers, and employers to enable them to detect and intervene prior to adverse events. Also offers cloud-based clinical analytics solutions.
     
  • SCIO Health Analytics: Provides data solutions to more than 50 healthcare organizations, pharmacy benefit management companies and life science organizations. Focuses on population health, payment integrity, care management, consumer segmentation and network performance.
     
  • Capsule: Full online pharmacy offering 2-hour delivery of prescription medicines.
     



4. Mosaic Movers

The CB Insights Mosaic algorithm is a National Science Foundation-backed score that tracks the health of private companies using public data. Here are some of the companies whose Mosaic scores have popped recently:

1. Reonomy+250
Reonomy is a commercial real estate platform providing property and market
data. Investors include Bain Capital Ventures, SoftBank Capital, and KEC Ventures.

2. Healthcare Bluebook+180
Healthcare Bluebook provides online tools designed to help customers understand how much they should pay for healthcare services.

3. Janrain+170
Janrain provides technology to leverage the popularity of social networks for user acquisition, engagement, and customer intelligence. Investors include Emergence Capital Partners, Epic Ventures, and Anthem Venture Partners.

4. ThreatMetrix+150
ThreatMetrix helps companies detect and reduce online fraud. Investors include CM Capital, Technology Venture Partners, and Tenaya Capital.

5. Biz2Credit+130
Biz2Credit is as an online credit resource for startup loans, lines of credit, equipment loans, working capital, and other funding options.


5. Food-delivery watchlist

Food delivery company Sprig shut down last weekend, the latest in a string of food delivery companies including Maple and Din and Bento and Take Eat Easy that have shut down.
 
We dug into our food-delivery company data to look through other companies that have not raised since calendar year 2015 and are not seeing significant traction per our Mosaic algorithm, which tracks private company health. Absent further funding they are at risk of shutting down or being at risk of down exits. Our list includes both grocery and prepared meal delivery.  
  • KitchFix based in Chicago has not raised since its Angel round in 2015. It aims to deliver healthy meals and has only expanded to Milwaukee.
  • EatFirst in the UK has not raised since its Series A in 2015 and has seen web traffic, social mentions, and media mentions drop recently per Mosaic data.
  • Zesty is another to watch. The San Francisco-based meal delivery startup has not raised since July 2015. The company is backed by prominent investors including Founders Fund, SV Angel, and Y Combinator. Nevertheless, it was reported that the company cut roughly 20% of its staff earlier this year after failing to hit sales projections.
  • Gobble which delivers meals from independent chefs has not raised since receiving an $11M Series A in October 2015.
  • In India Chef’s Basket also has not raised in 18 months. Another India food delivery company Bite Club shut down last year.
 
Another company to watch is India-based grocery-delivery startup Grofers, which is well-funded having raised a total of $166M but hasn't raised since November 2015, in which it received $120M from well-known investors including SoftBank Group and Sequoia Capital India. It was reported that Grofers cut 10% of its workforce in 2016. Additionally, it has been reported that Grofers had to modify its delivery model in order to cope with losses. 
 
Recently Grofers reopened in several cities where it had shut down and was reported to be in merger talks with another online grocer BigBasket which has raised upwards of $250M and was valued at $500M last year upon raising a $150M Series D.
 
In order to find all currently-active food delivery companies with a last funding date between January 2015 and January 2016 search here.
 
Check out our meal delivery Collection and our grocery delivery Collection, both of which are tagged for filtering through different types of delivery models.
 


The Most Data

We tracked over 280 global financings this past week. Here are 5 of the most notable deals. Run this search to see them all. 
  • Tuandaiwang, the operator of P2P online lending site Tundai.com, raised a $292M Series D from Beihai Hongtai Investment, China Minsheng Investment, and Yisheng Innovation.
  • Haier U-home, a smart home brand, raised $138.3M in Series B funding. Investors in the round included Forebright Capital Management and Tianfeng Securities.
  • Yuanfudao, an ed tech platform, raised $120M in Series E funding from Tencent Holdings and Warburg Pincus.
  • Bangalore-based food ordering app Swiggy raised an $80M Series E from investors including Accel Partners India, Bessemer Venture Partners, and Norwest Venture Partners.
  • Mattress manufacturer Casper raised $75M in Series C funding from Institutional Venture Partners, Lerer Hippeau Ventures, New Enterprise Associates, and Target Corporation.
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