Corporates are Doubling Down on Transport and Services Companies
By Jeff Carlson
In my first post on CVC investments, I noted that the amount of money invested with corporate participation rose from $16.7 billion in 2012 to $111 billion in 2017. This post is focused on identifying sectors and subsectors that have received the bulk of this dramatic increase.
The chart below shows the breakdown of investment dollars in ten sectors as defined by GCV. These represent investments in companies in each of these sectors in which at least one CVC participated.
You can see that, between 2012 and 2015, there were significant increases in funding of Consumer and IT companies. Since 2015, the amount invested in those two sectors, along with Energy, Telecoms, Financial Services, Media, and Industrial has remained relatively flat, however.
On the other hand, investments in Transport and Services sectors have increased dramatically, especially in the past two years.
These breakdowns are quite broad, so let's take a more granular look at the various subsectors within each sector. The chart below highlights some of the subsectors while maintaining the color by sector theme. This chart is meant to give a qualitative view of the sector and subsector trends; the next two charts provide a more quantitative view of these trends.
As with the previous chart, you can hover over any item in the chart to see (or even highlight) a specific subsector across the years. Selecting a sector from the color legend will highlight all subsectors within that sector.
The treemap below shows the relative investment amounts in various subsectors for a specific year. Each box is sized relative to the others based on dollars invested. For each subsector, the dollars invested and number of investment deals are shown (when room allows).
You can see that the largest area of investment in 2017 is in the Ride Hailing, Car Sharing & Car Rental subsector, with 74 investments totaling $13,778m. Second largest is E-commerce Platforms, with 58 deals for $10,440m.
Another way to view this information is to show both the dollars invested by subsector and the year-over-year growth in investment dollars since 2012. Each dot in the chart below represents a subsector and its size is relative to the number of investments. The vertical height identifies the dollars invested, whereas the horizontal location represents the annual growth rate in investment dollars from 2012.
For 2017, you can again see that Ride Hailing, Car Sharing & Car Rental andE-commerce platforms received the most investment dollars. The next tier of subsector investments include Pharmaceuticals, Other (Services), andConnected, Autonomous & Electric Vehicles, with $6B to $B each.
The areas of highest growth through 2017 include Sports & Gambling (259% Y-o-Y), VR & AR technology (197%), Insurance (196%), and Ride Hailing, Car Sharing & Car Rental (190%). The first three all received less than $3B in 2017, whereas Ride Hailing, Car Sharing & Car Rental received over $13B.
The table below shows the top 20 subsectors for 2017, based on amount invested. Note that all three subsectors each for Transport and Services sectors (highlighted) have (essentially) 100% or more year-over-year growth over the past five years. At the same time, the overall investments with CVCs have increased an average of 46% year-over-year. These two sectors represented 35% of all dollars invested in 2017, up from only 7% of investments in 2012.
Top 20 Subsectors by Dollars Invested in 2017
Note: Vehicle Marketplace & Platforms had no investments in 2012, hence Y-o-Y growth is infinite.
So, although overall investments with CVC participation have grown dramatically over the past six years, some sectors (and subsectors) have grown at a much greater rate than others. Much like the high concentration of investments in Asia over this time period discussed in the previous post(relative to the rest of the world), investments in the Transportand Services sectors have been disproportionately large as well.