CB Insights helps us compress our timeto-decision when gathering and analyzing data and getting an external view on what's happening in the market so we can quickly take action. Meraj Mohammad Vice President, Ventures Group, ADP 2 WHAT IS CB INSIGHTS? CB Insights helps the world’s leading companies make smarter technology decisions with data, not opinion. Our Technology Insights Platform provides companies with comprehensive data, expert insights and work management tools to drive growth and improve operations with technology. CLICK HERE TO SIGN UP FOR A FREE TRIAL 1 Contents 5 Summary Of Findings 6 FAMGA Highlights & Market Drivers 20 33 Acquisition Trends Investment Trends 45 Methodology 4 Summary Of Findings Overview of FAMGA’s financing & acquisition activity, 2020 – 2021 YTD (3/31/21) Big tech acquisitions reached a 5-year low amid the pandemic… • FAMGA’s acquisition activity dropped steeply in the second half of 2020 and in the first quarter of 2021. …as FAMGA upped its investments to record levels, backing equity deals worth a combined $12.4B in 2020. • Google leads FAMGA in unique investments (16) throughout the pandemic, followed by Amazon (14). • GV (Google Ventures) is the most active FAMGA venture arm by a wide margin, focusing on healthrelated investments. • After an aggressive H2’20, FAMGA pulled back on investments in Q1’21. Amazon led the pack in the quarter, with 4 investments (and 3 acquisitions). FAMGA outperformed the market by more than 30 percentage points in 2020. In turn, the companies poured money into these areas: • Acquiring for emerging technologies: Big tech has looked to bolster its artificial intelligence (AI) and virtual reality (VR) capabilities, among other areas. • Investing for the work-from-home era: In particular, Google and Microsoft backed a number of cloud, cybersecurity, and productivity software providers. • Racing for consumers in India: Facebook, Amazon, Microsoft, and Google all made investments to companies based in the country. • Big bets on mobility: Amazon, Microsoft, and Google backed auto tech companies like Cruise, Waymo, Zoox, and Rivian. Note: Includes investments & acquisitions made by Facebook, Apple, Microsoft, Google (and its parent Alphabet), and Amazon (FAMGA) 5 standalone corporate entities only from January 1, 2020 – March 31, 2021, unless otherwise noted. FAMGA Highlights & Market Drivers 6 FAMGA HIGHLIGHTS & MARKET DRIVERS Big tech acquisitions have trended down… Annual number of acquisitions made by FAMGA, 2016 – 2021 YTD (3/31/21) 50 47 43 39 35 16 4 2016 2017 2018 2019 2020 2021 YTD* *2021 full-year data is based on a run rate as of 3/31/21. 7 FAMGA HIGHLIGHTS & MARKET DRIVERS …while investments have trended up Annual number of investments made by FAMGA, 2016 – 2021 YTD (3/31/21) 38 35 36 24 21 13 9 2016 2017 2018 2019 2020 2021 YTD* Note: Includes follow-on investments. Financings may be double-counted if they include more than one backer among FAMGA. CVC or venture 8 arms are not included. *2021 full-year data is based on a run rate as of 3/31/21. FAMGA HIGHLIGHTS & MARKET DRIVERS Big tech funding hit record high in 2020 Unique equity deals & dollars with FAMGA participation ($M), 2016 – 2020 Funding amount ($M) Deal count $16,000 40 35 35 $12,000 $8,000 $4,000 $0 24 21 13 $7,280 $2,609 $2,915 $3,844 2016 2017 2018 Note: Includes follow-on investments. CVC or venture arms are not included. 2019 $12,362 30 20 10 0 2020 9 FAMGA HIGHLIGHTS & MARKET DRIVERS Google leads in acquisitions over the past 5 years… Annual number of acquisitions made by FAMGA, 2016 – 2020 20 15 10 Apple Microsoft Google Facebook Amazon 5 0 2016 2017 2018 2019 2020 10 FAMGA HIGHLIGHTS & MARKET DRIVERS …But its acquisition pace has slowed down significantly Annual number of acquisitions made by FAMGA, 2016 – 2020 20 15 10 Google’s annual acquisition activity has 5 dropped over 60% since 2016 0 2016 2017 2018 2019 2020 11 FAMGA HIGHLIGHTS & MARKET DRIVERS Google also leads in investments, followed by Amazon Annual number of investments made by FAMGA, 2016 – 2020 16 12 8 Apple Microsoft Google Facebook Amazon 4 0 2016 2017 2018 2019 2020 12 FAMGA HIGHLIGHTS & MARKET DRIVERS GV is the most active FAMGA venture arm Annual number of investments made by FAMGA venture arms, 2016 – 2020 100 GV (Google Ventures) Google Gradient Ventures 75 capitalG M12 (Microsoft) 50 Amazon Alexa Fund 25 0 2016 2017 2018 2019 2020 Note: GV, Gradient Ventures, and capitalG are venture arms of Google (Alphabet). M12 is Microsoft’s venture arm, while the Alexa Fund is 13 Amazon’s venture arm. Facebook and Apple do not have venture arms. FAMGA HIGHLIGHTS & MARKET DRIVERS Big tech continues its ascent during pandemic… Technology became an even more integral part of consumers’ lives and business operations amid last year’s stay-at-home orders, driving users to FAMGA’s products. The coronavirus has only made Big Tech more dominant July 31, 2020 Big Tech companies, fully recovered from pandemic, report record earnings October 29, 2020 How Big Tech Got Even Bigger February 6, 2021 One Year Into the Pandemic, Big Tech Is Bigger Than Ever March 11, 2021 14 FAMGA HIGHLIGHTS & MARKET DRIVERS …and outperforms the market in 2020 Growth of $1,000 invested in a “FAMGA Fund” vs. $1,000 invested in the S&P 500 $2,000 FAMGA growth rate $1,500 $1,519 51.9% $1,000 $1,000 $1,172 S&P 500 growth rate 17.2% $500 $0 1/2/2020 12/31/2020 FAMGA (aggregate) S&P 500 15 FAMGA HIGHLIGHTS & MARKET DRIVERS FAMGA picks up pace of $1B+ bets in 2020 Collectively, FAMGA has made 32 $1B+ acquisitions. In 2020, the group acquired 5 companies for $1B+, compared to 3 in both 2018 and 2019. Microsoft has made 12 $1B+ acquisitions, the most among these tech giants, followed by Google, with 8, then Facebook and Amazon, which tie at 5 each. Source: CB Insights 16 WHAT EXECUTIVES ARE SAYING We will continue to make significant investments against the strategic growth opportunities Satya [Nadella, Microsoft CEO] outlined, organically and through strategic acquisitions like that of Affirmed Networks this quarter. And we have the flexibility given our strong financial position and free cash flow generation to do all of this and support our commitment to capital return. Amy Hood, Microsoft CFO Q3’20 earnings call 17 FAMGA HIGHLIGHTS & MARKET DRIVERS After an aggressive H2’20, Q1’21 saw a pull-back in investments Quarterly number of investments and acquisitions made by FAMGA, Q1’20 – Q1’21 16 14 13 12 11 10 8 8 7 6 Acquisitions 9 Investments 4 4 4 0 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Note: Includes follow-on investments. 18 FAMGA HIGHLIGHTS & MARKET DRIVERS Google leads pandemic investment activity FAMGA ranked by number of unique investments, 2020 – 2021 YTD (3/31/21) Rank Investor Select investments 1 +11 2 +9 3 +3 4 5 Note: Facebook invested in Reliance Jio via its subsidiary Jaadhu Holdings. 19 Acquisition Trends 20 FAMGA ACQUISITIONS 2020 – 2021 YTD (3/31/21) Auto & mobility Entertainment & gaming Enterprise Retail & consumer Fintech Other 21 ACQUISITION TRENDS Overall FAMGA acquisition themes 2020 – 2021 YTD (3/31/21) Overview Key themes • Apple and Microsoft are the most active big tech acquirers since the pandemic began, at 10 acquisitions each. The leaders are followed by Google (7) and Facebook and Amazon (6 each). • Amazon is the most active in 2021 so far, with 3 acquisitions in Q1’21. Microsoft is the only other big tech company to have made an acquisition in Q1’21. • Google and Amazon primarily deploy capital outside of acquisitions, including backing or leading billion-dollar corporate minority rounds to Reliance Jio (Google, as well as Facebook) and Rivian (Amazon). • FAMGA acquires companies developing emerging technologies, from AI to VR to cloud services, to enhance core products and offerings. • Big tech’s purchases also include entertainment & gaming companies, some of which develop immersive gaming tech like VR (e.g., Sanzaru, acquired by Facebook). Microsoft’s $7.5B acquisition of video game publisher ZeniMax Media was the largest disclosed FAMGA purchase amid Covid-19. • Facebook, Amazon, Microsoft, and Google all made $1B+ acquisitions over this period, including Kustomer (Facebook, $1B), Zoox (Amazon, $1.3B), Affirmed Networks (Microsoft, $1.4B), and Fitbit (Google, $2.1B). 22 ACQUISITION TRENDS Facebook diversifies its bets, acquires emerging tech providers The platform’s acquisitions of mapping companies Scape Technologies and Mapillary will help it further localize its Facebook Marketplace offering and other services. Facebook’s purchase of Lemnis Technologies, which develops mixed reality solutions, will support its work on VR/AR devices. VR game developer Sanzaru, acquired by Facebook in February 2020, will join its Oculus gaming division. Where Facebook acquires 2020 – 2021 YTD (3/31/21) Auto & mobility Entertainment & gaming Enterprise Retail & consumer Other 23 ACQUISITION TRENDS Facebook’s biggest 2020 acquisition: Kustomer Facebook announced its purchase of omnichannel chatbot company Kustomer in November 2020. The $1B acquisition will help Facebook build customer service tools for businesses on its platform. 24 ACQUISITION TRENDS Apple looks to build new product features with AI, VR, and other iPhonefocused acquisitions These include video AI startup Vilynx, edge computing AI developer Xnor.ai, and VR streaming company NextVR. Apple also acquired weather app Dark Sky, mobile payments company Mobeewave, and podcast station Scout FM. Where Apple acquires 2020 – 2021 YTD (3/31/21) Entertainment & gaming Enterprise Fintech Retail & consumer Other 25 ACQUISITION TRENDS Apple aims to enhance Siri through acquisitions SPEECH RECOGNITION MACHINE LEARNING Acquired: About: 4/3/2020 Voysis is an Ireland-based startup developing speech recognition technology for brands to offer voice-driven interfaces to customers. The technology enables customers to interact with electronic systems using natural language and is expected to enhance Apple’s voice assistant Siri on the iPhone, Apple Watch, and other devices. Acquired: About: 5/27/2020 Inductiv is a Canada-based startup developing an AI platform to identify and correct errors in data. Inductiv’s technology will be used to clean the data incorporated into machine learning models, including data used to train Siri. 26 ACQUISITION TRENDS Microsoft continues building its enterprise technology stack, from cloud security to IT software development, with acquisitions For example, it acquired UK-based robotic process automation (RPA) provider Softomotive in May 2020. It then acquired IoT cybersecurity startup CyberX and large-scale data model developer ADRM Software in June. Where Microsoft acquires 2020 – 2021 YTD (3/31/21) Entertainment & gaming Enterprise Other 27 ACQUISITION TRENDS Microsoft makes $1B+ bets The tech giant’s biggest acquisitions in 2020 were cloud-native network provider Affirmed Networks for $1.4B in March and video game publisher ZeniMax Media for $7.5B in September. Microsoft’s purchase of Affirmed Networks will enable it to play a more significant role in the edge computing ecosystem, as 5G and telecom providers are expected to drive adoption of the tech. The acquisition may also bring some of the telecom industry’s cloud usage to Microsoft’s Azure platform. Microsoft’s acquisition of ZeniMax Media, the parent company of the game developer Bethesda, gives a boost to its overall gaming strategy. Bethesda’s game franchises and tech will bolster Microsoft’s video game brand Xbox’s gaming subscription service. 28 ACQUISITION TRENDS Google races to grow its cloud business, which lags Microsoft’s and Amazon’s… The tech giant acquired: • No-code app development platform AppSheet in January 2020 • Cloud migration services provider StratoZone in August • Data back-up platform Actifio in December Where Google acquires 2020 – 2021 YTD (3/31/21) Enterprise Retail & consumer 29 ACQUISITION TRENDS …while bolstering its retail & consumer efforts FITNESS TECH RETAIL TECH SMART WEARABLES Acquired: About: 1/14/2020 Google completed its acquisition of Fitbit, following regulatory scrutiny around its data usage, as it looks to gain ground on Apple with smartwatches. Acquired: About: 1/14/2020 Google bought Pointy, a product scanner that can help businesses get their inventories online, to deepen its relationship with small shops. Acquired: About: 6/30/2020 Google acquired augmented reality glasses developer North to strengthen its hardware and ambient computing efforts. 30 ACQUISITION TRENDS Amazon extends its reach into new sectors and was the most active FAMGA acquirer during Q1’21 The company acquired Finlandbased 3D software developer Umbra in January 2021, followed by e-commerce sales platform Selz in February and India-based retail payments company Perpule in March. Where Amazon acquires 2020 – 2021 YTD (3/31/21) Auto & mobility Entertainment & gaming Enterprise Retail & consumer Other 31 ACQUISITION TRENDS Amazon’s biggest 2020 acquisition: Zoox In June 2020, the e-commerce giant acquired self-driving vehicle developer Zoox for $1.3B. This was a surprising move given that Zoox is highly focused on passenger vehicle applications, an area Amazon has yet to enter. Amazon may tap into this using its Prime member cohort and eventually start offering autonomous ride-sharing or food delivery. Zoox unveiled its self-driving taxi in December 2020. 32 Investment Trends 33 FAMGA INVESTMENTS 2020 – 2021 YTD (3/31/21) Auto & mobility Industrial Enterprise Retail & consumer Fintech Health Other Note: Includes unique investments made by FAMGA. Facebook invested in Reliance Jio via its subsidiary Jaadhu Holdings. Verily Life Sciences and 34 Waymo are Alphabet subsidiaries. INVESTMENT TRENDS Overall FAMGA investment themes 2020 – 2021 YTD (3/31/21) Overview • Google leads FAMGA in unique investments (16) since the start of the pandemic, followed by Amazon (14) and Microsoft (8). During this time, Facebook made 4 investments (including a $5.7B corporate minority round to Reliance Jio) and Apple made 1. • In Q1’21, Amazon made the most investments (4) out of FAMGA, followed by Microsoft (3), then Google and Apple (1 each, a co-investment to UnitedMasters). • FAMGA has made overlapping investments across industries, from modular home developer Factory OS (Facebook & Google) to India-based news app DailyHunt (Google & Microsoft). Key themes • FAMGA uses investments to bet on new markets and tech adjacent to core offerings, such as mobility (Microsoft), biopharmaceuticals (Google), and financial services (Amazon). • Since the start of 2020, FAMGA’s investment focuses also include renewable and at-home tech (Microsoft, Amazon), cloud security (Microsoft, Google), and healthcare (Google). • Big tech looks to gain ground with consumers in India, with Facebook, Amazon, Microsoft, and Google all making investments to companies based in the country. 35 INVESTMENT TRENDS Microsoft focuses on renewable tech... For example, the company recently led a corporate minority round to carbon capture firm Climeworks and backed carbon removal company CarbonCure Technologies’ Series E round. It also participated in environmental sensor company Aclima’s $40M Series B round in November 2020. In January 2021, Microsoft joined a $2B corporate minority round to GMowned Cruise Automation, which develops electric self-driving vehicles. Where Microsoft invests 2020 – 2021 YTD (3/31/21) Auto & mobility Industrial Enterprise Retail & consumer Other 36 INVESTMENT TRENDS …and positions itself as the go-to enterprise cybersecurity provider ahead of ever-more insecure cyber future Microsoft’s M12 venture arm has backed a range of cybersecurity companies since the start of the pandemic, like Israelbased threat detection platform Hunters.AI. M12 followed up its 2016 and 2019 investments in Aqua Security in March 2021, participating in the enterprise cloud security company’s $135M Series E that valued it at $1B. M12 also participated in UK-based identity verification software provider Onfido’s $100M Series D in April 2020. Industrial Fintech Retail & consumer Enterprise Health Other Bubble size and placement corresponds to total number of M12-backed investments in a company, 2020 – 2021 YTD (3/31/21) 37 INVESTMENT TRENDS The pandemic accelerated Google’s existing focus on healthcare The tech giant backed conversational AI and mental health companion Wysa and precision oncology library Tempus. It also participated in rounds to care platform Cityblock Health and health insurance provider Oscar Health. A number of Google’s investments have overlapped with other FAMGA companies, investing alongside Facebook (Factory OS), Apple (UnitedMasters), and Microsoft (DailyHunt). Google also led a $4.5B corporate minority round to Reliance Jio 3 months after Facebook’s $5.7B investment. Where Google invests 2020 – 2021 YTD (3/31/21) Note: Verily Life Sciences and Waymo are Alphabet subsidiaries. Auto & mobility Industrial Enterprise Retail & consumer Fintech Health Other 38 INVESTMENT TRENDS GV eyes drug development cos Since the start of the pandemic, Google’s venture arm has backed: • Low-cost drug maker EQRx ($200M Series A and $500M Series B); • Therapeutic manufacturing tech company RESILIENCE ($800M Series B); • And drug discovery platform insitro ($143M Series B and $400M Series C), among others. Fintech Retail & consumer Industrial Entertainment Auto & mobility Health Enterprise Other Bubble size and placement corresponds to total number of GV-backed investments in a company, 2020 – 2021 YTD (3/31/21) 39 INVESTMENT TRENDS GV also bets on the future of work WORKPLACE COMMUNICATION CLOUD SERVICES Round: About: Series E (10/6/2020) Amount: $100M Dialpad is an AI-powered cloud communications platform for businesses, providing calling, conferencing, and call center services. The company reportedly hit $100M in ARR in March 2021. GV’s participation in Dialpad’s Series E marks the sixth time the venture arm has backed the company since 2011. Round: About: Series E (1/12/2021) Amount: $160M Cockroach Labs develops CockroachDB, a cloudnative distributed database. Featured on CB Insights’ 50 Future Unicorns list, the startup garnered a $2.2B valuation at the time of its Series E round. GV also participated in the company’s May 2020 Series D as well as all of its previously disclosed funding rounds since 2015. 40 WHAT EXECUTIVES ARE SAYING Cloud and productivity software for businesses of all sizes is a deep area of investment. … we continue to focus anywhere we think the actual work we are doing is based on. Deep technology, deep computing, deep computational scale is the kind of investments we think still stand the test of time through things like that. Sundar Pichai, Alphabet CEO Q1’20 earnings call 41 INVESTMENT TRENDS Amazon makes inroads in India, leads Q1’21 investment activity… The e-commerce giant invested in Indiabased marketplaces like MyGlamm (beauty), BankBazaar (financial products), and Shuttl (bus aggregator). It also backed digital insurance platform Acko General Insurance and financial services firm Capital Float, both based in India. In Q1’21, alongside investing in MyGlamm, Amazon also backed Infinium, while making follow-on investments to Rivian and Deliveroo. Where Amazon invests 2020 – 2021 YTD (3/31/21) Auto & mobility Industrial Retail & consumer Fintech Other 42 INVESTMENT TRENDS …while the Alexa Fund works to build out the smart home Amazon’s venture arm backed Span, which develops a smart electrical panel for homeowners, in December 2020. It also participated in a Series C round to SmartRent, which develops connected home tech for property managers and renters, in May 2020, following up on its 2019 investment in the startup. In October 2020, it funded smart indoor gardening system Rise Garden’s Series A extension. Enterprise Retail & consumer Other Amazon Alexa Fund-backed investments, 2020 – 2021 YTD (3/31/21) 43 INVESTMENT TRENDS Apple & Facebook make fewer investments compared with other giants Facebook’s 2 consumer platform investments in 2020 point to its ambitions of modeling itself as a super app, or destination for a variety of consumer needs. Facebook invested in: • Reliance Jio, a subsidiary of India’s telecom giant Reliance Industries; • And Gojek, an Indonesia-based on-demand ride-hailing and delivery service. Facebook also backed edtech startup Unacademy and modular construction company Factory OS. Note: Facebook invested in Reliance Jio via its subsidiary Jaadhu Holdings. While Apple typically acquires rather than invests in companies, it made one investment at the tail end of Q1’21, leading a $50M Series B to UnitedMasters. Apple also signed a strategic partnership with the independent music distribution platform. The collaboration will likely enable new integrations with Apple Music. 44 Methodology CB Insights encourages you to review the methodology and definitions employed to better understand the numbers presented in this report. If you have any questions about the definitions or methodological principles used, we encourage you to reach out to CB Insights directly. Additionally, if you feel your firm has been under-represented, please send an email to info@cbinsights.com and we can work together to ensure your firm’s investment data is up to date. What is included: Notes: • Equity financings to tech-enabled companies made by Facebook, Apple, Microsoft, Google (and its parent Alphabet), Amazon (FAMGA) corporate standalone entities only, unless otherwise noted. Financings may be double-counted if they include more than one backer among FAMGA. • Acquisitions by FAMGA (as defined above). This also includes P2P acquisitions, company talent acquisitions, asset sales, and corporate majority rounds. Acquired units or pending acquisitions are not included. • For the purposes of this report, we define the Covid19 pandemic as starting January 1, 2020. • Retail & consumer includes retail tech and services, e-commerce, logistics, CPG, and food & beverage companies. • Enterprise includes companies offering IT, cloud, cybersecurity, HR, developer, and general enterprise software solutions, excluding telecom providers. • Historical funding data is subject to change as our technology & data operations explore global datasets and refine company classifications. 45
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