22 August 2022
New funding for DTC brands founded by Venus Williams, YouTube star Emma Chamberlain
This week's Dealboard has a look at investment and M&A news from eBay, Ted Baker, Northbeam and more.
This week's Dealboard has a look at investment and M&A news from eBay, Ted Baker, Northbeam and more.
Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in the ecommerce and consumer goods landscape.
This week, DTC brands founded by stars of courts and Shorts raise investment, Ted Baker finds a suitor and eBay adds to its trading card collection of services. Plus, marketing intelligence platform Northbeam raises a Series A, and GrubMarket acquires a pair of enterprise software firms.
Check out the latest deal news below:
The investor lineup for Happy Viking. (Courtesy photo)
Happy Viking, the plant-based superfood nutrition company cofounded by tennis champion Venus Williams and Dyla Brands CEO Neel Prekumar, closed on $2 million in new investment. Williams was joined by a slate of prominent professional athlete investors in the round, including Serena Williams, Kevin Durant & Rich Kleiman's 35V, Peloton Vice President of Fitness Programming Robin Arzón, professional golfer Michelle Wie West, soccer icon Megan Rapinoe, tennis star Reilly Opelka, and basketball stars Isaiah Hartenstein and Collin Sexton. Created by Venus Williams after she was diagnosed with an autoimmune disease in 2011, Happy Viking offers complete-meal shakes.
Bravo Sierra, a men’s personal care company that develops products with and for a community from the US military, raised $17 million in a Series B round. Led by The Merchant Club, the round included participation from Capstar Ventures, Redo Ventures, AF Ventures and Mousse Partners. Founded in 2019 with a deodorant that became popular on Amazon, Bravo Sierra is preparing to launch across all Walmart stores and channels in the US.
Northbeam, a marketing intelligence platform for DTC and ecommerce brands, raised $15 million in a Series A round led by Silversmith Capital Partners. Northbeam is designed to help companies that are running marketing campaigns across multiple channels determine return on investment. It is among solutions that have gained traction in the fallout from Apple’s App Tracking Transparency and rising customer acquisition costs. With 27x year-over-year revenue growth, the company said it works with brands including PetMeds, The Ridge, Jones Road Beauty, Truff Vessi and Hexclad, among others.
Chamberlain Coffee, the coffee brand founded by prominent YouTuber Emma Chamberlain, raised $7 million in a Series A funding round. The financing was led by Blazar Capital, Ole & Steen / Lagkagehuset cofounders Ole Kristoffersen and Steen Skallebaek, GRIN founder Brandon Brown, DTC luminary Nik Sharma and beverage industry expert Ken Sadowsky. Launched as a DTC brand, Chamberlain Coffee is now available through channels including grocers like Erewhon and Sprouts, as well as ecommerce platforms like Amazon and instant delivery platform Gopuff.
Boohoo, the UK online fashion retailer, made a strategic investment in Revolution Beauty, acquiring a 7.1% stake in the health and beauty brand. Revolution Beauty products were already sold through Boohoo’s direct-to-consumer channels and digital department store. “The investment reflects boohoo's belief in the growth potential of Revolution Beauty and it intends to be a supportive stakeholder and long-term partner,” Boohoo wrote in a filing.
HyperTrack, an API platform for logistics, raised $25 million in a Series A funding round led by WestBridge Capital and existing investor Nexus Venture Partners. The company also announced the release of BuilderX, a platform which provides developer tools to build apps for delivery functions such as on-demand order planning, assignment and tracking. The tools can extend these capabilities across mobile, maps and cloud.
Carmigo, an automotive marketplace connecting dealers and consumers in a one-day auction format, raised $7 million in a round led by Southern Bancorp in partnership with Advantage Capital. Tupelo, Mississippi-based Carmigo plans to grow its team following the round.
Highbeam, a neobank for ecommerce brand entrepreneurs, raised $7 million in seed funding, Techcrunch reported. The round was led by FirstMark and Mayfield, with participation from individuals. The company plans to use the funding to improve the product and expand in go-to-market and sales. Highbeam provides a "single view" into finances for ecommerce brands, while assisting with credit and offering data analysis. Following the funding round, it is looking to improve the product and expand in go-to-market.
Ryan Cohen, the founder of Chewy, sold his stake in Bed Bath & Beyond. Through his firm RC Ventures, Cohen revealed a stake in the retailer earlier this year. He then affected leadership moves including the replacement of the company's CEO and several board members. Bed Bath and Beyond was among the companies at the center of a meme stock rally this month. Shares of the company were up more than 200% in August as of Thursday’s close, according to CNBC. Meanwhile, on Monday, S&P Global downgraded its credit rating for the company, citing "mounting challenges, including very poor sales performance, deteriorating liquidity, and looming maturities." S&P added: "We believe macro conditions are worsening and prospects for home goods sales continue to deteriorate."
Just Eat Takeaway, the parent of several food delivery companies around the globe, sold a stake in iFood, a Brazilian online food ordering and delivery platform. The 33% stake was sold to an affiliate of Dutch multinational Prosus for a cash consideration totaling up to €1.8 billion – representing an equity multiple over five times the investments made in iFood to date.
Saks.com, the luxury ecommerce platform, said it raised the borrowing capacity of two loans: A revolving credit facility was increased from $350 million to $450 million, and a senior secured term loan facility was increased from $115 million to $175 million. Saks, which became a standalone ecommerce business when it was split off from Saks stores last year by owner HBC, said the increased borrowing capacity will be used "to help fund the company’s working capital needs and will be used for general corporate purposes."
eBay acquired trading card platform TCGPlayer. (Photo by Erik Mclean on Unsplash
eBay is set to acquire collectible card game marketplace TCGplayer for $295 million, the companies said Monday. With the deal eBay will add a leader in trading cards with more than 600 employees as it looks to expand offerings in collectibles. Along with expanding eBay's assortment, TCGplayer has also built inventory management tools and hardware like robotic sorting machines.
Authentic Brands Group, the parent company of Reebok and Forever 21, reached a deal to acquire British fashion retailer Ted Baker for about $254 million. The acquisition price was an 18% premium over the closing share price of Ted Baker on August 15. Going forward, ABG plans to grow Ted Baker in North America. It also plans to turn the retailer into a holding company, with one or more firms operating its in-person retail, ecommerce and wholesale operations, Footwear News reported. Ted Baker, which has nearly 400 retail stores, had been the subject of multiple buyout proposals in 2022.
Walmartwill acquire gig worker management company Delivery Drivers Inc., the company that developed the retailer’s Spark Driver platform, according to Business Insider. Spark manages delivery from Walmart, as well a white label service for other retailers. It is now the largest delivery service provider within Walmart, which had relied on a host of partnerships. The acquisition comes as Walmart is set to end its partnership with DoorDash.
Pattern, an ecommerce acceleration firm, acquired influencer marketing platform Current. With the deal, Current's capabilities will be offered as part of Pattern, which is intent on helping brands drive traffic to DTC websites, marketplaces and other channels to increase the likelihood of conversion. Current's platform includes tools to help brands build ambassador programs, create content, measure impact of influencer programs and manage payouts. Terms were not disclosed.
GrubMarket, the San Francisco-based food tech company acquired a pair of enterprise software companies focused on the food supply chain: Frantoni Corporation, which makes software used by many wholesalers in New York; and Kansas-based Granite State Software, which brings customer relationships in the Northeast, Midwest and Southeast US. Both companies will remain under existing management, while integrating with Orders IO, which is GrubMarket’s ecommerce app.
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.