26 September 2022
Merger in the Shopify ecosystem, Purple takes the poison pill
In this week's Dealboard: Nano-fulfillment, lease-to-own, and discount tools get funded.
In this week's Dealboard: Nano-fulfillment, lease-to-own, and discount tools get funded.
Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in ecommerce, CPG and retail.
This week, there’s news of investment deals for nano-fulfillment centers, lease-to-own payment programs, a Shopify-focused ecommerce aggregator and discount code alternatives. Plus, brands in travel, beverage and sexual wellness all attract venture dollars. In M&A, there's news of a key merger in the Shopify ecosystem and the latest on the Purple takeover bid.
Check out the details:
The 1M Robotics team. (Courtesy photo)
OpenStore, an ecommerce roll-up that acquires Shopify brands, raised $32 million at a valuation of $970 million, Techcrunch reported. The round was led by Lux Capital, and is a 25% increase in valuation over a $75 million round the company raised in November 2021. Open Store was founded by prominent names in the startup world, including Founders Fund General Partner Keith Rabois and Atomic Managing Partner Jack Abraham. Former DoorDash engineer David Zhu joined the company in May as head of engineering. OpenStore seeks to acquire U.S.-based, direct-to-consumer brands that have $1-$10 million in gross merchandise volume.
Travel brand Monos raised $30 million in a Series B investment round. The funding was led by venn growth partners, with participation from Strand Equity and Michele Romanow. Marcello Bottoli, the former CEO of Samsonite, Louis Vuitton, and Pandora, will also join the company’s board of directors with the deal. Vancouver-based Monos offers suitcases, bags and accessories. Monos said it achieved 4x growth in 2021, and has another 4x growth forecast in 2022. The capital will be invested into new inventory, product development, talent recruitment and channel expansion.
1M Robotics, a startup developing robotic nano-fulfillment centers, emerged from stealth mode with an announcement that it has raised $25 million. A recent Series A funding was led by Ibex Investors, and included participation from existing investors Emerge VC, Target Global and INT3. The Israel-based company makes small (20 square meters), automated dark stores that can be sent within shipping containers, and arrive ready to deploy. These are designed to be put on street corners or other convenient locations, where they serve as distribution points for last-mile delivery.
Kafene, a startup which helps merchants offer lease-to-own payment options at the point of sale, raised $18 million in a Series B round. The funding was led by Third Prime, with participation from existing investors. Kafene said it enables retailers to offer lease-to-own agreements, with a goal of serving underbanked consumers as they make purchases of big-ticket items like furniture, electronics, appliances and tires. It combines an underwriting model that allows financing to be tiered based on risk with a software platform. The company will use the funding to grow its team.
Brightflow AI, a financial intelligence platform for small businesses, said it has raised a total of $19 million in equity funding from investors. This includes a recently-closed $15 million Series A led by Haymaker Ventures, and a $4.2 million seed round led by Bonfire Ventures that was previously undisclosed. The company's platform is designed to forecast sales and automate cash flow management for businesses. It is taking an initial focus on ecommerce, providing integrations with Shopify, Amazon, QuickBooks, Netsuite, Xero, Plaid, Facebook and Google Ads. It raised a further $100 million in debt financing to provide small businesses to provide qualifying businesses with access to capital.
Fondue, which built an alternative to discount codes called CashBack, announced that it raised $10.5 million in seed funding. The funding was supported by Quiet Capital and Hanaco Ventures, as well as Infinity Ventures, Ground Up Ventures, Sugar Capital, Starting Line, R-Squared Ventures, Gaingels and Verissimo Ventures. Available as a Shopify App, CashBack is being used by brands including Steve Madden, Birthdate Candles and Duradry. As opposed to a pre-purchase code, the tool involves a UTM that allows shoppers to “see their CashBack eligibility throughout the purchase journey and then redeem it post purchase in a method they choose: extra store credit, gift cards, cash, and more to come soon,” the company said in a blog post.
Sparkling water brand Aura Bora closed on a Series A funding round that brings its total capital raised to $10 million, Food Business News reported. The funding round was led by Siddhi Capital, with participation from Consumer Ventures, Gaingels, Seaside Ventures and Simple Food Ventures. Along with the funding, Siddhi Capital General Partner Melissa Facchina, Waterloo Founder Clayton Christopher and Brad Barnhorn joined the brand’s board. The brand is looking to expand its distribution, which currently include 4,000 stores such as Sprouts Farmers Market, Whole Foods Market and Thrive Market.
Dame, a sexual wellness company, raised $7 million in a Series A funding round. The round was led by Amboy Street Ventures, with participation from Listen Ventures, Flybridge, Echo and Forest Road Company. It has raised $13 million total. The brand also launched a new product called Dip, which it described as “an unintimidating, inclusive entry point to pleasure for people who are in the early stages of their sexual wellness journey.” Dame said it is posting 100% year-over-year ecommerce growth, and doubled its wholesale business for each of the last two years. Its products are available at its website, and stores including Sephora, Bloomingdales, Nordstrom and Free People.
Muddy Bites, maker of a bite-sized, chocolate-filled waffle cone snack, said it has raised $5 million from investors including Reformation Partners, RXBAR founder Peter Rahal, former RXBAR COO Sam McBride and Scott Semel. As it gains name recognition through viral TikTok videos and influencer partnerships, the brand said its products are now in 5,200 US retail locations, up from 2,300 at the beginning of 2022.
Checkmate, a personalized smart shopping tool, raised $5 million in a seed funding round. Fuel Capital led the funding, with participation from Rakuten Ebates CEO Kevin Johnson, f7 Ventures, Blackbird Ventures, Scribble Ventures, Hyper, and Susa Ventures. Also participating were Liquid 2 Ventures (founded by NFL Hall of Famer Joe Montana), Wischoff Ventures, Exits Capital, Night Capital, Ancestry CEO Deborah Liu, Firstbase CEO Chris Herd and XMTP President Shane Mac. Available as a browser extension, Checkmates takes offers from personal email and the web, and applies them at checkout. The investment will help the San Francisco-based company speed up product development and customer growth.
A screenshot of RetentionEngine. (Courtesy photo)
Retextion, a subscription management platform for Shopify brands, acquired Bellwethr Inc., the maker of churn reduction app RetentionEngine. With the merger, Retextion said it will integrate RetentionEngine’s feature set into its platform for all merchants. The companies are also planning to roll out new feature sets powered by Rentention Engine’s machine learning algorithms, including a new set of dashboards focused on predictive analytics. “RetentionEngine is hands down the best churn reduction tool on the market,” said Gina Perrelli, CEO of Retextion. “We’re thrilled to have the talent and resources to layer powerful machine learning into every aspect of subscriber acquisition, retention and winback.” Terms of the deal were not disclosed.
L’Oréal is set to acquireSkinbetter Science,, a sknicare brand dispensed by physicians. Founded in 2016 by pharmaceutical professionals Jonah Shacknai, Justin Smith and Seth Rodner, Skinbetter Science developed products for anti-aging, moisturizing, cleansing, exfoliating, skin peeling and sun protection. The Arizona-based brand recorded trailing 12-month sales of $95 million for the period ended August 31. Skinbetter’s team will continue to run the brand, with the integration led by Christina Fair, president of the Active Cosmetics Division within L’Oréal USA. Terms of the deal, which is expected to close in the fourth quarter, were not disclosed.
Purple Innovationsaid last week that it received an acquisition bid from Coliseum Capital Management. This week, it has a response: It will mull it over. The DTC mattress brand adopted a limited-duration shareholder rights plan, known as a poison pill, which is a strategy employed by public companies to hold off acquisitions. Meanwhile, a newly-formed special committee will evaluate the unsolicited bid. The company also disclosed that Coliseum Capital currently owns 45% of the shares outstanding. “The Special Committee adopted the Rights Plan in response to the Coliseum Proposal, Coliseum's substantial increase in ownership of shares of Purple over the last year and the Special Committee's desire to have the time and flexibility necessary to evaluate the Coliseum Proposal,” Purple said in a news release.
Food technology company Grubmarket said it acquired JC Produce, a fresh produce company with a focus on South America and Asia. Founded in 2012 by Jacky Chan, JC Produce grew as a distributor of ginger and garlic, and has over 30 SKUs. Following the acquisition, JC Produce will continue to be run by its current management team and use WholesaleWare, which is Grubmarket’s SaaS platform for wholesalers and distributors. “This acquisition enables GrubMarket to further strengthen our presence on the West Coast as well as our sourcing power worldwide,” said GrubMarket CEO Mike Xu.
Can Shop Cash entice more users to use the app for browsing and buying?
Shopify is launching a new rewards program for items purchased through its checkout system.
Shop Cash will provide the opportunity for consumers to earn 1% back on purchases made through Shop Pay.
The feature includes a direct tie-in with the Shop app. Users can check their balance through the app, and the rewards are redeemable for future purchases through Shop, as well.
“This is a coming of age moment for Shop. It’s become an incredible app that allows shoppers to discover great brands, check out with one tap, and track orders in real time,” said Harley Finkelstein, president of Shopify, in a statement. “Shop Cash represents the next evolution of Shop, connecting independent brands to more shoppers, and rewarding those shoppers for being loyal fans.”
The launch falls on Shopify’s 17th birthday, so the ecommerce software company is giving away Shop Cash to celebrate. For Shop Day, Shopify partnered with dozens of merchants, including Trixie Cosmetics, MrBeast and Monday Swimwear. They’ll share custom links across channels that offer cash to spend on the Shop app. In all, Shopify will give away more than $1,000,000. Brands will also be running exclusive Shop Cash offers throughout the day.
The rewards program marks a new way that Shopify is aiming to transform Shop into more of a shopping app where users can discover new items, extending beyond its initial use for post-purchase order tracking and management at launch in 2020.
Shopify has been making moves over the last year to provide more opportunities to browse and buy recommended products, as well as giving brands more tools to showcase storefronts and tell their stories. With Shop Pay, the app offers one-click checkout. There are signs that it is all inspiring users to seek out the app. Shopify said 35% of the orders on the Shop app are repeat purchases.
With more brands joining the app and infrastructure for the shopper experience and checkout in place, rewards can help make the app stickier for consumers. The opportunity to earn cash, redeem it and even check a rewards balance are all reasons to keep returning to the app, and make it a destination to shop.
Shopify has long been known as the infrastructure layer of commerce, as it provided the tools for brands to run and manage an online store under their own name. With the Shop app, it is aiming to make Shopify itself a destination for shopping. It remains a nascent effort, even as more brands have taken advantage of the new features to enhance storefronts.
This comes as marketplaces continue to rise across ecommerce, and giants like Amazon and Walmart experiment with tools that do more to boost discovery of new products.
Social media has long been the engine of discovery in ecommerce, especially in the direct-to-consumer realm that Shopify has owned. Users found products on Facebook or Instagram, then finished checkout on a brand's phase. With the push toward privacy making performance marketing more difficult and customer acquisition costs rising, the ecommerce platforms are attempting to take that power into their own hands. With advertising placed close to the point of sale through retail media and the ability to check out on the same page where a user sees a product, marketplaces and Shop are realizing new opportunities to attract, convert and deliver for users within one app. For Shop, the trick is to attract more shoppers to the app. Rewards like Shop Cash are a carrot to do just that.