05 December 2022
A new food + bev fund, Everlane's loan, Freshly's future
Dealboard has updates on new valuations for ecommerce unicorns, a deodorant brand's acquisition and more.
Dealboard has updates on new valuations for ecommerce unicorns, a deodorant brand's acquisition 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 ecommerce, CPG and retail.
This week, a longtime Whole Foods tastemaker closes a new fund to invest in food and beverage brands, while logistics technology continues to pick up steam with investors and ecommerce unicorns are seeing valuations fly even higher. Meanwhile, Everlane secured a loan, Intermix has a new owner and Nestle is spinning off a meal delivery business.
Ecommerce tech firm Rokt saw its valuation rise to $2.4 billion following a “secondary transaction” that followed the company’s $325 million Series E.
The latest financing was led by Square Peg and Wellington Management.
Rokt’s technology delivers messages at the moment when customers are most likely to convert. This year, it has added customers including Uber and AMC. Going forward, it plans hiring across the globe, and a second product development center in North America.
"Despite broader market declines in valuations, we continue to see rapid growth in Rokt driven by new ecommerce partners and an uplift from advertisers," said Bruce Buchanan, CEO of Rokt in a statement. "Due to the challenging economic climate, ecommerce companies are focusing on more relevant customer experiences that improve economics and deliver new revenue. This has further propelled Rokt's growth and we're pleased to see this expression of support from existing investors as Rokt looks towards an IPO."
Locus Robotics, which provides autonomous mobile robots for fulfillment and distribution warehouses, raised $117 million in a Series F funding round.
The financing was led by Goldman Sachs Asset Management and G2 Venture Partners. It brings the company’s valuation close to $2 billion.
Locus provides a fleet of robots that work alongside humans with piece‐handling, case-handling, and pallet-moving. It has more than 90 customers worldwide in retail, 3PL and specialty warehousing.
SaltBox, a co-warehousing and logistics provider for small ecommerce businesses, raised $35 million in a Series B round.
The round was led by media company Cox Enterprises and Pendulum, a firm that supports founders and leaders of color. Also participating were Playground Global, XYZ Capital, Fundrise, Kapor Capital, Wilshire Lane Capital, Colliers, Lincoln Property Company, Flexport and Overline.
SaltBox already expanded its warehouse network to 10 cities in 2022, and plans two more. It also opened a fulfillment hub in Dublin, Ohio, which it says enables members to reach two-thirds of the US population with two-day shipping. The funding will support development of the company’s core technology stack, which powers a logistics software platform for businesses.
OneRail cofounders Bill Catania and Lisa Catania. (Courtesy photo)
OneRail, a last mile logistics firm, raised $33 million in a Series B round.
The financing was led by Piva Capital and Arsenal Growth Equity, with participation from Trimble Ventures, the corporate capital venture fund of construction, agriculture and transportation firm Trimble, ATD and existing investors including Ironspring Ventures, Las Olas Venture Capital, Bullpen Capital, Triphammer Ventures/Alumni Ventures Group, Gaingels and Mana Ventures.
OneRail provides a delivery operating system to businesses including retailers and CPGs. This is designed to match the order with the right shipping mode and courier or carrier network.
“Since our Series A round in 2021, we’ve grown revenue year-over-year by 312 percent and have expanded service to over 330 U.S. cities,” said OneRail CEO and cofounder Bill Catania, in a statement.
With the funding, the company plans to develop new platform capabilities, and expand in sales marketing and solution engineering.
Everlane, the digitally native apparel company, secured a $25 million loan from investment firm Gordon Brothers. According to the company, the loan will be used to support a decade of growth at Everlane.
“Gordon Brothers’ flexible approach will help build a better capitalized business that matches the strength of Everlane’s underlying brand,” said Bill Wafford, CFO of Everlane, in a statement.
New Fare Partners raised $20 million in an inaugural fund that will invest in early stage food and beverage businesses.
The firm is led by Elly Truesdell, who led innovation at Whole Foods Market as the global director of local brands and product innovation and served as a partner at venture fund Almanac. Co-leading is Hallie Bonnar, who was the head of marketing at Almanac. Truesdell and Bonnar also served as leaders of Made by Nacho, the cat food brand founded by star chef Bobby Flay.
Along with Made by Nacho, the fund has invested in the retailer Foxtrot, Mexican brand Tacombi, Japanese barbecue sauce company Bachan’s and functional chocolate bar Mid-Day Squares.
A news release detailed the investors in the fund:
New Fare’s investor group consists of prominent LPs, many of whom are former founders themselves, including Walter Robb, former Co-CEO of Whole Foods Market; Bobby Flay, Chef/Restaurateur and Entrepreneur; Kathleen King, Founder of Tate’s Bakeshop; Gary Hirshberg, Founder of Stonyfield Organic; Andrew Abraham, Founder of Orgain; Gabi Lewis, Founder of Magic Spoon; Charlie Sweat, Former CEO of Earthbound Organics; David Barber, Partner at Astanor Ventures, Co-Owner/Founder of Blue Hill and Almanac, and Nick McCoy, Founder and Managing Director of Whipstitch Capital. Advisors include Michael Dubin, Founder and Former CEO of Dollar Shave Club; Lily Chang, PE Industry Executive; and Christina Minardi, Global EVP, Growth & Development at Whole Foods Market.
Buckzy Payments, a cross-border payments company, raised $14.5 million in a Series A round.
The financing was led by Mistral Venture Partners and Uncorrelated Ventures, with participation from new investors Luge Capital and Blue 9 Capital, and existing investors Revel Partners. As part of the round, former Xoom and PayPal Karim Gillani, who is currently a general partner at Luge Capital, will become a board advisor.
Founded in 2018, Buckzy is growing a payment network that works with traditional banks to disburse funds to over 80 countries. It has 140 customers, including traditional banks, neobanks and fintechs.
“We’re on a mission to build the plumbing for real-time money movement globally, the same way high-speed internet fundamentally shifted the communications industry,” said said Abdul Naushad, founder and CEO of Buckzy, in a statement.
Smoodi, which makes a “healthy smoothie store in a box,” raised $5 million in a Series A round, Techcrunch reported.
The funding was led by an investment group from former distributor Keith Canning. Participating were FCP Ventures, UnderscoreVC, Allston Venture Fund, WSPR Fund, Phoenix Club and a group of angel investors that included former Nespresso president Frédéric Levy and Blue Rhino founder Billy Prim.
The company’s smoothie-making machines use robotics to mix together the fruits, vegetables and protein infusion of a smoothie and serve it. It is available in convenience stores, offices, restaurants and other retailers. With the funding, the company is planning to scale nationwide, with the aim to reach thousands of locations through a partnership with food distribution giant Dot Foods.
Stony Creek Colors' indigo crops
Stony Creek Colors, a manufacturer of natural indigo dye, raised $4.8 million in a Series B2 round.
The financing was led by growth equity firm Lewis & Clark AgriFood and apparel giant Levi Strauss Co., which has been a collaborator with the company for five years.
Stony Creek makes 100% bio-based indigo, with a model that allows traceability to the farm level. It grows the indigo on over 500 acres of farmland in Tennessee, Kentucky and Florida, where farmers use it as cover crop as they rotate soil.
Two years after acquiring Freshly, Nestle is set to spin off the meal delivery business.
According to Food Processing, Nestle plans to combine Freshly with Kettle Cuisine in a joint venture led by investment firm L Catterton.
Nestle acquired Freshly for $950 million at the height of ecommerce demand in 2020, but it has not met objectives and is now operating in an environment with higher customer acquisition costs, CEO Mark Schneider said at Nestle’s recent investor day.
UK-based brand incubator DCB Lab acquired clean personal care brand Type: A, according to Beauty Matter. Type: A makes aluminum-free deodorant and personal care products that have earned over 8,000 five-star reviews. DCB Lab plans to expand the brand to the US.
Tannico, an ecommerce company for wine and spirits, was acquired by LVMH Moet Hennessy and Campari in a deal that gives the firms 100% control of the company through a joint venture, Reuters reported.
In 2020, the spirits brands purchased a 49% stake in the company, then created the joint venture.
"With this operation, we confirm our commitment to making Tannico the leading European platform in the sale of wines and premium spirits," said Bob Kunze-Concewitz, CEO of Campari.
Trafilea, an ecommerce group that owns shapewear and intimates brands Shapermint and Truekind, acquired The Bod Con, a body confidence-focused virtual conference and podcast.
Founded by talent management and influencer relations entrepreneurs Jess Hunichen and Emily Ward, The BodCon will plan to continue its mission under Trafilea’s leadership.
“Trafilea has invested significantly in furthering the body confidence movement through its products and campaigns, making it an incredibly aligned partner,” Hunichen and Ward said, in a statement. “We feel strongly that Trafilea's resources and international reach will allow The BodCon to become an even larger and more powerful voice within the body confidence community."
Intermix, a multibrand store, is set to be acquired by the private equity firm Regent L.P., according to WWD. Intermix is currently owned by Altamont Capital Partners, which acquired the 30-location company from Gap in 2021. The sale comes as Intermix became the latest retailer to hit difficult financial straits. WWD reported that 60 employees were laid off from Intermix, and payments to vendors were paused. Interim CEO Karen Katz also stepped down last month.
“Intermix has been faced with too much inventory, a slowdown in sales, improperly budgeting for overall expenses and a highly competitive and challenging retail environment,” WWD reported.
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.