Daily Consumer #25 - Announcing Our $40M Investment In Backbone
Plus a recap of Q4 earnings for Doordash, Shopify, and others.
Announcing Our $40M Investment In Backbone
This week, I’m excited to announce our lead investment in Backbone’s $40M Series A financing round. Backbone is redefining core gaming on mobile with a controller product that makes it easier to play games and accompanying software to discover games and connect with friends.
Backbone combines several of the areas that I explore in my role as a venture capitalist - gaming, commerce, and social media. You can read more about this investment here.
My Index Ventures colleague Rex Woodbury wrote a great piece about a few emerging ecommerce trends like live shopping. Check it out here.
Glossy profiles Anine Bing, an emerging luxury fashion brand that started as an influencer-driven brand. An Index Ventures portfolio company.
My colleagues at Index Ventures wrote up a profile on the evolution of the sneaker market and how our portfolio company GOAT is playing a central role.
Interlace Ventures launches Unbundled, a resource to learn about the tech stacks for the top 50 ecommerce brands like Glossier and Bombas. Quite cool.
A great writeup on the state of digital advertising by Ben Thompson. “The problem for Meta is in the title of that article: Apple. The latter’s App Tracking Transparency (ATT) initiative severed the connection amongst e-commerce sellers, app developers, and Facebook by which Facebook achieved that ROI.”
RangeMe, a product discovery platform with >200K suppliers and >1M products, adds the ability to conduct transactions through their platform. Trying to respond to the fast growth and better business model of Faire?
McKinsey shares survey results that suggest ecommerce is a must-have capability for B2B commerce.
Success in beauty is increasingly about the ingredients in products and less about the brand on the label. “The Hut Group, which owns Look Fantastic and Cult Beauty, saw searches for ingredients start to climb rapidly, particularly within the skincare category, growing over 229% YoY.”
A great deep dive on JD.com. China’s 2nd largest ecommerce marketplace started as a chain of 12 electronics stores.
Another great writeup examining the similarities and differences of Alibaba, JD.com, and Pinduoduo.
Nike and Adidas are waning in popularity in China as consumers shift their demand to Li Ning and other domestic athletic brands, partially driven by political moves by those non-domestic brands.
New Guards Group is partnering with Reebok and will overtake marketing and product development for the brand.
Content + Commerce.
The makeup artist for the hit show Euphoria is launching her own Euphoria-inspired brand called Half Magic. #euphoriamakeup has 1.4B views on TikTok.
Saw Q4 revenue grow 34% YoY to $1.3B and GMV grew 36% YoY $11.2B. Reached 25M MAU in Q4. Saw 14% of customers shop in a category outside of restaurants. Now has >10M DashPass members, up from 9M in Q3. Has >3M active drivers.
Saw Q4 revenue grow 16.5% YoY to $4.2B. Active sellers grew 72% to 7.5M and active buyers grew 17.6% to 96.3M.
Saw Q4 revenue grow 41% YoY to $1.4B and saw GMV grow 32% YoY to $54.1B. However, called out that revenue growth will slow as the demand surge driven by lockdowns and stimulus disappears in 2022. Also expects to invest $1B in 2023 and 2024 to develop its fulfillment network.
Separately, Ben Thompson shares a great writeup on Shopify as a platform and what opportunities lie before them. Like him, I’m more excited about them launching an advertising business than a fulfillment business.
Saw Q4 revenue grow 8.4% to $14.8B. Ecommerce grew 44%. In just 5 years, ecommerce has gone from 2% of Unilever's revenue to 13% in 2021.
Saw Q4 revenue grow 0.5% YoY to $152.9B. Ecommerce sales grew 1% YoY. Has now enabled grocery pickup in 4.6K locations and same-day delivery from 3.5K stores. Their global advertising business, Walmart Connect, generated $2.1B revenue in full year 2021. In the US, active advertisers using the service increased 136%. Expect the advertising business to grow into a “top 10” ad business.
Consumers seem to be more smell-conscious post-pandemic. “In the first quarter of 2021, fragrance sales reached $954M, according to data from the NPD Group, an 82% increase from the first quarter of 2020.”
Walmart is hosting a special online shopping event for Walmart+ members. Members have the opportunity to save up to 40% on hundreds of items on Walmart.com reserved exclusively for them.
A profile of Aimé Leon Dore, an emerging men’s streetwear brand that recently received funding from LVMH.
The NFL partners with Roblox to launch NFL Tycoon Experience. “Lets fans build, play, and learn in their own NFL-centered world through a combination of the popular tycoon and simulator genres on Roblox where nearly 50M users are connected daily.”
Alo Yoga partners with Roblox to launch Alo Sanctuary, an immersive wellness space for yoga and meditation. Is Alo’s first foray into digital fashion - will launch a 5-piece collection.
Amazon is rolling out its cashierless technology across Whole Foods stores.
Revolve is launching its first store in LA.
Allbirds is beginning to enter into wholesale relationships in an effort to grow revenue.
RFID may be the key technology to enable offline retailers to sell their inventory online as well. Target, Best Buy, and Walmart are investing heavily in the technology.
Apple enables Tap to Pay on iPhones removing the need for point of sale hardware or card readers to accept payments as a merchant. Shots fired at Square as Apple tried to create its own closed-loop payments ecosystem?
Costco has been scaling its private label business for 30 years. As the number of private label products grew, they decided to centralize all of them under one brand called ‘Kirkland’, which they hoped would be synonymous with value and quality. It worked.
Lowe’s launches their own home decor and furniture brand called Origin21.
Allbirds partners with Trove to launch ReRun, a service where Allbirds customers can trade in their worn shoes for $20 in store credit.
Cuts launches their own fashion resale marketplace powered by Treet.
DICK’S Sporting Goods partners with SidelineSwap to host a series of trade-in events where athletes can trade in their used sports gear and receive DICK’S store credit to use towards their next purchase.
Vinted partners with InPost Group, a logistics company that will allow Vinted customers to access their deliveries across their network of 35K+ lockers and other delivery pickup locations.
Toast releases its Restaurant Trends Report using data from 57K locations. Saw restaurant sales grow 41% YoY. Takeout and delivery sales increased 59% from Q4 2019 to Q4 2021.
Online ordering is working really well for large restaurant brands. “Restaurants love digital orders. They are as a rule more profitable because an employee isn’t the one taking the order, the customer is making it. More than a quarter of the sales at McDonald’s restaurants in its six biggest global markets are now coming through digital channels. Taco Bell now generates 20% of its sales through digital channels.”
Chipotle is well up the curve on online ordering as well. “Chipotle’s digital sales grew 4% in the fourth quarter, to 42% of sales, or $811M. The chain’s full-year digital sales of $3.4B are nearly 3.5x more than the company saw before the pandemic.”
The CEO of Olo predicts that $100B of transaction volume will shift to online ordering in the restaurant industry over the next 7 years.
McKinsey shares a great overview on the growing retail media opportunity. As Apple disrupts ad platforms like Facebook, a big opportunity emerges to define ad units where transactions are already taking place.
Uber Eats is growing its ad business quickly. Launched ads in 30+ countries. Now has 170K activated advertisers as of Dec ’21 and is on a ~$225M annualized revenue run-rate for the business.
An overview of the retailers trying to spin up advertising businesses now that Amazon has proven it can be very lucrative.
DHL partners with ReturnLogix to manage ecommerce returns. Returns grew 78% in 2021 to >$761B.
Doordash launches flower delivery in partnership with 3K local and national florists across the US.
Grubhub is partnering with Buyk to launch a 15-minute delivery service for grocery and convenience items. Will start in more than 30 locations in New York and Chicago.
Deliveroo partners with Waitrose, an upscale grocer, to deliver groceries in 10 minutes.
Lowe’s partners with Instacart to enable same-day delivery of 20K+ products.
A deep dive on the economics of the “instant delivery” space. “The economics look underwhelming.”
Search Engine Marketing.
Doordash is integrating into Order with Google, which will allow consumers to order directly through Google Search and Maps. Is specific to merchants who use Doordash Storefront, which is an owned storefront that Doordash does not charge commissions on orders for.
A profile of TikTok which is seeing the highest time spend per day of any social media app in the US.
TikTok is trying to turn on ecommerce as its core rival in China, Kuaishou, shows that it’s possible. TikTok’s early attempt isn’t off to a promising start though. TikTok also has its eyes on SheIn as well.
Facebook is rolling out Reels globally on the Facebook app. Shots fired at TikTok.
YouTube is increasing focus on Shorts, it’s TikTok competitor. “Plan to enable viewers to shop directly via YouTube Shorts.”
Recharge, the leading subscription enablement software company, shares their annual State of Subscription Commerce report.
A profile of quickly growing Athletic Greens, which sells just one product — its AG1 daily nutrition supplement, which costs $99 for 30 servings.
Some subscription-based brands like Bark and KiwiCo are trying to innovate beyond the model. Rigidity of subscriptions is cited as a big paint point to scale the model.
Cole Haan launches its first sustainable shoe which has a sole made from FlowerFoam, which is a natural dandelion rubber.
Connected TVs are the new battleground for tech companies. “The spoils of the CTV wars will be enormous. Hundreds of billions in advertising, subscription, and commerce revenues over the 25 years.”
Funding and Exits
Y.o.u. raises $40M from Hidden Hills Capital for its Indonesia-focused beauty brand. Product price points aim at the mass market, with lipsticks for less than $5 and serums for under $15.
SellerX raises $500M in debt and equity from Sofina and Victory Park Capital at a $1B valuation buy up e-commerce brands and businesses selling goods on Amazon. Has 40 brands in the portfolio selling 25K products.
Aviron raises $18.5M from Stripes for its connected rower product.
Food and Beverage.
Nestle acquires Orgain, a brand of protein-based shakes, powders and snacks. Have the nation’s best-selling plant-based and organic protein powder (I use it personally). Nestle is all in on the health / nutrition trend.
Nex Gen Foods raises $100M from Alpha JWC, EDBI, and others for its plant-based chicken products.
Wildtype raises $100M from L Catterton, Cargill, and others for its cell-grown salmon.
Waterdrop raises $70M from Temasek for its “microdrink” hydrating sugar-free cubes that dissolve in water. “By switching from plastic bottles to Waterdrop pods and reusable bottles, the company claims consumers can reduce their CO2 emissions and plastic use by 98%.”
Good Culture raises $64M from Manna Tree for its alternative dairy-based cottage cheese products.
Zero Acre Farms raises $37M from Lowercarbon Capital and Fifty Years for its sustainable, fermented vegetable oil.
Kos raises $12M from Springdale Ventures for its plant-based protein products.
De La Calle raises $7M from KarpReily for functional Mexican tepache beverage brand. Is available in 2K stores.
Havenly, an interior design platform, acquires The Inside, a high-end furniture brand.
Backbone raises $40M from us at Index Ventures for its gaming platform combing a controller with software.
Clare raises $8M from Pendulum for its D2C paint brand.
Blueland raises $20M from Prelude Growth Partners for its refillable home cleaning products. “The company grew over 400% in its second year of business.”
Wild Cosmetics raises $6.7M from JamJar for its plastic-free refillable deodorant. Has sold 2.5M units so far.
Uni raises $4M from SOUNDWaves for its closed-loop system for bodycare. The packaging is aluminum-based and repeat orders are conducted with product refills.
Made by Nacho raises $14M from CAVU Venture Partners for its premium cat food brand.
Kimberly Clark acquires Thinx, a period-proof underwear brand which has 2M+ customers.
Brunt raises $20M from Stripes for its boot and apparel brand targeted at construction workers and tradespeople.
Glance raises $200M from Reliance Industries at a $1.7B valuation for its software that serves media content, news and casual games on Android handsets’ lockscreen. Has access to 400M phones.
ElasticRun raises $300M from Softbank at a $1.5B valuation for its India-based marketplace that matches small stores with suppliers of inventory. Suppliers on the platform include Amazon, Tata Consumer Products, and Coca-Cola.
LandscapeHub raises $9M from Klaff Realty and Hyde Park Venture Partners for its B2B marketpalce connecting buyers with sellers of plants and landscaping material. Is seeing 100K product searches monthly.
Beauty for All Industries raises $96M from TPG Growth. Is the parent company to Ipsy, BoxyCharm, Addison Rae's Item Beauty, Becky G's Treslúce Beauty, and other beauty businesses. “Their subscription model has been an amazing way to introduce Tresluce to millions of other beauty-obsessed people and build immediate brand awareness,” says Becky G.
CoProcure raises $22M from Forerunner Ventures for its marketplace for government agencies to discover and purchase goods and services. Has >300 government agencies on the platform with access to 50K+ vendor contracts and is influencing >$100M annualized GMV.
Gousto raises $230M from Softbank for its UK-based meal kit service.
Livspace raises $180M from KKR at >$1B valuation for its India and Singapore-based consumer marketplace for furniture.
Mundimoto raises $23M from P101 for its Europe-based online motorcycle buying and selling marketplace. Has sold 4K vehicles and generated €15M revenue in 2021.
Papier raises $50M from Singular for its marketplace for paper-based products like stationery. “It’s a $200 billion market and it doesn’t have a strong online brand.”
Alloy Automation raises $20M from A16Z for its automation platform specific to ecommerce tools. The product makes it easy to link apps together to allow merchants to create automated workflows.
Voila raises $6M from Sinovation Ventures for its AI-powered customizable, shoppable storefronts. Works by automatically detecting items in the creators’ online content, then generating shoppable links. Has 10K creators on the platform.
Cococart raises $4M from Forerunner and Sequoia for its software that enables small businesses to build an online store in minutes with no code, no design and no app downloads. Has 20K merchants in 90 countries signed up that have collectively taken over 500K orders.
Fabric raises $140M from Softbank for its suite of headless commerce APIs. Also announces that is just signed The Honest Company as a customer.
Shopware raises $100M from PayPal and Carlyle for its suite of headless commerce APIs. This is the company’s first fundraising round after being run profitably since 2000. Customers include Philips and Haribo.
Bloomreach raises $175M from Goldman Sachs Asset Management at a $2.2B valuation for its marketing automation software that also encompasses recommendations and content management. ARR gew 63% YoY to $117 million in ARR.
Cerebra raises $15M from Notion Capital for its AI-powered software that analyzes external and internal data sources to make marketing and merchandising recommendations.
Cortina raises $6M from Point72 Ventures for its software that helps retailers sell the products of other retailers without taking inventory risk.
Depict.ai raises $17M from Tiger Global for its AI-based software that allows ecommerce stores to enable product recommendations. Claims to increase overall ecommerce revenue by 4-6% for any store without needing any sales data at all.
Olo acquires Omnivore, a platform that allows restaurants to plug in a huge variety of technologies into their point of sale. Will increase Olo’s technology partnerships by 50% to more than 300 partners.
Table22 raises capital from Footwork and Forerunner Ventures for its software that enables restaurants to build, manage, and grow subscription offerings for consumers. Serves 175 merchants today.
Scalapay raises $497M in debt and equity from Tencent and Willoughby Capital for its BNPL service that is largely focused on Europe-based merchants.
Alma raises $131M from Tencent and others for its Europe-focused BNPL service that has 6K merchants today.
ViaBill raises $120M in debt and equity from Fasanara Capital for its Europe-focused offline-focused BNPL service.
Skipify raises strategic capital from PayPal Ventures, Synchrony, Amex Ventures and Okta Ventures for its instant checkout platform.
Neon raised $300M from BBVA for its Brazil-based neobank. Has 15M registered accounts.
Vivid Money raises $114M from Greenoaks Capital at a $886M valuation for its Europe-focused neobank with 500K customers. Plans to reach 1M customers by year end.
Niyo raises $100M from Accel and Lightrock India for its India-focused neobank. Is processing >$3B annually and has 4M customers.
FIS acquires Payrix, an embedded payments platform.
Flutterwave raises $250M from B Capital Group at a $3B valuation for its Africa-focused payments platform. Processes 200M transactions worth more than $16B and is used by 900K businesses.
PayMongo raises $31M from JAM Fund and others for its Philippines-focused payments platform that helps SMBs take digital payments.
Kiwibot raises $7.5M for its autonomous food delivery service that operates on college campuses.
PrettyDamnQuick raises $6M from TLV Partners for its integrated checkout and carrier selection software.
Flexport raises $900M from Andreessen Horowitz, Founders Fund, Shopify, and others for its freight forwarding service. “Sales reached $3.3B in 2021, up from $1.3B in 2020 and $670M the year before. Last year, the firm generated its first profit, posting net income of $37M.”
Scandit raises $150M from Warburg Pincus for its computer vision technology to scan barcodes, text, ID cards or any physical object to trigger automated responses.
Shipsy raises $25M from A91 Partners and Z3 Partners for its software that helps Asia, India, and Middle-East-based businesses track freight and parcel shipments.
J&T Express raises $2B from Temasek Holdings, Hillhouse Capital, and others for its express services and cross-border logistics spanning 10 countries largely in Asia.
Xpressbees raises $300M from Blackstone Growth, TPG Growth, and ChrysCapital at a $1.2B valuation for its India-based fulfillment and delivery services business that serves 1K customers including Meesho, Xiaomi, and others. Is in in 3K cities and processes >3M orders per day.
Veho raises $170M from Tiger Global at a $1.5B valuation for its last-mile package delivery service. Operates in 15 cities and customers include HelloFresh, Misfits Market and thredUP.
Anyvl raises $31M from B Capital for its software that integrates brands and suppliers’ end-to-end operational processes to automate supply chain management.
Righthand Robotics raises $66M from Safar Partners, Thomas H. Lee Partners and SoftBank Vision Fund at a $240M valuation for its robotic arms that can automate the process of picking items in warehouses.
ProductDonation of the Week
My sympathies lie with the people of Ukraine. My family comes from Bosnia, another non-NATO country in Eastern Europe. Not being a part of NATO unfortunately means these countries are left to fend for themselves in conflicts such as this one or the Bosnian War in the 90’s (Europe’s last war).
With this going on, it’s hard for me to push a product. Instead, I’ve made a donation to Unicef which does great work to help kids in war-torn areas. I hope you’ll consider donating to them as well. Donate here.