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BFD Expert Voices - Retail Deals

BFD Expert Voices

Radar, which develops technology to help retailers locate in-store inventory, raised $30 million in Series A funds, CEO Spencer Hewett tells Kimberly exclusively.

Why it matters: With margins under pressure, tools that can bring more visibility to retailer inventory go a long way.

Details: The round was led by existing investor Align Ventures, with participation from RX Ventures (the corporate venture arm of South American retailer Lojas Renner), The Ferrante Group, Hilldun Corporation, Future Archives and Leeds Holding.

The capital will facilitate Radar's rollout with its current retail partners, adding additional partners and bolstering its product development efforts.

Total funding comes to $63 million to date.

How it works: The company uses tags and wireless sensors in stores to help retailers track product location, how many items are in stock, and customer engagement, among other features.

Hewett claims its sensors make existing RFID tags nearly as accurate as Apple AirTags.

Radar also integrates with retailers’ systems, with several mobile apps for in-store teams to use.

Plus, its technology is compatible with existing RFID tags — already common in many apparel and footwear retailers.

“Radar has the potential to become so integrated into the workflow of retail companies that just switching over to a new RFID solution is not going to be that attractive,” Founders Fund partner Delian Asparouhov tells Axios.

What’s next: Radar is currently in eight American Eagle Outfitters stores and has plans to roll out in about 500 of its locations across the U.S. over the next year.

It is in active pilots with two Fortune 500 retailers.

The company is building out infrastructure to help with the logistics of rolling out in many stores, including software to automatically place sensors based on the floor plan and the store, removing the manual work.

Zoom in: The issue of inventory boils down to "bad data," according to Hewett.

"Retailers just don’t know what exactly they have on hand,” he says.

Many are making purchasing decisions based on the sale of items they erroneously thought were out of stock — or they have fewer items than they assumed, Hewett says.

“All you're doing is trying to maximize supply and demand,” Hewett says. "[If] you have bad supply data, it's going to influence what you do for demand planning.”

The big picture: Hewett says its technology could eventually move beyond apparel and home goods into areas like consumer electronics, beauty and general merchandise.

Other potential sectors include medical equipment, agriculture and defense — industries wherein knowing the accurate location of products is cost-effective and critical, he says.

1 big thing: Radar raises $30M Series A for retail rollout

Illustration of a location pin icon with a T-shirt in the center.

Jewelry maker VRAI and parent Diamond Foundry have begun construction of a new diamond foundry in Spain, President Mona Akhavi tells Richard exclusively.

Why it's the BFD: When the factory comes online in 2025, it will produce 20 million carats of rough synthetic diamonds per year, moving VRAI into capacity levels that rival peers like De Beers.

Of note: De Beers mined more than 34 million carats of diamonds last year, while Diamond Foundry currently has the capacity to produce 3 million carats per year at its foundry in the state of Washington.

Details: The San Francisco-based, DTC lab-grown diamond producer is in the process of building the foundry, which carries roughly an $800 million price tag, Akhavi says.

The initial investment in the plant was €245 million, €120 million of which was provided by the Spanish government via its Ministry of Industry’s Productive Industrial Investment Support Fund, she explains.

The company also received €80 million in grants from the European Union, Diamond Foundry CEO R. Martin Roscheisen says.

There is a second and third stage planned, however, that will begin construction in 2026. That part of the expansion will be funded in part via cash flow and grants, Roscheisen says. "If we used funds for this, it’d be simply bank debt rather than equity."

To ensure it has an ample supply of energy, it is being built near a solar power farm.

Meanwhile, though VRAI is a digital-first business, it is expanding its physical footprint this year to 17 showrooms from 13, Akhavi says.

Boston and Florida are locks for two of those locations, where customers can directly interact with the brand, while Texas and the West Coast are candidates for the other two, she notes.

What we’re watching: When the foundry comes online in 2025, the company could begin to weigh its exit options.

Near term, distress in the segment will likely lead to consolidation.

Catch up fast: Diamond Foundry has raised a total of $315 million in financing to date from firms such as Fidelity, which is its largest investor, Akhavi says.

According to PitchBook, the company last raised money in 2021 at a $1.8 billion valuation.

The bottom line: “This is a very capital-intensive technology and business to run,” Akhavi says.

Funding, operating efficiencies and scale are necessary not just to succeed but also to survive, she says.

One fun thing: Actor Leonardo di Caprio is an investor in and adviser to Diamond Foundry.

Editor's note: This story and headline have been updated with comments from Martin Roscheisen, who clarified they are not currently seeking financing for the first phase of the construction, but will raise additional funds for the second and third phases. Mona Akhavi’s title was also corrected to show she's president of VRAI, not CEO.

2. The BFD: VRAI starts first phase of diamond foundry

Illustration of man in a suit holding an open engagement box with a stack of money in it

🔪 Angelo Gordon & Co. is exploring a sale of Benihana that could value the U.S. restaurant chain at $600 million or more, including debt, Reuters reports, citing sources familiar.

The private equity firm acquired Benihana in 2012 for $296 million.

The strong performance of Cava Group’s IPO has served to bolster investor confidence in the restaurant sector.

☕️ Star Plus Legend Holdings, a low-carb coffee and drinks maker founded by the mother of Taiwanese pop star Jay Chou, received a warm reception from investors in its Hong Kong IPO.

The company’s shares surged 48% in its trading debut.

👀 Tuesday Morning, the discount retailer, asked the court that its Chapter 11 bankruptcy reorganization be converted to a Chapter 7 liquidation, something the judge will take up on July 27.

Note that the company was already planning to go out of business.

This retailer previously filed for bankruptcy in 2020.

🥑 Chipotle’s venture fund invested in Vebu, a product development company that helps food retailers create automation tools and technology to better help the industry.

The food chain, which didn’t disclose financial details, is co-developing a new avocado-processing collaborative-robot prototype that can cut, core and peel avocados with the aim of reducing guac prep time by 50%.

While it is currently being tested in Chipotle’s Cultivate Center in Irvine, California, the company said in an emailed statement that it hopes to bring “Autocado to a Chipotle restaurant later this year.”

📉 Online spending during Amazon’s Prime Days improved from Day 1 to Day 2, but online sales overall fell 7% across both days compared with last year’s event, according to Salesforce data obtained by Axios.

“Retailers didn’t see the Prime Day halo effect that typically boosts online sales during the dog days of summer,” says Rob Garf, vice president and general manager of retail at Salesforce, referring to the e-commerce industry as a whole.

Part of the allure of the event is the big discounts, something U.S. shoppers didn’t see this year — the average discount rate was stuck at 18%, a decline of 15% over last year. (The average discount rate during 2022’s Cyber Week was 30% for comparison.)

The average selling price was up 8% from last year, a sign of continued inflation, per Salesforce.

3. Retail therapy

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• Simbe Robotics, an SF-based maker of retail inventory robotics, raised $28m in Series B funding led by Eclipse. www.simberobotics.com

🍔 Carlyle and Trustar Capital are in talks to sell part of their stake in the Hong Kong and mainland China operations of McDonald’s, via a $4b sale to GIC and Mubadala, per Bloomberg. https://axios.link/44LnUEn

• Genspring acquired Bradford Soap International, a West Warwick, R.I.-based maker of beauty and personal care products. www.bradfordsoap.com

• Meratus, an Indonesian logistics and marine shipping firm, is seeking a buyer for around $2b, per Bloomberg. https://axios.link/3pMM4zj

• Swiggy, an Indian food delivery firm valued by VCs last year at $10.7b, agreed to buy Indian retail logistics startup LYNK. https://axios.link/3rvXAzr

• Coca-Cola (NYSE: KO) and eight bottling partners launched a $137.7m VC fund focused on sustainability investments, with VC firm Greycroft serving as manager. www.coca-colacompany.com

• Argonne Capital Group closed $1 billion of recapitalization continuation vehicles across two separate transactions for National Fitness Partners, one of the largest franchisees of Planet Fitness, and Sunshine Restaurant Partners, a master licensee of IHOP for all of Florida and southern Georgia. https://argonnecapital.com/

• Monster Beverage Corp. (Nasdaq: MNST) received U.S. bankruptcy court approval to buy rival energy drink maker Bang Energy for $362m. https://axios.link/3JX40Ov

4. Retail transactions

• Laura Denk has been named president of footwear retailer DSW Designer Shoe Warehouse and EVP of parent Designer Brands. She was most recently chief merchandising officer at crafts chain Michael’s. https://axios.link/44dEEUN

• Lisa Roath was promoted to CMO of Target. She was previously its senior vice president of food and beverage. https://axios.link/3NPcGYy

• Scott Lewis, who served as Interim CFO of everyday apparel company HanesBrands, has been appointed to the spot permanently. He will also retain his role as chief accounting officer. https://axios.link/44Ltd6L

• Bill Weimer was promoted to president of Argonne Capital. Ben Ghriskey, a former Fir Tree Partners executive, was hired as managing director and head of business development; Smruti Shah, a former State Street vice president, was named CFO and chief compliance officer; and Argonne partner Karl Jaeger was promoted to vice chairman. https://argonnecapital.com/

5. It's Personnel

🎬 What we're watching: Kim saw "Indiana Jones and the Dial of Destiny" in the movie theater and let's just say, it was much better than the last installment.

✏️ Many thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

July 13, 2023

1 big thing: Radar raises $30M Series A for retail rollout