Funding

After a record 2021, retail tech funding slowed down in Q1

Store tech and supply chain saw a strong quarter, per CBInsights.
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After a hot year in 2021, retail tech funding is now showing some signs of a cool off. The sector, which includes everything from contactless checkout to e-commerce marketplaces, brought in $23.8 billion in funding in Q1 2022, an 11% drop from the previous quarter (and down 6.6% YoY), per CBInsights.

  • The decline aligns with trends among all venture funding, which saw the largest percentage QoQ dip (19%) since Q2 2012, the business analytics platform noted.

Money moves: “A fair amount of volatility” in the markets has made investors shift their focus to companies that are a bit more of a “sure thing,” CBInsights Senior Lead Analyst Laura Kennedy told Retail Brew.

  • Though 55% of deals in the quarter were early-stage, the median size of mid- and late-stage investments is getting bigger, the latter growing by 11% to $100 million.

“When investors are really looking to double down, they’re looking at the mid-stage companies that are growing and that there’s proof of their growth, and they’re looking at the late-stage companies that can offer them scale and more stability,” she said.

Nearest exit: Retail exits largely consisted of M&A deals. There were 256 in the quarter, 91 of which were in e-commerce. Meanwhile, the number of companies that went public through IPOs and SPACs (11) was cut in half from the previous quarter (just when we finally memorized what a SPAC is).

Ones to watch: Nearly half of the new unicorns in Q1 were within supply chain and logistics (like French warehouse robotics company Exotec and Indian B2B e-comm platform ElasticRun), which Kennedy noted was “not shocking” given the tumultuous state of global supply chains.

Store-management tech was the only sector that saw a QoQ boost in funding, up 10% thanks to Relex Solutions’s $568 million deal in February. Meanwhile, e-comm got off to a slow start this year, with funding down 15% QoQ, though the space garnered plenty of sizable deals, like Fanatics’s $1.5 billion round.

  • Kennedy noted the performance in these two sectors “emphasizes the need for the omnichannel solutions and omnichannel tech.”

“For all of the funding that goes into e-commerce…an increase in funding [for] in-store tech reminds us that for the vast majority of retailers and brands, stores still make up the vast majority of sales,” she said.—EC

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.