Weekly Update #242: Retail Dead? Not for Some Startups...
Eyeglass retailer Warby Parker raised $75M last week, putting the company’s valuation at just under $2B. The fresh funds continue Warby’s remarkable valuation trajectory from the $37M awarded to it just seven years ago. Even more remarkable -- the valuation gains stand in stark contrast to the lackluster performance of the retail sector in general (compared to the S&P 500) and of its larger and well-heeled rival, Luxottica.
Warby’s is not the only success story that challenges the widely-held notion of retail being dead. A handful of other companies including Glossier (makeup), Moda Operandi (luxury clothing), Rent the Runway (luxury clothing rental) and Casper (mattresses) have also well outpaced both the broader retail market and incumbents on share price gains. The charts below show this outperformance, comparing share price performance of the startups (dark green bar) and their publicly-traded peers (light green bars) between recent funding rounds.
Of course, missteps haven’t eluded the startup world and valuation can be a misleading metric for success -- Nasty Gal and Blue Apron saw initial success only to stumble later. Further, startups have the benefit of growing from a smaller base -- which can account for at least part of the performance differential. Nevertheless, it likely does not explain the entire gap. Far from languishing in a challenging retail environment, some startups seem to have found a way to thrive.
** Kartik Ram, Managing Director of Fashion Fund and one of our guest contributors, offered his insight on digitally-savvy retailers here.
Other items we are reading:
- MapR’s CEO John Schroeder discusses product focus now that he is back at the helm of the big data startup.
- Palantir was awarded a new $876M contract with the US Army.
- 23andMe will start testing for breast cancer genes. The new tests open the startup to a promising market opportunity -- around 12% of women develop breast cancer at some point in their lives.
- Instacart discusses its strategy to tackle competition from Amazon.
- Ripple will debut Money Tap, a blockchain payment app, in the fall. The app will be used for domestic payments in Japan. In other blockchain news, Swift, the cross-border payments network, noted the technology was not yet ready for adoption into its system after proof of concept testing. Swift facilitates ~$5T of payments daily.
- Rent the Runway raised $20 million from Jack Ma and Joe Tsai. The deal looks like an extension of the startups 2016 funding round.
- More on Warby Parker’s funding round here.