Can venture funds help retailers keep apace with technology?
Ulta Beauty has become the latest retailer to officially launch a digital innovation venture fund. The fund will invest $20 million in startups “unlocking new technology that fuels greater discovery, personalization, and convenience.”
Prisma Ventures, unofficially announced at Ulta’s 2021 investor day, has invested in five firms:
- Haut.ai, a B2B SaaS tool for AI analysis of customers’ skin
- Adeptmind, an AI-powered e-commerce search engine
- Revea, a skincare company using personal analysis and machine learning to tailor skincare
- LUUM, a lash extension robot
- ReStyle, a virtual hair try-on start-up
Beyond capital, fund participants have access to Ulta’s innovation team, consumer insights and in-market testing opportunities.
“We believe this fund presents opportunities for creative disruptors to further propel the industry forward,” said Prama Bhatt, chief digital officer, Ulta, in a statement. “We set out to build lasting relationships with startups, welcoming them into our ecosystem, co-creating and experimenting in ways that tap each other’s expertise and ultimately leverage our resources to imagine – and reimagine – what’s next for retail and beauty.”
Among other retailers, Amazon.com in April established a $1 billion Amazon Industrial Innovation Fund “to spur and support innovation in customer fulfillment, logistics, and the supply chain.”
Also in April, Chipotle launched a $50 million Cultivate Next fund focused on restaurant innovations. In May, Home Depot launched a $150 million Home Depot Ventures fund to “identify, fund and partner with early-stage companies to accelerate emerging technologies that aim to improve the customer experience and shape the future of home improvement.”
A still common route to explore emerging technologies is strategic collaborations. Kroger in March partnered with Nvidia to build an AI-powered lab and demonstration center.
Walmart, Amazon and Nike stand out for making numerous acquisitions to extend their digital capabilities. Earlier this year, Nike announced plans to open an Atlanta Technology Center focused on supply chain, cybersecurity and AI.
Ratnakar Lavu, global CDIO at Nike, wrote on LinkedIn, “Our advanced teams focus on AI/ML, platform as a service, dev ops, Web3 and much more and we aspire to move people into action to create a better world.”
- Ulta Beauty Launches Digital Innovation Fund, Prisma Ventures – Ulta Beauty
- The Home Depot Announces $150 Million Venture Capital Fund to Fuel Innovation in Retail and Home Improvement – Home Depot/PRNewswire
- Chipotle Announces $50 Million New Venture Fund, Cultivate Next – Chipotle
- Introducing the $1 billion Amazon Industrial Innovation Fund – Amazon.com
- Alimentation Couche-Tard Announces Nearly $55 Million Of Investments From Its Circle K Venture Fund To Explore The Future Of Convenience – Alimentation Couche-Tard/PRNewswire
- CVS Health launches $100 million venture fund – CVS Health
- Albertsons Companies and Greycroft Announce $50 Million Fund to Invest in and Grow New Companies in the Grocery Sector – Albertsons/Globe Newswire
- Kroger and NVIDIA to Reinvent the Shopping Experience Through State-of-the-Art, AI-Enabled Applications and Services – Nvidia
- Walmart To Acquire AR Optical Tech Company Memomi – Walmart
- NIKE, Inc. Acquires RTFKT – Nike/Business Wire
- Nike Tech Center Opening In Atlanta – LinkedIn
DISCUSSION QUESTIONS: What’s driving the apparent trend of retailers establishing venture funds to invest in digital startups? What’s the advantages and drawbacks versus strategic partnerships or outright acquisitions?