Apple in AR. Another Dollar Shave Club? Korean investment.
Research Team Notes
March 21, 2017

Hey Prathima,

Continued thanks for all the feedback on client newsletters one and two.

A few folks asked for some insight into product direction so wanted to share some ideas we're thinking about and a related question to get your feedback.

Product idea 1 - We've started doing text analysis of public company earnings call transcripts to see if we can discern corporate strategy, areas of focus (or reducing focus), etc.

Product idea 2 - We're exploring whether we can build a database of market sizings. We often get this question about how large is market X and think we may have a novel way to build a large dataset of these.

So the question is which of these two is most interesting to you?  Please click your vote below.

Earnings call text analysis
Market sizing data

If you have thoughts on the above ideas or other product ideas, definitely let me know.

Again, this newsletter is only for paid clients.  Please don't share it.

On with the show.


P.S. All links in this newsletter lead into the CB Insights platform. Be sure to log in to your CB Insights account. There may be some links into capabilities your subscription level might not be able to access. Collections, patents, or enhanced valuations, for example, are only in higher level subscription plans. 


1.  Apple is gunning for AR

Reports emerged yesterday about Apple and CEO Tim Cook's bets on AR.

For our clients tracking Apple on CB Insights, this should not have been a surprise if you look at where Apple was putting its resources.

Apple has been an active player in AR/VR M&A, with its acquisitions of FlyBy Media, Metaio, and PrimeSense.

In addition, Apple patents highlight growing interest in AR esp around maps. Here's a search for Apple patents related to AR.

If you want to track the AR/VR landscape, our public AR/VR Collection is a great place to start.

We recently mapped the AR/VR startup landscape, and we'll be watching as Apple gears up for AR products on both mobile and a dedicated headset. 

2.  Will there be another Dollar Shave Club?

When Dollar Shave Club was acquired by Unilever for $1B, there was some chatter to see if other incumbents might pony up to buy other direct-to-consumer startups. There certainly were a lot of D2C companies that have been funded over time as the landscape below illustrates.

The past couple of weeks have seen a couple of M&A deals of D2C companies. bought struggling apparel site Modcloth, giving parent company Walmart a mid-priced apparel platform that had built up some loyalty among millennial women. Modcloth had raised $75M from First Round Capital, Accel Partners, Floodgate, and others, but was reportedly sold for a price in the low forty millions.

Also, PVH, the massive apparel company that owns traditional brands like Tommy Hilfiger and Calvin Klein, acquired direct-to-consumer bra startup True&Co last week. This marks its first startup acquisition.

There was no valuation given for the True deal which suggests it wasn't a big win (this heuristic works well 99% of the time).

So yes — there is some activity in D2C M&A.

But it's also of the small ball variety (not like Dollar Shave).

The reality is that Unilever's bold bet on DSC was a bit of an anomaly for a large CPG or retail incumbent. These firms don't do billion-dollar tech deals regularly. Generally, their deals tend to be smaller and more focused on the core, i.e. smaller product substitute tuck-ins.

For investors doing deals in D2C companies, there often appear to be several logical buyers on paper, but the reality is most of those logical buyers don't have a history of paying the valuations you might be after.  

That said, there are several startups in the space which have high Mosaic scores including Function of Beauty (D2C personalized haircare), Hubble Contacts (D2C consumer contact lenses), and MeUndies (D2C designer underwear). It will be interesting to see if they can build large stand-alone businesses or if the buying behavior of their "logical buyers" changes over time.

Our public Direct-to-Consumer Collection is here.  

3.  Don't sleep on Korea

Within Asia, we see a lot of chatter about the big markets of China and India, but it looks like investors have woken up to Korea.

Unicorns include Yello Mobile and Coupang.

VC firm Bessemer has done a handful of deals in the market including which raised $48M and is the Venmo of Korea. They also backed Retrica, a very popular selfie-app.

Here's a search for Korea-based tech companies who've raised in the last 2 years.

As with any nascent market, the majority of investment activity in the country at this point is at the very early stages (~82% at seed/Series A).

4.  The lending renaissance

Fintech unicorn SoFi raised $500M at a $4B+ valuation last month and one of the new product areas they were said to be entering was practice loans for doctors and dentists starting their own practices.

That move suggests a larger foray for the traditionally consumer-focused online lender into the small business lending world.

More generally, there has been a spate of new deals since February (financing, credit facilities, loan purchase agreements) to lending startups including Upstart Network, Prosper, Kabbage, Bond Street, and LendUp.

5.  Friendly neighborhood robots

Online delivery company Doordash unveiled plans to roll out delivery robots made by Starship Technologies this week. Starship is backed by Daimler, Matrix Partners, and Shasta Ventures, among others.

Deliveries as enabled by robots / unmanned aerial vehicles (UAV) is a space that has been garnering increased attention as the Trends chart below illustrates with folks speculating on the impact of these robots on retailers and last-mile logistics companies.

A search on CB Insights for delivery and robot, UAV, or drone companies reveals a long list of startups attacking this problem.

Note: pay attention to the boolean logic on this search screenshot below. Nice, eh? Run the search here.

If you want to quickly ID some of the players in delivery robotics, check out the Robotics Collection and filter by the tag #delivery.

6.  Mulesoft is out — who is next?

With strong investor interest in the Mulesoft IPO, will any of the other enterprise integration platform-as-a-service (iPaaS) providers who are still private get acquired or hit the public markets?

A search reveals numerous players in the iPaaS space.

A quick sorting by Mosaic score shows a few of the companies behind Mulesoft which might be worth keeping an eye-on including SnapLogic, Cloud Elements, IFTTT, and Jitterbit.

Note: we don't have a public iPaaS Collection but are building one out. If of interest, please ping me, and we'll put it into your account.

Product — Beyond the hype cycle

We've found quantifying media attention to a topic (what we call the Media Attention Path or MAP) is a great way to identify emerging trends.

We discuss the findings and technology we've built to do this here.

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