Driven By AI, Funding To In-Store Tech Startups Spikes

Deals to in-store tech startups dropped in Q2’17, but total funding jumped over 20% on the backs of several major deals to companies providing AI tools to retailers.

Using CB Insights data, we examined financing trends in the retail tech sector. Our in-store tech category focuses on startups providing technology to brick-and-mortar retailers, including beacons and sensors for tracking customers, point-of-sale software, tools for store associates, shelf monitoring systems, and more.

For a more detailed look into the diversity of the category, check out our market map here. This does not include restaurant-focused startups, which we’ve mapped separately here.

Quarterly deals and dollars

In-store tech startups raised $229M across 32 deals in Q2’17, representing a 29% drop in deals from Q1 but a 21% rise in investment dollars. The quarter’s largest deal went to Trax, a retail analytics startup that uses machine vision to track in-store activity and offer insights to retailers and CPG brands. Trax raised $64M in a private equity round led by Warburg Pincus, bringing the company’s total disclosed funding to $148M.

Retail loyalty platform LevelUp raised the quarter’s second largest deal, with a $37M Series F that boosted total funding to $103M. In third, Reflexis, a workforce optimization tool that works with Dollar General, TJ Maxx, and other retailers, raised $33M in private equity from Great Hill Partners.

Annual deals and dollars

The early days of Q3’17 saw a large mega-round to an in-store tech startup: Brain Corp, which is building autonomous navigation systems for retail robots, raised a $114M Series C from Qualcomm Ventures and Softbank Capital. The deal, which will help Brain Corp develop self-driving shopping carts and janitorial robots, is the largest deal in 2017 to date.

The $64M private equity round to Trax, described above, was the second-largest deal of 2017 (and like Brain Corp, Trax focuses on machine vision). The third-largest deal also took place in early Q3’17 — a $50M Series B to NewStore, a retail platform that merges in-store and mobile experiences. NewStore has $97M in total disclosed funding from General Catalyst, Activant Capital Group, and others.