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 May 20, 2020

Walmart is a clear winner in Q1, announcing that e-commerce sales were up 74% due to grocery pickup and delivery. But it announced something else interesting: it is discontinuing, which it acquired in 2016.

The retail giant delivered top-line and bottom-line earnings beats. While discretionary categories lagged, grocery was up low double digits and health and wellness was up high single digits (hurt by the closure of vision and auto care centers). Other than reporting increased revenue, Walmart indicated that it further consolidated operations and also said its US e-commerce operations helped curb losses elsewhere. It is an impressive achievement given the significant increase in COVID-19 related costs.

Which led to its announcement of discontinuing as part of the consolidation effort. Walmart has been known in the industry as an aggressive acquirer that learns everything it can from the management team and the operations and then discontinues the acquired business all together to consolidate IPs under the Walmart brand. Modcloth had a similar story arc and many believe that Bonobos is not far behind. founder Marc Lore sits at the head of Walmart's U.S. e-commerce businesses. Mr. Lore has stock incentives to stay with the company through the fall of 2021. Instead of growing, Walmart has focused on adding third-party sellers to, delivering online orders from stores, and adding online grocery service to many stores. During the quarter, Walmart started temporarily using 2,500 stores to ship out online orders, signaling its strategy to focus on stores rather than distribution centers. 



Challengers are coming for Amazon’s Go stores. In January 2018, Amazon rolled out Go stores, where a customer can scan his or her phone, walk-in, shop, and walk out with the items. So far, consumer response to Amazon Go has been largely positive, prompting Amazon reportedly to plan to open an additional 3,000 Amazon Go stores by 2021, including an expansion into airports and college campuses as well as heading overseas to London. If this vision is realized, Amazon Go could translate into a $4.5 billion sales opportunity.

Despite Amazon Go’s success, the autonomous stores still are not widely deployed, and others are working on similar solutions. Standard Cognition is one such startup that has been quietly working on perfecting the technology. Today it announced big plans for the future. As it prepares to scale in a world more amenable to skipping checkout, the San Francisco startup has acquired a competitor based in Italy called Checkout Technologies for an undisclosed sum.

Standard Cognition is eyeing international expansion. It has revealed plans to roll out its tech in Japan, where consumer habits revolve around visiting convenience stores. Stateside, the startup focuses on retrofitting existing stores, a service Amazon Go lacks. Standard Cognition has already landed a partnership with the Worcester Red Sox to showcase their tech in the baseball team’s new stadium.



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Rising Stars:

Consumer finance startup Tally Technologies helps its users pay down their credit card debt, based on an analysis of their personal financial profiles and a new line of credit it provides with a lower interest rate. The app also manages credit card payments, allowing its users to avoid credit card late fees. The company grew revenues 9x in 2019 vs. 2018. Founded in 2015, it has raised $92M with a recent valuation of $285M. [Read more].

Funding & Deal Highlights:

Electric gets another $7M in funding from 01 Advisors and the Slack Fund. Electric offers a fully-automated IT platform that is pitched as providing small- to medium-sized businesses with enterprise-grade support, including support for IT troubleshooting, systems administration, security network management, and onsite assistance. The company offers a chatbot interface that works with Slack to connect customers to more than 50 certified industry specialists to deliver personalized, intelligent resolutions of IT problems.

Prospect Medical Group to acquire three independent physician associations. Prospect Medical Group will acquire certain assets of CalCare IPA, Los Angeles Medical Center IPA, and Vantage Medical Group. The three additional IPAs currently hold health plan agreements with six payors responsible for approximately 130,000 members, most of whom are managed Medicaid/Medi-Cal members. The acquisition complements Prospect’s focus on providing care through the lifespan continuum for all members, across all products.

SQZ Biotech closes $65M Series D financing.

Nanotech Energy concludes oversubscribed $27.5M Series C funding.

AI-powered system Commerce.AI raises more than $1M through Reg CF offering on StartEngine.

ProctorFree lands funding for its online proctoring solution.

Archimed acquires remote monitoring company Actigraph in all equity deal.

Copley backs Tourmaline Partners.

Kalibrate Technologies acquires Trade Area Systems.

SS&C Technologies completes acquisition of Innovest Systems.

Archibus + Serraview buys SpaceIQ.

MAI Capital Management acquires Grisanti Capital Management.

Since last week, PrivCo has added:
71,482 Profiles | 101 M&A Deals160 Fundings
Exclusive Revenues, EV, EBITDA, and Valuations
Spotify lands another deal.
Adding to Spotify's podcast empire, the company has landed an exclusive agreement with Joe Rogan, pulling him away from other podcast distributors. Spotify made some key acquisitions last year with the Ringer, Gimlet Media, and Anchor.FM.
All-time high demand for bicycles.

By the end of April, many stores and distributors had sold out of low-end consumer bikes. The US is facing a severe bicycle shortage as global supply chains tighten. [Read more]
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