Latest Research
Investing in Skupos

Investing in Skupos

We’re investing in Skupos as a play on our vision of the future of retail. Skupos’ real-time inventory data fundamentally changes the game for convenience stores (c-stores), distributors, and brands. Automated retail and same day delivery are the future of commerce, and Skupos enables its customers to benefit from these shifts.

Skupos leverages scan data from c-store transactions that, in our view, will play a crucial role in the emergence of cashier-less commerce and same day delivery from c-stores.

The $50B Automated Retail Opportunity

In 2016 there were 3.5 million cashiers in the U.S., according to the Department of Labor, with an average salary of $13,574 (Data USA). That represents a nearly $50 billion opportunity in cashier-less retail. Of those 3.5 million cashiers, 323,000 are convenience store or gas station employees, 9% of the cashier workforce.

Same Day Delivery Isn’t Solved Yet

Just 12% of Americans live within 5 miles of one of Amazon’s 194 fulfillment centers, according to data from Piper Jaffray. Including the 427 Whole Foods Market stores as “Amazon fulfillment centers” increases that number to 30%; expanding the distance to 20 miles increases the number of Americans that live near an Amazon fulfillment center or Whole Foods to 63%.

Amazon’s network is impressive, but not good enough. It’s why we still see $35 minimums and $5 on-demand delivery fees.

By contrast, 93% of Americans live within 1 mile of one of the 155,000 convenience stores in the U.S., according to the NACS.

93% of Americans live within 1 mile of a convenience store.

Imagine the power of leveraging convenience stores as nodes on a same-day-delivery distribution network. Suddenly, it’s feasible to deliver a can of Coke and a Snickers bar instead of 6 twelve packs of Coke and a dozen Snickers bars, just to meet a minimum. Skupos’ real-time inventory data will enable convenience stores to join the same day delivery distribution network.

The Value of C-store Scan Data Today

C-store scan data is also incredibly valuable today. Skupos gives retailers, distributors, and brands real-time insights into sales and product velocity. Since launching in 2016, the company now tracks and analyzes over 2 billion c-store transactions per year for over 2,000 customers.

We’re proud to partner with Jake, Mike, Linh, and the rest of the Skupos team to help build the future of retail.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make. 

Amazon, Portfolio Company, Retail, Startup
2 min. read Show less
Musk Fills in the Blanks and Addresses Funding Questions

Musk Fills in the Blanks and Addresses Funding Questions

Elon Musk wrote a blog post titled Update on Taking Tesla Private addressing the most common questions following last weeks going private circus. We still believe there is a greater than 50% chance Tesla is private in a year, and the blog post slightly increased those odds. We see 5 key takeaways from the update.

  1. Funding secured. The “funding secured” comment was driven by previous conversations with the Saudi Sovereign Wealth Fund that expressed interest in providing the funding to take Tesla Private. Bloomberg has reported that the Saudi government plans to turn the private investment fund into a $2T vehicle which would have ample funds to be an anchor investor in a private Tesla, so the question, “where would the money come from?” has been answered.
  2. Investor concentration. If Musk can help it, we believe he will limit additional investors to 20% equity (he owns 22%), which implies the Saudi fund could only invest $16B. If he’s unable to build a syndicate for the other $10B (which gets us to $26B), he will likely accept the Saudi’s at greater than 20% ownership.
  3. Legal risk. We do not believe Elon Musk is at legal risk with his use of the term “funding secured.” Today’s blog post argued it was Musk’s interpretation that the funding was secured. While we are not securities law experts, our interpretation is the previous meetings with the Saudis created enough grey area to dismiss stock manipulation legal risk from the SEC. That said there are at least two class action lawsuits underway which may take months to settle.
  4. Funds needed. Musk suggested two-thirds of shares owned by existing investors would roll over into a private Tesla, implying a $25-$30B funding requirement.
  5. Next steps. Next steps will take several months to play out. First, Tesla needs to build a syndicate. Second, a vehicle must be created for existing shareholders to roll their public investment into a private one. Lastly, regulatory approvals will need to be obtained and the plan will be taken to a shareholder vote. Our best guess is this will take 3-9 months.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Tesla
2 min. read Show less
Food Safety, Sustainability and Frontier Tech Leading an Evolution in Agriculture

Food Safety, Sustainability and Frontier Tech Leading an Evolution in Agriculture

  • Due to advancements in technology, as well as consumers’ growing appetite for locally grown leafy greens and vegetables that are both high in nutritional value and come with improved taste, an evolution is underway in the agriculture space.
  • This is changing the way produce is produced, and where it is being grown.
  • This new method is called Indoor Ag, commonly known as Controlled Environment Agriculture (CEA).
  • We see Indoor Ag as an attractive investment opportunity and believe frontier tech will play a prominent role in this flourishing market.

Why now?

According to Indoor Farm Economics, there were 15 commercial-scale Indoor Ag farms in the US in 2016. In Spring 2017, there were 56, and the number continues to grow at a healthy rate. While Indoor Agriculture is not new and has been most recently used to grow cannabis, farmers are beginning to explore these methods because of the quality and cost benefits it offers consumers, as well as consumers growing concern over food safety. In addition, technological innovations have improved profitability and are beginning to create a more sustainable method over traditional processes as the world population continues to grow. For these reasons, we see indoor ag as an attractive investment opportunity and believe frontier tech will play a prominent role in its rise.

Industry overview

Indoor agriculture is the process of growing produce using hydroponics, aquaponics, and aeroponic techniques in standardized form factors such as warehouses, greenhouses, and containers. Today, indoor agriculture farms primarily produce leafy greens, microgreens, herbs, and tomatoes. In addition, strawberries, nutraceutical plants, and pharmaceutical plants are under intense R&D and are now starting to come to market. The biggest advantages of moving to an Indoor Ag model, include:

  1. Year-round availability of any and all produce items at competitive wholesale pricing.
  2. Time to market is measured in hours versus days contributing to a better, more nutritious product that tastes better and minimizes transportation costs and carbon emissions.
  3. Superior “science” of growing can be applied using advanced LED lighting, controls, and mechanisms to guarantee a perfect crop every time regardless of outside weather or location.
  4. Grown without chemicals and drastically more efficient use of water plus ability to recapture/recycle.

These CEA advantages improve food safety and sustainability. However, the industry still has a long way to go until Indoor Ag becomes mainstream. The biggest challenges holding this up include:

  1. The lack of capital from banks and VCs that will invest in this theme.
  2. Gaining sufficient scale to service accounts like a Wal-Mart.
  3. Concerns around profitability due to the limited size of the growing building.

Key frontier tech

The emergence of Indoor Ag startups creating innovative tech has been a material catalyst to adoption and improving profitability. Specifically, technological advancements around LEDs, robotics, and genomics have helped meaningfully.

  • Excessive heat can be incredibly damaging to plants. GrowFilm, a Minnesota startup (growfilm.ag), has developed light emitters that operate around 93º F, allowing them to be placed closer to plants. This also eliminates the need for multiple lamps and lighting systems, which can increase yields by 40%. Additionally, a better understanding of how photosynthesis is impacted by different light spectrums is allowing Indoor Ag locations to work with cost-effective LEDs to further “tune” their grow recipe.
  • Given indoor robotics is considered a “lab” environment by the US Labor Department, personnel requirements are more stringent than the migrant workers used to pick 70%+ of the nation’s produce. In addition, rising farm wages and labor shortage have been headwinds. Advancements in robotics and artificial intelligence have lowered the cost of labor and increased productivity. This includes cameras and sensors to enhance grow cycles and provide real-time feedback. Tortuga AgTech is a startup developing robotic systems for harvesting fresh produce in controlled environments.
  • Advanced indoor farmers are turning their attention to how they can create seeds that are better designed for indoor systems, producing higher yields. Some are turning to heirloom seeds because they cost less and produce more nutritious foods than hybrid seeds, which are the primary seeds used in traditional agriculture.

Indoor Ag economics

One of the arguments against indoor farms historically has been the limited size of the growing form factor, and many struggled to reach profitability. While this was a challenge, the technological improvements discussed above, new CEA farms capable of producing over one million leafy green products per month, recycling resources, and lowering transportation costs are making indoor ag economics very favorable. Another advantage of indoor ag is it is less exposed to the cyclical nature of traditional agriculture due to the ability to steadily produce the same amount all year long. Plus, given labor shortages to harvest field grows, the dynamics of CEA farming become compelling.

Venture committed to this theme growing

While receiving capital has been another challenge for indoor farmers, VC dollars increased 3-fold in 2017 to $300M year/year. This was primarily driven by Softbank’s $200M investment into Plenty, which also included an investment from Jeff Bezos. We think the opportunity in indoor agriculture is large and believe it is an attractive theme for frontier technology over the next decade.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Robotics
4 min. read Show less