Unexpected trends in venture capitalist funding are forming as small business and entrepreneurs look to integrate new technologies, support diverse communities and address new challenges in the post-COVID economy.
While experts were concerned that an early-year banking crisis would force economic growth to stagnate even more in 2023, entrepreneurs are still launching, scaling and selling enterprises at a startling rate. Compounding this trend is the proliferation of new technologies, such as artificial intelligence, which has helped some startups attract newfound interest from venture capitalists. One of these is RADAR, a software company that announced last week it had successfully raised an additional $30 million through its Series A funding round. The startup is developing an inventory management platform combining RFID (radio frequency identification) and AI. So far, the business has raised a total of $63 million from investors, which include major firms such as Align Ventures, and has already formed partnerships with high-profile brands such as American Eagle Outfitters.
Access to capital is also increasing thanks to the efforts of investors to back under-served entrepreneurs through initiatives like Fearless Fund. The venture capitalist program focuses on supporting enterprises run by Women of Color and recently revealed it had led a multi-million dollar funding round for BREAD Beauty Supply, a small business launched by Maeva Heim to sell hair products for diverse hair types. Such organizations play a crucial role in the nation’s efforts to overcome gaps in business ownership as they help minority owners obtain the funds needed to scale their enterprises. “For the past three years, our goal of not only sustaining but expanding as a business is now possible with key investors creating a level playing field in the beauty category,” writes Heim.
The pandemic and subsequent economic fallout have also pushed venture capitalists to direct more attention toward addressing newly discovered weaknesses and challenges, helping business owners solve complex issues facing the American public. For example, parents across the U.S. were faced with a shortage of baby formula last year, exposing vulnerabilities in the infrastructure supporting this crucial product. On July 12, Bobbie, a major supplier in the sector, announced the acquisition of pediatric nutrition business Nature’s One as part of its promise to invest $100 million in America’s formula supply chain and stop a similar event from ever happening again. Laura Modi, co-founder and CEO of Bobbie, said that the previous year’s struggles “woke us up to a lack of redundancy and resiliency that this essential good deserves to have.” Nature’s One, originally a manufacturer of toddler formula, transitioned to making baby products last October after receiving clearance from the Food and Drug Administration. “The infant formula industry has disrupted faster than anyone’s ability to catch up in the last year,” continued Modi, “and I think, for them, it was a realization that we are stronger together than going at this alone.”