VMG Catalyst, a venture capital firm, raises $400 million for Retail Tech – WWD
The future of retail is in technology. This is the premise that VMG Catalyst – the venture capital arm of VMG Partners – is betting on anyway.
The venture capital firm today closed a $400 million funding round, bringing the total amount raised across its two funds to $650 million. VMG Catalyst plans to use the latest round of funding to invest in new technologies for digital businesses, such as software and supply chain platforms that will propel retail brands into the future.
“We see huge opportunities at the intersection of retail and technology and look forward to supporting the Catalyst team as they support more businesses focused on the next generation of consumer businesses,” said Michael Mauze, general partner at VMG Partners.
“In just a few years, VMG Catalyst has become a key player in the commercial venture capital space,” he added.
In fact, since the launch of VMG Catalyst in July 2019 — founded by partners Carle Stenmark, Brooke Kiley and Jeff Truong — youhe venture capital firm has worked with 22 companies at all stages of investment, including beauty brand Necessaire, Latin American e-commerce platform Nuvemshop, post-purchase customer platform ParcelLab and l software company Specright, among others.
“We’re primarily focused on digital businesses,” Kiley told WWD. “We have invested in many companies that have been omnichannel since day one. Through this strategy, we have built relationships across the consumer ecosystem. So whether it’s retail, Fortune 500 conglomerates, very large strategic brands, manufacturers, small emerging brands, our tentacles are all over the consumer world and we leverage that network to then invest in the technology and software that powers this ecosystem. . Thus, the next generation of iconic brands and iconic retailers will be supported and created because they have invested in enabling technologies, because they are able to create a more efficient business and adapt more quickly to consumer needs and , overall, acquires customers better when they take advantage of advanced technologies.
VMG Catalyst continues to actively grow its brand portfolio under the leadership of talented partner Brianna Rizzo, who helps facilitate cross-brand introductions. Under his leadership, Rizzo helped launch VMG Catalyst’s first Commerce Council. The Council – which is made up of founders, digital experts and other senior executives from some of the brands Catalyst partners with, as well as other well-known national brands – strives to grow the company’s brand ecosystem alongside ongoing fundraising efforts. Kiley added that the fund looks for brands to invest in that are differentiated in their respective spaces and have a large following community.
Meanwhile, VMG Catalyst is part of the VMG Partners franchise, which stands for “velocity made good”. VMG Partners, a retail private equity firm, was founded in 2005 and today includes both VMG Catalyst and VMG Growth. The company manages $2.5 billion in assets across both businesses and has invested in more than 30 brands in wellness, food and beverage, beauty, pet care , consumer services, e-commerce and supply chain.
VMG Growth, now in its fifth round of funding, has raised approximately $850 million for later-stage consumer brands. The list includes fitness brand Solidcore, beauty brand Drunk Elephant, Quest Nutrition, personal care brand Sun Bum and food brand Perfect Snacks, among others.
“Our deep understanding of the voice of the customer and the issues facing brands and retailers of all sizes allows us to invest with the conviction and speed we believe is needed in today’s rapidly changing business landscape. “, said Carle Stenmark, Managing Director. partner at VMG Partners. “We’re excited to support visionary entrepreneurs who are striving to solve these pain points and disrupt how we interact with products and services, and how they get to shelves. »
VMG Catalyst’s latest funding round comes as the IPO market for smaller brands is winding down, thanks to continued inflationary pressures, recession fears and equity market volatility. Corporate mergers and acquisitions activity is also down from 2021, but on par with 2020 levels, according to the latest quarterly report from Pitchbook-NVCA Venture Monitor.
Funding in the U.S. venture capital space also fell in the second quarter of this year, compared to 2021 — around $121 billion, compared to nearly $139 billion in the same period of 2021, according to the same report – but the funds are still higher than the quarterly totals before 2021.
Some of the VC fundraising momentum in early 2022 can be attributed to a ripple effect: fundraisers that were already underway before the onset of the current market volatility. It was also a byproduct of a strong environment for seed-stage investing, which Kiley says appears to be relatively immune to uncertainty in the marketing of later-stage investing. .
“With the public markets and their performance today, it has definitely affected the late-stage investor,” she explained. “His [also] started to affect growth stock investors and it’s starting to affect venture capitalists. But if you look at the early stages – pre-seeding and seeding [rounds] – it doesn’t really affect the market, for now.
“We just don’t see a lot of [investing or M&A] activity right now,” Kiley continued. “We were in a crazy market in the second half of 2021 where people were quickly closing deals and now we are seeing longer due diligence periods and really thoughtful investments focused on unit economics and not just on the growth. [But] I think in the third, fourth quarter, we’ll probably see a bit more activity. There is still a lot of money in the private markets.
“Demand over the past decade has been high,” she added. “But there was definitely a very fast environment in [the back half of] 2021 to go very quickly. Investors were paying very high prices; the due diligence times were very short. It was a very founder-friendly environment and now we are back to a business-friendly environment where the investor has the opportunity to do all their due diligence, talk about their time, and build their relationship with the entrepreneur. My gut feeling is that it will be an acquisition market over the next two to three years, especially because there are a lot of later-stage private companies that have pretty strong balance sheets that have grown opportunistically in 2021 because valuations were high and capital was cheap. ”