Retail and Direct To Consumer Strategy Session

Strategy Session: Silicon Road Ventures Forges Path To Commercialization For Commerce Startups

Strategy Session is a feature for Crunchbase News where we ask venture capital firms five questions about their investment strategies.

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Silicon Road Ventures is taking its $31 million fund out shopping for commerce technology companies after closing the oversubscribed fund back in March.

The Atlanta-based firm was founded in 2019 by Managing Director and Partner Sid Mookerji, who previously founded Software Paradigms International Group, a global retail technology company that touted clients, such as Macy’s and Walmart. With him in the same role is Ross Kimbel, who comes from the VC and commerce worlds, having co-founded venture capital fund Be Curious Partners and was global director of innovation and entrepreneurship at The Coca-Cola Co.

Silicon Road invests in U.S.-based technology startups ranging from seed to series A across e-commerce, retail and consumer product goods. Its focus areas include in-store retail and shopper tech, multichannel commerce, supply chain and logistics, as well as fintech and payments.

In 2020, the firm invested in 10 startups and aims to infuse funds into approximately 30 more by 2023, Mookerji told me.

With last year being big for e-commerce, Mookerji talked to me about some of the unique programs Silicon Road has for its portfolio companies, as well as the hype around social commerce. The following was lightly edited for clarity and length.

Sid Mookerji, Silicon Road Ventures

How do you like to work with founders?

Mookerji: We want to bring innovation to retailers, so we have to have a wider breadth of innovation in our toolkit versus others. Our check sizes start at $250,000 to $500,000 and go up to $2 million in follow-on funding. We provide the money, but also provide connections and advice. We participate on the board of some companies and are advisers, often speaking with them weekly. We also have our “Corporate Connect” program where companies can do pilots with corporations.

Your other program, “Retail Sandbox,” also looks like a unique opportunity for startups to launch with a retailer to test their technology. How did that come about?

Mookerji: Startups can showcase technology inside of a store. We have a relationship with Citizen Supply, a notable retailer here in Atlanta owned by Phil Sanders. He started out in a startup and understands the space. When we met, he said he couldn’t afford to look for tech to make his business better, and was looking for someone to provide retail-as-a-service. We give him access to our portfolio companies so they can test and learn in one of Atlanta’s retail hot spots.

You focus on the commerce technology space. What’s driving technology innovation in the e-commerce, retail and CPG industries?

Mookerji: It’s a great time to be in this space. In Q1 of this year, numbers tripled compared to last year, with something like $28 billion invested in one quarter. Retail has been around for a long time, and it is not going away. What is changing is how we buy. It used to be the only place to buy shoes would be to get them at the mall. You go there, ask about the shoe, and they may not have your size, so you go home and wait for it to come in. Today, the first shopping people do is on Instagram to find out what everyone else is wearing. Then they find out where it can be bought. Also, in general social media didn’t exist back then, but now you are spending a lot of time there.

Definitely! We saw a lot of VC funding going into companies focused in social commerce. Is it accurate to call this a trend, and what do you see happening here?

Mookerji: Yes, but it is very early. China leads the way with this, controlling 44 percent of e-commerce worldwide. It is a predictor for how the U.S. will evolve. All of this is driven by technology. A 10-cent WeChat enables you to set up something quickly. Studies show that 60 percent of people discover new products on Instagram.

Also, social commerce is getting more acceptance. I felt awkward buying something on Facebook for the first time, but more people are getting comfortable doing that. People spend something like four hours per day on social media, and that is a significant number. We expected most of the social media retailers to be direct-to-consumer, but business-to-business is using it, too. Twenty-five percent of B2B buyers say they are using LinkedIn or YouTube to contact their suppliers.

Products should be available wherever we are, so retailers are going to have to think about social media as another channel. When you purchase something online, then every site you go to will feature an ad from where you bought. Even on social media.

However, more sophistication is needed. Many retailers are not currently doing it right and are not ready in terms of technology or strategy, but it is coming. One of the trends really taking off is “re-commerce.” Millennials and Gen Z don’t mind buying someone else’s used items, and it provides another way to sell it before returning it.

Where do you see retail and e-commerce innovation happening?

Mookerji: Social media will be a game changer. Even though people did not go into stores in 2020, that is the largest emerging trend. We will see a lot of innovation in that space. We will see experiential retail and augmented reality within stores. There will be a social media or online experience in the store when you go up to an item. It will be more interactive. We are also more active with our texting than in the past, and combined with wanting to be more contactless, companies are providing those kinds of ways of paying — SMS payments are going to take off.

Another area is supply chain, which has been struggling for years, so there is going to be lots of innovation in 2021. Another piece that will be important is the redundancy of supply chain partners. With COVID and a lot of geopolitical realignments, it won’t be the smartest thing to do to rely on suppliers. Companies will have to be smarter about redundancies. Overarching all of this is that many of us got groceries delivered for the first time during the pandemic, and that is a $1 trillion opportunity that people will figure out and where we will see innovation.

Photo of Sid Mookerji courtesy of Silicon Road Ventures.
Illustration: Dom Guzman

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