It seems that the ‘R&D department’ of the 21st century is the ‘VC Department’.  Increasingly big business is developing this area to help them embrace and benefit from the rise of the ‘start-up’ community. What’s interesting is it’s not just tech companies embracing this new function but retailers are also getting on board.

We recently covered Nordstrom’s efforts to work as a VC, but we thought we’d cover what other brands are doing in this space. So here some to watch:

1. 7-Eleven’s 7-Ventures: Launched a the end of 2013 by longtime development executive, Raja Doddala. So why are 7-Eleven putting money into a VC department: ‘to learn about new products, new retail models, and new technologies…a lot of innovation is coming from start-ups’ says Doddala. So what are they investing in:  an undisclosed coffee company, Belly (a customer loyalty/ marketing program) along with other investors like Cisco and finally Key Me (allows user to store, share and duplicate their physical keys based on a digital scan that is then stored in a the cloud).


2. Walmart’s Walmart Labs: Yes, they’ve given it the traditional R&D name, but it’s more than that. Walmart call it their ‘accelerator’, we call it a glorified VC fund (with a mean budget). It’s raison d’être: ‘in the effort to meet the needs of our customers wherever they are, we have joined with key companies to build products that seamlessly integrate the online and inshore shopping experience’.Over it’s lifetime it has acquired and invested in 14 start-ups. Their most recent buys have been:Luvocracy (a social market place – before it was acquired by Walmart it’s Series A funding came from Google, Tony Robbins, and Yahoo’s Marissa Mayer among others), Stylr (a local based fashion shopping app) and worth noting they bought the Aussie start-up Grabble (which developed a smartphone digital receipt service).

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3. Google’s Google Ventures: Although they’re not a ‘retailer’, Google are literally securing their dominance in customer retail experience through their acquisitions and investments. Here’s a few of their latest: FullStory (gives product/support teams everything they need to know about the customer experience – capturing all user events) and Spring (focused on imagining the way people buy things in the m.commerce space, trying to create the world’s best mobile shopping experience – which interestingly Groupe Arnault aka Bernard Arnault of LVMH has invested in).  They’ve also had a couple of hits like their investment in ride-sharing service Uber, US retailer Blue Bottle Coffee, news service Medium, fitness service Fitstar, DNA testing site 23 & me, reading service Pocket etc.

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Businesses are increasingly looking to the start-up community for real innovation (not inside themselves they way they use to with R&D departments). Start-ups offer these big businesses the fresh thinking their culture is sometimes missing.

We’re just waiting to see where the Australian retail market will take this with the fledging start-up communities in Sydney and Melbourne…

Author Pippa Kulmar

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