AI and supply chain are top of mind for venture capitalists heading into 2024

Insights from Commerce Ventures and NewRoad Capital Partners on retail tech opportunities and trends in the year ahead
NRF 2024: Retail’s Big Show

Browse photos, blog posts, videos and more from NRF 2024: Retail’s Big Show.

With the collapse of Silicon Valley Bank, less-than-ideal IPO and M&A markets, and more companies taking continuations, down rounds and bridges, 2023 was a trying year for venture capital.

On the flip side, it turned out to be a promising year for retail technology companies and the venture capitalists investing in those businesses. Breakthroughs in generative artificial intelligence technologies transformed how retail businesses serve their customers and supply chain technology innovations provided the resiliency needed as geopolitical conflicts, inflationary pressures and the recessionary environment tested the retail industry at large.

To better understand what went well in 2023 and the biggest priorities and opportunities for venture capitalists in the year ahead, we heard from two members of the NRF Innovation Advisory Committee: Matt Nichols, a general partner at Commerce Ventures, and Josh Jewett, an operating partner at NewRoad Capital Partners.

AI is poised to transform every part of retail

On investing in AI businesses, both Nichols and Jewett are bullish on the promise it poses for retailers and brands.

Commerce Ventures has invested in AI companies in the past, and many of its existing portfolio companies use AI to enhance their products. “AI will enable retailers and brands to better surface the right products to the right consumers at the right time, and this will happen both in digital formats and in physical ones,” Nichols says.

“The next wave of retail tech companies will help make this a reality by improving the efficacy of product merchandising, marketing creative/targeting and site experience. The growth of TikTok shopping and its ability to surface the precise product to the right person is the ‘canary in the coal mine’ for AI delivering on this promise. Over the next few years, we will see existing brands and retailers utilize retail tech to enable this type of hyper-targeting.”

Similarly, NewRoad Capital has also invested in AI in the past, including Insite AI, a platform that applies AI/ML technology to large retail data sets to provide new insights and predictive analytics that support better decision-making, and supports a number of portfolio companies that have invested in AI features, like MFour.

The biggest opportunity from Jewett’s perspective when looking at retail tech companies is AI-enabled computer vision. “There has been a lot of focus and excitement surrounding autonomous check-out, but the use cases expand into inventory management, store and supply chain labor optimization, loss prevention mitigation, quality assurance and compliance, and customer and associate safety,” he says. “We’re seeing innovative companies seeking and receiving investment funding across all these use cases.”

Innovations across the supply chain will continue to be a focus

Retailers and brands have been trying to crack supply chain management for years, including issues around inventory management, deadstock and efficient turnaround times. Meaningful innovation over the next year will be critical as the industry continues to tackle these complex problems.

For Commerce Ventures, Instock and Portless are two portfolio companies that are leading the way in supply chain management. Regarding InStock, “the growth of ecommerce across grocery, and retail more generally, has continued to reduce an important source of free labor — consumers picking products from store shelves, which has reduced margins for broad-based retail and made grocery ecommerce unprofitable for nearly every player in the market,” Nichols says.

Compared with legacy systems, InStock’s structure is a radically different, simple and more affordable approach to storing and moving inventory.

Portless is similarly looking to crack the inventory issue and enables retailers and brands to ship direct product from their overseas factories to consumers in the United States, Europe or Asia.

Retail technology

Check out NRF’s coverage on the latest retail technology.

“This has enabled Portless’ customers to produce inventory in much smaller quantities, and only as customers place orders,” Nichols says. “We believe that for many brands/retailers, it will be possible to partially (or completely) remove the warehouse and logistics infrastructure costs, increasing their agility and reducing the burden of unsold inventory.”

NewRoad Capital’s portfolio company Logiwa has developed an innovative cloud fulfillment platform, which is a fully integrated warehouse management and order fulfillment system that helps companies and 3PL providers run a digital fulfillment network and grow their direct-to-consumer business — without additional headcount.

“The Logiwa implementation process is transformational in the world of WMS,” Jewett says. “Customers can complete converting fulfillment facilities in just four weeks to realize a streamlined, high-performing WMS solution operating at peak efficiency faster than ever before.”

Interested in seeing some of Commerce Ventures and NewRoad Capital’s portfolio companies like InStock, DRINKS and Kevel in action? Register for NRF 2024: Retail’s Big Show, Jan. 14 –16 in New York City, to see the companies in action in the NRF Innovation Lab.

Related content

NRF 2024: Retail's Big Show
NRF Retail's Big Show
Join us back in New York City for retail's biggest event.
Read more
The key to predictive AI project success
Eric Siegel at NRF Nexus 2024.
NRF Nexus: Gooder AI founder and CEO Eric Siegel says deployment is ‘the whole point’ from a business perspective.
Read more
Balancing the threats and opportunities of AI
Retail leaders speaking at NRF PROTECT.
How security leaders can effectively support the innovative use of artificial intelligence and protect against risks.
Read more