Boston incentivizes office-to-residential conversions / Banana Republic enters home decor market / Buy Buy Baby stores closing after failed bankruptcy deal

Plus, Chipotle tests avocado preparing robot

Inside Business For July 13, 2023

Hello Insiders, Today's issue covers: Boston's program to convert office space into housing Gap's new business model for Banana Republic Closing of Buy Buy Baby stores after failed bankruptcy deal Please keep reading and check out the Knowledge Hub and Quick Hits! If you find this newsletter helpful, please share it with your friends and colleagues. Thank you. Shriram p/Shriram

1 Boston is incentivizing the conversion of empty office buildings into residential housing to revitalize its downtown business district. The city is offering a 25% reduction in property taxes to developers who convert their office buildings into housing and seeks to attract new residents and businesses to the area. More: The program is expected to cost the city $10M over the next five years. The city will require developers to set aside at least 10% of the units in each converted building as affordable housing. According to real estate firm CBRE, vacancy rates at downtown office buildings nationwide have increased by 5.6 percentage points since the fourth quarter of 2019, reaching 17.8% in the first quarter of 2023. Other cities that are pursuing office-to-housing conversions include Pittsburgh, Seattle, and Washington, D.C.

2 What the numbers say: Banana Republic, a subsidiary of Gap Inc., saw a 47% decline in net sales during the initial months of the pandemic. Although it rebounded with a 24% increase in the first quarter of 2022, Banana Republic experienced a 10% drop in net sales this year, leading to company-wide layoffs to save $300M and a 19% decrease in Gap Inc.'s stock. Relevance: Banana Republic is broadening its product offering by introducing home products, such as throw blankets, rugs, and bed frames, to appeal to a more extensive client base and stabilize the business. This action reflects consumers' changing shopping habits, as they are making more informed decisions when buying clothing. Banana Republic strives to motivate people to acquire a range of goods from their brand by adhering to the industry trend of becoming "lifestyle brands." More data: Banana Republic is experiencing sales issues, forcing store closures (566 in 2019 to 400 in January 2023). The retailer will create a smaller flagship store with home items and art, grow into athleisure and baby/toddler clothing, and investigate new opportunities in hospitality and restaurants to reinvent its business.

3 Bed Bath & Beyond, the struggling home goods retailer, announced that it would close all of its Buy Buy Baby stores. The closures will affect 120 stores and 3,000 employees. The company is also planning to close 360 Bed Bath & Beyond stores. More: The closures are part of Bed Bath & Beyond's ongoing bankruptcy liquidation. Bed Bath & Beyond purchased Buy Buy Baby for $67M in 2007. Bed Bath & Beyond's annual revenue in 2022 was $6.21B, and the company's estimated revenue for 2023 is $5.25B. The company's stock price has fallen by more than 90% in the past five years and last closed at about $0.30 per share.

4 Chipotle has collaborated with robotics startup Vebu Labs to develop an Autocado robot that can efficiently cut, core, and peel avocados for their guacamole. This innovative technology is expected to reduce guacamole preparation time by half, from about 50 minutes to a significantly shorter duration. More: The $50M venture arm of Chipotle, Cultivate Next, also disclosed on Wednesday that it had invested in Vebu.  Due to a labor crisis in the restaurant business, interest in robots and automation has surged. The Autocado can process up to 25 pounds of avocados by slicing, coring, and peeling them, allowing employees to hand mash and mix them with other guacamole ingredients easily. Chipotle will test the Autocado at its restaurants later this year to cut food waste, labor costs, and waiting times. Zoom Out: Sweetgreen has opened a fully automated location in Naperville, Illinois, while Starbucks is investing in coffee-making equipment to reduce barista work, and fast-food chains like Carl's Jr. are using AI software to take drive-thru orders.

5 Lucid's delivery of 1,404 Air luxury sedans in Q2 fell below analyst predictions of around 2,000 vehicles, indicating weaker demand for the model than anticipated. Despite having more than 28,000 reservations, Lucid Motors shocked investors in February by stating intentions to only construct 10,000 to 14,000 Airs in 2023, suggesting potential problems translating reservations into actual sales. More: The company's stock has decreased by approximately 58% over the past year in light of the unpredictability surrounding the market for its Air luxury sedan. The number of Airs produced by Lucid declined from 2,314 in Q1 to 2,173 in Q2, and in late March, the firm reduced its employment by about 18% (or roughly 1,300 personnel). Lucid announced a partnership with Aston Martin, where they will provide electric-vehicle powertrains and technology in exchange for $232M and a 3.7% stake in Aston Martin. The company expects to produce more than 10,000 cars in 2023 after obtaining an additional $3B in May, and its finances are safe through at least Q2 of 2024.

6 Anchor Brewing Company, the oldest craft brewery in the United States, announced on Wednesday that it is ceasing operations and liquidating the business due to "a combination of challenging economic factors and declining sales since 2016." The company employs 61 people and was revived by Fritz Maytag in 1965 when he purchased the brewery and saved it from closure. More: The brewery was founded 127 years ago, in 1896, by Ernst F. J. Ulmer, Otto Schinkel, and Gustave Pabst. Anchor Brewing's annual sales declined by 20% from $80M in 2016 to $64M in 2022. Anchor Brewing was acquired by Sapporo Holdings in 2017 for $85M. The company's beer will still be sold through the end of July.

7 Quick Hits: Combine traditional project management with your docs, knowledge base, and AI.* Elon Musk introduced xAI, his latest AI venture, as tech firms compete to create ChatGPT alternatives. Bob Iger will remain CEO of Disney until the end of 2026 after a unanimous decision by the board of directors to extend his term by two years. Viasat's stock fell by up to 21% after the company reported a malfunction in its recently launched satellite. After failed negotiations with studios, Hollywood actor union negotiators unanimously recommend a strike, which may result in actors joining writers on picket lines and causing disruptions to many series and films as early as Thursday. Sharpen your mind in minutes a day with Brilliant. From AI to math and data science, their interactive lessons help you level up. Try it free today* *This is a sponsored post.

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Shriram Jeevakumar Freelance Writer Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. This newsletter was edited by Aaron Crutchfield

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Simbe Robotics raises $28M Series B / AI-assisted portable ultrasound startup EchoNous raises $7M

Plus, AI for IP startup Tangibly raises $6.5M

Inside Startups For July 13, 2023

Hey Insiders,  Today we are taking a look at AI startups' latest funding rounds, including Simbe Robotics, EchoNous, and Tangibly. Scroll down for some quick hits, and let us know what other content you'd like to see in future issues.  Nicolas p/mobilitynerd

1 Simbe, the developer of robots for retail, announced it raised a $28M Series B led by Eclipse. In 2020, the startup launched its autonomous inventory robot, Tally 3.0.  More: The company added custom capabilities for BJ's Wholesale Club this year in preparation for nationwide deployment.  The company also has deals with Carrefour, SpartanNash, Schnuck Markets, and Wakefern, among others. Simbe had its $26M Series A led by Venrock in September 2019. It previously graduated from SOSV's HAX accelerator for hard tech startups.

2 EchoNous, the developer of an AI-assisted portable ultrasound machine, raised $7M. The startup's Kosmos point-of-care ultrasound system is able to image the heart and calculate its ejection fraction. More: The Kosmos ultrasound was rated second highest for overall image quality, behind Philips Healthcare's Lumify, in a study of portable ultrasound machines published by the University of Texas, San Antonio researchers in The Ultrasound Journal. EchoNous partnered with 19Labs, which focuses on telemedicine, to teach ultrasound technology to users in real-time. The new round is led by recurring investor Kennedy Lewis Investment Management, which led its last two rounds for $57M in September 2022 and $60M in June 2021.

3 Tangibly, a Seattle-based startup that uses AI to protect intellectual property, raised a $6.5M Seed round. The company develops the Patent X-Ray, which identifies information during the patent drafting process.  More: The round was led by Madrona Venture Group, with participation from MVP Ventures, Spike Ventures, Holt Ventures, Incisive Ventures, and law firm Wilson, Sonsini, Goodrich & Rosati's investment arm WS Investment Company. Founded in 2021, the startup was started by a former executive at Intellectual Ventures and founder of Wavefront Venture Labs, Tim Londergan; CEO of AI Patents, Lit Belinson; and director at Inflection Point Technologies, Christopher Buntel. Tangibly previously raised a $1.3M pre-seed round in August 2022, with participation from PatentVest, Brainstorm Ventures, and angel investors Jack Newton, Mark Britton, and Dave Rosenberg, among others.

4 Spline, a no-code design tool, has secured $15M in a seed funding round led by Gradient Ventures with participation from First Round Capital, NXTP, Chapter One, Vercel CEO Guillermo Rauch, Y Combinator, Webflow CEO Vlad Magdalin, and Backend Capital. The funds will primarily be used for R&D and team expansion, as the company aims to further develop its product and capabilities. More: Alejandro Leon, co-founder and CEO of Spline, introduced it in 2020, intending to simplify and streamline the 3D design process. Platform users can produce 3D objects, modify and animate them, work together on assets, and export them using a web browser. Since its debut, Spline has attracted over a million creators, and it recently expanded its toolkit by including AI-style transfer and AI texture capabilities. The business views AI as a crucial element in democratizing 3D creation and has ambitions to investigate generative AI and content creation with big language models.

5 A $30M Series A fundraising round has been secured by RADAR, a technology platform that combines RFID and computer vision, bringing its total capital to $63M. They announced that the funds would be used to expand their customer base, speed up product innovation, and hire more engineers, salespeople, and product developers. More: The inventory tracking platform from RADAR, powered by AI, offers 99% accurate location data and real-time visibility for in-store goods. Retail brands can use the platform to improve customer satisfaction, increase operational effectiveness, and make data-driven inventory decisions. Ben Bryce, Managing Partner, Align Ventures, stated, "Spencer and RADAR have successfully demonstrated their cost-effective inventory-tracking technology, which has led to a significant increase in sales (12%) and the elimination of overstocks, helping retailers and brands efficiently manage inventory, increase revenue, and enhance customer service." American Eagle Outfitters are introducing the inventory-tracking system from RADAR in about 500 stores, and the company is also testing its platform with two additional Fortune 500 companies.

6 London-based business Causaly raised $60M in a Series B fundraising round organized by ICONIQ Growth, with participation from previous backers Index Ventures, Marathon Venture Capital, the EBRD, Pentech Ventures, and Visionaries Club. The business's AI platform for drug discovery and biomedical research, used by 12 significant pharmaceutical firms and agencies like Gilead, Novo Nordisk, and the FDA, promises to speed up the discovery and testing of new drugs for researchers. More: The platform developed by Causaly shortens the time it takes to create new pharmaceuticals from 10-15 years to "several" years, saving a large amount of money. The platform seeks to lower the 90% high failure rate and $1B to $2B per drug expense of medical development. The company has raised $93M and plans to use that money for R&D and staff growth. Instead of creating its treatments, Causaly differentiates itself by giving biomedical teams access to tools.

7 Quick Hits: Combine traditional project management with your docs, knowledge base, and AI.* Rad Power Bikes announces its exit from Europe and a new round of layoffs. Stability AI, the company behind Stable Diffusion, is releasing a new service that turns sketches into images. Learning platform for application security Secure Code Warrior raised a €45M (~$50.4M) Series C. Scholastic sports management software Aktivate raised a $3.7M Series A led by Will Ventures, Tal Ventures, and Benson Oak Ventures. Sharpen your mind in minutes a day with Brilliant. From AI to math and data science, their interactive lessons help you level up. Try it free today.* *This is sponsored content.

Upcoming Events JUL 13 #ThankfulThursdays Wellness Community Challenge Virtual Join Here JUL 20 How to Set Up a Fundraising Campaign" Virtual Register Here OCT 16 Meet Our Fund 5, Building and Investing in AI San Mateo, California Save Your Seat * This is a sponsored event

Knowledge Hub Term of the Day Breadcrumbs: Breadcrumbs are a navigational tool used to help website visitors understand their current location within the website's hierarchy. Read More Question of the Week Do you think it's ever acceptable to bring politics into the workplace? Join the conversation

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Nicolas Saravia Sr. Analyst Nicolas S. is a Sr. Analyst at Inside, covering transportation and startup trends. He is an avid map maker and data nerd. Nicolas has worked in the shared-scooter space, as well as advised e-bike and moped startups. Follow him at @MobilityNerd. _____ Shriram Jeevakumar is a freelance writer at Inside.com. He is pursuing Master’s in Business with Marketing. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. This newsletter was edited by Vibha Chapparike

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