Shein and Forever 21 launch co-branded clothing line / Deep Dive: U.S. food insecurity rises for the first time in 11 years / Prada sales slump despite Miu Miu success

Plus, Stellantis loses $3B due to UAW strike

Inside Business For November 01, 2023

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Here's your daily business briefing. 👗 Shein and Forever 21 launch co-branded clothing line 🔍 Deep Dive: U.S. food insecurity rises for the first time in 11 years 👜 Prada sales slump despite Miu Miu success Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram p/Shriram

1 Shein and Forever 21 are launching a co-branded clothing line primarily available on Shein's website, building on their earlier joint venture when Shein invested in Sparc Group, the operator of Forever 21. In this partnership, Shein will design, produce, and distribute co-branded Forever 21 apparel and accessories, emphasizing availability on Shein's website and featuring a range of men's and women's attire, including sportswear, activewear, and swimwear. More: As part of their arrangement, Shein purchased around one-third of Sparc Group, and Sparc acquired a small share of Shein. The partnership aims to boost sales for both brands and help Shein enhance its reputation, particularly as it considers a potential U.S. IPO in 2024, addressing concerns related to labor practices, tariffs, and design integrity. The collaboration hopes to bring Forever 21 back to life and attract younger consumers who buy online. In addition to giving Forever 21 a digital boost, the partnership gives Shein credibility with a significant ally. Zoom Out: The Frasers Group has sold the British fast fashion brand Missguided to Shein, which intends to produce and market Missguided's merchandise on the websites of both businesses.

2 What the numbers say: Food insecurity affected over 17 million U.S. families (12.8% of all households) in 2022 compared to 13.5 million households (10.2%) in 2021. In 2022, there were 6.8 million households experiencing food insecurity, which is a rise from 5.1 million households in 2021. Relevance: The impact of increased food costs and supply interruptions during the COVID-19 outbreak was highlighted by the U.S. Department of Agriculture, which reported the first yearly increase in food insecurity in over a decade. More data: Due to supply disruptions, crop losses, and geopolitical issues like Russia's war in Ukraine, food costs skyrocketed throughout the pandemic, making it increasingly difficult for lower-class households to acquire basic meals. Food insecurity highlights the persistent difficulties that poor American households experience, which have been made worse by national and international events.

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3 Prada SpA reported third-quarter sales of $1.17B, falling short of analyst expectations, as its flagship Prada label experienced a growth slowdown, dropping to 5% from the previous quarter's 15%. Global luxury goods demand is slowing, with Hermes International faring better than competitors like Kering SA (Gucci's owner) and LVMH Moet Hennessy Louis Vuitton SE, which reported below-expectation sales growth in fashion and leather goods. More: Andrea Guerra, CEO of Prada, claims that geopolitical events like the Middle East crisis have harmed the company's operations. With full-price volumes and average prices driving the increases, retail sales — the most significant contributor to the overall figures — rose by 17%. Except for the Americas, which showed a minor 1% dip, most markets recorded double-digit increases. Japan recorded the highest growth at 47%, primarily due to domestic demand. Miu Miu topped the Lyst Index in the third quarter for the most popular products and brands on the shopping app and in mentions on social media. Miu Miu's retail sales increased by 49% in every category.

4 Stellantis, the parent company of Chrysler, attributed a revenue loss of over $3B to the six-week U.S. auto worker strike, resolved after labor deals with the United Auto Workers. The strike caused around $3.2B in lost revenue and had a profit impact of less than $790M. More: The business exceeded analyst forecasts by reporting a gain in third-quarter sales from $44.33B to $47.48B, ascribed to improved volume and pricing, somewhat offset by currency exchange rates. Compared to Ford and GM, which recorded profit losses of $1.3B and $800M, respectively, the strike had a less significant effect on profits. Stellantis pointed out that, in contrast to its rivals, its global organization was not as affected by the strike in North America. To 1.4 million, consolidated vehicle shipments grew by 11% across several areas. Stellantis reaffirmed its forecast for the entire year, predicting positive free cash flow and an adjusted operating income margin in the double digits.

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5 Here are the quarterly earnings reports for the following companies released in October:

6 Southwest announced third-quarter earnings per share of $0.38, in line with estimates, and sales of $6.53B, just less than $6.57B. Southwest Airlines aims for a 10% to 12% expansion in the first quarter, down from the prior 16% prediction, and intends to reduce capacity growth in 2024 as travel demand recovers to pre-pandemic levels. More: CEO Ted Christie attributed the third-quarter 2023 performance to weaker demand and discounted fares in their markets. Southwest projects a growth rate of 6% to 8% for the entire year 2024. With capacity growing by roughly 21%, Southwest anticipates a 9%-11% decrease in unit revenue in the fourth quarter over the prior year. In the third quarter, Southwest's net income dropped to $193M, or $0.31 per share, a 30% year-over-year decline. Similar difficulties with declining demand forced other airlines, notably Spirit and Frontier, to change their expansion strategies.

7 Quick Hits: Are you getting the best discounts from leading cloud providers? This is your go-to resource for learning how to maximize multicloud discounts.* Australia's Treasury Wine Estates is acquiring Californian vineyard DAOU Vineyards, founded by Lebanese migrants, for up to $1B, aiming to establish a luxury wine division in the Americas. Realty Income will acquire Spirit Realty Capital in an all-stock deal valued at about $9.3B, with Spirit shareholders receiving 0.762 shares of Realty stock for each Spirit share. An analyst from the Wells Fargo Agri-Food Institute reports that prices for the standard 10- to 15-pound Thanksgiving turkey dropped 13% in October over the prior year. As part of its cost-cutting measures, Charles Schwab has let go of around 2,000 workers or 5% to 6% of its workforce. Create a winning SaaS business plan and calculate your break-even point. Join the 1-Page SaaS Blueprint Challenge to map out your startup.* *This is a sponsored listing.

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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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EV charging startup Erapid raises $32M / Midjourney hits $200M in ARR / LiquidPiston bags $30M through crowdfunding

Plus, ML-driven precision oncology startup Engine Biosciences raises $27M

Inside Startups For November 01, 2023

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Here’s a look at today’s Startups briefing. Irish EV charging startup Erapid raises $32M. Bootstrapped AI startup Midjourney hits $200M in ARR. LiquidPiston bags $30M through a crowdfunding campaign. Thank you. Karan p/karan-chafekar

1 Ireland-based EV charging company Erapid, known by its EasyGo brand, raised €30M (~$31.7M) led by Aviva Investor. The company operates 4,000 charging points across 1,500 locations. More: The startup plans to use the funds to hire 60 employees. Erapid claims more than 50,000 registered users, growing at a rate of 2,000 per month. The company plans to add more than 20,000 AC chargers to its network, including at hotels and apartment buildings. Erapid, which sources its charger stalls from Tritium, is planning to replace phone booths with EV chargers through a partnership with Irish telecom Eir.

2 Bootstrapped AI-powered image generation startup Midjourney has reportedly hit $200M in annual recurring revenue (ARR), per CB Insights.  What the numbers say: Per CB Insights, Midjourney could be valued at $10B, using a multiple of 50x on the ARR. With just 100 employees, Midjourney is generating outsized revenue compared to rivals Stability AI and Metaphysic, which have a workforce strength of 175 and 97 employees, respectively. Stability is generating considerably less revenue and was last valued at $1B.  Relevance: Due to strong revenue, Midjourney is able to aggressively grow its team size. The firm increased its team headcount by 25% in the six months preceding Sept. 2023. In the same period, Stability grew its headcount by 18%.  What's next: Midjourney intends to remain bootstrapped despite a potential frenzy from investors. VCs, including Coatue and Lightspeed Venture Partners, are heavily investing in the generative AI space, most of which is going into organizations working on developing AI assistants.

A message from our sponsor, Impact. Calling all marketing professionals! Are you familiar with the world of influencers, affiliates, and more? We'd love to hear from you! At impact.com, we understand that building successful partnerships can be both exciting and challenging. We invite you to share your experience about partnership discovery and ask for just 7 minutes of your time (we know you're busy)! Let us know about: 🔍 Your process for finding and recruiting new influencers, affiliates and more. ⛰️ The unique challenges you've faced and how you've conquered them. 🔥 Your strategies for effective outreach and recruitment. Your expertise can make a difference for fellow marketers, and as a token of our appreciation, you'll have a chance to win a $200 gift card. Take the 7-min survey

3 LiquidPiston, a startup developing efficient rotary engine technology, raised $30M in capital from a crowdfunding campaign on the DealMaker platform. The firm has raised $50M in total funding to date from three Regulation CF campaigns and two Regulation A campaigns. More: DealMaker CEO Rebecca Kacaba said, "LiquidPiston is a perfect example of an aspiring startup that has leveraged the reach of crowdfunding to bypass traditional funding bureaucracies and reach directly into the hearts and minds of individual investors more familiar with their area of innovation." Over 10,000 investors participated in the recent oversubscribed Reg A+ equity crowdfunding campaign.  LiquidPiston will use the proceeds to accelerate R&D, scale up operations, and commercialize the company's engine technology. The Bloomfield, Conn.-based startup claims its engine technology can deliver major gains in efficiency and power density, and has applications across the automotive, aerospace, and power generation industries. LiquidPiston has secured $65M in funding from the U.S. Department of Defense, including a recent $35M contract from the U.S. Air Force.

4 Engine Biosciences, a BioTech startup with a presence in Redwood City, CA., and Singapore, raised a $27M Series A extension. The company uses machine learning to discover and develop precision oncology medicine.  More: The round was led by Polaris Partners, with participation by Temasek's ClavystBio, Invus, EDBI, and Cedars Sinai's Singapore-based investment firm Coronet Ventures. The startup seeks to develop precision medicine by locating key genetic interactions driving diseases, focusing on solid tumors. Engine claims over 30 previously unidentified precision medicine opportunities.

A message from our sponsor, Zscaler. Ransomware attacks increased by over 37% in 2023, with the average enterprise ransom payment exceeding $100,0001,2,3 with a $5.3 million average demand4 Read the 2023 ThreatLabz State of Ransomware Report to learn the latest ransomware trends based on data from the world’s largest security cloud. Dive into the metrics and discover our findings, predictions, and best practices to help inform your ransomware defense strategies. Download the report now to explore the latest ransomware insights into: Top 2023 ransomware attack statistics by industry and ransomware family The evolution of ransomware and current attack sequence Key ransomware trends including supply chain attacks, ransomware as a service, geo-political and law enforcement attacks, and more How to safeguard your organization against ransomware attacks with a zero-trust strategy Ransomware predictions for 2023-2024 Download Now 1. Verizon Data Breach Report 2022. 2. McAfee Labs 2022 Threat Report. 3. IBM X-Force Rhreat Intelligence Index 2022. 4. Coveware Ransomware Report.

5 Redhorse Corp. acquired Gainesville, Fla.-based cybersecurity firm Allied Associates International for an undisclosed sum. The acquisition adds cyber intelligence capabilities to Redhorse's data analytics, engineering, and other tech services for federal clients. More: Arlington's Redhorse and Gainesville's Allied Associates International, both founded in 2008, serve defense, national security, intelligence, and other federal clients. Two years ago, Redhorse had secured investment from venture capital firm Blue Delta Capital Partners to support acquisitions like this. With Allied Associates, Redhorse now has nearly 500 employees, up from 400 in Jan. 2022. Allied Associates will operate as a Redhorse business unit, with the existing leadership continuing to lead the division.

6 London-based HR tech startup Spotted Zebra raised a €8.8M ($9.3M) Series A led by SaaS-focused VC firm Nauta Capital. The company develops a management platform that enables organizations to identify skills gaps and tackle these through hiring, succession planning, or reskilling. More: Spotted Zebra plans to use the funds to expand across markets and sectors, as it seeks to reach 10 million individuals on its platform by 2030. The startup, founded in 2020, claims FTSE100 companies among its clients.  Spotted Zebra last raised a €1.6M investment led by Playfair Capital in April. Playfair Capital also invested in the new round, in addition to participation by Act VC and Entrepreneur First.

7 Quick Hits: Are you getting the best discounts from leading cloud providers? This is your go-to resource for learning how to maximize multicloud discounts.* Authentication and user management tools provider FusionAuth bagged its first outside funding of $65M. Updata Partners led the funding round.  AI-powered cybersecurity services startup SpiderSilk raised $9M in fresh funding led by Aramco's venture fund Wa'ed Ventures.  U.S.-based battery startup Our Next Energy started manufacturing prototype battery cells at its Michigan plant.  The China Manned Space Agency is offering an undisclosed sum to private commercial space companies developing rockets for cargo transport trips to the Chinese space station.  Create a winning SaaS business plan and calculate your break-even point. Join the 1-Page SaaS Blueprint Challenge to map out your startup.* *This is sponsored content.

Upcoming Events NOV 8 Compete Week - Competitive Intelligence Summit is back: Join top GTM leaders from Salesforce, Hubspot, Apollo and more!* Virtual Register Here NOV 25 AI in Financial Services with Saroop Bharwani Virtual Watch On Demand NOV 25 The Future of Fractional Work with David Berkowitz Virtual Watch On Demand * This is a sponsored event

Knowledge Hub Term of the Day Board of directors: A board of directors is a group of individuals elected by shareholders to govern and oversee a company’s strategy and management. Read More Question of the Week What's one tool or app that has significantly made your life easier at work? Join the conversation

INSIDE STARTUPS LEADERBOARD (7 DAYS) 🥇 Kris Christopher (13) 🥈 James Spurway (5) 🥉 Justin Valentin (3)

Karan Chafekar Analyst Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.  Nicolas is a Sr. Analyst at Inside, covering startups and transportation 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 start-ups.  This newsletter was edited by Vibha Chapparike

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