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The key trends in angel investment that are impacting retail

Early stage angel investment is a good barometer of how an industry is likely to develop in the future. Looking at what is capturing the interest of investors in the retail space, a focus on uniqueness, ‘customer delighting’ and supply chain efficiency looks like a recipe for success.

Customer delighting

On the Angel Investment Network (AIN) platform, ‘retail’ as a keyword search among the audience of 200,000 investors fell from 45th to 52nd over the past 12 months, reflecting a challenging time for the sector as a whole. Companies that have bucked the trend and won financial backing have a combination of the following attributes. These are service, uniqueness, supply chain efficiency and ‘customer delighting’.

They are all qualities at the core of Wolf & Badger’s offering. Recently completing a £4.5 million fundraise, having first raised with AIN, the clothing retailer has a smart team and a really interesting model. In supporting new designers, it has a strong appeal among millennial and traditional fashionistas who want an individual and different look. Wolf & Badger also made canny use of a key retail location, supported by a joined up promotional and distribution model. 

Overall fashion is the sixth largest sector for pitch ideas on the platform. However it drops to 14th in terms of the number of investors interested, with three times as many pitch ideas as investors willing to back them. A big driver of this is that fast fashion is on the decline. Wolf & Badger has bucked the trend by offering something very different.

Similar ‘customer delighting’ and great service underpinned another very different retail business – high end London-based bakery, Orée, for whom we raised £425,000 this year, one of the largest raises we have ever completed for a food business. It satisfied several consumer trends that have characterised the UK casual dining market in the past couple of years, including ‘premiumisation’ and a concern for provenance. 

Deeptech

A key part of the value proposition for so many new startups companies across all industries is deep technology powered by AI. It is also enabling a new customer-centric proposition in retail with some exciting companies winning early stage funding. Nordic inspired Skandl, currently raising, works with some of London’s biggest hospitality businesses. Skandal supplies restaurants and venues, offering home delivery with the quality of freshness in fish you would expect in a restaurant. Using predictive analytics to ensure supply matches demand, it is ensuring selling fresh fish – one of the oldest professions known to man – is ready for the AI driven future.

Near me searches 

While there has been much talk of online retailers eating into physical retailers’ margins, smart new ways of using online data developed by start-ups are also boosting visits to all retailers. NearStreet is an interesting company who has partnered with Google, offering real-time map led information on where consumers can find products they need.  The data also informs shop owners about their customers’ physical journeys, enabling them to better target them.

Competition between Deliveroo, Just Eat and Uber is also heating up the acquisition market with Just Eat recently acquiring City Pantry  for £16m. The office catering marketplace enables businesses to order in food for staff, company events and meetings, This will drive innovation in the market. We have seen business proposals covering the creation of dark kitchens, meat alternatives, robot chefs and changes to the delivery system via high performing electric bikes.

Technology offers some really exciting opportunities for retailers that investors are backing. By effectively utilising it and focusing on great service and a unique offering, retail businesses can continue to win investment and delight customers even in a challenging environment.


Ed Stephens, director of brokerage, global head of brokerage for Angel Investment Network

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