According to Dave Balter, global head of investments at dunnhumby, “we have some goals we’re trying to hit, [which is to fund a] range of 10 companies a year for the next three years” with the average initial investment falling between $100,000 to $500,000 per company, he said.
Balter came to dunnhumby in 2011 by way of the company’s acquisition of BzzAgent, a word-of-mouth media and marketing company he served as founder and CEO of, in addition to his work as a venture partner with Boston Seed Capital. At the time, “the intent of dunnhumby was to infuse the business with what we were doing in social and advocacy and to think about the future… [we wanted] a strategy to get closer to changes that were happening all around this business.”
The goal, then, was to be a supporter of the commerce ecosystem that dunnhumby’s British parent company Tesco plays a sizeable role in, he said. Dunnhumby Ventures obtains equity in the businesses it invests in, although that relationship is not necessarily exclusive, as is the traditional investment-round structure.
“Our hope is to invest and from there, figure out how to create value with the company,” he said. From the startups’ perspective, value comes in the form of dunnhumby’s existing relationships, analytics and consumer data insights, he said. “As part of the investment, we take equity but we don’t force upon the company a need to work with us,” although that would be a viable path for both the startup and investor.
Dunnhumby was looking to fill a gap in strategic investment funds with a commerce focus. The investment fund is nothing new – everyone from AOL to Bertelsmann has one -- but in the retail realm, Commerce Ventures has little to no company, and dunnhumby saw a wide-open opportunity.
Dunnhumby Ventures has placed a stake in its earliest round of startups, which include InfoScout, Coherent Path and The Shelf; all share a recurring theme of helping “personalize the shopping experience” with a dose of “an understanding that data and analytics will help inform more loyal customers.”
Email This Post