Despite global economic uncertainties including the omicron coronavirus variant and high inflation rates stymieing public markets in recent weeks, money continues to pour into companies seeking to both speed up the supply chain and address the waste it produces.
Symbotic LLC, an A.I.-based supply chain technology platform that powers robotics within 25 Walmart distribution centers, is hopping on the SPAC bandwagon, merging with SoftBank’s SVF Investment Corp. to go public on the Nasdaq in the upcoming year. Under the deal, Symbotic will have a pro forma equity value of approximately $5.5 billion.
And after already seeing success in its first venture capital fund, Closed Loop Ventures Group has generated a new round for its second fund, surpassing its $50 million target to scale breakthrough circular economy solutions across fashion, plastics and packaging, food and agriculture, and supply-chain technology. The firm invests in the circular economy, particularly sustainable and profitable solutions that reduce waste, increase operational and material efficiency and protect the planet.
Symbotic, which would become Symbotic Inc. after the merger, refers to its product movement platform as a “conductor” of a team of robots that receive, store and retrieve products within a warehouse.
At the core of the system is a fleet of several hundred autonomous, intelligent, mobile robots called “Symbots.” These autonomous fleets of Symbots move products at speeds up to 25 mph with claims of 99.9999 percent accuracy to and from random access storage structures. As products exit the system, A.I.-enabled robots use proprietary end-of-arm tools and vision to output cases, totes and packages at some of the fastest speeds in the industry. The system aims to enhance storage density, increase available SKUs, reduce product damage and improve throughput and speed to customers.
The proceeds of the merger will enable Symbotic to accelerate its growth plans, provide the company with more financial flexibility to continue innovating to streamline its customers’ supply chains, and help it efficiently deliver on its contracted backlog while working to achieve growth targets.
In particular, the company plans to expand the application of its core technology to new use cases, including new verticals such as apparel, auto parts and home improvement. The company also wants to enter new geographies outside the U.S. and Canada.
As part of the merger, which is scheduled to take place in the first half of 2022, Symbotic will trade on Nasdaq under the ticker symbol “SYM.” The deal more than quadruples Symbotic’s forecast estimated revenues at the end of the 2023 calendar year.
Aside from Walmart, Symbotic works with retailers including Albertsons and C&S Wholesale Grocers, and says that its systems serve more than 1,400 stores in 16 states and eight Canadian provinces.
The Symbotic team says its workers benefit from enhanced workplace safety while gaining important, widely applicable skills in robotics and technology.
The platform can be incorporated into existing operating infrastructure so customers can reap the benefits of the system without disrupting existing operations or needing to build new distribution infrastructure to accommodate automation. This extends the economic benefits of existing infrastructure, workforces and can provide less disruption to surrounding communities.
“When we founded Symbotic, we set out to develop technology to make the supply chain work better for everyone. We have successfully invented and developed a truly disruptive solution that reimagines the traditional warehouse from the ground up. Not only that, but we have also proven its power in partnership with some of the world’s biggest retailers,” Symbotic chairman and CEO,Rick Cohen said in a statement.
Symbotic expects to generate $433 million in revenue in the 2022 fiscal year, representing an increase of more than 73 percent year-over-year. But the company also is accounting for what it says is a contracted order backlog of over $5 billion, which would help it realize a proposed 86 percent annual growth rate through 2025.
SVF Investment Corp. 3, (SVFC) the company merging with Symbotic, is a special purpose acquisition company (SPAC) sponsored by an affiliate of SoftBank Investment Advisers (SBIA). SPACs are designed to quickly take a private company to the public market via an acquisition, circumventing the slower traditional initial public offering (IPO). The IPO process requires a substantial investment from both the going-public business itself, as well as potential stakeholders, further lengthening the process.
But amid the expedited shift to the public market, SPACs in general have a weaker track record compared to traditional IPOs. According to a Bloomberg study of firms that went public from late 2018 to Oct. 29, 2021, IPOs saw an average gain in stock price of 61 percent, compared to just 11 percent for SPACs.
The transaction is expected to deliver up to $725 million of primary gross proceeds, consisting of $320 million of cash in trust from SVFC, a $205 million common equity private investment that includes $150 million from Walmart, and another $200 million investment by an affiliate of SoftBank Vision Fund 2. The $40 billion SoftBank Vision Fund has shelled out serious investment toward retail players over the past year, including Vuori, payments giant Klarna, DTC acquirer Perch and luxury marketplace Vestiaire Collective.
Symbotic also expects to receive an additional $174 million in cash from Walmart by the end of December to be used for “general corporate purposes” as a result of Walmart gross exercising warrants it holds in the company. If the deal closes as expected, Walmart will own 9 percent of the firm’s shares.
The transaction, which was unanimously approved by the board of directors of SVFC and the board of managers of Symbotic, is subject to approval by SVFC stockholders and other customary closing conditions. At closing, Symbotic is expected to form a seven-member board of directors including executives from “some of the world’s largest retailers and technology leaders,” the company said.
Venture fund gets $50 million to boost circular economy
As for Closed Loop Partners, the new $50 million comes at a time when the firm is capitalizing on the industry need to shift away from inefficient, linear supply chains toward healthier, waste-free circular systems.
The Closed Loop Venture Fund II is strategically positioned within the firm’s broader ecosystem, which also includes divisions that cover growth equity, private equity and project-based finance, and operates its own Center for the Circular Economy.
Across its investments, the Closed Loop Ventures Group sees transparency and digitization as critical tools in building the supply chains of the future, and invests in innovations aimed at reimagining and redesigning current systems, driven by data and scientific input.
The firm is focused on furthering localized and distributed manufacturing to build resiliency, and accelerating recovery and reuse to reduce a reliance on volatile commodity prices tied to limited virgin resources.
To date, the Closed Loop Venture Fund II has invested in solutions including Partsimony, Ucrop.it and Dimpora—investments that span supply chain technology, food and agriculture and fashion.
Dimpora develops sustainable and PFC-free non-harmful membranes to waterproof clothing, and reduce waste and chemicals from apparel production.
Partsimony’s SaaS network is designed to unify disparate data to help product designers manufacture more locally and with more sustainable materials. Ucrop.it operates a collaborative traceability platform that connects farmers to stakeholders across the agriculture value chain, incentivizing supply chain transparency, best agricultural practices and greater value sharing to advance sustainable agriculture on a global scale.
“The successful raise of Closed Loop Partners’ second venture fund signals the increasing understanding that circular supply chains represent the future of industry and materials. We are seeing more founders building businesses in the circular economy, and a growing need for early-stage capital,” said Danielle Joseph, managing director of the Closed Loop Ventures Group at Closed Loop Partners. “We look forward to collaborating with the broader venture capital community, fostering transparency and open insight sharing to advance breakthrough innovations.”
Building on its thought leadership, the venture capital team at Closed Loop Partners is currently evaluating how it wants to invest in markets often misunderstood in traditional VC investing, namely biopolymers as plastic alternatives and evolving molecular recycling technologies.
The firm’s Ventures Group benefits from a broad range of investors including multinational corporations like Microsoft and GS Group, and investment firms like female-founded certified B Corporation Align Impact.
“The need for solutions that advance the circular economy is coming into focus, and investment is key to scaling their impact. Closed Loop Partners’ venture capital team continues to be at the forefront of this work, supporting founders and businesses that are transforming our systems and supply chains for the better,” Jennifer Kenning, CEO and co-founder of Align Impact, said in a statement. “Our partnership with the Closed Loop Ventures Group is mission-critical to our work, advancing investments that have massive positive outcomes for people and our planet.”