The godfather of direct-to-consumer, Warby Parker, proves why storefronts aren’t dead

Direct-to-consumer companies are known for being digital first, launching their storefronts online rather than on New York’s Fifth Avenue. Perhaps unsurprisingly, their rise fueled worries over the accelerated death of commercial real estate. After all, if a company could sell directly to consumers online, why would they bother with a costly rent?

But the company that helped jumpstart the bevy of direct-to-consumer companies, a category that includes everything from selling mattresses to dog toys, is living proof why storefronts aren’t anywhere close to dead.

Warby Parker, the eyewear retailer with at-home try-ons, said in its Tuesday filing to go public that a surprising majority of its revenue came from in-store sales.

The company estimated that 65% of its net revenue in 2019 came from store locations, with the rest from online channels. While that balance flipped during the brunt of coronavirus-related lockdowns in 2020, the company says it has seen a shift “back towards pre-COVID-19 levels,” with 50% of revenue in the first half of 2021 sourced from its physical locations.

In a sign that the company believes stores will continue to be important despite predictions that the coronavirus will shift consumer preference to online channels, Warby Parker added on net 26 stores by the end of June 2021 compared to the end of 2019.

If that’s not enough, the company’s own description of how it views its physical footprint also speaks to the importance it places on in-store: “Our retail stores serve as valuable marketing vehicles for introducing new customers to our brand and driving repeat purchases.”

And Warby Parker isn’t alone in its continued expansion of storefronts: Amazon is reportedly planning to open department stores, per the Wall Street Journal, which is expected to have a smaller footprint compared to the traditional department store.

Meaning the new age of retailers might not be as different as they say from the previous generation—storefronts after all are not dead. But the war for customers might not only be in the internet, but also in the look and feel of the physical stores themselves.

That said, Warby Parker’s growth did slow in 2020 in part due to much of its demand coming from physical channels: Revenue grew just 6.3% to $393.7 million while losses fell about 2.8% to $55.9 million despite an increase in media spend to point customers to its non-physical services, like telehealth and e-commerce. That figure rebounded slightly in the first six months of the year, with revenue up 53% to $270.5 million and losses that doubled to $20.4 million.

THE GHOST OF ELIZABETH HOLMES: Blood testing startup Theranos is dead. But its founder Elizabeth Holmes remains a ooming figure for female entrepreneurs, who are finding themselves unfairly compared to the now bizarrely canonized figure, per this important story from the New York Times’ Erin Griffith. One founder, Julia Cheek of Everly Health, says that those around her even suggested she dye her hair to stop the comparisons.

ONLYFANS BLAMES THE BANKS: When OnlyFans banned explicit sexual content last week, it blamed its “banking partners and payout providers” for the decision without naming the parties involved. Much of the ire then fell on the Visas and Mastercards of the world. But Mastercard said it had no part in the decision. OnlyFans CEO Tim Stokley on Tuesday said it was the Bank of New York Mellon that drove the decision in an interview with the Financial Times. The Bank however declined to comment.

And then in an odd twist, OnlyFans said it paused the ban in a tweet: Wednesday “We have secured assurances necessary to support our diverse creator community and have suspended the planned October 1 policy change.”

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

Jessica Mathews compiled the IPO and SPAC sections of this newsletter.

VENTURE DEALS

- Discord, the maker of a social media app, is in talks to raise at least $500 million in a round led by Dragoneer. It would value the business at $15 billion.

- Xiaodu Technology, Baidu’s A.I. voice assistant, raised a round of funding that values it at $5.1 billion, up from $2.9 billion in 2020.

- Form Energy, a Boston-based maker of energy storage systems, raised $240 million in Series D funding. ArcelorMittal’s XCarb innovation fund led the round and was joined by investors including TPG Rise.

- Grafana Labs, a New York City-based maker of an operational dashboard, raised $220 million in Series C funding. Sequoia Capital and Coatue led the round and was joined by investors including Lightspeed Venture Partners, Lead Edge Capital, and GIC. 

- Blockstream, a Canadian crypto infrastructure company, raised $210 million in Series B funding valuing it at $3.2 billion. Baillie Gifford and iFinex invested.

- Cribl, a San Francisco-based data analytics company, raised $200 million in Series C funding led by Greylock and Redpoint Ventures. They were joined by IVP, Sequoia, CRV, Citi Ventures, and CrowdStrike. Cribl is valued at $1.5 billion after this round.

- Trove, a Brisbane, Calif.-based e-commerce infrastructure company, raised $77.5 million in Series D funding. G2 Venture Partners led the round and was joined by investors including Bank of Montreal, Capital One Ventures, Commerce Ventures, and Wellington Management.

- Bungalow, a San Francisco-based residential real estate marketplace, raised $75 million in Series C funding. Deer Park Road led the round and was joined by investors including Atomic, Founders Fund, Coatue, and Khosla Ventures.

- Upstream, an Israel-based automotive cybersecurity company, raised $62 million in Series C funding. Mitsui Sumitomo Insurance led the round and was joined by investors including I.D.I. Insurance, 57 Stars’ NextGen Mobility Fund, and La Maison Partners.

- NoRedInk, a San Francisco-based maker of writing curriculum, raised $50 million in Series B funding. Susquehanna Growth Equity led the round and was joined by investors including True Ventures, GSV, Rethink Education, and Kapor Capital.

- Coco, a Los Angeles-based remotely-piloted delivery service, raised $36 million in Series A funding. Sam Altman, Silicon Valley Bank, and Founders Fund led the round.

- LevelTen Energy, a Seattle-based infrastructure focused startup, raised $35 million in Series C funding. NGP ETP led the round and was joined by investors including My Climate Journey (MCJ) Collective.

- Hunters, a Newton, Mass. and Tel Aviv-based cybersecurity company, raised $30 million in Series B funding. Bessemer Venture Partners led the round and was joined by investors including YL Ventures, Blumberg Capital, M12, U.S. Venture Partners, Okta Ventures, and Snowflake.

- Bazaar, a Pakistan-based startup, raised $30 million in Series A funding. Defy Partners and Wavemaker Partners led the round.

- Knoetic, a New York City-based human resources startup, raised $18 million in Series A funding. Accel led the round.

- Sayata, a Boston-based insurance broker and carrier-focused startup, raised $17 million in Series A funding. Team8 Capital and Vertex Ventures led the round.

- Level AI, a Mountain View, Calif.-based customer service startup, raised $13 million in Series A funding. Battery Ventures led the round and was joined by investors including ENIAC and Village Global.

- DiA Imaging Analysis, an Israel-based company automating the analysis of ultrasound scans, raised $14 million in Series B funding. Investors include Alchimia Ventures, Downing Ventures, ICON Fund, Philips, and XTX Ventures.

- Antidote Health, a New York City-based telehealth provider, raised $12 million in seed funding. Investors included iAngels, Well-Tech Ventures, and Flint Capital.

- MindRhythm, a Cupertino, Cali.f-based medical technology company focused on neurological injury in stroke, raised $5 million in seed funding. Investors included Pierre and David Lamond, Corey Goodman (Managing Partner of venBio), DCVC, Aestus Capital, Perseverance Capital Management, and Blue Fog Capital. 

- Knock, a New York City-based leasing platform for landlords and management companies, raised $5 million in seed funding. Accomplice and Boston Seed led the round.

- InShare, a Scottsdale, Ariz.-based company focused on insurance, raised $5 million. ManchesterStory and The Hive led the round.

- Notivize, a Palo Alto, Calif.-based a low-code solution for building product notifications, raised $2.2 million in seed funding. AI Fund, Firebrand Ventures, and Heroic Ventures invested.

PRIVATE EQUITY

- Accel-KKR invested additional capital in ATP, a Brisbane, Calif.-based provider of aviation software. Financial terms weren't disclosed.

- Wheel Pros, backed by Clearlake Capital Group, agreed to acquire Driven Lighting Group, an automotive lighting products provider, from Kian Capital. Financial terms weren't disclosed.

- Connect America, a portfolio company of Rockbridge Growth Equity, acquired 100Plus, a Chadds Fords, Pa.-based remote patient monitoring platform. Financial terms weren't disclosed.

- GCM Grosvenor agreed to invest in Horizon, a Columbus, Oh.-based fiber-optic broadband company. Financial terms weren't disclosed.

- Gorilla Logic, backed by Sverica Capital Management, acquired Modernist Studio, an Austin-based design consultancy. Financial terms weren't disclosed.

- Law Business Research, a portfolio company of Levine Leichtman Capital Partners, acquired Hopkins Bruce Publishers, a London-based provider of business information, legal analysis tools and networking for the legal industry. Financial terms weren't disclosed.

- National Auto Care, backed by Lovell Minnick, acquired Profit Concepts, Pinnacle Dealer Services, Pritchard Insurance, RRC Companies, and Ace Financial Development Group, five companies in the auto finance and insurance space.

- PennSpring Capital invested in Environmental Remediation and Financials Services, a New Jersey-based provider of subsurface soil and groundwater remediation. Financial terms weren't disclosed.

- Red Barn Equity Partners invested in ReproTech, a Columbia, Mo.-based cryostorage and fertility preservation company. Financial terms weren't disclosed.

- Thriving Brands, formed by Trive Capital, acquired Right Guard and Dry Idea, two antiperspirant and deodorant brands, from Henkel Corp. Financial terms weren't disclosed.

- Unified Women's Healthcare, backed by Altas Partners, Ares Management Corporation, and Oak HC/FT, acquired Women’s Health USA, a provider of practice management services for the women’s health companies. Financial terms weren't disclosed.

EXIT

- Blackstone (NYSE:BX) is in talks to acquire Interplex Holdings, a Singapore-based tech services provider, for at least $1 billion from Baring Private Equity Asia, per Reuters.

- Azurity, backed by Novaquest, acquired Arbor Pharmaceuticals, an Atlanta-based pharmaceuticals company,  from JW Asset Management and KKR. Financial terms weren't disclosed.

OTHER

- The U.S. Federal Trade Commission is seeking to unwind Illumina’s acquisition of Grail, the cancer testing startup.

- Lanxess agreed to acquire International Flavors & Fragrances’ (IFF) microbial control unit, which focuses on disinfectants and cleaners, for $1.3 billion.

- Headspace and Ginger,  a meditation app and a mental health service, agreed to merge. Financial terms weren't disclosed.

- Substack acqui-hired the team behind Cocoon, a San Francisco-based maker of a subscription-based social media app. Cocoon has raised funding from investors including Lerer Hippeau Ventures and Inovia Capital.

IPOS

- TPG Capital, a Fort Worth, Texas-based private equity firm, is working with investment bankers on a planned initial public offering, per Bloomberg. A deal could value the company at around $10 billion.

- Solaris Midstream Holdings, a Houston, Texas-based water infrastructure and recycling developer and operator, is preparing for an IPO, according to Reuters. Crude oil producer ConocoPhillips backs the firm.

- On Holding AG, a Switzerland-based sportswear shoe company, filed for an initial public offering in the U.S. The company generated $187 million in net sales 2020, and reported a loss of $36.2 million. Stripes, Point Break Capital, and Hillhouse back the firm.

- Delhivery Pvt, an Indian commercial logistics and supply chain services company, is planning to file a draft prospectus for an IPO in the country, according to Bloomberg. SoftBank and Carlyle Group back the firm.

- Mixue, a Chinese ice cream and tea company, is weighing an IPO in Hong Kong, according to Bloomberg. 

IPOS

- a.k.a. Brands Holding Corp., a San Francisco-based fashion brand company, filed for an initial public offering. The company reported $215.9 million in net sales in 2020 and net income of $14.8 million. Summit Partners backs the firm.

- ForgeRock, Inc., a San Francisco-based digital identity verification company, filed for an initial public offering. The company posted $127.6 million in revenue in 2020, and reported a net loss of $41.8 million. Accel, Riverwood Capital, and Meritech Capital back the firm.

- Cilo Cybin Pharmaceutical Ltd., a South African cannabis health company, is weighing a local IPO, according to Bloomberg.

- Shenzhen IVPS Technology Co., a Chinese e-cigarette company, is considering an IPO in Hong Kong, per Bloomberg.

F+FS

- Apollo Global Management, the New York City-based private investor, is raising $500 million for a fund focused on SPACs, per Reuters citing sources.

- Fika Ventures, a Los Angeles-based investor, closed Fika Fund III with $160 million and Fika Opp I with $35 million.