Amazon backs 3D imaging startup Cambridge Terahertz, return fraud

Amazon is popping to the startup world to seek out a possible fix for one in all its thorniest logistics problems.

Retailers of all sizes have lately struggled with an uptick in fraudulent returns. The scam involves shoppers requesting a refund, but as an alternative of returning the merchandise, they keep the item and send back an empty package or a box of unrelated junk.

It’s turn into a costly nuisance for retailers, accounting for $103 billion in losses last 12 months, in line with Appriss Retail.

Cambridge Terahertz, a Sunnyvale, California-based startup, has developed a 3D imaging system that may see inside unopened packages, enabling retailers to more easily and quickly spot cases of return fraud.

The corporate has just closed a $12 million seed financing, led by enterprise firm Felicis, with participation from Amazon’s $1 billion Industrial Innovation Fund and other investors.

“Amazon handles plenty of boxes, as you’ll be able to imagine,” Nathan Monroe, CEO of Cambridge Terahertz, said in an interview. “It’s an enormous problem just knowing what’s inside boxes, knowing how efficiently they’re packed, knowing if what you’ve got returned to them is what you said it’s.”

Amazon launched the Industrial Innovation Fund in 2022 with a goal of investing in businesses working on technology solutions that would apply to the corporate’s massive and sophisticated operations network, from the center mile to the last-mile portion of the delivery process.

Franziska Bossart, head of the fund, said in an interview that Amazon will typically plan to pursue a deeper “business relationship” with portfolio firms over time, starting from piloting the technology to a possible acquisition.

Cambridge’s technology “aligns well with Amazon’s needs” and might have an actual impact on its ability to screen inventory for damages and defects once it’s returned or before a package leaves the warehouse.

“The power to see into boxes, discover contents, together with the compact nature of the system could allow for integration at various points in our operations,” Bossart said.

The fund has backed 20 firms to date. It also sourced Amazon’s acquihire and licensing take care of artificial intelligence robotics startup Covariant last August, Bossart added.

Amazon’s investment track record has come under scrutiny up to now. A 2020 investigation from The Wall Street Journal found the corporate’s Alexa Fund, which primarily invests in voice and AI technologies, used privileged information gained during meetings to launch its own competing products, citing people and startups aware of the situation. Amazon previously denied any wrongdoing.

Considered one of the Alexa Fund’s most notable investments was in video doorbell maker Ring, which Amazon later acquired in 2018 for $1 billion.

Cambridge connected with Amazon last 12 months through a pitch competition focused on packaging visibility. Monroe co-founded the corporate in 2023 after researching terahertz imaging on the Massachusetts Institute of Technology.

The corporate, which has 10 employees, says it shrunk airport-scale security scanners all the way down to a chip-based system inside a pyramid-shaped device that may slot in your hand. The device was originally conceived as a method to detect concealed weapons by seeing through nonconducive materials, like clothing or packages, in an unobtrusive way.

Cambridge said it has since been approached by firms considering how the technology will be utilized in supply chains, manufacturing, aerospace and medical applications.

The startup said it has secured 4 government contracts, and has had discussions with U.S. Customs and Border Protection around how the technology will be used to detect shipments of fentanyl on the border, an issue the Trump administration has zeroed in on through its crackdown on a near century-old trade loophole generally known as de minimis.

The capital from Amazon and others will enable Cambridge to ramp up hiring and “fully productize” its 3D imaging technology, Monroe said.

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