Global funding almost reached $22 billion in May 2023, up a bit month over month and significantly down, around 44%, compared to May 2022, Crunchbase data shows.

The funding setback has impacted all three funding stages — seed, early- and late-stage venture — with each stage down between 41% and 48% in a year-over-year comparison. And despite large funding rounds for AI startups in May, investor interest in the technology wasn’t strong enough to change the overall picture.

For new unicorns in May we count 10 companies — double the count in April, but much lower than the 34 new unicorns that joined the board in May 2022. This is the first month since November 2022 for new unicorns to reach low double digits.

This scaled-back funding environment shows a massive decline from 2021 and the first half of 2022. Current monthly funding is in line with amounts seen in the years 2018 to 2020 — which were up from prior years.

E-commerce play

However, billion-dollar fundings are still taking place in 2023. The largest funding this past month went to Singapore-headquartered fast-fashion retailer Shein, albeit at a lowered valuation. The company raised $2 billion at a valuation of $66 billion, slashing a third of its value from its 2021 funding when it was valued at $100 billion. It reported $22.7 billion in revenue in 2022 and remained the fourth most highly valued private company on The Crunchbase Unicorn Board with ByteDance, owner of TikTok, the most highly valued private company.

AI leverage

One ameliorating trend is investments into AI companies. Out of 38 new unicorns in 2023, AI companies represent eight new unicorns, including two from this past month. Toronto-based Cohere is a ChatGPT competitor, building large language models that companies can integrate to build products. Runway is a New York-based generative AI video automation platform.

Other AI companies that raised large rounds in May 2023 include Anthropic, Builder.ai, CoreWeave and Lightmatter.

However, the interest in funding AI companies is not enough to shift the overall macro funding climate. Around 13% of total funding in May went to companies tagged with AI.

Market turns

The leading AI chip provider, Nvidia, tipped close to the trillion-dollar value mark for the first time in May 2023, more than 20 years after it went public at $676 million in 1999.

Apple and Microsoft have also seen their stocks rise, in line with peak values, in the past month. The other trillion-dollar valued behemoths Amazon and Google are down from 2021 peaks.

So, are we in a bubble or downturn? This question was posed by Crunchbase News reporter Joanna Glasner. The 2000 dot-com bust wiped out the asset class, and it took 15 years for Nasdaq to recover from the bubble. After the 2008-2009 financial crisis, the value of tech stocks powered back within two years from the downturn.

In 2021, tech stocks spiked up sharply, a pandemic-driven increase with cloud services leading the way, and many tech companies saw unprecedented growth and garnered large valuations.

The following year, of course, saw a dramatic pullback in funding to tech startups. But despite the recent Nasdaq upswing, May funding numbers indicate that the reset is looking more protracted as investors proceed with caution.

Methodology

Funding rounds included in this report are seed, angel, venture, corporate-venture and private-equity rounds in venture-backed companies. This reflects data in Crunchbase as of June 5, 2023.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

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The popular fast-fashion startup based in China has reportedly raised $2 billion at two-thirds of its valuation, according to The Wall Street Journal.

The company rose through The Crunchbase Unicorn Board ranks during the pandemic, receiving a valuation of $100 billion and ranking just under the likes of TikTok owner ByteDance and SpaceX. But this new round of funding cut its valuation down to $66 billion. No big deal — it’s still the fourth-highest-valued startup in the world. 

Shein quickly won the hearts of American consumers as e-commerce and delivery exploded during work-from-home orders, and investors took note — in 2021, funding rose to more than $27 billion, around three times higher than the year before. 

The company has remained relatively quiet as rumors swirled that the e-commerce giant had a plan to raise money and, later on, go public. But while Shein contemplates its lofty plans, the company faces numerous obstacles to going public, including weaving through complex international regulations and declining activity in e-commerce.

E-commerce loses its luster

Funding toward e-commerce has seen a slow but steady rise in the last 10 years. 

That all changed in 2021, when the tech industry pinpointed e-commerce as a long-lasting consumer behavior much like working from home was. Funding jumped around 3x higher than 2020, and then immediately crashed to normal levels in 2022. Several big tech giants like Amazon and Meta were quick to build up their e-commerce services, only to lay off thousands of workers when those strategies didn’t play out. 

It’s unclear if Shein will face a similar, less drastic fate. The company reportedly garnered $23 billion in revenue in 2022, on par with other fast-fashion retailers like H&M and fashion conglomerate Inditex, which owns popular brands like Zara. But the e-commerce model isn’t as popular as it once was, and global regulations around environmental and sustainability laws could dwindle its popularity even further.

Stricter environmental regulations

Shein’s clothing is known for being extremely cheap — women’s shirts sell for as little as $2. The company has had to dodge questions over forced labor and environmental impacts of its production line. 

Despite telling U.S. congressional members Shein worked with third-party firms to audit its supply chain of forced labor, the company used cotton from Xinjiang (which has been cited for using forced labor) in at least two instances. In some instances, workers spent 18-hour days in the factories, or were given one day off a month, which violates China’s labor laws. 

The European Union is also setting strict sustainability standards on imports, taxing companies more based on how high their carbon footprint is. This could drive up the price of Shein-made items, or require the company to make changes to its supply chain in order to lower its environmental impact. 

If Shein does go through with its IPO, it has the potential to disrupt the $1.53 trillion apparel industry, but changing headwinds could ruin its course.

Correction: A previous version of this article incorrectly stated Shein raised money at a third of its previous valuation. We have updated the story to reflect the accurate number.

Related Crunchbase Pro queries:

• Global Funding Toward E-Commerce Startups

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Shopify announced on Thursday it will sell its shipping and fulfillment department to Flexport, laying off 20% of its staff in the process.

The move would allow Flexport, which partners with Shopify, to advertise the last-mile delivery services Amazon is known for. Shopify’s e-commerce customers will have access to the full range of Flexport’s freight services that can ship internationally as well as domestic home delivery. 

The announcement is another example of how tech’s attempt to latch onto e-commerce during the pandemic was a huge swing and a miss.

The broken promises of e-commerce

During the pandemic, tech companies thought they could tap into a brand-new, long-lasting consumer behavior that was ripe for disruption. That hasn’t been the case.

Funding to logistics startups — from everything to delivery to freight — dipped dramatically in 2022. You could blame, in part, the economic downturn that hurt every corner of the private market, but 2022 saw about half the money the logistics sector garnered the year prior, in part due to changing consumer behaviors.

Shopify spent years cultivating its in-house logistics firm, which included the $2.1 billion acquisition of last-mile delivery startup Deliverr last year. At the time, it seemed like a smart move — the pandemic accelerated e-commerce and delivery needs as people warmed up to having their groceries and home goods delivered to their door. Like working from home, the tech industry thought that level of online shopping activity would stick, and quickly hired warehouse workers and customer service representatives, and built new fulfillment centers.

Well, it didn’t stick, and what followed was a slew of layoffs and mea culpas. During a call with around 11,000 workers Meta laid off back in November, Mark Zuckerberg said his investment in e-commerce didn’t play out the way he thought it would. Shopify, which previously laid off 1,000 employees (10% of its staff) in November, said layoffs were driven by consumers returning to in-person shopping. Amazon abandoned plans to open several new warehouses and laid off hundreds of warehouse employees in the process. Same goes for online furniture retailer Wayfair, which reportedly laid off around 2,600 people in the span of four months, according to the Crunchbase Layoffs Tracker. 

For what it’s worth, this is a big win for Flexport, which bills itself as a one-stop logistics platform for businesses to organize delivery across multiple in-person and online retailers — something Amazon hasn’t been able to promise. Yet. 

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The company, which was founded in 2012, provides risk performance insights in the world of logistics. It works with the various touchpoints of the supply chain system such as shipping, weather and freight routes to improve efficiency and mitigate climate issues. 

Using predictive analytics, Everstream says it tries to help companies make game-time decisions on how to reroute its supply chains to lower its carbon footprint and operational costs while delivering goods faster. 

The California-based startup says it has helped companies achieve a maximum 30% reduction in revenue losses and 70% less time invested in managing risks. 

Logistics are losing love

Logistics were largely neglected in the venture world until the pandemic.

The rise in e-commerce habits jammed supply chains during the first two years of the pandemic, forcing investors to pay attention to new opportunities that could leverage existing technologies — the cloud, predictive analytics and AI — to improve the space. Logistics saw a flood of funding in 2021, with over $21 billion invested into the space, according to Crunchbase data. 

Then funding to logistics startups fell again in 2022 with around $11 billion invested, a 48% drop year over year. 

Project44, another logistics startup, raised $80 million in November. But it’s one of the rare raises in the space as the sector sees new entrants. 

Compliance is becoming an increasingly sticky issue in the world of logistics. Various countries have supply chain regulations that tax or ban companies that use logistics services involved in forced labor (like the Uyghur Forced Labor Prevention Act). The European Union also expects any imports or exports to meet its carbon reporting requirements under the Corporate Sustainability Reporting Directive.  

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Wunderkind, the New York-based marketing startup, announced on Thursday it raised $76 million in Series C funding, TechCrunch reported. Neuberger Berman led the round, bringing total funding to the company to $151.9 million per Crunchbase data.

Formerly known as BounceX, Wunderkind started in 2010 to better find niche consumers and market to them at scale. The company promises customers it can increase page views, convert readers into subscribers and generate more e-commerce revenue through its data-capturing and analytics services. The company knows when a viewer has stopped reading, watching or otherwise engaging with an ad. 

Wunderkind has worked with brands like fast-fashion retailer Forever 21, media group Refinery29 and cosmetics company Clarins.

A changing world

Behavioral marketing strategies like the ones Wunderkind employs — triangulating customers based on a spat of information about people’s interests, age and location (among other things) — is a popular strategy for brands. If you’ve ever been inundated with pet food ads after befriending your new cat-owning roommate, you’ve certainly been the unintended victim of behavioral marketing. (No? Just me?)

But behavioral marketing, however popular, has been scrambling lately. Meta and other social media platforms have significantly increased the cost of advertising after the direct-to-consumer marketing boom. Apple has made it easier for users to opt out of data tracking on apps. 

In addition, the European Union’s data privacy and protection law, known as GDPR, enforces sizable fees to companies that use “invasive” data mining. A lot of behavioral marketing tactics commonly deployed in the U.S. won’t fly in Europe. 

Marketing tactics will have to involve getting active consent from users to mine their data, as well as relying less on automation. Perhaps the future will move away from behavioral marketing and more toward contextual marketing — if you’re watching a video about cooking, you may be served cookware-related ads. 

That means brands are often stuck paying more money to target potential customers while being less informed about who those customers actually are. And companies like Wunderkind will have to adapt to being just as effective without being able to rely on cookies or automation. 

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Will 2023 be the comeback year for IPOs? What will it take for the public market to thaw? Here are the Crunchbase News staff’s top picks for the companies we think could go public next year. 

And if some of these sound familiar, it’s because they are: In our 2022 edition of this list, we predicted many of these might go public this year. Little did we know that the IPO markets would stall. So here we are again, offering up some thoughts on who might make public debuts, if and when IPOs start happening again.

Enterprise tech and cybersecurity

Arctic Wolf: It wasn’t that long ago when Eden Prairie, Minnesota-based Arctic Wolf seemed IPO bound. The company raised $150 million in a Series F in July 2021, taking its valuation from $1.3 billion to $4.3 billion. At that time, then-CEO Brian NeSmith said an IPO was likely the next logical move. Then the market changed drastically, and in October the managed security provider raised $401 million in convertible notes led by existing investor Owl Rock. Convertible notes work like a short-term loan, but these notes are repaid to the investor at a later point in equity — i.e. after an IPO — typically at a discount. The managed security space can support large players and Arctic Wolf has grown large since being founded in 2012. Perhaps those notes turn to equity in 2023.

Databricks: Everyone has been on Databricks for a while. As recently as February, CEO Ali Ghodsi talked about going public, but offered no timeline. The market has only grown colder for IPOs since then, but this is a company that ended 2021 with more than $800 million in annual recurring revenue. It’s big and growing. It also hit a post-money valuation of $38 billion after raising a $1.6 billion Series H led by Morgan Stanley’s Counterpoint Global in August 2021. And that big Series H came just seven months after the company raised $1 billion at a $28 billion valuation. That valuation may be what is keeping the San Francisco-based company from going public. Nevertheless, Databricks — which creates tools and products to help companies view both structured and unstructured data in a single location — could look to 2023 to finally offer employees and investors the liquidity they’ve waited for.

Flexport: The supply chain is still top of mind, so maybe some company will ride that to the public market. San Francisco-based Flexport, which was on our IPO list last year, locked up a $935 million Series E in February led by Andreessen Horowitz and MSD Partners at an $8 billion valuation. The global freight forwarder and logistics platform moved nearly $19 billion in merchandise across 112 countries in 2021, even as global supply chains suffered from multiple disruptions. In total, the startup has already raised more than $2 billion, according to Crunchbase data. Despite a down VC market this year, logistic and supply chain startups still were able to raise cash from private investors. Maybe they can do the same with public ones?

— Chris Metinko

Fintech and banking

Stripe: The most obvious and one of the most successful fintech startups to add to this list is online payments company Stripe, which is co-headquartered in London and Dublin. It is the fifth most valued startup on the The Crunchbase Unicorn Board, and was most recently valued in a 2021 financing at $95 billion. Founded by brothers Patrick Collison, its CEO, and John Collison, its president, Stripe is now 12 years old and has raised more than $2 billion in funding. The company processed $640 billion in payments in 2021 up 60% from the prior year. It was said to have $12 billion in revenue in 2021 according to Forbes. As a result of the market correction, the company lowered its internal valuation in 2022 to $74 billion. The company filed its intention to go public in July 2021 but has not yet set a date. It cut around 1,100 jobs, or 14% of its workforce, earlier this year.

Revolut: London-based Revolut is the second most valuable European fintech, valued at $33 billion as of July 2021. The company is 7 years old and has raised $1.7 billion in funding. Founded by Nikolay Storonsky and Vlad Yatsenko, Revolut took off as it made transferring money in different currencies easy for those who work or travel in multiple countries. Revolut has not initiated layoffs in 2022 — in fact, it has kept hiring. The company announced revenueof 261 million pounds in 2020 but has not posted revenue for 2021. Revolut has 25 million retail customers and applied for a banking license in the U.K. in 2021. 

Plaid: San Francisco-based Plaid connects user bank accounts to fintech apps. The company was founded nine years ago by Zachary Perret, its CEO, and William Hockey, a board member. It was last valued in Series D funding in August 2021 at $13.4 billion and has raised $734 million over time. Plaid’s revenue in 2020 was said to be around $170 million in an article by Forbes. Visa planned to purchase the company in 2020 for $5 billion, which was halted by regulators the following year. In December 2022, Plaid laid off 20% of its staff, or around 260 employees, as Peret said that slower than expected growth after the pandemic meant that Plaid’s “pace of cost growth outstripped our pace of revenue growth.” On the other hand, Peret also said that the number of customers Plaid serves has grown 50% in the past year. 

— Gené Teare

Consumer platforms and services

Instacart: Instacart is kind of the startup equivalent of the “always a bridesmaid never a bride” cliche. It’s always high on lists of likely public market entrants, but has never actually consummated an IPO. Well, we think 2023 will be the year. (Yes, we said that last year too, but cut us some slack.) An offering started looking even more likely after the company confirmed in May that it filed a confidential draft registration with U.S. securities regulators, with a debut currently expected to come next year. The filing followed a steep write-down, as Instacart cut its valuation in March from $39 billion to $24 billion.

Guild Education: Denver-based Guild was also on our list last year, but all told, it still looks like a strong IPO candidate. The Denver-based company, which offers a platform for extending employer-covered education and upskilling to workers, has raised over $640 million to date, including $265 million in a June Series F round. It’s particularly noteworthy that the company secured a big round in a period in which overall edtech funding has been declining, indicating investors see a lot to like in the business model.

Faire: If you’ve been around long enough and raised enough money, inevitably investors will be looking for a return. This notion applies quite succinctly to Faire, an online marketplace for independent retailers and brands that has raised $1.7 billion since 2017, per Crunchbase data. The company’s business model could also see some favorable headwinds as consumers return to local stores, which stock from its suppliers, after a pandemic-driven shift to predominantly online shopping.

TripActions: TripActions is another heavily funded company that’s often bandied about as a likely IPO candidate. The 7-year-old, Palo Alto-headquartered company provides corporate cards and expense management tools, with a focus on business travel. Startup investors certainly seem to like the brand. The company pulled in $300 million in an October Series G round at a post-money valuation of $9.2 million. TripActions also is already making progress on the IPO path — it filed confidential paperwork for an offering with the SEC, per a September report.

— Joanna Glasner

Life sciences, agtech and foodtech

Lyra Health: We’re still waiting for Lyra — or maybe Headspace Health or some other teletherapy company — to go public. A first-mover teletherapy startup that took the direct-to-employer route in 2016, Lyra Health has worked with companies including Palantir, Zoom and Amgen to provide teletherapy long before insurance companies at-large embraced the practice. At the beginning of this year the startup raised $235 million in Series G funding, upping its valuation to $5.58 billion. Lyra held back during the 2021 IPO mad rush its competitor Talkspace participated in, but it’s more than ready for the public markets.

Plenty: We consider vertical farming and urban farming a solid bet next year. Thin-margin grocery stores are being hit hard by logistics and supply issues, so the idea of a produce farm located close to consumers seems pretty ideal. Vertical farming startup Plenty rang in 2022 with $400 million in Series E funding, almost half of all the funding the company has raised since it got started in 2014. Plenty began building out a vertical farming “campus” in Virginia, where it would grow strawberries for the large farming conglomerate Driscoll’s. There aren’t that many agriculture startups that went public — AeroFarms almost made the leap via SPAC in 2021 until funding closed up — but Plenty seems ripe to go public.

Tempus: Armed with $1.3 billion in funding over nine funding rounds, precision medicine startup Tempus is easily one of the most intriguing companies to come out of the pandemic. Its technology platform is different from most biotech upstarts that focus on developing molecules. Tempus scooped up two clinical trial-related startups and has its hand in multiple parts of the drug-making lifespan — something we don’t see outside of giant pharma companies such as Amgen or Merck. Tempus raised $275 million in debt financing in October for its ability to leverage AI in drug discovery and genomic sequencing. 

— Keerthi Vedantam

Outside the box

Canva: Design-software maker Canva has reeled in more than $572 million in funding and a $40 billion valuation from venture investors. The Australia-based company is known for its design software for nondesigners, but new tools rolled out this year show its ambitions are even bigger. It recently launched an AI writing tool that promises to help automate marketing copywriting, around the same time that OpenAI’s ChatGPT tool set the tech world abuzz. Investors seem to be increasingly drawn to technology that automates even the most creative of fields, and Canva is at the head of the pack in that group. At least one of Canva’s biggest investors is feeling more bullish on the company again: Franklin Templeton increased the value of its stake in Canva last month, after the design softwaremaker was previously hit by a series of writedowns.

ICON: We thought it’d be fun to include a name that doesn’t generally grace the likely IPO lists, and that’s where ICON comes in. The Austin-based construction technology company, known for its iconic 3D-printed homes, has raised more than $450 million in venture funding in the past five years. It’s the kind of branded, consumer-facing technology company that might benefit from the higher public profile that comes with a listing on a major exchange.

 — Marlize van Romburgh and Joanna Glasner

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Mirroring what is going on in the public markets, investors slowed funding to private companies with only $21.2 billion for startups in the region. That is a 26% decrease from the second quarter and an astonishing 56% from the third quarter of last year.

As with the global numbers, the total funding amount marked the lowest investment since the first quarter of 2020, when the world was just entering into a pandemic and only $19.6 billion was raised by startups in the region.

Not surprisingly, deal flow also suffered, hitting its lowest level since the fourth quarter of 2020. Only 1,417 deals were announced in Q3, down 18% from last quarter and 22% from a year ago.

Late stage leads in drop

While all types of rounds were down from last quarter, the biggest drop was seen in late-stage and tech growth rounds. That trend is not unique to Asia, but it was certainly pronounced.

Large late-stage and growth rounds fell 42% from last quarter to $9.2 billion. That number also represents a 71% drop from Q3 last year when the total hit $32.2 billion.

Although there were some large deals—such as Singapore-based online shopping company Lazada Group closing a $912.5 million round from Alibaba—deal flow also fell. Deal flow dropped nearly one-third from last year for the quarter with just 168 late-stage and tech growth rounds closed in Q3. That also is a decline of 18% from last quarter.

Early stage staggers

The drop in late-stage deals meant early-stage funding rounds actually saw more investment in the Q3 with $10.4 billion raised. However, that doesn’t mean things were completely positive for early-stage funding.

Early-stage deals fell 28% from Q3 last year to $10.4 billion. That was only a drop of 3% from the previous quarter, but well off the recent high of $17.2 billion in early-stage rounds we saw in Q4 of last year.

Early-stage deal flow did take a significant hit from last quarter, falling 22% to 497. That also is a drop of 16% from Q3 2021.

Seed stage uneven

Seed and angel rounds took a hit from last quarter, falling 23% to $1.6 billion—although that number actually is up 13% from the same quarter last year. While that may be a good sign, the amounts for such rounds are so small they do not really move the needle for overall funding in the region.

However, deal flow was down both from last quarter and year to year. Just more than 750 seed and angel deals were announced in Q3, a drop of 14% from last quarter and 23% from last year. It also is a far cry from the 1,174 deals announced in Q4 2021.

India crashes

So which countries in the region led to these numbers?

While nearly every major country saw their numbers fall, India took one of the most pronounced declines. Startups in the country raised only $2.9 billion in Q3, compared to $8.5 billion last quarter and $15.4 billion in Q3 2021.

Last year was a standout year for Indian startups, but this year tells a very different story.

China’s numbers also were down significantly quarter to quarter. Chinese startups saw only $9.6 invested last quarter, compared to $18.5 billion in the same quarter of 2021. The number also is down from the $9.8 billion invested in Q2 and a dramatic drop from the record $27.9 billion investors poured into startups in Q4 2021.

Exits

With the public markets wobbly nearly everywhere, Asia also did not see a robust IPO market. The biggest IPOs in the region involving VC-backed startups included two on the Shanghai Stock Exchange:

• China-based health care solutions provider MGI Tech raised approximately $506 million in a September IPO.
• China-based biotech firm InventisBio raised nearly $293 million in a July IPO.

M&A dealmaking was also down, as only about 60 deals involving VC-backed startups were announced—a decrease of about 25% from last quarter. The biggest deals announced in the third quarter in Asia were:

• In August, ByteDance acquired China-based health care organization Amcare Women’s and Children’s Hospital for $1.5 billion as more big tech firms continue to move into the health care space.
• That same month, e-commerce platform Noon bought online fashion retailer Namshi for $335.2 million.

Takeaways

What more really needs to be said?

Venture and growth—especially late-stage growth—funding is down nearly everywhere. Tension between China and the U.S.and Europe likely did not help funding numbers in the region, nor did China’s continued regulation ramp-up on tech firms.

Mix into that the public market tumult and overall economic gloom, and you have a down market globally, as well as in North America, Europe and most certainly Asia. 

It is odd that India’s numbers dropped so far considering some signs indicate it has weathered the overall down global economy well. However, perhaps the venture numbers show that is changing.

Last year saw a record of more than $175 billion invested into startups in the region. That robust market seems much further away than just nine months ago.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Oct. 3, 2022.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

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After exploding during the pandemic, online retail growth in the U.S. continues to slow, posting single-digit growth in the last four quarters. Online’s share of total retail sales has settled at around 20.6% as of the second quarter of 2022, according to the U.S. Department of Commerce.  

Ontario-based Shopify, which enables small retailers to set up e-commerce channels, acknowledged that the growth seen during the pandemic was not sustainable. CEO and co-founder Tobias Lütke announced the company laid off 10% of its employees, or around 1,000 team members, in July.

Even mighty Amazon is affected. The company’s online shopping business slowed by 4% in the second quarter of 2022 compared to a year ago, although Prime Day’s shift from July to June did impact the numbers.  

But not all e-commerce sectors are slowing. Scattered niches with a mix of business-to-business and direct-to-consumer offerings are still gaining market share in 2022. They’re finding ways to win with livestreaming, wholesale matching and shopping rewards. Here are four companies that have doubled—or in one case, quadrupled—their valuations from their 2021 fundings per a Crunchbase News analysis.

Live shopping 

Marina Del Rey, California-based Whatnot, a live marketplace for selling collectibles such as sneakers, trading cards and rare toys, raised a $260 million Series D in July. DST Global and Alphabet’s CapitalG led the large round, which gave Whatnot a valuation of $3.7 billion, up 147% from its $1.5 billion valuation in September 2021. 

Whatnot grew sales 20x year over year in 2021, and its monthly revenue is up 3x so far in 2022. Co-founder Grant LaFontaine has credited the launch of livestreaming on Whatnot’s app in July 2020 with changing the course of the business. 

Livestream has also excited investor interest in Firework, a business-to-business livestream and short video shopping company. Based in the Bay Area, Firework helps retailers connect with consumers through its website and channels, and across social platforms. 

In May, Firework raised a $150 million Series B led by the SoftBank Vision Fund. That round pushed the company’s valuation to $750 million, up 226% from its prior valuation of $230 million in March 2021. 

Wholesale marketplace 

South Korea-based Tridge focuses on the wholesale side of things. Tridge, which matches wholesale buyers and sellers for agricultural products, raised a $37 million round in August, led by DS Asset Management. That round earned Tridge a $2.7 billion valuation, up more than 400% from the company’s $500 million valuation in July 2021. The company provides a trusted place for wholesale agriculture analysis, supply and purchasing across 150 countries. 

Rewards

Shopping rewards app Fetch Rewards announced a funding of $240 million in equity and debt led by Hamilton Lane at a valuation north of $2.5 billion. The Wisconsin-based company was last valued at $1 billion just over a year ago. Fetch Rewards users scan their purchase slips to earn points toward gift cards or other rewards. The company recently announced 17 million active monthly users, up from 7 million in March 2021. Great Oaks Venture Capital led Fetch Rewards’ first seed round in 2014.

Update: Fetch Rewards announced 17 million active users as of August, 2022

Illustration: Dom Guzman

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Vetted, which was formerly known as Lustre, uses artificial intelligence to help online shoppers find the products they’re looking for that are the most highly-recommended by other users. The company, which was founded in 2019, uses reviews from platforms like YouTube, Reddit, and review websites to recommend products, according to a press release from the company.

“Shoppers shouldn’t have to spend hours sifting through indistinguishable products littered across thousands of ad-infested sites loaded with fake reviews and unreliable information,” Vetted co-founder Stuart Kearney said in a statement. 

“That’s why we’re building Vetted. Our users get a smart guide aligned with their best interests, transforming e-commerce into the simple and trustworthy experience everyone wants – especially today, when every dollar counts.”

Online shopping has seen a boom since the start of the COVID-19 pandemic, with more consumers buying everything from clothes to groceries online. But searching for items, like consumer electronics, often comes with having to read multiple buyer reviews, along with recommendations from review websites, such as Wirecutter. It’s not uncommon for buyers to have to do research on their own before settling on a product.

More than 330,000 online shoppers have used Vetted, and users buy the products recommended by Vetted 70% of the time, according to Hanna Jung, the company’s VP of Marketing. Jung added that users are also “asking for help beyond our initial focus on consumer electronics.”

The new Series A funding will help Vetted, which is based in San Francisco, expand its product and retailer coverage to other areas, Jung added in her statement.

Vetted last raised a seed round in August 2020, according to Crunchbase. The company is backed by investors including Index Ventures, Golden Ventures, and Bling Capital.

Illustration: Dom Guzman

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For retailers, this has translated into fewer buyers for items like clothes, furniture and gadgets. Walmart shares tanked earlier this week after the retailer said it is having to cut prices to reduce merchandise levels, which brings profits down. Items like kitchen appliances and exercise equipment that were backlogged a year ago are now overflowing stores and warehouses. 

The slowdown also has extended to providers of backend software and services to online retailers. This week, Shopify—the stock market poster child for the e-commerce boom of 2020 and 2021—posted a quarterly loss and downwardly revised forecasts, and said it will cut 10% of its workforce.

Shopify shares, down about 80% from highs last fall, are also emblematic of broader sector woes. Others in the e-commerce software space, including relatively recent market entrants like BigCommerce and Global-e, are also down sharply.

For startup investors in the retail-focused SaaS startups, meanwhile, all of this is happening at a particularly inconvenient point in time.

That’s because last year, investment in e-commerce software companies hit an all-time high, with more than $4.8 billion in global venture funding, per Crunchbase data. This year started hot as well, with a decline in funding in the past couple months only slightly offsetting a rollicking first quarter. For perspective, we chart out investment to the space for the past 5+ years below:

Where did venture investments go in 2022?

Salsify, a provider of tools for retailers and brands to beef up their e-commerce presence, was the largest equity funding recipient in the space this year, per Crunchbase data. The Boston-based company closed on a $200 million Series F round in April at a $2 billion valuation.  

Other big funding recipients included:

• Austin-based Cart.com, developer of an analytics platform for brands to accelerate online growth, was another big funding recipient, raising $240 million in a February debt and equity round.

• Lehi, Utah-based Route, a provider of package-tracking tools for online orders, raised $200 million in a January Series B at a $1.25 billion valuation.
• Boston-based Zoovu, developer of an AI-enabled platform for online customers to find products, raised $169 million in a June Series C. 
• Toronto-based Shoplazza, which pitches itself as a commerce platform aimed at helping online brands “go borderless,” raised $150 million in a January Series C round led by SoftBank Vision Fund.

Notably, big financings followed several quarters of sharply rising revenue for funded companies.

Salsify, for instance, said it generated over $110 million in annual recurring revenue in 2021, up over 50% from 2020. Cart.com, meanwhile, said its revenue grew over 400% in the year leading up to its last funding round.

Market conditions, however, are sharply different from even a couple quarters ago. And the swell in online shopping that began in the early days of the pandemic has since receded. 

As Shopify CEO Tobi Lütke pointed out in a letter to employees this week, when the COVID pandemic set in, almost all retail shifted online, and demand for software to help with that shift skyrocketed. 

“We bet that the channel mix—the share of dollars that travel through e-commerce rather than physical retail—would permanently leap ahead by five or even 10 years,” he wrote. “It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-COVID data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful five-year leap ahead.”

For venture-funded e-commerce software software startups, it’s likely a similar trajectory will apply. Consumers haven’t abandoned their online shopping carts. And it’s reasonable to expect steady growth ahead. But the environment is now one in which supercharged growth will likely be much harder and costlier to achieve.

Illustration: Li-Anne Dias

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