PitchBook Data, Inc.

John Gabbert Founder, CEO Nizar Tarhuni Vice President, Institutional Research and Editorial

Paul Condra Head of Emerging Technology Research

Institutional Research Group Analysis

Eric Bellomo Analyst, Emerging Technology eric.bellomo@pitchbook.com

Data
TJ Mei
Data Analyst

pbinstitutionalresearch@pitchbook.com

Publishing Designed by Jenna O’Malley

Published on October 2, 2023

Key takeaways

Overview 2

TTM fundraising and deal count 3 by segment

Step-ups 6

Down rounds 7

Exits 8

EMERGING TECH RESEARCH E-Commerce VC Trends Deep Dive

Segment and category analysis

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Key takeaways

• In Q2 2023, the TTM deal count was evenly distributed across segments and led narrowly by horizontal platforms with 60 deals. Median pre-money valuations for each segment were slightly less concentrated and led by the postpurchase segment at \$65.0 million. On a subsegment basis, fulfillment & delivery startups led all subsegments with 182 deals, followed by analytics & CDPs with 117 deals.

• Three categories achieved median step-ups of 2.8x or higher, led by product protection at 6.6x. Despite these step-ups, startups continue to face downward pressure on deal activity. Across sectors, down rounds accounted for approximately 14% of VC deal activity, and three e-commerce categories faced average haircuts exceeding 50%.

Exit activity was muted during the TTM period. Exit value totaled \$3.8 billion across 46 deals. The majority of exit value was attributable to AnyMind’s IPO for \$1.3 billion on the Tokyo Stock Exchange in March 2023, and the decline in exits closely correlates with elevated interest rates and a broad-spectrum closure in the IPO window.

• The leading categories by MOIC were price optimization startups (51.2x), conversational commerce platforms (15.2x), and fulfillment & delivery services (9.0x).

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Overview

E-commerce enablement startups help online merchants manage all aspects of the buyer journey and provide technologies spanning prepurchase product discovery, purchase venues, purchase mediums, postpurchase experiences, and horizontal platforms. This ecosystem boasts tremendous technological diversity, covering both B2B and direct-to-consumer business models, and is interwoven with adjacent verticals, such as financial technology (fintech), supply chain technology, and artificial intelligence & machine learning. Q2 2023 VC deal activity extended a QoQ deceleration dating back to the end of 2021. In Q2, VC investment totaled \$1.9 billion, the lowest such figure since Q4 2018 (\$2.0 billion).1 Nevertheless, several significant developments occurred in Q2 2023. US consumer spending was healthy but did slow, increasing only 0.1%, while the rate of inflation also cooled.2 In May, e-commerce sales increased 5.0% YoY, and consumers were provided with a degree of inflation relief, according to the Signifyd US E-Commerce Price Index.3 In July, retail sales beat expectations by increasing 0.7%. Global supply chain pressure continued to decrease, despite a moderate uptick toward the end of the quarter.4

TTM share of e-commerce VC deal count by segment*

TTM fundraising and deal count by segment

Deal count was distributed evenly on a trailing 12-month (TTM) basis through Q2 2023 as the segments with the highest deal counts (horizontal platforms at 60 deals) and lowest deal counts (prepurchase at 43 deals) were separated by less than 20 investments. There was greater separation in deal value, and purchase medium led all categories with \$2.6 billion raised, followed by horizontal platforms (\$2.2 billion) and postpurchase startups (\$1.4 billion). The subsegments with the highest median pre-money valuations straddled adjacent verticals, namely fintech and supply chain tech, including payment (\$154.3 million), fulfillment & delivery (\$125.6 million), fraud prevention (\$109.7 million), and BNPL & credit (\$92.5 million). E-commerce-as-a-service (EaaS) platforms led all categories in angel and seed valuations at \$24.1 million, benefiting from long-term tailwinds in B2B e-commerce adoption. Swiftly’s \$100.0 million Series B, which raised the company’s valuation to \$780.0 million on a 14.6x step-up, and Cart.com’s \$60.5 million Series C, which elevated the company to unicorn status, are two such examples. The trend toward omnichannel shopping and discoverability was also reflected in the angel and seed valuations for marketplace enablement and online-to-offline startups of \$18.6 million and \$21.0 million, respectively. Other early-stage category leaders included payment (\$104.4 million), livestream & social commerce (\$92.1 million), and analytics & CDPs (\$90.0 million). Category leaders for late-stage deals included BNPL & credit (\$867.3 million) and livestream & social commerce (\$340.0 million). The venture-growth stage was similarly led by BNPL & credit with a median pre-money valuation of \$3.4 billion, followed by the subscriptions category at \$2.6 billion.

TTM median e-commerce VC pre-money valuation (\$M) by segment*

Source: PitchBook • Geography: Global *As of June 30, 2023

TTM e-commerce VC deal count by subsegment*

Source: PitchBook • Geography: Global *As of June 30, 2023

TTM median e-commerce VC pre-money valuation (\$M) by subsegment*

Source: PitchBook • Geography: Global *As of June 30, 2023

TTM median e-commerce VC pre-money valuation (\$M) by stage*

Source: PitchBook • Geography: Global
*As of June 30, 2023

Source: PitchBook • Geography: Global *As of June 30, 2023

Step-ups

Across all deal stages, product protection startups produced the highest TTM median step-up at 6.6x following Proteger’s \$3.2 million Series A in Q4 2022. Other leading categories included storefronts & headless APIs at 3.4x and search at 2.8x. Headless and composable services continue to perform well, but our conversations with investors point to a potential softening in short-term demand as merchants scrutinize the return on investment of their software spending. Overall, the portion of merchants that identify as fully composable sits in the single digits, pointing to long-term growth potential.5 Nevertheless, startups in this subsegment produced healthy step-ups, including Uniform’s 15x round. Search providers also stand to benefit from generative AI tailwinds and the adoption of emerging technologies such as vector databases. Analytics & CDP platforms led angel and seed step-ups with a median of 13.5x, and three other categories exceeded 3.0x: storefronts & headless APIs (4.6x), EaaS (3.7x), and returns & reverse shipping (3.3x). Reverse logistics continue to be an expensive pain point for merchants. In 2023, Amazon started charging for returns, and e-commerce returns amounted to \$203.2 billion in value.6 Late-stage VC deals were led by returns & reverse shipping (9.3x), and although venture-growth step-ups were sparse, product information & inventory management solutions led at 1.9x. Nearly all the highest step-up rounds were Series A deals in the first half of 2022, led by Coco’s \$56.0 million deal on a 18.2x step-up, Nautical Commerce’s \$29.9 million deal on a 15.3x step-up, and Uniform’s \$33.0 million deal at 15.0x. The highest step-up in 2023 was Nivoda’s \$14.8 million Series A for a 4.4x step-up.

TTM median e-commerce VC pre-money valuation step-up by subsegment*

Down rounds

Startups continue to face downward pressure on deal activity. The current fundraising environment is the most investor friendly in a decade, according to PitchBook’s VC Dealmaking Indicator, and down rounds accounted for 14.2% of all investments, according to our most recent Venture Monitor report. That said, the portion of deals reported without valuation disclosures is increasing, which clouds the overall outlook. Given the negative implications of a down round, an increased issuance of venture debt is possible, as rising customer acquisition costs, intense competition, and a slowdown in consumer spending underscore the need for capital. Two categories were hit hard with haircuts above 75%: BNPL & credit (87.1%) and loyalty & incentives (75.7%). Three categories also reported multiple down rounds: payment (three), fulfillment & delivery (three), and personalization (two). We expect down rounds to increase as debt rounds and cash runways are drawn down further.

TTM e-commerce VC down rounds by subsegment*

Source: PitchBook • Geography: Global *As of June 30, 2023

Exits

Exit activity was extremely muted during the TTM period. Exit value totaled \$3.8 billion across 46 deals, but most activity occurred in 2022. Most of the exit value was attributable to AnyMind’s IPO for \$1.3 billion on the Tokyo Stock Exchange in March 2023. The decline in exits closely correlates with elevated interest rates and a broad-spectrum closure in the IPO window. Public listings for startups in adjacent verticals, namely Klaviyo and Instacart, may help thaw the IPO market, but other macro-level factors will likely need to be settled before the IPO backlog clears. Our Exit Predictor corroborates a challenging near-term outlook for public listings, but a handful of categories present median IPO probabilities over 10%: account & order management (29.0%), BNPL & credit (23.0%), subscriptions (16.0%), and product protection (13.0%). M&A remains the most likely exit outcome, and three categories had median M&A probabilities over 80%: reviews (89.0%), analytics & CDPs (82.0%), and search (81.0%). Multiple on invested capital (MOIC) data is sparse, but two categories had a median MOIC that exceeded 15x: price optimization (51.2x) and conversational commerce (15.2x). Exits with notable MOIC totals included social commerce platform Grip’s \$151.8 million acquisition at an outlier 15,474x; FanFix, a creator monetization platform, with its acquisition for \$65.0 million at 65.0x; and Netrivals, a price optimization service, which was acquired for \$35.0 million at 51.2x. A possible tailwind for e-commerce M&A is the flurry of startups offering generative AI services, which have raised \$1.3 billion in 2023 so far, according to our recent deep dive into generative AI applications in e-commerce, and many smaller startups could be acquired and integrated into a larger platform based on e-commerce’s more immediate positioning for generative AI impact relative to other verticals.

TTM share of e-commerce VC exit count by type*

Source: PitchBook • Geography: Global *As of June 30, 2023

TTM median e-commerce VC post-money valuation (\$M) by type*

Source: PitchBook • Geography: Global *As of June 30, 2023

TTM median e-commerce VC post-money valuation (\$M) by subsegment*

Source: PitchBook • Geography: Global

*As of June 30, 2023

TTM median e-commerce VC MOIC by subsegment*

Source: PitchBook • Geography: Global *As of June 30, 2023

Median e-commerce VC exit predictions by segment*

Source: PitchBook • Geography: Global *As of June 30, 2023 Note: Probability data based on PitchBook VC Exit Predictor methodology.

Average e-commerce VC exit predictions by segment*

Source: PitchBook • Geography: Global
*As of June 30, 2023
Note: Probability data based on PitchBook VC Exit Predictor methodology.

Median e-commerce VC IPO prediction by subsegment*

Source: PitchBook • Geography: Global
*As of June 30, 2023
Note: Probability data based on PitchBook VC Exit Predictor methodology.

Median e-commerce VC M&A prediction by subsegment*

Source: PitchBook • Geography: Global
Note: Probability data based on PitchBook VC Exit Predictor methodology.
*As of June 30, 2023

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Contents

EMERGING TECH RESEARCH E-Commerce VC Trends Deep Dive

Segment and category analysis

Key takeaways

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Overview

TTM fundraising and deal count by segment

Step-ups

Down rounds

Exits

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PitchBook分析师注：电子商务风险投资趋势深度挖掘（英）-2023-WN10