How live-shopping platforms are bucking the funding doldrums

The live-shopping space is a bit of an outlier in this regard. With the exception of buzzy fields like artificial intelligence, much of the funding landscape has been shaky over the last few years. VC funding reached an all-time high in 2021 before dipping back down. Although funding picked back up at the end of 2024, many investors today are uneasy about the chances of a recession and the effects of global tariffs. Still, more investors are betting on live-shopping platforms, enticed by the hockey stick-like growth many of these platforms are seeing in gross merchandise volume, buyers and sellers.

“We’ve built a really strong business that our users love,” Grant LaFontaine, CEO and co-founder of Whatnot, told Modern Retail. “Our investors saw that and are excited about our traction.”

At a time in which many consumers are trading down to private-label goods or watching their discretionary spending, “it’s been more difficult to assess the stickiness of a brand’s revenue and customers,” Eric Bellomo, senior e-commerce research analyst at PitchBook, told Modern Retail. “The macro uncertainty really clouds that outlook, which produces a wait-and-see [approach].”

Live shopping, though, is breaking through. It’s a bit of an about-face, as the segment has been traditionally met with skepticism by American investors. Live shopping has exploded in Asia, thanks to major e-commerce platforms like Taobao and Douyin, but the numbers paint a different picture in the U.S. In January 2024, eMarketer predicted that livestream e-commerce in China would grow 25% to hit $703 billion last year. Meanwhile, live-shopping sales are expected to account for some 5% of total e-commerce in the U.S. by 2026, per Coresight Research.

Still, appetite is growing in the U.S. A 2024 survey from digital commerce platform VTEX found that 45% of U.S. consumers had browsed or purchased from live-shopping events in the past 12 months. Americans also spend an estimated $32 million per day shopping on TikTok, Capital One Shopping calculated. Investors are finally starting to come around to live shopping, founders told Modern Retail, after seeing the promise in the space.

Chen Li, co-founder and CEO of Palmstreet, told Modern Retail that U.S. investors were initially “very hesitant” to invest in the live-shopping space. Part of the matter was competition, Li explained. “In Asia, live shopping doesn’t have to compete with a very strong offline shopping infrastructure,” he said. “In the U.S., the offline shopping infrastructure is robust, so the competition for live shopping is also very strong.”

Li mentioned that he had been rejected “more than 100 times” by investors since starting Palmstreet five years ago. “That’s been my normal expectation,” he said. “I had investors I talked to four years ago, and they did four rounds of interviews and still rejected me.” But, in the last two years, after Li showed them growth figures and projections, “they did the investment immediately,” he said. Palmstreet received the $25 million in funding over three rounds in December 2023, June 2024 and October 2024.

Palmstreet, which began as a social app for plant care in 2020 and ventured into live-streaming in 2023, has achieved 5X monthly growth in gross merchandise volume, Li said. On average, between 500 and 700 people are watching a livestream on Palmstreet at any given moment, Palmstreet told Modern Retail in 2024. Although known for rare plants, Palmstreet has expanded into categories like crystals, pottery and live animals like geckos. “We want to grow another 5X from where we are today in the year,” Li said.

Meanwhile, Whatnot, a live-shopping platform that started with collectibles like sports cards before building out its fashion offerings, announced its $265 million in funding in January “on the heels of major growth for our company,” LaFontaine told Modern Retail. Whatnot finished 2024 with more than $3 billion in GMV from livestream sales, and it doubled the number of sellers and first-time buyers on the platform.

That growth, LaFontaine said, was the biggest driver in getting investors on board. “The best time to raise money is when you don’t need to,” he said. “This latest round of funding came about because of the strength of our business.” LaFontaine added that while much of today’s VC funding is going to AI, “there will always be an appetite for consumer companies that can demonstrate massive engagement, a long track record of growth and a clear path to profitability.”

Marcie Vu, a partner at the VC firm Greycroft, which led Whatnot’s $265 million funding round, wrote in a blog post: “We believe Whatnot is poised to address all of retail, approximately $7 trillion in the United States alone, as it redefines how consumers engage with and experience commerce.” She added that “Whatnot is pioneering a new, dynamic shopping experience — one that is more authentic, fun, social and effective.”

Whatnot’s LaFontaine and Palmstreet’s Li told Modern Retail they plan to use funds across a number of areas, including building more seller features, expanding into additional categories and providing customer support. Neither ruled out the possibility of future funding rounds.

Still, PitchBook’s Bellomo told Modern Retail that live-streamed commerce is a “tough category” for companies to succeed in. Since 2022, PitchBook has tracked only five deals in the space that exceeded $30 million in value, and the Whatnot deal is one of those.

“There’s kind of a pinch on both ends of the spectrum,” Bellomo said. “We’re seeing foot traffic in traditional retail recover, and we’ve seen consumption of short-form video across TikTok and Instagram increase share. It leaves this very difficult middle ground for these livestream platforms to not only survive in, but grow in.”