- Venture capitalists see ongoing potential in e-commerce despite reduced funding in 2023.
- Investors remain bullish on technologies like AI for visual search and process automation.
- While skepticism endures after online retail’s pandemic boom, merging AI and e-commerce could unlock fresh funding
Investors Still Bullish Despite Funding Dip
Though e-commerce funding dipped in 2023, VC firms still spy opportunities, particularly in AI integration.
Top investors told Business Insider what they’re betting on after a year of startup carnage. Most said deals declined as post-COVID hangovers set in alongside supply chain woes and inflation denting consumer spending.
But they remain bullish on technologies transforming online retail’s next phase – whether AI discovery or automation easing merchant burdens.
Antler, Plug and Play, and PayPal Ventures
Antler’s Alan Poensgen said niche digital brands and e-commerce infrastructure have potential, like AI for product images. But “a major COVID hangover” brought funding crashes.
Plug and Play doubled down on AI’s eCommerce collision in 2023 despite deal flow slowing. Partner George Damouny expects hype-driven AI startups to flame out, burning some investors.
PayPal Ventures’ James Loftus still backs online small business enablers with global ambitions. But the bar is higher, requiring sustainable growth and metrics exceeding projections – no more hyper-scaling on ideas alone.
SpeedInvest, M13, Insight Partners
Speedinvest sees marketplaces and related software as indefinite growth drivers, investing in supply chain upgrades, dynamic pricing, and visual search to outcompete.
For M13, social commerce, B2B purchasing, and full-stack AI solutions still warrant attention. The future lies in sourcing, forecasting inventory, and distribution – anywhere automation drives efficiency.
Insight Partners’ Rebecca Liu-Doyle wants unfair acquisition advantages like viral loops. She said conversion-lifting AI already delivers margins, embedding its positive impacts.
SuperAngel, Vinyl Capital
Given the cutthroat competition, SuperAngel’s Ben Zises considers no easy wins remain in building brands or SaaS today. Still, quality teams solving real needs can break through, though survival means no shortcuts.
Vinyl Capital’s Steve Mahony flagged ending platform reliance as crucial for brands managing data and technology internally. He’s hot on generative AI as the next wave of business transformation.
Activant Capital bankrolls online B2B simplifiers and decision engine startups around procurement and logistics. Partner Steve Sarracino said that Better data tools are essential as entry barriers climb.
So, while prevailing skepticism around e-commerce endures after its once golden sheen wore off post-pandemic, excitement brews for AI remaking retail. And though deals declined, merging both trends may unlock new funding rivers in 2024.
