Live buying remains hot as Whatnot valuation more than doubles to $3.7 billion
Despite a drop in venture capital spending, live shopping platform Whatnot – popular for sports cards, rare toys and other collectibles – raised $260 million in new funding.
Grant LaFontaine has been collecting since he was seven years old, when he started selling Pokémon cards on eBay. In their twenties, he and his friend Logan Head got into the business of finding and selling cool sneakers. But he felt the online interfaces on eBay and other sites were clunky and boring, and security features were lacking.
In 2019, he quit his job at Facebook to start Whatnot with Head, hoping to give collectors the chance to buy and sell baseball cards, rare toys, comic books and other items. coveted in a live interactive online setting where they could chat with each. others and score new items for their collections.
“We had this assumption that a new generation of collectors was entering the market,” said LaFontaine, 34, CEO of Whatnot. “And we thought this generation, growing up on an iPhone, was not going to be happy with the existing players because a lot of them hadn’t evolved.”
The three-year-old company has grown rapidly and just raised an additional $260 million in a Series D funding round led by CapitalG (Alphabet’s investment arm) and DST Global, with participation from ‘Andreesen Horowitz, YC Continuity and Bond. That brings its valuation to $3.7 billion, more than double the $1.5 billion it was valued at last year. The round took just seven days to come together, despite the downtown market and a pullback in venture capital funding.
“Growth here is almost in a class of its own. There are fast growing companies and then there is Whatnot,” said Laela Sturdy, general partner at CapitalG. “They also have a strong and sustainable business model, which positions them well.”
The company has become America’s largest startup focused on live shopping, which is the term used to describe a modern take on QVC-style shows in which a salesperson presents items available for purchase to a live online audience. . The format has exploded in popularity in China in recent years. A slew of startups like Whatnot, ShopShops, and TalkShopLive, as well as tech giants like Amazon and Facebook, are now devoting resources to testing the appetite of American shoppers.
LaFontaine said he had no idea of the Chinese phenomenon when they started the business. When he and Head brought up the round and investors started asking them about it, he just nodded — then went home and did his homework.
The company, which started out as a struggling marketplace for Funko Pop toys and had to temporarily relocate to Phoenix because it couldn’t raise money, now offers live shopping sessions in more than 70 categories, including sneakers, watches, vintage fashion and rare coins. The live stream lasts an average of two to three hours, with some sellers moving thousands of products during that time.
“I think live shopping is the closest thing to an in-person retail experience,” LaFontaine said. “You can actually talk to someone, you can see objects as they are. It’s more fun.
Whatnot has been the fastest growing market in the country for the past two years, according to the List of 100 marketplaces assembled by Andreesen Horowitz. Last year, sales increased more than 20 times. Although the company does not disclose its financial information, it said it expected an 8% reduction in sales and was not profitable.
It has managed to attract a dedicated community of buyers and sellers who spend both time and money on the platform, according to Sturdy.
“The data is closer to social media engagement levels, in terms of time spent on the platform and daily active usage,” she said. “At the same time, it has very strong business metrics, in terms of purchase conversion and repeat purchase.”
In an effort to foster trust and security on the platform, individuals must complete a detailed application before they can sell on Whatnot. The company likes to see people who have previous experience, like owning a comic book store or being a known social media influencer in the space. It also asks for information on where the seller is sourcing from. Whatnot approves about 30% of requests, LaFontaine said, with new sellers going through training before they can get started on the site. Its sellers range from amateurs to professionals, with the largest outfits on the platform operated by 20-30 people.
Whatnot, similar to eBay, started out in collectibles but sees room for all types of merchandise, with plans to expand into electronics and wine, beer and spirits. He also wants to develop additional features that make the app more social. It recently introduced direct messages, for example. And while other companies are making layoffs or implementing hiring freezes, it plans to hire around 100 more employees by the end of the year, boosting its workforce to more than 300.
Most of the time, LaFontaine works from his home office in Los Angeles, where Funko Pop toys and other treasured collectibles adorn the library behind him. The office, just a 15-minute walk from his house, is still fully isolated.