Venture capital funding to e-commerce startups passed $11B last year, and has grown 136% in the last four quarters, including Q1’15. With e-commerce-startup investing becoming increasingly competitive and crowded, it’s important to know where the top VCs are putting their money.
E-commerce deal flow for the top 20 smart money VCs has remained steady since 2011. In the four years through 2014, there have been 64 to 78 smart money e-commerce investments per year. The first half of 2015 has already seen 40 investments, more than half the deals seen in 2014, meaning this year is on track to beat last year’s deal total.
For dollars invested in deals in which smart money participates, Q4’14 hit a multi-year high with a total of $1.3B invested. Q2’15 was the second-biggest quarter with a total of $1B invested in e-commerce startups alongside smart money. Half of this attributed to a $500M Series C investment in ContextLogic (the company behind Wish.com) led by Founders Fund, GGV Capital, and Digital Sky Technologies.
(For more on how we selected our top 20 VCs, see the note at the end of this post.)
One useful way to visualize smart money strategies is to use CB Insights’ Business Social Graph, which shows how key investors and target companies are related. Accel Partners is the most active top investor in e-commerce, with about 40 separate investments. Four additional venture firms are also noticeably active in the space: Kleiner Perkins Caufield & Buyers, First Round Capital, Index Ventures and Andreessen Horowitz. CRV and Founders Fund are less active.
We identified three specific e-commerce categories where smart money VCs are investing heavily.
- The first is marketplaces. The top investors have made more than 100 investments in this space, in industries ranging from apparel, to home furnishings, and electronics. Some notable companies include Flipkart, ModCloth, and Houzz.
- The second is the on-demand industry. This space is heavily dominated by same-day food- and grocery-delivery services. Notable companies include Grubhub Seamless, Instacart, and Just-Eat.
- The third market consists of brand e-commerce companies that sell their own branded products online. Some major players include Warby Parker, Chloe + Isabel, and Nasty Gal.
Tracking smart money VC investments can help industry-watchers stay on top of e-commerce shifts and retail disruption.
Note: To analyze smart money trends, we looked at the activity of the top 20 VC firms, selected according to portfolio valuations and CB Insights’ Investor Mosaic investor ranking model. Here’s our full list of 20 smart money investors:
- Accel Partners
- Andreessen Horowitz
- Battery Ventures
- Benchmark Capital
- Bessemer Venture Partners
- Greylock Partners
- Kleiner Perkins Caufield & Byers
- New Enterprise Associates
- Redpoint Ventures
- Sequoia Capital
- Union Square Ventures
- Spark Capital
- Index Ventures
- Khosla Ventures
- Founders Fund
- Google Ventures
- Felicis Ventures
- Floodgate Fund
- First Round Capital
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